LEGAL DEFINITION OF CORPORATE TRANSFORMATION
LIABILITY OF PARTNERS IN CORPORATE TRANSFORMATION
Debts incurred prior to the transformation remain subject to the same liability regime that existed when they were contracted. If such liability was unlimited and joint, it will remain unchanged toward creditors, unless they consent otherwise (which may be presumed by silence following personal notification within 30 days or by entering into contracts with the transformed company).
If the new corporate type involves unlimited liability, this will also extend to pre-existing obligations.
DIFFERENCES BETWEEN TRANSFORMATION, MERGER, AND CORPORATE AMENDMENT
To avoid confusion, consider the following distinctions:
- Transformation: The company continues to exist; only its corporate type changes (re-typification). Rights, obligations, assets, and liabilities are preserved.
- Merger: One or more companies dissolve to integrate into or create another entity; there is a universal transfer of assets and the extinction of merged entities.
- Amendment: Contractual or statutory clauses (e.g., capital, management, partner entry/exit) are modified without changing the corporate type.
PUBLIC DISCLOSURE REQUIREMENTS IN CORPORATE TRANSFORMATION
To protect creditors and ensure transparency, the process requires: approval of a special balance sheet, personal notification with a 30-day opposition period, publication of the resolution, execution of a public deed of transformation, and registration in the Commercial Registry.
RIGHT OF WITHDRAWAL IN CORPORATE TRANSFORMATION
When the transformation decision does not require unanimity, dissenting or absent partners may exercise their right of withdrawal (separation). This withdrawal does not release them from liability for pre-existing obligations until the transformation is registered and accepted by creditors. Remaining partners have preferential rights to acquire the departing partners’ shares or quotas unless otherwise agreed.
WHEN AND HOW TO REVOKE A CORPORATE TRANSFORMATION AGREEMENT
A transformation agreement may be revoked if it has not yet been published and does not harm partners or third parties. As a general rule, unanimous consent is required, unless the corporate contract provides for different voting majorities or a specific rule applies to the corporate type involved.
In summary, transformation is a re-typification process that modernizes capital and corporate governance without sacrificing legal continuity, balancing business flexibility with creditor protection.
Our law firm provides expert legal services in corporate transformations, including feasibility assessments, document drafting, and representation before the Commercial Registry. Contact us for tailored legal support in your transformation process.
Frequently Asked Questions (FAQs)
Does the transformation of a company dissolve its legal entity?
No. The company maintains its legal continuity; only its corporate form changes.
What changes in a company’s transformation?
The legal form, name, and structure (for example, quotas – shares) change, but rights and obligations remain the same.
How does it affect debts and partner liability?
Previous debts remain governed by the prior liability regime; partner responsibility cannot be reduced without creditor consent.
What is the right of withdrawal for partners?
It is the right of dissenting or absent partners to withdraw; their liability continues until registration and creditor acceptance.
What is the difference between transformation and merger?
Transformation preserves the company’s existence; merger dissolves it and transfers its assets to another entity.
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.
