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  • Jaime Deschamps

Mercantile Companies - Legal personality and Irregular Company. Intro IV (Arts 2 and 3).

As previously mentioned, corporations are entities that the law recognizes as persons, which means that the corporation for the law is an individual different from its partners/shareholders.

Doctrinally, legal personality has been defined as the "aptitude to be a subject of rights and obligations".

This means that corporations can have their own rights and obligations autonomously from those of their partners/shareholders.

Every person recognized as such by law, i.e. with legal personality, is attributed certain characteristics that have the function of individualizing the person, distinguishing it from others. These characteristics/qualities are called attributes of personality.

The attributes of personality are the following:

Name: Individualizes the persons, in the case of legal entities, the name is the corporate name (for capital companies) and it is requested by means of authorization to the Ministry of Economy through a portal; or in its case, it is the corporate name (for partnerships) composed by the name of the partners of the company.

Domicile: It is the place where the person predominantly fulfills its obligations. In the case of the corporation, it is customary for the corporate domicile to be a federal entity, i.e., a state, without designating a specific address.

Notwithstanding the above, in the electronic form to incorporate the Simplified Joint Stock Company, a specific address is designated as the corporate domicile.

In my opinion, the corporate domicile declared in the deed generates more problems than benefits (since the meetings must be held at the corporate domicile).

Nationality (Political Status): It is the link between the person and a state (nation), generating rights and obligations in relation to such position.

Capacity: It is the aptitude to be the holder of rights and obligations and to exercise them through a representative (capacity to enjoy) or by oneself (capacity to exercise).

Patrimony: It is the set of rights and obligations belonging to a person and that can be valued in money.

Additionally, individuals have civil status, but this attribute is not logically applicable to legal entities, since they do not get married and do not have a family.

Legal entities have juridical personality from the moment they are externalized as such before third parties or, as the case may be, from the moment they are registered in the Public Registry of Commerce.

Once registered in the Public Registry, only companies that have unlawful purposes or habitually perform them may be declared null and void, in which case they will be immediately liquidated (sale of assets and payment of debts) with the remaining (profit) to pay any civil liability that may have arisen and the rest will go to the public charity of the locality where the company has its domicile.

The petition to declare null and void a corporation that has unlawful purposes or that habitually carries out such purposes may be filed by any person.

Corporations that have not been registered in the Public Registry of Commerce, but that hold themselves out as such before third parties, are regulated by the agreement of the partners (corporate contract) and by the provisions of the General Law of Mercantile Corporations relating to the corresponding corporation.

The Simplified Joint Stock Company is only effective with respect to third parties if it is registered in the Public Registry.

The rest of the companies that are externalized as such before third parties, but are not registered are called irregular companies, either:

- That only the essential requirements foreseen in Art 6 of the General Law of Mercantile Corporations have been agreed upon, without a public deed having been executed, or;

- The agreement has been executed in a public deed but it has not been registered.

Those who represent irregular companies in agreements with third parties are liable subsidiarily (if the company does not comply, they must comply), jointly and severally (the third party may demand compliance from the company or the representative) and unlimitedly (with all its belongings) for such agreements, regardless of the liability that may arise if crimes have been committed.

Partners not guilty of the irregularity, may demand the payment of damages (losses) and losses (profits not obtained) from the guilty partners, as well as from the representative.

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