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  • Jaime Deschamps

Corporations I - What is a corporation, benefits and types.

Definition of Company:


Corporations are entities with legal personality (the law recognizes them as persons) and patrimony (being considered persons they have their own assets, rights and obligations, unrelated to those of their partners/shareholders), which arise from the union of the efforts and resources of two or more persons for the realization of certain purposes.


Benefits:


The advantage of partnerships is that they allow the members that create them to distinguish between the resources and efforts that will be dedicated to their own affairs and those that will be destined to the specific project for which the partnership is created.


Additionally, they allow to concentrate and manage all the activity related to the activity or business in a clear manner.


Likewise, in some cases they limit the liability of the shareholders and/or partners in case of losses or bankruptcy. That is to say, in some corporations, the partners or shareholders are only liable up to the amount they are obligated to invest in the corporation, so that in case of bankruptcy, those who the corporation may owe can only be charged with the assets that belong to the corporation and not with the personal assets of the members of the corporation (such as their homes).


Classification:


Within the partnerships we find two main types of partnerships classified by the matter that regulates them:


Civil partnerships - Whose main purpose is not the obtaining of profits through the exchange of goods (commercial speculation purpose).


Civil partnerships are regulated in the Civil Code.


Within these we find:


Civil partnership. - They have a predominantly economic purpose but their main purpose is not commercial speculation. For example, a medical clinic or a school (their purpose is to earn money, but we do not think of them as merchants buying objects at a price to resell them at a higher price).


Civil association - Their purpose is not primarily economic (For example, a neighborhood or parents association, they can make some money with the sale of certain products or events, but their main purpose is to take care of the interests of the neighborhood or students, not profits).


Trading companies - Whose main purpose is to make profit through the exchange of goods and/or services.


In Mexico Mercantile corporations are regulated by the General Law of Mercantile Corporations, published on August 4, 1934.


The corporations recognized by the General Law of Mercantile Corporations are:

I.- Sociedad en nombre colectivo (general partnership)

II.- Limited partnership

III.- Limited liability company

IV.- Joint-stock company

V.- Limited partnership by shares

VI.- Cooperative society (Regulated in the General Law of Cooperative Societies)

VII.- Simplified joint stock company.

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