By: Ana Carolina Barquero
1.- How many partners are needed to incorporate a corporation in Nicaragua?
The Nicaraguan legislation establishes that a corporation can be constituted by two or more persons that subscribe the corporate deed containing all the necessary requirements for its validity, referred to partners’ data, line of business of the corporation, corporate name, corporate capital, domicile of the corporation, duration, number and value of shares, advantages or rights of the founders, just to mention the basic requirements.
2.- Who can be part of the Board of Directors of a corporation in Nicaragua?
The administration of corporations will be entrusted to a Board of Directors, appointed by the General Shareholders’ Meeting or as provided in the articles of incorporation, and will be formed without exception by the same partners, for a fixed and determined term, not exceeding ten years.
3.- How can the articles of incorporation of a corporation be modified?
The Nicaraguan legislation establishes that the General Shareholders’ Meeting is the only one that can agree on the modification of the corporate agreement, requiring for such effect, the presence of partners representing at least three-fourths of the capital and the favorable vote of partners present representing at least half of the capital to resolve on the following:
- Early dissolution of the company
- Extension of its duration
- Merger with another company
- Reduction of capital stock
- Increase of capital
- Change of corporate purpose
- Any other amendment to the articles of incorporation
- If the General Shareholders’ Meeting approves such amendment, it must be submitted to the Judge for approval and registered in the Public Mercantile Registry
However, by means of Circular number 210420; issued by the National Directorate of Registries, a new provision was established regarding the authorization to corporations to modify their articles of incorporation, without requiring judicial authorization, it being sufficient that the agreement is recorded in a public instrument, in accordance with the provisions of articles 206 and 209 of the Regulations of the General Law of Public Registries, always verifying that the modification agreement has been approved in accordance with the rules governing the company (Code of Commerce, Articles of Incorporation and Bylaws), consequently, if any discrepancy is found, the procedure will be suspended or denied, as the case may be.
Likewise, the following cases are exempted from said agreement, and therefore the judicial approval established in article 213 of the Code of Commerce must be required:
1.-Modification to the corporate name;
Increase or reduction of capital stock.
For further information on this and other legal issues, please contact LatinAlliance Nicaragua, Attorneys and Notaries, at the following email address: abarquero@latinalliance.co