SOCIETY IN COLLECTIVE NAME: CHARACTERISTICS, REQUIREMENTS, EXAMPLES - ECONOMY - 2025

A partnership in collective name (Mexico) is a company name, which is the form of agreement on how the monetary capital should be handled between the partners of a company. It is a social type of commercial nature, where the responsibility of the partners is emphasized and distributed according to the obligations that the company contracts.

Specifically, in this society all partners will respond to the company's obligations in a subsidiary, joint and several way and without limits, in accordance with the provisions of Chapter II, Art. 25 of the General Law of Commercial Companies.

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When it is said solidarity and subsidiary, it means that each of the partners is responsible for all the others. By saying unlimited, it means admitting that none of the partners has any special right that limits their participation.

Despite the aforementioned, the partners could agree that the liability of any of them is limited to a certain quota or portion, according to article 26 of the law mentioned above.

Characteristics of the company in collective name

The company in collective name (S. in NC) presents some characteristics adapted to comply with Chapter II, Art. 25 of the General Law of Commercial Companies. Some of the most notable are:

- The minimum number of members must be two, while the maximum is unlimited.

- To make any modification to the contract in a partnership in collective name, all partners must agree, unless it has been agreed only to require the approval of the majority.

- The partners cannot assign their rights in the company without the consent (consent) of the other partners. Nor can other new partners be accepted without such consent, unless it is stated in the contract that majority approval will be sufficient.

- The partners may not engage in other businesses similar to those constituted in the purpose of the company, neither on their own account nor on behalf of others. They may not be part of other companies either, unless the other partners allow it.

- Every partner will have the right to resign from the company, when they have voted against the appointment of an administrator who falls to a person not belonging to the company.

- You must have an economic reserve, by saving 5% of the profits generated annually, until reaching an amount equal to one fifth of the capital stock.

- When a partner is the administrator and it has been stipulated in the contract that he cannot be deposed, he can only be judicially dismissed due to inability or fraud.

Modalities you can take

Company in collective name of variable capital (S. en NC de CV)

The capital stock may be increased by the entry of new partners or by subsequent contributions from the partners, and may be decreased by the total or partial withdrawal of the contributions, without greater formalities than those determined by the contract.

Society in the collective name of limited liability (S. en NC de RL)

It is constituted between partners obliged only to pay their contributions, without the social parts being represented by negotiable titles, since they can only be transferred with the requirements and cases established by law.

Society in collective name of limited liability of variable capital (S. en NC de RL de CV)

The capital of this type of company will vary according to the contributions of the partners, without being represented by negotiable titles.

Requirements

To establish a company in collective name, there may be: a) capitalist partners, who are those who contribute the money, b) and industrial partners, who contribute their work and receive a salary for it. The contributions of each of the partners can be made through work, money or goods.

The company name must be formed with the name of one or more partners. If the partners are many and not all of them can be mentioned because it would be too long a name, then it will be replaced by the words "and company" or some other equivalent expression.

To ask the government of Mexico for the company's name, you need to enter the Tu Empresa website.

To do this, you must have an electronic signature, which can be obtained from the Tax Administration Service (SAT). The procedure can also be carried out in the Delegations of the Ministry of Economy.

The partnership in collective name requires that there are at least two partners. This has the advantage of forcing the partners to participate in the decisions of the company, without there being one that can impose on the others.

Assemblies

The General Assembly of Shareholders is made up of the assembled shareholders, being the largest administrative body of the company. This will be preceded by the president of the collective meeting.

According to the General Law of Commercial Companies, this type of company must hold two General Shareholders' Meetings, one ordinary and the other extraordinary.

Ordinary assembly

It will be formed at least once a year within the four months that follow the closing of the fiscal year. It is in charge of discussing, modifying or approving the different measures that are opportune, among other actions.

extraordinary assembly

It is usually held once a year and they are responsible for dealing with administrative matters such as increase or reduction of share capital, transformations, extensions, mergers or dissolution of the company, issuance of fertilizers or all those matters that by social contract require a special quorom.

Advantage

Because it is a society of people, those who compose it know that it will always work with the same partners, so they all tend to collaborate with each other.

If for any reason one of the founding partners were to be replaced, this new person will enjoy the trust of others, because they will be accepted for their skills, merits and prestige.

No partner can grant an outsider participation in the company in the event of resignation, unless it is consulted and approved by the other partners.

When there are no family ties, these companies are rarely made up of more than three or four partners. Each of the partners contributes their financial effort to make the company progress.

This company is ideal for holding companies representing various subsidiary companies, as well as for professional firms.

Disadvantages

One of the problems of this type of company is that the company's partners cannot work in any other partnership as unlimited liability partners, if they do not have the authorization of the other partners.

Nor can you start on your own, or through another person, similar businesses that will represent a competition for society, or that in any way hinders it.

This can be explained because the same personal assets should not be affected to meet the debts contracted by several different companies.

These disadvantages explain the low popularity of this society, mainly due to the small number of people that make it up, because they are unable to agglutinate the large amounts of capital necessary to start up companies with a significant number of operations.

Undertaking activities through a partnership in the collective name implies that the partners must respond in an unlimited, subsidiary and joint manner for all the obligations of the partnership.

Therefore, the partners must respond with their own assets for the obligations of the company when it cannot meet them.

Examples in Mexico of companies in collective name

Some of the companies that already operate in Mexico under this type of company are the following:

- Boliches AMF and Compañía S. in NC: Chain of bowling alleys.

- Federal Express Holdings México y Compañía, S. en NC de CV: Cargo airline.

- Gigante Verde y Cía, S. en NC DE CV: Vegetables and vegetables.

- EFFEM México Inc. y Compañía, S. en NC de CV: Products for human and animal consumption.

- Galaz, Yamazaki, Ruíz Urquiza, SC: Savings House.

- Mojica y Compañía, SC: Savings House.

- Caja La Guadalupana, SC: House of Savings and Loans.

- Group of Business Advisors, SC: Educational Institution.

- Corporación Administrativa de Empresas, SC: Marketing and Distribution of Gas Lp.

References

1. Carolina Celayo (2019). What is a Society in Collective Name (S. in NC). Smart business. Taken from: Negocios-inteligentes.mx.
2. SME Toolkit (2017). Societies in collective name and limited partnerships. Taken from: mexico.smetoolkit.org.
3. Commercial Legislation (2015). The Company in Collective Name. Taken from: legislacionmercantilven.wordpress.com.
4. Society in collective name (2015). Society in Collective name. Taken from: snombrecolectivo.blogspot.com.
5. UNAM Legal Journals (2016). Carlos A. Gabuardi (2019). The company in collective name in Mexico. Taken from: magazines.juridicas.unam.mx.