Amendments to the General Law of Business Associations with respect to Duration and Capital Contributions

January 26, 2012
Amendments to the General Law of Business Associations with respect to Duration and Capital Contributions

On December 15, 2012, a decree was published in the Official Journal of the Federation through which variouslaws were amended, including the General Law of Business Associations (Ley General de SociedadesMercantiles [LGSM, for its acronym in Spanish]). This decree amends articles 6, section IV, 62 and 89, section II, of the LGSM. In accordance with the referenced transitory article from such decree, the amendments to theLGSM came into effect on January 1, 2012. With the amendment of section IV of article 6, it is clarified that theduration of entities, as established in their bylaws, may be indefinite. While it is true that it was common to seethis language in practice, it is also true that there was a difference of opinions as to whether such indefiniteduration was permitted under the LGSM. On the other hand, the amendment of article 62 and section II of article89 eliminates the minimum capital requirement of $3,000 and $50,000 pesos previously required for theformation of a limited liability association (sociedad de responsabilidad limitada) and a corporation (sociedadanónima), respectively. As of January 1, 2012, the amendment established that the capital contribution for alimited liability association shall be “that established by the articles of association” and for a corporation, “thearticles of incorporation shall establish the minimum capital contribution which shall be entirely subscribed.”Given the foregoing, it will be necessary to carefully analyze the activities that will be carried out and thecorporate purpose of the entity to be formed in order to establish the fixed minimum capital that will allow theentity to duly comply with its corporate obligations, as well as those to third parties.

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