The constitutive Act of a company is the document that contains important data about its creation and to whom it belongs. It is like a birth certificate, but from a company and it is a requirement to process many in Mexico.
In this content I will give you the most important information about a constitutive Act; from what it is, what it is for, to how or where to process one in case your business needs it. Ahead!
What is a charter?
A charter is the document that certifies the birth of a ―or legal person―, for this reason I mentioned that it is like a birth certificate but, in this case, it indicates that several people have come together for a joint purpose.
The articles of incorporation are created and validated by a notary public ―whether a broker or notary public― and function as a social contract to legally operate companies or partnerships.
Constitutive act: what is it for?
A moral person acts like a person of flesh and blood; although it is not physically perceptible, legally you have rights and obligations as a natural person.
Companies or associations -for-profit or non-profit- need this document to start operations in Mexico. Without it, it is impossible to carry out other essential procedures to start a business such as: registration in the SAT, opening business accounts, land use license, building and construction or operating license to mention just a few examples.
A constitutive act also serves to identify which moral person falls under the business activity; Likewise, it helps to determine the degree of financial responsibility of each partner or shareholder of a company by the percentage of participation and the powers that they have in it.
That is, a charter indicates the name of the company, the percentage of expenses and profits that the shareholders will obtain, as well as the people who will have the powers to carry out certain administrative activities, be bound on behalf of the company created or even represent it. in court.
Do I need a charter if I am going to undertake?
The answer to this question depends on the type of business you are going to start. It is possible to undertake as a natural person, there are some types of tax regime that allow you to run a business and, if so, you do not need a charter.
The Simplified Stock Company is the only case that does not require a charter, because the constitution of these companies can be generated online in the and, at the end of the process, a charter issued by the Ministry of Economy can be obtained at through its website, but if any modification is required, it is necessary to go to a notary public.
📌 Note: if you set up your company under the Simplified Stock Company (SAS) regime ―which has a maximum revenue cap of $5 million MXN per year― you do not need to process a charter. However, it is always essential to consult an advisor or expert to make legal or accounting decisions.
Types of articles of incorporation according to the type of commercial company
- Act for society in collective name. It has many partners, they are generally large companies in which all partners have a vote in decision-making and respond to the obligations of the company.
- Certificate for simple limited partnership. Formed by several partners who must respond jointly and severally for the company’s obligations, although it also accepts one to several partners who are only obliged to pay their monetary contributions, that is, they do not have joint and several obligations in case of incurring debts. for instance.
- Act for limited liability company. As its name indicates, the responsibilities of each partner are limited by the percentage or value of the shares that each one contributes, with this the personal assets of the partners are not put at risk since they are not obliged to respond jointly and severally on behalf of the company.
- Minutes for public limited company. Each shareholder or partner responds only with his percentage of shares, that is to say that there is also limited liability in case of financial or legal problems. In addition, the sale of shares is allowed, although other shareholders of the company will always have purchase preference.
- Certificate for limited partnership by shares. The partners must respond jointly and severally for the company, in this type of company it is possible to sell shares as long as the shareholders agree.
- Act for cooperative society. All members of the cooperative society have a vote and the form of decision regarding business activities is democratic. Withdrawal from this type of company is voluntary, as is the association.
- Act for civil society. It allows collaboration between two or more professionals to carry out activities for profit, but not for commercial purposes, that is, it allows the collection of fees for professional activities or consultancies but not the sale of products or merchandise.
- Act for civil association. This is a non-profit entity, it allows the organization of natural persons in order to fulfill purposes for the benefit of society such as educational, cultural, outreach or charitable activities, etc.
Elements of a charter
- Background: if it is a modification to a previously established company.
- General: book, date, notary, federal entity and corporate name of the company or company.
- Statute: corporate name of the company or company, corporate purpose, domicile, duration of the company, type of administration (powers of attorney), etc.
- Temporary: analysis of the company, names of partners and description of powers.
- Additional notes: additional clauses.
- Certifications: the faith that the notary grants to the documents and personality of the shareholders.
Articles of incorporation: example
📌 Note: each legal office or notary charges according to the type of company and the number of proxies who register. The cost ranges between $10,000 and $25,000 MXN, but the amount may be higher in some cases.
How to make a articles of incorporation of a company?
- Have the corporate name of the company or society.
- Collect the following documents from all partners:
- Birth certificate
- official identification
- Proof of address
- Tax identification card (e.firma and )
- Go with a lawyer or notary or public broker to carry out the process.
📌 Note: To obtain the registration ticket that will validate the company’s procedure before the Public Registry of Commerce, the waiting time is 1 to 3 months.
In conclusion
Now that you know that the purpose of the articles of incorporation is to bring together several people with a common goal, which is embodied in the corporate purpose of the company, you are closer to materializing that entrepreneurial project. Do not forget that if you want to reach more customers; An online store will serve as a virtual catalog and will help you increase both consumer confidence and your company’s sales.
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