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This contract of association must then be presented to the court of commerce for the district in which the company is domiciled. This court will gratuitously issue an order directing and authorizing the inscription of the company in the commercial registry on finding that all the legal requirements have been fulfilled. This inscription must bear out all the facts stated above under nos. 1 to 7, as well as all other provisions of the contract of association which determine the rights of third parties with respect to the different members of the company, and will be entered as of the date in which the contract of association is presented to the court of commerce. If the company should have branches located in other places coming within the jurisdiction of other courts of commerce, the same above-stated formalities must be fulfilled in all of them.

CHANGES IN CONTRACT OF ASSOCIATION

Article 295 of the Code of Commerce provides that any changes. in the original contract of association or any additional agreements affecting the same entered into by the members must be executed and registered with the same formalities required for its execution. In case of failure to do so the members will not be able to take advantage of these changes or additions as between themselves nor with regard to third parties.

IMPORTANCE OF REGISTRATION

The above-discussed inscription or registration is vitally important for the following reasons:

(1) Under article 26 of the Code of Commerce it enables the company to enjoy certain privileges and advantages provided for by the same code, and which are discussed beginning at page 62.

(2) If no registration is made of the contract of association or of its modifications, it will not be binding upon third parties, except to require from them the return of any property which they may have received and which they were to keep on the fulfillment of an obligation which they did not discharge. However, third parties may take advantage of this contract to sue the members jointly and severally. (Art. 294, Code of Commerce.)

(3) Under article 296 of the Code of Commerce no action as between the members, or these against third parties, based on the existence of the company, can be entertained, unless the instrument proving the existence of the company is introduced in evidence together with proof of its registration. Furthermore, it provides that a company which has not been organized under a written contract of association is null for the future insofar as that any of the members may withdraw whenever they so choose but it shall be binding with respect to the past, insofar as that the members must give an account to each other, in accordance with the rules of the common law, of the transactions that may have been made and of the profits or losses that may have resulted. When this is the case, the members, in establishing their rights with respect to the past, may take advantage of oral testimony and of all other proofs which may be introduced under commercial practice.

Third parties, under article 297 of the Code of Commerce, may entertain actions against a company in general or against any particu

lar member, independently of introducing the contract of association. When this is the case, and the members have not introduced in evidence the contract of association, the existence of the company (which of course must be proven when the company is sued as such) can be proved by the proofs which may be introduced under commercial practice; and in this connection article 298 of the Code of Commerce provides that there is a presumption of the present or past existence of a company if someone has performed acts proper of a company and which ordinarily are not performed without the existence of a company, such as: (a) Doing business promiscuously under a common name; (b) transfer, acquisition, or payment made in common; (c) if a person should hold himself out as member and this is not contradicted publicly by the others with which the existence of the company is sought to be established; (d) if two or more persons in common appoint an administrator or manager; (e) the use of the pronoun we or ours in the correspondence, books, invoices, accounts, or any other commercial papers; (f) the fact of receiv ing or answering letters addressed to the firm name; (g) the use of the name with the addition of the words "and company "; and (h) the dissolution of the association in the form of a company.

LIABILITY OF MEMBERS AS TO THIRD PARTIES

All members of this company (sociedad colectiva), whether they be managing members or not, are jointly and severally liable for all the debts and obligations contracted in the name and for the account of the company by a person authorized to use its name. An exception is made of the cases in which the company's name has been used in transactions which are notoriously foreign to the business of the company as designated in its contract of association. (Art. 302, Code of Commerce.)

The signing of the company's name by a person authorized to do so, in transactions which do not fall within the above stated exception, is equivalent to the signature of each of the different members. It binds them all as if all had actually signed. On the other hand, if all the members individually signed an obligation they all become jointly and severally liable as if the obligation was contracted under the name of the company. (Art. 303, Code of Commerce.)

The members cannot by agreement waive as between themselves this joint and several liability so peculiar to this company under the provision of article 304, Code of Commerce.

RIGHTS AND OBLIGATIONS OF THE MEMBERS

Contributions.-The obligations of the different members of this company begin from the date in which the contract of association was executed in the absence of any expressed stipulation contained in it to the contrary. These obligations last until the company is liquidated and until after all the company's debts and obligations have been paid and satisfied.

If within the time stipulated any particular member does not pay into the company's funds the amount of capital which he agreed to pay as his share, the company has the option of proceeding to collect the whole amount, or the balance which may have not been paid,

from his private property, or may regard the contract as rescinded with respect to this particular member. For any delay in the payment of money the current rate of interest will be charged. If the capital which was to be contributed consisted of property, the company has a right of action for any damages resulting from the delay. If the capital to be contributed consists of property its valuation must be made in the manner prescribed by the contract of association, but if no provision has been made therein to this effect it will be made by appraisers.

If a member should pay in his share of capital by credits, he will not be given credit for the same until these have actually been collected.

Apportionment of profits and losses.-The profits and losses, in the absence of any stipulation to the contrary, will be divided among the members in the proportion of the amount of capital which they have contributed. If a stipulation is made determining how the profits will be apportioned, and no provision is made for the apportionment of losses, the latter will be apportioned in the same proportion established for the profits, and vice versa.

Management. In the absence of any stipulation with reference to the management of the business of the company it will be presumed that the members have mutually conferred upon each other the power to do so in behalf of the others.

It is a common occurrence in this type of company to have one or more members in charge of the management of the business. The source of their authority may be found in some provision of the contract of association or in some power executed subsequently. Whenever a member or members have been so charged with the management of the business of the company, they may exercise and perform all acts proper of such a management as long as there is no fraud, even though there is opposition on the part of other members. If the source of their authority is found in some provision of the contract of association, their powers cannot be revoked without showing that a legal cause exists for so doing. On the other hand, if contained in a power executed subsequent to the execution of the contract of association, they may be revoked at the will of the company.

The decisions of questions which do not modify the contract of association of the company or which are not beyond its scope may be made by a majority of votes, the votes being counted by the amount of capital represented. (Art. 412, Code of Commerce.)

When the management of the company has been placed in the hands of two or more members, any one of them may exercise and perform all the acts proper to the management without the concurrence of the other or others, unless provision was made to the contrary, in which case all must act together under all circumstances.

COMPANY NAME

The company may transact business under the name of all its members, or several of them, or of one only, it being necessary to add in the latter two cases to the name or names given the words "y

compañía", meaning "and company." This name constitutes the company's name or signature, in which there may never be included the name of a person who is not at the time a member of the company. Those who, not being members of the company, include their names in the company's name, incur the liability of a member, including the penal liability, which may be incurred through such action in case of fraud or misrepresentation. (Art. 299, Code of Commerce.)

The name of the company, which must be different from that of any other, constitutes an exclusive property of its own and hence cannot be adopted by another company. (Art. 300, Code of Commerce.) The company is not bound by the contracts or acts entered into by any of its members and which have been signed under the name of the company, when by an express provision of the contract of association they were not authorized to use and sign the company's name. However, if a member, although not authorized to do so, should sign the name of the company, in which his own name is included, to any particular contract or act, the company is bound by it, but will then have the right to be indemnified in case of loss by this member who acted without authority, and may proceed against his private property. (Art. 305, Code of Commerce.)

The authority conferred upon a member or members to use and sign the name of the company cannot be ceded or delegated. If in violation of this mandatory provision, which is prescribed by article 306 of the Code of Commerce, they should do so, the obligation contracted with the party upon whom such authority was attempted to be delegated is only of the account of the latter and the former; the other members are bound only to the extent of the profits which may have been obtained by the company as a result of the particular transaction. If the person upon whom such authority was attempted to be delegated should be a member of the company in whose name his own private name is included, then what was said above in this particular connection applies, i. e., the company will then be bound by the contracts or acts, but will have the right to be indemnified by the particular member upon whom such authority was conferred.

RIGHT OF THE MEMBERS TO ENGAGE IN BUSINESS

In companies of the type under consideration, that have for their object the engaging in the general transaction of business, the members cannot engage in business on their own account without obtaining first the expressed consent of their fellow members. The members violating this provision, which is contained in article 308 of the Code of Commerce, can be forced to bring to the common funds any profit resulting from their independent transactions, besides being individually liable for any losses resulting in connection with the same. On the other hand, when the company has for its object a specific business, determined in its contract of association, the provisions of article 308 of the Code of Commerce do not apply, and the members can then engage in business for themselves as long as this does not conflict with that of the company of which they are members and there is no expressed stipulation prohibiting it.

SOCIEDAD EN COMANDITA (LIMITED PARTNERSHIP)

GENERAL CHARACTERISTICS

As stated before, a sociedad en comandita is a company which has certain members who are jointly and severally liable for all the debts incurred by the company, and also certain other members whose liability is limited to the amount of capital which they have contributed. The members who are jointly and severally liable for all the debts of the company are the ones who must be in charge of the management of the company and whose names may appear in the company's name. They are called "socios colectivos ", and their rights and liabilities are exactly the same as those of a member in a sociedad colectiva. The member or members whose liability is limited to the amounts contributed are called "socios comanditarios", and such members cannot take any part whatsoever in the management of the business of the company, not even in the capacity of special agents of the managing members, and their names must not appear in the company's name. Any "socio comanditario " who may be styled a special member, including his name or permitting its inclusion in the company's name, or taking an active part in the management of the company's business, will be subject with regard to third parties to the same liabilities as those of the managing members, without acquiring any more rights than those corresponding to him in his character of special member. (Art. 372-377, Code of Commerce.)

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However, under article 378 of the Code of Commerce acts of special members, such as examining the books of the company, supervising its business, verifying its data, and giving advice at its meetings, do not constitute acts of management as will subject them to this liability, as long as the managing members are left entirely free to act.

A sociedad en comandita can assume two forms-the simple company and the company by shares. In the latter, the entire capital of the company may be divided into shares and represented by certificates. These share interests may be transferred to third persons according to the manner provided for by the contract of association. (Art. 380, Code of Commerce.) Article 381 of the Code of Commerce provides that when the shareholders are at least 10, and represent a greater share of capital than that of the managing members, the provisions which are discussed hereinafter applicable to corporations (sociedades anónimas) apply to this company as well, subject, of course, to the exceptions established by the articles under discussion. When this is the case the managing members, in addition to their obligations as such, have also those of directors of corporations.

FORMATION

A sociedad en comandita is formed in the same manner as a sociedad colectiva. The contract of association must contain the same statements, and the formalities imposed by the law and the hereinbefore discussed liabilities which may be incurred for non fulfillment of them, are also the same. In registering a sociedad en comandita it is not necessary to state the name or names of the special members, but according to article 373 of the Code of Commerce it is an essential requirement that the capital contributed by the special members be stated.

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