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Simplified Joint-Stock Company
March 19, 2016 |
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| Simplified Joint-Stock Company |
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On March 14th, 2016, several amendments to the General Law of Commercial Companies were published in the Federal Official Gazette, creating a new modality of commercial company in Mexico: the Simplified Joint-Stock Company (Sociedad por Acciones Simplificada) (“SAS”). This amendments will become effective as of September 14th, 2016.
These amendments introduce the SAS as a new category of entity which may be incorporated as a variable capital company, with a separate legal personality from the one of its shareholders who will be obliged only to pay the amount of their contributions to the company, however establishing that “the shareholder(s) will be subsidiary and jointly and severally liable for the commission of criminal conducts.”
Some of the main distinctive features of the SAS are the following:
1. The SAS will be the only kind of commercial company in Mexico which may be incorporated by a single shareholder.
2. The shareholder(s) of the SAS shall only be individuals, being impossible for companies to participate as shareholders.
3. The shareholders cannot simultaneously own social capital of another company (including another SAS), if said ownership implies control over the company or its management.
4. To incorporate a SAS, it will not be required a public deed, or any other formality, so the use of Notary Publics will be optional for its incorporation. In this regard, the Ministry of Economy will be responsible of establishing an electronic system for its incorporation and registration, so the incorporation procedure will be much faster and low-priced.
5. The SAS will not be allowed to issue shares with limited voting rights.
6. The representation of the SAS will be in charge of a Sole Manager who must be a shareholder of the company.
7. The SAS shall not have total annual income higher than $5’000,000.00 Mexican pesos, amount that will be updated annually. Otherwise, the SAS must be transformed into any other type of commercial company. In the event that the company does not perform the conversion, the shareholder(s) shall be jointly, severally and unlimitedly liable before third parties, notwithstanding any other responsibility attributable to them.
8. The Shareholders’ Meetings, in case the SAS has more than one shareholder, may be held in person or by electronic means, which will accelerate and simplify the decision-making process.
9. The SAS shall publish their financial statements yearly in the Electronic System provided by the Ministry of Economy, and the lack of such publication shall cause the dissolution of the company.
10. The SAS is not required to form the legal reserve provided for other commercial companies.
11. The company’s bylaws will be formed by choosing model clauses previously drafted by the Ministry of Economy.
12. Unless otherwise agreed, alternative dispute resolution mechanisms shall be preferred to resolve disputes between the shareholders.
13. Where the provisions for the SAS are silent, regulations for the regular joint-stock company (Sociedad Anónima) will apply.
Conclusions. It is important to remark that this new corporate mode has been structured to be used by small businesses and new entrepreneurship projects (which expect income of less than 5 million pesos, at least in its first stages, and do not require distinctive corporate structures), and will not be adequate for businesses with larger or more complex operations.
Considering the above, we consider this new company mode will be a very useful tool for new business projects which require simplicity and immediacy to formally commence their activities, and will help to reduce informal trade in Mexico. However, we would not recommend its use to larger projects, or to initiatives which require a customized corporate structure, since in such cases it will be preferable to incorporate under one of the previously existent modalities, counting with specialized advice.
Special care should be taken by SAS shareholders in regard to their responsibility for criminal acts, since in case a single shareholder incurs in a criminal conduct that responsibility may be extended to the other shareholders jointly or severally. Although this responsibility will be challengeable before appropriate instances in conformity with applicable criminal provisions, shareholders should be careful when selecting their associates, and supervising the operation of the SAS and its Manager, taking into account that there will also be responsibility for compliance with tax obligations in accordance to the applicable law.
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IMPORTANT: IMPORTANT NOTE: The information here contained is of general nature and for informative purposes only. Please consider that what is here stated does not apply circumstances of any individual or entity. We strongly recommend not performing any activity based on this information without the professional assistance of our lawyers considering your particular circumstances. |
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