COMMERCIAL COMPANIES: HISTORY, ELEMENTS, TYPES, EXAMPLES - ARTE - 2024

Commercial companies are legal entities formed by an association of people, whether natural, legal, or a mixture of both, to carry out a commercial or industrial company, whose objective is the execution of commercial acts.

For this reason, they are entities that the legislation recognizes with their own legal personalities and different from the members that compose it. As they also have their own assets, they direct their efforts to the execution of a common profit-making purpose.

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In general, commercial acts are activities that are subject to commercial law, thus differentiating themselves from civil companies, whose corporate purpose does not contemplate commercial acts.

The members of the company share a common purpose and come together to focus their diverse talents and collectively organize their available skills or resources to achieve specific stated goals.

Commercial companies have the characteristic of proceeding on their own behalf, with a denomination or name under a domicile, with their own assets and capacity.

Legal handling

The constitution of a commercial company must be carried out through a document that contains all the aspects indicated in the legislation, and then be settled in the corresponding Registry.

They can change their structure as many times as necessary. That is, they can change the partners, merge with another, divide, incorporate new members, change the commercial activity, or change the statutes established in the constituent document.

However, mercantile companies have the peculiarity that each of the applied modifications must be included in the Registry where it was incorporated.

On the other hand, commercial companies can be dissolved when their partners decide to terminate the activity, or when they consider the company consummated for reasons established in the statutes or in the law.

When this occurs, the liquidation of the company must be carried out, converting all the company's assets into cash, in order to pay the liabilities and distribute the rest of the money among the partners, according to the number of shares of each one.

Each country has legal regulations to regulate the different commercial companies. For example, the law of capital companies in Spain, the law of commercial companies in Argentina, the general law of commercial companies in Mexico, etc.

Origin and history

The creation of mercantile companies began in Rome, where a primitive civil society existed, which functioned through lucrative economic activities, both for religious and family reasons. Over time, this organization gave way to the structure we know today.

In the time of Justinian, who reigned from 527 to 565, Roman law recognized a series of corporate entities under the names of universitas, corpus, or colleges. These included private associations, political groups, and artisan or merchant guilds.

These bodies had the right to own property and enter into contracts, receive gifts and bequests, sue and be sued, and carry out legal acts through their representatives.

The supposedly oldest trading company in the world, the Stora Kopparberg mining community in Sweden, obtained permission from King Magnus Eriksson in 1347.

In medieval times, merchants did business through associations. When people acted together in order to make a profit, the law considered that a commercial company arose.

The oldest representation of the mercantile societies was called Company, which would now become a collective society.

Creation of companies

In the 17th century, the creation of Dutch and English companies, such as the Dutch East India Company and the Hudson's Bay Company, was authorized to run the colonial companies of European nations.

Investors were issued paper certificates, as proof of ownership of the shares, being able to trade their shares on the Amsterdam Stock Exchange. They also explicitly received limited liability from the company.

Labeled as "the largest merchant society in the universe," the English East India Company symbolizes the rich potential of a company, as well as new business methods, which could be brutal and exploitative.

Corporations were created when capitalism arose, constituting the most appropriate tool for its development.

The expansion of this type of company in European law begins with the French law of 1867, which eliminated the requirement of a prior authorization from the government to establish this type of company.

Elements of commercial companies

Three essential elements participate in this type of partnership, which we will briefly describe below.

Personal element

It is made up of the partners, who are the people who pool their efforts and contribute the capital.

Patrimonial element

It is formed by the accumulation of total assets paid by each of the partners, in order to make up the assets, work and social capital.

Formal element

It is the group of rules that are related to the solemnity that the contract that initiates the company as a legal entity must cover.

Classification according to its elements

According to the way in which its elements are constituted, commercial companies can be classified according to several criteria. Here we will look at some of the most common types.

Societies of people

They are the societies where the personal element is predominant. Includes simple and collective limited partnerships.

Intermediate companies

They are those societies in which the predominant element is not clear. Includes limited partnership by shares and limited liability company.

Capital companies

They are the societies where social capital is predominant. Includes corporations and cooperatives. In turn, there are two types of capital:

- Variable capital: is one that is flexible according to the progress of the commercial company.

- Fixed capital: is the capital that cannot be modified, unless there is a modification in the bylaws.

Types and their characteristics

Sociedad Anónima (SA)

- It is the most common type of company within the tax system.

- It is made up exclusively of partners whose duty is limited to paying their shares.

- Requires a minimum of two partners, without limit of partners.

- Your stay can be up to 99 years.

- The capital paid by the partners is divided into shares. This company can be open or closed, since it may or may not carry out a public offering of shares.

Limited liability company (S. de RL)

- Constituted by partners only obliged to pay their contributions, without the parties being represented by negotiable titles, since they can only be assigned with the requirements and cases established by law.

- It has an initial capital divided into indivisible contributions and in equal parts between the partners. No one can own less or more participation than the others.

- The partners have the right to make directive decisions, as well as to belong to the Administrative Board.

Collective society

- The company name will be created with the name of one or more partners. If not all names are in the business name, the words “and company” or equivalent will be added.

- There must be at least two partners.

- A minimum capital is not implemented.

- The partners respond to the debts personally, they are direct managers.

- Partners can contribute their workforce and capital at the same time. They have the right to manage the company directly.

Simple limited partnership (S. en C.)

- Composed of one or more limited partners, who are liable for unlimited corporate obligations, and by one or more limited partners, obliged only to pay their contributions.

- Formed with the names of one or more partners. If not all names are listed, follow with the words "and company" or equivalents.

- The words "Limited Partnership" or its abbreviation "S. in C. ».

- There is no established minimum capital.

- There must be at least two partners.

Limited partnership by shares (S. en C. por A.)

- There are two types of partners: limited partners and limited partners. The limited partner will be bound to the third parties for all the obligations of the company where he has taken part.

- Its capital is represented by shares. Therefore, not all partners are bound to the same responsibilities.

- Limited partners cannot be administrators, although they can monitor and authorize their partnership.

- A minimum capital is not implemented.

- There must be at least two partners.

Cooperative Society (SC)

- It has a more participatory and horizontal form of union of the partners.

- All partners are part of the working class.

- The responsibility can be supplemented, where the partners respond with their own capital up to the amount established in the articles of incorporation, or limited, where they respond up to the amount of their contribution.

- No minimum or maximum share capital is set. However, this must always be variable.

- Must have at least five partners.

How are mercantile companies constituted?

Before establishing a commercial company, you must decide what its name or denomination will be.

For this, it is necessary to request a negative name certification before the Mercantile Registry, processing an application where a maximum of three options will be consigned for the future name of the company.

All commercial companies must be registered in the Commercial Registry. They acquire their legal personality from this process.

Establish the constitution

The constitution of the company must be formed before a notary in a public deed and be signed by the partners. In this writing the following data must be reflected:

- Of the partners: Name, profession, address, marital status and marital status.

- Name and address of the company.

- Corporate purpose, which is the activity to be developed.

- Duration of the company

- Subscribed capital: Depending on the type of commercial company, it will be required that it has been fully paid up or not, consisting not only of cash, but also real or personal property.

- Portion of the capital subscribed by each partner, and the number of shares (limited partnership) or shares (joint-stock company) into which it is divided.

- Administrative body of the company: The election of the position and its powers.

- Statutes by which the company is to be governed.

The following documentation must be presented to the notary so that he can authorize the signing of the document: certification of name issued by the Mercantile Registry, and bank receipt of the deposit of the capital stock.

Once the procedures have been completed, within 15 days, the Office of support for the creation of the company inserts a notice in a newspaper of legal notices of the notary.

What are they for?

Commercial companies are legal entities formed by a group of people to participate and operate with a commercial company. A company can be organized in various ways for fiscal and financial responsibility purposes, depending on the corporate law of its jurisdiction.

The line of business the partnership is in will generally determine which business structure is chosen. As such, a company can be considered as a type of business.

A commercial company is essentially a legal person, in the sense that it is a separate entity from the people who own, manage and support its operations.

A business has many of the same legal rights and responsibilities as a person, such as entering into contracts, the right to sue or be sued, borrow money, pay taxes, own assets, and hire employees.

They are generally organized for profit from some type of business activity, although some may be structured as a non-profit charitable organization. Each country has its own hierarchy of companies and corporate structures, although with many similarities.

Advantages and disadvantages

The benefits of creating a corporation include income diversification, a strong effort-reward correlation, creative freedom, and flexibility.

- Limited liability for shareholders.

- Structure well understood and accepted.

- Ability to raise significant capital.

- Possibility of progressing with losses to offset them with future gains.

- Easy to sell and transfer the property.

- Profits can be reinvested in the company or paid to shareholders as dividends.

Many of the world's largest personal fortunes have been amassed by people who have started their own business.

Disadvantages include increased financial responsibility, increased legal responsibility, long work hours, responsibility to employees, and administrative, regulatory, and tax responsibilities.

Examples

Below are examples of mercantile companies located in Mexico, according to their type.

Anonymous society

- Bimbo SA de CV: Preparation and distribution of food products.

- Alpura SA de CV: Production and marketing of dairy products.

- Lala SA de CV: Production and marketing of dairy products.

Limited liability

- Becomar de México S. de RL de CV: Laboratory machinery and equipment.

- General Motors de México, S. de RL: Manufacture of cars and trucks.

- Goodyear Servicios Comerciales S. de RL de CV: Cauchera.

- Mabe México, S. de RL de CV: Manufacture of kitchen furniture.

Collective society

- Cooperativa la Cruz Azul: Cement products.

- Kpmg Cárdenas Dosal, SC: Audit, tax and advisory services.

- Club de Pilotos Aviadores Profesionales de México, SC: School.

- Popular savings bank Yanga SC: Promotion of cultural savings.

Limited partnership by shares

- Bader de México, S. en C. por A. de CV: Transformation of bovine skin.

- Grupo Blue Bunny y Cia, S. en C. por A.: Generation and distribution of electricity.

- Loreto Builders Partners, S. en C. por A.: Constructora.

- Energy Plus Unger Chavez, S. en C. by A. Industrial Consultants.

Cooperative Society

- Cooperative Society of Workers of Pascual, scl: Marketing of beverages.

- Autoexpress, scl: Credits.

- Sociedad Cooperativa de Consumo Pemex, scl: Consumption of goods and services.

- Cooperativa la Cruz Azul, scl: Cementos.

References

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3. CIES (2019). The forms of commercial companies. Taken from: cies.sn.
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5. Will Kenton (2018). Company. Investopedia. Taken from: investopedia.com.
6. Matias Riquelme (2017). Commercial Companies (Definition and Characteristics). Web and Companies. Taken from: webyempresas.com.
7. Daniela Lisset Espinoza Rodríguez (2018). Background of commercial companies. University of Durango. Taken from: academia.edu.
8. Wikipedia, the free encyclopedia (2019). Corporation. Taken from: en.wikipedia.org.