By: Salvador Baldizon

In Guatemala there are different types of companies, civil and commercial. Today it is important to be clear for many businessmen or entrepreneurs, depending on the activity they are going to carry out and the needs required by the company, which is more legally convenient for them and in this case specifically what type of company is going to be used.

1. What types of Commercial Companies exist in Guatemala?

In Guatemala there are different commercial forms, through which a company can be organized and this is established by Guatemalan legislation, specifically in article 10 of the Commercial Code, which indicates that: “The following are exclusively organized companies under a commercial form:

1. Collective society.
2. Simple limited company.
3. Limited Liability Company.
4. Anonymous society.
5. Company limited by shares.
6. Entrepreneurship Society.”

Therefore, if a group of people is interested in establishing a commercial company in Guatemala, they must use any of the commercial forms listed above.

It is worth mentioning that in Guatemala, despite the fact that there are 6 types of commercial companies, the most common and popular is the Public Limited Company, since it offers advantages for entrepreneurs, or groups of people who want to organize themselves in a more formal way for commercial purposes. In the following questions we will specifically cover the Public Limited Company, in order to deepen the advantages and main characteristics of this commercial form, since it is one of the most used in Guatemala.

2. What are the advantages of establishing a Public Limited Company?

Among the main advantages that a duly constituted Public Limited Company has, is the responsibility of the shareholders, its business structure, transparency, business extension and access to financing; which will be briefly developed below:

The responsibility of the shareholders is undoubtedly one of the main advantages, since the shareholders have limited liability according to the amount of the contributions they make and in relation to the debts that the Company acquires, that is, if the Company were to to have a legal problem and did not have the economic solvency to respond, the shareholders are not personally responsible 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 Public Limited Company has in its structure, and that is that in this commercial form any individual or legal person can be a shareholder, as well as the number of members that are necessary, since they can have unlimited shareholders, that is, there is no limit for this form of business in terms of the amount that the Company must form, since the only requirement established by law is that it must be constituted with at least two members or more , which allows the Public Limited Company to be diverse in terms of its integration, development and expansion without any limitation.

Another important advantage within a Public Limited Company is transparency, because the obligation to keep all shareholders within the Company informed must be fulfilled, inform each shareholder about financial reports, accounting records, and the correct functioning of the Company, thereby generating more security and certainty to attract more investors. Likewise, the business extension is applied, since the company can continue to operate normally, regardless of the death of any of the shareholders of the Company, assign or sell their shares, even if due to the fact that the Company at the time of incorporation acquires its own legal personality. , that is, it does not depend on the human factor for the correct operational functioning. And finally, this mercantile form facilitates access to financing, for two important reasons. The first is to attract the attention of many investors, who, realizing how well structured the Company is, generates more confidence in them and are willing to inject more capital into it; and the second reason that the Company can issue stocks and bonds, which allows it to raise capital more efficiently than other forms of business.

3- What are the main characteristics of a Public Limited Company?

Article 86 of the Commercial Code establishes the meaning of what the Public Limited Company is, from it we will detach the main characteristics and they will be complemented with others that we will develop that, although they are not defined in it, it is clear that they are important for the proper functioning of the Company.

As mentioned above, the commercial code establishes in article 86 that: “The Public Limited Company is the one that has the capital divided and represented by shares. The liability of each shareholder is limited to the payment of the shares that he has subscribed.. The Public Limited Company is of the capitalist type, since its contributions are represented by shares, it is identified with a company name, this means that it can be called freely because the law allows it, in which your personal element goes to be the shareholder partners, who are the ones who will contribute capital and will have rights and obligations in accordance with the corresponding share title with which they accredit said quality to exercise their rights and fulfill the obligations.

On the other hand, the capital is divided as follows, by an authorized capital, which is the maximum amount that a Public Limited Company can issue new shares; a subscribed capital, this is the minimum amount that each shareholder must pay at the time of subscribing shares, of at least 25% of the face value of each subscribed share, and the paid-in capital is that which is duly paid in full at the time of establishing the Company.

Contributions within a Public Limited Company can be in two ways, being monetary or non-monetary, the latter consist of everything that is not money and that can be appraised, can be used as a contribution and it must have the approval of the shareholder partners to be considered as a contribution.

The Public Limited Company has three main pillars, these being the administrative body, the sovereign body and the supervisory body.

The administrative body is the one that will exercise the legal representation of the Company, and this may be exercised by a single Administrator being a single person or by a board of directors, which will be made up of a minimum of 3 shareholders, which they may or may not be shareholders and they may be reelected. The body of sovereignty is exercised by all the shareholder partners that make up the Company, formed in a General Assembly, since it is the most important body because all the decisions of what the Company does are made in it. And finally, the supervisory body, which is in charge of controlling the Company, verifying that the decisions made in the Assembly are complied with and that the administrative body fully complies with them.