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Doing Business in Guatemala

Forms of Business Organisation

Sociedad Colectiva (Articles 59-67 of the Commercial Code)

The definition of corporation is valid for this form of corporation, except for the fact that there is no limited liability and partners are jointly and extensively liable for damages or debts incurred by the corporation. The most obvious distinction between a sociedad colectiva and a partnership is that in a partnership each partner retains the right to manage and bind the partnership while in a sociedad coletiva these rights are granted to elected officials who may or may not be partners. No issue of shares is permitted and the only means to show participation is through a copy of the bylaws.

Sociedad en comandita Simple o por Acciones (Articles 68-77 and 195-202 of the Commercial Code)

These are two different types of corporation that due to their proximity can be explained together. This corporations are formed by two or more persons, having as members one or more general partner and one or more limited partner. General partners are granted the right to manage and bind the corporation since they are subject to unlimited liability. The general partners’ unlimited liability in this case is not joint and extensive, and their assets can only be touched after foreclosure on corporation assets (capital). Shares may or may not be issued depending on prohibitions in the bylaws, hence the difference between one and the other.

Sociedad Anónima (Articles 86-183 of the Commercial Code)

This is the most commonly used form of corporation due to the benefits of limited liability and the fact that its capital is divided into shares of stock (face value shares) that facilitate transfer and appreciation (market value).

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