PARTIAL DISSOLUTION: A KEY CONCEPT FOR COMMERCIAL COMPANIES
Partial dissolution of the corporate contract consists of amending the company’s founding document due to the departure of a partner, while maintaining the company’s legal existence, provided that the minimum number of partners required by law is preserved. This process necessarily involves amending the articles of incorporation, notarizing the changes, publishing them in a nationally circulated medium, and registering the modification with the Registry of Commerce managed by FUNDEMPRESA.
MAIN GROUNDS FOR PARTIAL DISSOLUTION
DEATH OF A PARTNER
In companies such as general partnerships, simple limited partnerships, and joint ventures, the death of a partner leads to partial dissolution of the corporate contract. However, the agreement may include provisions for the company to continue with the deceased partner’s heirs, provided they are legally capable of engaging in commerce. In the case of limited liability companies, there are mechanisms to transfer capital quotas or redeem them.
CAUSES PROVIDED IN THE CORPORATE AGREEMENT
The applicable regulations allow the corporate contract to include additional grounds for partial dissolution, provided that they respect the rights of the partners. These grounds may address specific operational needs, such as voluntary withdrawal due to administrative reasons or internal management issues. Including such clauses adds flexibility and legal security to corporate governance.
EXCLUSION OF PARTNERS FOR JUST CAUSE
A partner may be excluded for just cause, such as serious breach of obligations, fraudulent conduct, misuse of company assets, or loss of legal capacity to conduct business. This exclusion must be pursued through a summary judicial process, ensuring impartiality and respect for due process.
The right to exclude a partner must be exercised within a maximum period of ninety days from the date the cause became known; otherwise, the right expires.
PROCEDURE AND EFFECTS OF EXCLUSION
When a partner is excluded by court ruling, they are entitled to receive the cash value of their participation, along with any outstanding profits and losses. If their contribution was the use of an essential asset, compensation will be paid in money. Additionally, with respect to third parties, the excluded partner remains liable for the company’s obligations until the amendment is registered in the Registry of Commerce.
This mechanism balances the company’s interests with the patrimonial rights of the excluded partner, ensuring the company’s continuity is not compromised by the partner’s departure.
PARTIAL DISSOLUTION ACCORDING TO COMPANY TYPE
GENERAL PARTNERSHIP (SOCIEDAD COLECTIVA)
The death, withdrawal, or exclusion of a partner modifies the articles of incorporation. The contract may establish that the deceased partner’s share be acquired by the remaining partners or redeemed by the company, avoiding dissolution.
SIMPLE LIMITED PARTNERSHIP (SOCIEDAD EN COMANDITA SIMPLE)
The departure of a managing partner who only contributed labor leads to partial dissolution. If the partner also contributed capital, the heirs may become limited partners. The withdrawal of a limited partner also requires contractual modification.
LIMITED PARTNERSHIP BY SHARES (SOCIEDAD EN COMANDITA POR ACCIONES)
Partial dissolution only applies to managing partners. Limited partners are treated as shareholders, as in corporations, which avoids changes to the corporate agreement.
LIMITED LIABILITY COMPANY (SOCIEDAD DE RESPONSABILIDAD LIMITADA)
The agreement may include mechanisms for heir incorporation, share transfer, or buyout. In the absence of such provisions, the company may face dissolution.
JOINT VENTURE OR PARTICIPATION ACCOUNTS (ASOCIACIÓN ACCIDENTAL O CUENTAS EN PARTICIPACIÓN)
Due to their temporary nature and joint liability structure, partial dissolution may not apply; instead, full dissolution and liquidation may be required.
CORPORATION AND MIXED-ECONOMY COMPANY (SOCIEDAD ANÓNIMA Y SOCIEDAD DE ECONOMÍA MIXTA)
In these types of entities, partial dissolution is not applicable, as their capital-based nature allows for the free transfer of shares without altering the corporate contract.
In conclusion, partial dissolution of the corporate contract is a legal tool that provides flexibility for commercial companies, enabling them to continue operating despite a partner’s departure. Subject to legal and judicial formalities, it ensures a balance between protecting the company and safeguarding the rights of departing or excluded partners. Its implementation varies by company type, particularly distinguishing between partnerships and capital-based companies.
Contact our law firm for expert legal advice on corporate law matters, including partial dissolution, partner exclusion, and contract amendments.
Frequently Asked Questions (FAQs)
What is the difference between partial dissolution and full dissolution of a company?
Partial dissolution involves the exit of a partner and modification of the corporate contract, whereas full dissolution terminates the company entirely.
What happens to the heirs of a deceased partner?
They may join the company if permitted by the contract and legally able to engage in commerce; otherwise, their share is liquidated.
How long does a partner have to request the exclusion of another?
Ninety days from the date the cause for exclusion becomes known.
Is it mandatory to register the amended contract with the Registry of Commerce?
Yes, registration is required for the amendment to have legal effect against third parties.
Does partial dissolution apply to corporations?
No, in corporations, ownership is represented by shares, which can be freely transferred without affecting the corporate structure.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
