Por: Salvador Baldizón
There are different types of companies, civil and mercantile, nowadays it is important to have clear for many businessmen or entrepreneurs, depending on the performed activity they are going to perform and company needs, which is legally more convenient for them and in this case specifically what type of company is going to be used.
- What kinds of commercial companies exist in Guatemala?
There are different mercantile ways in Guatemala, in which a company can be organized, as established by the Guatemalan legislation, specifically in Article 10 of the Commerce Code, which indicates that:
“The following are the only companies organized under the mercantile form:
- General Partnership.
- Limited Partnership Company
- Limited Liability Company
- Limited Liability Company
- Limited partnership by shares
- Venture partnership.”
Therefore, if a people group is interested in a Guatemalan corporation, they must use any mercantile form listed above:
It is worth mentioning that in Guatemala, there are 6 types of corporations, the most common and popular is the limited liability company, since it offers advantages for group entrepreneurs to organize themselves in a more formal way, for commercial purposes.
In the following questions, we will specifically cover the limited company, with the purpose of deepening the advantages and main characteristics of this mercantile form, since it is one of the most used in Guatemala.
- What are the advantages of forming a corporation?
The main advantages of a duly incorporated corporation are the liability of the shareholders, its business structure, transparency, business extension as well as access to financing, which will be briefly described below:
The liability of the shareholders is undoubtedly one of the main advantages, since, the shareholders have a limited liability according to the amount of the contributions they make and in relation to the debts that the Company acquires, that is to say, if the Company were to have a legal problem and did not have the economic solvency to respond, the shareholders are not personally liable for the Company, in this way what is intended is to protect the shareholders from possible financial losses.
On the other hand, we have the flexibility that a corporation has in its structure, and in this mercantile form any individual or legal person can be a shareholder, likewise, the number of members that are necessary can belong to it, since it can have unlimited shareholders, in other words, there is no limit for this mercantile form since there is no limit to the number of members that can belong to it, there is no limit for this mercantile form as to the number of members that the corporation must have, since the only requirement established by law is that it must be constituted with at least two or more members, allowing the corporation to be diverse as to its integration, development, and expansion without any limitation whatsoever.
- What are the main characteristics of a corporation?
Article 86 of the Commerce Codes establishes the meaning of corporation, from this article we are going to determine the main characteristics and complement them with others that we will develop, although they are not defined in the same, it is clear that they are important for the proper functioning of the corporation.
As mentioned above, the Commerce Code establishes in Article 86 that: “The corporation is the one whose capital is divided and represented by shares. The liability of each shareholder is limited to the payment of the shares subscribed”. The corporation of a capitalist nature, since its contributions are represented by shares, is identified with a corporate name, this means that it can be freely denominated because the law allows it, in which its personal element will be the shareholder partners, who are the ones that contribute capital and will have rights and obligations in accordance with the corresponding share title with which they will accredit such quality to exercise their rights and comply with the obligations.
On the other hand, the capital is divided as follows: authorized capital, which is the maximum amount that a corporation may issue new shares; subscribed capital, which is the minimum amount that must be paid by each shareholder member at the time of subscribing shares, of at least 25% of the nominal value of each share subscribed; and paid-in capital, which is that which is duly paid in full at the time of incorporation of the corporation.
Contributions within a corporation can be in two forms, monetary or non-monetary, the latter consists of everything that is not money and that can be valued, it can be used as a contribution and it must have the consent of the shareholders in order to be considered as a contribution.
The corporation has three main pillars: the administrative body, the sovereignty body as well as the control body. The administrative body is the one that will exercise the legal representation of the Company, and this may be exercised by a sole Administrator being a single person, or by a board of directors, which will be formed by at least 3 shareholders, who may or may not be shareholder partners and who may be reelected. The sovereignty body is exercised by all the shareholder partners that integrate the Company, conformed in a General Assembly since the General Assembly is the most important body because in it all the decisions of what the Company does are taken. And finally, the supervisory body, which is in charge of controlling the Company, verifies that the decisions made at the General Meeting are complied with and that the management body complies with them in full.