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February 25, 1977
Gaceta Oficial (Bolivia)
Commercial Code of Bolivia
(Decree Law No. 14379 of Feb. 25, 1977, effective from August 6, 1977, amended by Decree Law No. 15184 of Dec. 15, 1977, effective Jan. 1, 1978.)
PRELIMINARY TITLE. GENERAL PROVISIONS
BOOK ONE. MERCHANTS AND THEIR OBLIGATIONS
Article 1. Application of the Law -The Commercial Code shall regulate juridical relations derived from commercial activity.
In case not expressly regulated, the norms of this Code shall be applied by analogy, and, in defect of this,
the Civil Code shall be applied.
Article 2. Jurisdiction and Competency- Mercantile cases are under the jurisdiction and competency of the ordinary courts, in accordance with the provisions of the Law of Judicial Organization.
Article 3. Procedural Law - Procedures not regulated by this Code or by special law shall be subject to the provisions of the Code of Civil Procedure.
Article 4. Definition of Merchant - A merchant is a person who habitually practices any kind of commercial activity for lucrative purposes.
The quality of being a merchant shall be acquired even in the case in which the commercial activity is
exercised by means of a mandate, an intermediary or agent.
Article 5. Merchants - The following may be merchants:
(1) Natural persons with capacity to contract and to be obligated; and with their principal domicile outside the country, and established under the laws of the country of their domicile, shall remain subject to the provisions of this Code and other relative laws in order to operate validly in Bolivia.
Article 6. Acts and operations of commerce - The following are acts and operations of commerce, inter alia:
(1) The purchase of merchandise or movable property for the purpose of resale in the same state or after any transformation, and the subsequent alienation of same, as well as the act of transformation;
(2) The acquisition or rental of machinery in general or implements to lease them or sublet them, and the
leasing or sub-leasing of the same;
(3) The purchase-sale of a mercantile enterprise or commercial establishment or the alienation of
shares, stocks or quotas of interest in the capital fund;
(4) The receipt of cash on loan with or without guarantee, in order to distribute it on loan at interest and
subsequent loans, as well as habitually loaning cash at interest;
(5) Purchase or transfer of public or private securities with the aim of negotiating them, and the
management, authorization, acceptance or negotiation of the same;
(6) Transactions of the exchange, of auctioneers, brokers, commission agents, and the representation or
agencies or national or foreign firms;
(7) Bonds, avals and other guarantees granted in mercantile acts and operations;
(8) The business activity of premium or mutual insurance entitles, which insure against patrimonial and
personal damages.
(9) The business activity of premium or mutual insurance entitles, which insure against patrimonial and
personal damages;
(10) Industrial activity for the purpose of manufacturing goods by means of transforming raw materials,
whether such raw materials have been acquired or produce by the same entity;
(11) The business activity of transporting persons or goods at onerous title, whatever the way or method
utilized; as well as the operation of communications;
(12) The business activity of depositing merchandise and goods;
(13) The business activity of hotels, boarding houses, apartments, restaurants, bars, cafes, public
spectacles and other similar establishments;
(14) The business activity of publishing periodicals, editorials, printing , photograph, photocopying,
publishing books, notices, information and advertising;
(15) The business activity of sanatoriums, clinics, pharmacies and other similar establishments,
including funeral homes;
(16) The business activity of construction and building in general;
(17) The business activity of the extractive industry, as well as the search for and exploitation of
renewable and non-renewable natural resources;
(18) The business activity of business promotion or business administration;
(19) Private educational enterprises and schools organized for lucrative purposes;
(20) Banking activities; (Amended by Decree Law No. 15184 of Dec. 15, 1977.)
Article 7. Commercial Acts by Connection - Acts by merchants in connection with their commercial activities and those executed by any person when their purpose is compliance with commercial obligations, shall also remain subject to this Code.
Article 8. Non-Commercial Acts - The following are not commercial acts;
(1) The direct production and negotiation or agricultural goods, livestock, poultry and other similar fruits and products, unless that production and negotiation constitutes a business activity;
(2) The direct rendering of services by professionals, as well as scientific or artistic creations and their
alienation by their author;
(3) Manual works or offices or services of artisans, workers and others, established without businesses, and whose subsistence depends upon such products;
(4) Family boarding homes personally attended by the owner, when such activity is engaged in as a
method of subsistence;
(5) The acquisition of fruits, merchandise and other goods for the purpose of consumption or use, or the
occasional sale of an excess, and
(6) The acquisition and imposition of real property, except when engaged in by enterprises habitually
exercising such activity.
Article 9. Mixed Mercantile Acts - If the act is commercial for one of the parties, it shall also be regulated by the provisions of this Code.
Article 10. State Enterprises - State, municipal or other fiscal enterprises are not commercial enterprises, but may engage in acts of commerce with private parties, and on account of such acts or commerce remain subject to this Code and special laws on the matter.
Article 11. State Enterprises - The following are mercantile assets:
(1) Mercantile enterprises or commercial establishments;
(2) Merchandise or goods to display merchandise and other movable goods for transfer by or to mercantile
enterprises;
(3) Real property, when it is the object or commercial activity of the enterprise;
(4) Securities;
(5) Industrial property, trade names, advertisement, trademarks, patents, licenses of use and operation and
other similar signs
(6) Other assets regulated by this Code.
BOOK ONE. MERCHANTS AND THEIR OBLIGATIONS
TITLE I. MERCHANTS
CHAPTER I. COMMERCIAL OPERATION
Article 12. Capacity - Persons with capacity to contract and be obligated in accordance with the Civil Law, may undertake commercial operations.
Article 13. Emancipated or habilitated minors - (Amended by Decree Law No. 15184 of Dec. 15, 1977.)
Emancipated or habilitated minors who have reached at least 18 years of age may carry on commercial
activities.
The requirements fulfilled, such a minor shall be considered of majority age for all commercial effects and
obligations; he may not in any case invoke the rights inherent to his minority against third parties of good
faith.
Article 14. Continuation by the father or the mother - The father or the mother, in exercising their parental authority, may continue the mercantile negotiations belonging to their minor child through inheritance, gift or legacy, in accordance with the provisions of the Family Code, and must render account when the child reaches majority age or becomes emancipated.
Article 15. Continuation by Guardians - In the case of a minor subject to guardianship or of a person declared incompetent, the Family Court shall decide, upon testimony of experts and of whoever is legal representative, whether to continue the business or to liquidate it, and must establish in each case the bases to which it shall be subject, unless there is a special provision of the donor or decreased which shall be respected.
Article 16. Appointment of the Administrator - Persons who exercise parental authority or guardianship, and do not assume administration of the business, shall appoint an administrator or administrators under their liability. The family court shall establish the guarantees which they must authorize.
Article 17. Married Women - A married woman who has reached majority age as set forth in Article 13 may carry on commerce separately from her husband, and as liability for those acts, her own assets or part of the common property shall be obligated in accordance with the provisions of the Family Code.
Article 18. Commerce for both spouses - If the spouses carry on commercial activities jointly, both shall be considered as merchants, unless one of them is solely an auxiliary or employee of the mercantile activity of the other.
Article 19. Impediments and Prohibitions to the Exercise of Commerce - The following are impediments and prohibitions to the exercise of commercial activities:
(1) Persons incapacitated by legal provisions or as a consequence of judicial sentence.
(2) Bankrupt persons who have not been rehabilitated.
(3) Directors, administrators, managers or legal representatives, as well as syndicates of companies
declared in a state of culpable or fraudulent bankruptcy for the penal period; and
(4) Officers or public employees of official or semi-official entitles in relation to activities which encumber
their functions.
Article 20. Legal Presumption - For legal purposes, it shall be presumed that a person is carrying on commercial activities in any of the following cases;
(1) He has an establishment or location open to the public; and
(2) He announces by any media that he is a merchant.
Article 21. Penalty of Commercial Incapacity - In felonies against property, public faith, the national economy, industry and commerce or for contraband, unfair competition, usurpation of industrial property rights and others carrying on commercial activities concurrent with the condemnation, shall be imposed.
Article 22. Loss of Quality of Merchant The quality of merchant shall be lost by incapacity for carrying on commercial activities.
Article 23. Liability of Parents and Guardians - The exercise of commerce without the required capacity does not confer the quality of merchant.
Those who exercise parental authority and guardianship shall be personally liable for damages and
losses occasioned by third parties of good faith by commercial activities engaged in by incapacitated
persons in their care.
Article 24. Liability of Impediments and Prohibitions - Persons included in Article 19 who, notwithstanding, shall be engaged in commerce, are considered as merchants only for purposes of civil liability and shall be subject to penal sanctions they incur.
CHAPTER II. OBLIGATIONS OF MERCHANTS
Article 25. Obligations of Merchants
All merchants are obligated:
(1) to be registered in the Commercial Registry;
(2) To inscribe in the same Registry all acts, contracts and documents which the Law demands;
(3) To advise the competent authority the cessation of payments for obligations contracted, within the
period fixed by Law;
(4) To deep accounting records of their negotiations in proper legal form;
(5) To comply with tax obligations as prescribed by Law;
(6) To keep books, documents and other papers related to their negotiations for the length of time
prescribed by Law;
(7) To abstain from executing acts which would give evidence of unfair competition;
(8) To fulfill other obligations as prescribed by Law.
CHAPTER III. COMMERCIAL REGISTRY
Article 26. Charge of the Commercial Registry - The Commercial Registry shall be under the charge of the Ministry of Industry, Commerce and Tourism, and its administrative organization and it shall be regulated by the respective regulation.
Article 27. Purpose of the Registry - The purpose of the Commercial Registry is to peek a record of merchants and of all the acts, contracts and documents required by the Law.
Article 28. Persons subject to Listing - Individuals or legal entities mentioned in Article 5 except joint ventures or participation accounts must be registered in the Commercial Registry.
Article 29. Acts and Contracts Subject to Recording - The following must be recorded in the Commercial Registry:
(1) The system regulating conjugal relations and, if such is the case, the liquidation of the conjugal family
by divorce or separation of property, when the husband and the wife, or either of them are merchants;
(2) Emancipations or authorizations that, in accordance with the Law, authorize minors to carry on
commerce;
(3) Resolutions or sentences prohibiting a merchant from carrying on commerce; a judicial interdiction
pronounced against a merchant; preventive agreements; the declaration of bankruptcy and appointment
of liquidators or trustees; public charges that incapacitate the exercise of commerce and, in general,
incapacities provided by Law;
(4) Constituting contracts of mercantile companies, their amendments and amplifications, as well as the
winding up, transformation or merger of such companies;
(5) Any act, by virtue of which the power of general or special administration of assets or negotiations of
the merchant shall be conferred, amended, substituted, or revoked;
(6) The opening of commercial establishments and of branch offices or agencies and acts which change
or affect their ownership or their administration;
(7) Encumbrances and related civil demands by law whose change is subject to the Commercial
Registry;
(8) Approval, additions and statutory reforms and, if required, the regulations;
(9) Designation of legal representatives and liquidators and their removal in the case of liquidation of a
company;
(10) Bonds of directors, administrators, trustees, and all who are obligated to loan them, as well as their
cancellation, and
(11) Other acts and documents provided by Law.
Article 30. Obligation of Reporting to the Commercial Registry - The merchant is under obligation to report to the Commercial Register any change or transfer relative to his commercial activity and in case of loss of his standing as merchant. Branches, agencies and commercial establishments are also under such obligation, as are any acts and documents subject to registration.
Article 31. Effects of Listing and Registration - The listing may be required at the commencement of trade or within the month, if the regulation does not fix a definite term for it. However, acts and documents subject to recording shall have no effect against third parties until the date of recording. No inscription may be made altering the order of their presentation.
Article 32. Request of Recording - The recording may be requested by the merchants or by any interested person. In the case of an erroneous inscription, it may be appealed within 5 days before the Superior Court of Justice of the District, without further recourse.
Article 33. Evidence of Listing - Merchants appearing in court may be demanded to show their listing in the Commercial Register.
Article 34. Sanctions - A person who habitually carries on commerce without being listed in the Commercial Register shall be sanctioned by a fine imposed by the Commercial Register, without prejudice to other legal sanctions. This sanction shall also be applied if the inscription of acts and documents subject to be registered is omitted.
Article 35. Other Registers - Registers created for certain companies, by virtue of their object, as in the case of cooperatives and others, shall be regulated by their respective laws.
CHAPTER IV. ACCOUNTING
Article 36. Obligation to Keep Accounts - All merchants are obligated to keep an accounting adequate to the nature, importance and organization of the enterprise, on a uniform base permitting a demonstration of the situation of its negotiations and a clear justification of all and each act and operation subject to accounting; they must also keep in good state books, documents and correspondence relating.
Article 37. Books - The merchant must obligatorily keep the following books: Journal, Ledger, Inventories and Balance Sheets, unless other books are specifically required by law.
He may also keep such books and records as he esteems convenient for greater order and clarity and to
obtain information and exercise control. Such books are auxiliary books and are not subject to the
provision in Article 40, even though those considered necessary may be legalized in order to serve as
evidence along with the obligatory books.
Article 38. Small Merchants - Individual merchants who carry on small business, whose volume of operations and capital employed in their commercial activities do not meet the minimum required by legal provisions on that matter, shall comply with the obligation imposed by the preceding article by daily registering a resume of purchases and sales on the accounts, and by a list of credit transactions including collections and payments realized for that purpose.
Article 39. Persons Authorized to Keep Books - The accounts shall be kept by legally authorized accountants who are regulated by rules on liability, system of procedure, remuneration, and guarding of accounting secrets, without prejudice to the liability of merchants to whom they render their services.
Article 40. Manner of Presentation of the Books - Merchants shall present the books they are obligated to keep, bound and numbered by a Notary Public before they use them, including on the first page of each one what the books shall be used for, the name of the person to whom it belongs and the number of pages that it contains, dated and signed by the Notary, stamped also on all the leaves must be the stamp of the notary who authorizes it and complies with the established fiscal requirements.
The entries and notations effected by any kind of mechanical or electronic method on removable leaves or
cards are also valid, so long as they are bound correlatively afterwards into the obligatory books which
must be legalized, provided that they facilitate the operations and shall serve as clear, complete and
faithful evidence.
The authorization for their use shall be granted by the Commercial Register upon request of the interested
party, requiring a resolution founded on the basis of opinion of experts, which may be dispensed with in the case of existing antecedents of use with respect to the proposed procedure.
In the case of stock corporations, the authorization shall be granted upon a favorable opinion of the
respective administrative organization of control.
Article 41. Language and Currency - The accounting items must obligatorily be made in the Spanish language, expressing their values in national currency. Nevertheless, for purposes of internal order, a language different from Spanish may be used and their value expressed in foreign currency.
Article 42. Prohibitions - The following shall be prohibited in books of accounting:
(1) Altering the progressive order of dates of operations;
(2) Leaving blank spaces;
(3) Having interlineations and superimpositions;
(4) Erasing or crossing out any part of the entries;
(5) Tearing out leaves, altering the order of numbering or mutilating the pages of the books.
Any error or omission shall be corrected with a new entry on the date it was found; a clear explanation shall accompany such entry.
Article 43. Sanctions - Violation of the two preceding articles, without prejudice to the corresponding penal action, shall render the books containing such irregularities invalid in court for the merchant who has kept them.
Article 44. Entries in the Journals and Ledger - In the Journal by the operation of the enterprise shall be entered day by day in a progressive (chronological) order, so that each entry clearly expresses the account or accounts of debits and credits, with a clear and precise explanation of such operations and their amounts, indicating intervening persons and supporting documents.
The references and debit or credit amounts of each account affecting the operation shall be transferred
from this book to the Ledger in the same chronological order, in order to maintain balances for
individualized accounts.
Article 45. Concentration and Notation by Periods - It is valid, nevertheless, to make a joint notation of totals of transactions for periods no longer than a month, provided that details appear in other books or auxiliary registers, in accordance with the nature of the activity. In this case books shall be considered as an integral part of the Journal.
Article 46. Inventories and Balance Sheets - The book of Inventories and Balances shall be opened with the initial inventories and balances, and following the annual or semestral fiscal period, shall contain the final inventory and general balance, including the account of results. These financial statements shall be elaborated, in accordance with the class of activity, with uniform accounting criteria permitting clear, complete and true knowledge of the financial state of the operation, the patrimonial situation and profits obtained or losses suffered during the fiscal period.
The statement of results shall reflect profits obtained and expenses or losses deducted in order to
determine net gains or losses of the fiscal period and to distinguish the current results from those originating in extraordinary operations.
Article 47. Appraisal of Parts of the Balance Sheet - Without prejudice to special laws, parts of the Balance Sheet shall be appraised, when necessary, in accordance with objective criteria guaranteeing business interests and interests of third parties in agreement with the principles demanded by order and prudent economic management. Once adopted, a criterion of valuation shall be maintained, and may not be changed without justifiable cause. Likewise, the method of determination of cost or other applied value must be indicated in the balances and inventories, or on a separate page.
Article 48. Balances of Banks, Financial and Insurance Entities - Without prejudice to what is established in this chapter, banks and other financial or credit entities, as well as insurance companies, are subject tot he rules on information, accounting and other concomitant aspects, established by the respective administrative organ of fiscalization.
Article 49. Signatures and Liabilities - The merchant himself or his authorized legal representatives shall sign the balance sheet of the fiscal period and the account of results, jointly with the professional preparer. Applicable legal rules shall establish liability for the veracity of those statements.
Article 50. Period for elaboration and revision of the balance sheet - Merchants must file the balance sheet and other financial statements with the authorities established by law, and with the organizations of internal direction and control, within the periods set forth by the respective provisions, under their report to the meeting.
Article 51. Correspondence File - The merchant must keep a file copy of correspondence relating to business negotiations by whatever means will assure the exactitude and durability of the copy. Also, he shall keep the correspondence he receives relative to his commercial activities, with notation of the date of receipt, reply or note of not having answered.
Also, he shall keep files of documents establishing entries in this accounting books. in a form which would facilitate their verification at any time.
If the books are made up or removable pages or cards, they must be numbered and kept in files for later
binding.
Article 52. Conversation of books and commercial papers. - Books and papers to which the preceding article refers must be kept for at least 5 years from their closure or from the date of the last entry or proving document, unless special provisions establish another period for certain types of documents. After this period destroyed, provided the legal norms are complied with.
Article 53. Obligation to keep books and papers even in the case of ceasing of activities or the death of the
merchant.- The cession or commercial activities does not exempt the merchant from the obligation referred to in the preceding article, and if he should die, the obligation falls upon his heirs. In the case of winding up of a company, the liquidators are obligated to comply with the preceding provision.
Article 54. Audit - The balance sheet of the fiscal period and the account of results are subject to verification and exemption by a legally authorized auditor, in the following cases:
(1) When the Law, the regulations or the statutes expressly establish it;
(2) Upon request of persons or entitles who have a legal right;
(3) In the case of issuance of securities for public offering or listed on the Securities Exchange;
(4) Upon court or controlling authority request for a legitimate reason.
The verification shall include a substantiation of the balance sheet and account or results by the auditor at
his liability, and of the accounting and documents.
The regulatory norms concerning liability, incompatibility, retribution and system of actuation shall apply as regards the guarding of professional secrecy by the auditor.
Article 55. Audit order by the court or controlling authority - In the case of non-compliance with the obligation of verification established by reason of Numbers (1), (2) and (3) of the preceding article, the court or competent administrative authority, by petition of the interested party, shall order such verification by a court appointed auditor.
In the case shown in Number (4), the petitioner shall be required to adequately guarantee payment of
processing costs and verification expenses which shall be charged to him if there are no essential
violations or irregularities in the accounting investigated.
Article 56. Prohibition of investigations - Official investigations of books and accounting registers are prohibited, except when carried out by provisions of judicial authority.
The provision of this article shall not restrict the right of inspection of the books, correspondence and
documents or commercial companies that the law grants to partners, neither does it restrict their right to
control, receivership or audit of them.
Article 57. DeOfficio inspection of books and papers - The judicial or administrative authorities may only order DeOfficio inspection of books, correspondence and documents of merchants in the following cases:
(1) To define amounts of taxes owned in cases of controversy;
(2) To exercise vigilance and control of stock corporations, banks, financial entities and other credit
institutions, as well as insurance companies;
(3) In the investigation of felonies, in accordance with the provisions of Penal Procedure.
Article 58. Cases in which the books and other documents shall be investigated, exhibited or surrendered - The investigation, exhibition or surrender of books, correspondence and other documents of merchants,
may only be ordered deofficio or at the request of a party in cases of secession, suspension of payments,
bankruptcies and liquidation.
Article 59. Exhibition by request of party - In the cases set forth in the preceding article, the exhibition of the books, correspondence, and documents of merchants may only be ordered by request of a party when the person has a legitimate interest or liability in the matter for which the exhibition is requested.
The examination shall be limited exclusively to the matters relative to the request.
Article 60. Place of exhibition - In all cases, the exhibition shall be made in the establishment of the merchant or in the place where the books, correspondence and documents are kept, in the presence of the merchant or of the person he has commissioned for that purpose, without power to demand their transference.
Article 61. Refusal to exhibit - If the merchant does not present books, correspondence and documents whose exhibition has been legally ordered, or if he should hide any of them or impede their examination, proceedings shall be ordered for their collection.
Article 62. Evidence among merchants - Commercial books and papers kept with all the requirements demanded by this chapter shall constitute plenary evidence in mercantile controversies, whether judicial or extra-judicial.
If in a litigation, one of the parties presents books kept as required by Law, and the other party does not, the litigation shall be resolved in favor of the party who has kept the books properly, unless plenary evidence is presented which should destroy or discredit the contents of such books.
If the books of both parties are not subject to legal prescriptions, such books shall be totally rescinded, and
only other evidence shall be taken into account for the litigation.
Article 63. Evidence with non-merchants - In a litigation between a merchant and private parties who are not merchants, the books shall only constitute a rule of evidence which must necessarily be complemented with other legal evidence.
Article 64. Double Accounting - If a double set of books is kept for fraudulent purposes, the books and papers shall constitute evidence against the merchant, independently of applicable penal sanctions.
Fraudulent double accounting exists when a merchant keeps two or more sets of books which register the
same operations in a different manner, when he has different evidentiary documentation on the same acts
or when the operations are only partially recorded.
Article 65. Filing and reproduction of documents - Merchants may keep their documents and correspondence in general by means of systems of micro-filming, photographic copies, photostats and other similar systems, in compliance with the legal requirements demanded for this purpose.
CHAPTER V. UNFAIR COMPETITION
Article 66. Unfair Competition - A commercial activity constituting unfair competition, in accordance with the provisions of this Code and related laws, shall be sanctioned in accordance with the provisions of the Penal Code.
Article 67. Indication of Place of Origin - Merchandise produced in the Country must be marked "Hecho en Bolivia", without prejudice to the same expression in other languages.
Article 68. Prohibited Uses - The use of marks, countersigns, words, drawings or indications that may induce public confusion concerning quality, derivation or quantity of objects offered for sale, shall constitute a crime sanctioned by the Penal Code.
Article 69. Acts constituting unfair competition - The merchant who does the following shall be considered as engaging in unfair competition:
(1) Violates the provisions pertaining to commercial name, trademarks, invention patents, advertising,
patterns, secrets, etc.;
(2) Operates under assumed names or adopts distinctive signs that can be confused with the products,
activities or advertising of other competitors;
(3) Uses methods or systems tending to discredit the products or services of a competitor or altering them
with the intent to deceive;
(4) Uses a name of origin or imitates and profits by the qualities of foreign products for his own benefit;
(5) Employs exaggerations whose use may induce errors of judgment in the public;
(6) Suborns employees of another enterprise in order to obtain its clientele or exercises machination to find out confidential techniques and methods of his competitors;
(7) Uses fraudulent methods or systems designed to disrupt the commercial market;
(8) Effects any other procedure, in detriment to other enterprises, contrary to Law and mercantile custom.
Article 70. Action of damaged parties - Damaged parties may have recourse to the competent court, in summary proceedings, in order to order:
(1) The abstention from the denounced act and the destruction of the material methods employed, and
(2) Public rectification in the case of inexact or false affirmations.
The damaged party may also demand the payment of damages occasioned as well as the granting of
guarantees set forth by the court for responding to acts of unfair competition.
If such acts cause damages to a group of merchants, the action may be executed personally or by the
corresponding chamber.
Article 71. Non-compliance with judicial resolution and fines - The non-compliance with the judicial resolution ordering the cessation of acts of unfair competition within the period set forth by the court, shall render the merchant guilty of contempt subject to a fine of from .002 to 0.01 of his capital, without prejudice to the sanctions established in the Penal Code.
TITLE II. COMMERCIAL AUXILIARIES
CHAPTER I. FACTORS OR ADMINISTRATORS
Article 72. Concept - A factor is a person in charge of the administrations of negotiations or of a commercial establishment, appointed by the owner.
Article 73. Manner of Acting - A factor must act in accordance with the faculties and powers granted him by the holder of the general or special mandate, and by the acts, contracts, and documents relative to the management of the enterprise or establishment showing the kind of mandate given him.
The factor shall be considered empowered to fulfill all acts and contracts relative to the management of the enterprise or established, including judicial intervention as plaintiff or defendant, unless the principal sets specifically determined limitations which are notarized and recorded in the Commercial Register.
In the absence of inscription in the Commercial Register, the limitations are not opposable before third
parties.
Article 74. Effect of the Acts - All acts and contracts celebrated by the factor in his capacity, shall obligate the principal without exception, provided that the factor has acted within the limits of his mandate. Even when the factor acts in his own name, if it can be shown that he really acted on behalf of his principal, the principal shall be jointly and severally liable with the factor.
Article 75. Presumption of a mandate - If the acts performed by the factor involve operations included in the ordinary management of the enterprise or establishment, they shall be understood to be acts in the name of and on behalf of the principal, even when the factor has not demonstrated them as such in his execution of them, has transgressed his powers or has committed abuses of trust, without prejudice to the actions the principal may take against the factor.
The principal shall, however, be liable for acts executed by the factor, having been entrusted with the
ordinary management of the enterprise or establishment, when the factor has worked in accordance with
his instructions, when they have been either expressly approved or when, by positive acts, they may be
presumed valid.
Article 76. Recording in the Registry - The designation of factor, mandate and its modifications shall be recorded in the Commercial Register along with the principal enterprise or establishment.
Revocation of powers must also be recorded in the Commercial Register.
Failure to record makes an act unopposable before third parties.
Article 77 Plurality of principals - If there are several principals, all shall be jointly and severally liable for the acts of the factor.
Article 78. Several factors - If there are several factors, all shall act jointly unless the mandate states that each one may act, totally or partially, independently of the others.
Article 79. Remuneration - The factor has a right to the agreed remuneration and to perquisites recognized by law.
Article 80. Prohibitions - The factor, unless there is express authorization of the principal, may not perform the following acts:
(1) Delegate the mandate that has been conferred on him;
(2) Reveal industrial or commercial secrets of the enterprise he administrates;
(3) Constitute an enterprise with purposes similar to those of the principal's enterprise;
(4) Execute, in his own name or that of another, negotiations of the same kind as those of the enterprise to which he renders services.
In this latter case, the principal may receive whatever profits are obtained without being liable for losses.
Article 81. Termination of function - The functions of a factor shall cease by:
(1) Death, incapacity or disqualification for carrying on commerce;
(2) Revocation of his powers;
(3) Dissolution or alienation of the enterprise;
(4) Withdrawal, once accepted;
(5) End of the agreed term;
(6) Bankruptcy of the enterprise.
The death of the principal shall not interrupt the functions of the factor and does not revoke his powers, but he must offer surety if so requested by the heirs. The surety shall be qualified by the competent Court.
In all cases of cessation of functions of the factor, the fact must be recorded in the Commercial Register.
Article 82. Compliance with Laws - The factor shall conserve the laws and regulations of commerce in relation to the enterprise or establishment he administrates.
Article 83. Rendition of accounts - The factor must render accounts of his management in established periods.
Article 84. Revocation or transferal not notified to the factor - Acts and contracts celebrated by the factor in the name or and on behalf of the principal are valid, even in the case of revocation of powers or sale of the enterprise, if such acts were not notified to the factor within an opportune time.
Article 85. Termination of the mandate by fraud - In addition to the cases set forth by Law, the mandate shall terminate when the factor, in carrying it out, commits fraud or abuse of trust, without prejudice to the penal action to which he is liable; likewise, if he violates the prohibition of delegating his mandate.
Article 86. Liability for damages - The factor is liable for any damages occasioned by the principal for fraud, negligence or violation of instructions received for the fulfillment of his functions.
Article 87. Factors not expressly constituted - Acts of the factor not expressly authorized shall find, as well, the liability of the principal when, by positive acts or gave omissions, they have taken place by reason of the faculty for acting in his name.
Article 88. Fines - The fines imposed for guilt of the factor for violation of the Law or regulations shall be charged to the establishment that he administrates, notwithstanding the right of the principal to receive repayment from the factor if he was liable for the sanctioned acts.
CHAPTER II. EMPLOYEES
Article 89. Concept - An employee is a person to whom the principal of an enterprise or establishment charges with the carrying out of determined labors proper to commercial management or to a class of negotiations, in temporary or permanent form.
Article 90. Acts of employees - The employer is liable for the acts of his employees when he has expressly conferred the faculty of executing, in his name, determined operations of his commercial management, or when such acts result from the exercise of entrusted functions.
Contracts celebrated by persons with employees to whim the employer has given his written authorization
to execute any operations of his management shall also obligate the employer; but the authorization must
be granted by means of a notarial power registered in the form set forth in Article 76, in order to sign
correspondence, collect, draw, accept or endorse bills of exchange, draw cheques, subscribe other documents that produce an obligation or to celebrate contracts by correspondence.
Article 91. Authorization for collection - Sales personnel shall be understood to be authorized to receive the price of minor sales when the collection is in the place of the negotiation, duly expedited in the name of the employer, invoices or receipts corresponding utilized on proper forms.
Sales personnel have also the faculty to receive the price of major sales provided that the sales shall have
been counted and the payment made in the establishment in which the services were rendered.
Faculties for receiving cash may be limited if those limitations are posted visibly some place in the
establishment.
Article 92. Authorization for collecting in case of being bearer of the document - When sales are made on installment and the price is not paid where the sale was made, the employee may only collect if the document on which the receipt of the adequate amount is declared is duly signed by the employer or his authorized representative.
Article 93. The traveling employee - The traveling employee is one who promotes sales or solicits in zones or places different from that of the principal establishment.
Any other faculty must be granted expressly in writing, and shall obligate the employers to the extent of the attributions set forth in the respective documents.
The traveling employee may have, without prejudice to the prescribed precedent, the quality of common
employee during periods he acts within the principal establishment, under agreed form and conditions.
Article 94. Reception or dispatch of merchandise - Reception or dispatch of merchandise which an employee makes by instruction of the employer, shall be considered as acts by the latter.
Article 95. Applicable rules - Articles 79, 85 and 86 shall be applied to employees.
CHAPTER III. BROKERS
Article 96. Concept - The broker is an individual or legal entity established on his own account who mediates between the offerer (seller) and the bidder (buyer) to obtain agreement of both for the direct concretion of the contract by the interested parties, without having an employee or representative relationship with the parties.
Article 97. Requirements for qualifications - Only persons who have been qualified by the competent administrative organ may be brokers, upon previous compliance with the requirements and conditions of the respective regulations and inscription in the corresponding Registry.
In addition to the conditions demanded by this Code for merchants, a broker shall have a special
knowledge of the market and be capable of appraising and ascertaining the reality and certainty of the
negotiation in question.
Article 98. Violation of rules - In case of violation of the rules set forth in this chapter and in the regulations, the competent administrative organ is empowered to impose sanctions consisting of fines or cancellation of the authorization, without prejudice to the corresponding penal sanctions.
Article 99. Remuneration - Brokers have a right to an agreed commission. In the absence of a stipulated amount the usual commission shall apply, and if there is no usual commission set, experts shall set it in accordance with the corresponding rate in force.
Unless there is a stipulation to the contrary, the contracting parties shall contribute equally to the payment of the broker's commission.
The broker shall have a right to the commission in all cases in which the parties have agreed upon the
negotiation.
Article 100. Costs incurred by the broker - The broker shall have a right to reimbursement of authorized costs incurred in handling the commission, even when the negotiation, has not been celebrated or executed.
Article 101. Conditional or null negotiations - In negotiations subject to regulating conditions, the intervening broker has a right to the commission from the date of the negotiation. If it has been celebrated under a suspensive condition, the broker has a right to his commission upon the fulfillment of the condition.
The nullity of the contract shall not affect such rights if the broker is not informed of the causes for nullity.
Article 102. Register Book - Brokers shall keep a book called the "Register Book", in which they will note in chronological order all negotiations in which they have intervened, indicating the name and address of the parties, quantity, price of merchandise or assets, their description and the commission received.
This book shall be opened and kept with the same formalities required for accounting books.
Article 103. Duties and obligations of brokers - The following are duties and obligations of brokers:
(1) Substantiating the identity and capacity of the contracting parties;
(2) Proposing the negotiations with clarity and exactitude, abstaining from offering falsities which may
induce the interested parties into error;
(3) Keeping the patterns of the merchandise sold which shall serve as a basis of the negotiation;
(4) Keeping the negotiations he is entrusted with secret, except in the case of judicial order, and
(5) Giving immediate notice to the principal when mis-intervention in the negotiation is not accepted, taking the necessary steps for return of the objects, documents or securities he has received, under liability or repaying damages and losses.
Article 104. Prohibitions - The broker is prohibited from:
(1) Negotiating on his own account and being mandatory, factor, employee or agent of a merchant;
(2) Being charged with collections and payments for another's account or complying with or demanding that the contracting parties comply with their obligations;
(3) Guaranteeing the contracts in which he has intervened; being drawer, acceptor, endorser or beneficiary
of securities he has negotiated, and, in general, contracting any obligation extraneous to his function;
(4) Forming a company, except he is allowed to own stock in companies, but can not be director or
administrator of any;
(5) Purchasing for himself the merchandise, assets or securities which he is negotiating;
(6) Incurring any other prohibitions imposed by Law or in the respective regulations.
The violation of those prohibitions shall be sanctioned by the cancellation of the respective authorization.
Article 105. Insurance Brokers - An insurance broker shall be charged habitually with offering insurance, promoting the celebration of such contracts and negotiating their renewal. The broker shall be distinguished from the insurance agent in that the latter is an employee of the insurer, in accordance with a special regulation.
Article 106. Subjection to control of the respective organ - Insurance brokers are subject to control and auditing by the respective specialized administrative organ and must comply with the requirements and conditions set forth in this Code and in the respective Regulations.
Article 107. Inscription and Certification - Insurance brokers must be recorded in the specialized administrative organ which shall issue a certificate authorizing them as insurance brokers, provided they comply with the requirements and conditions sent forth in the respective regulations.
Article 108. Use of the term "Broker" Only a person who has compiled with the requirement of inscription and who has been issued the certificate by the specialized administrative organization, may use the title, "Broker".
Article 109. Fraudulent bankruptcy - Bankruptcy of a broker shall be considered fraudulent, unless there is proof to the contrary.
CHAPTER IV. AUCTIONEERS
Article 110. Concept - An auctioneer is an individual or legal entity who habitually acts as seller in competitive public bidding, to the highest bidder, of assets of any kind which are entrusted to him for that purpose.
Article 111. Inscription - In order to legally carry on the activities of an auctioneer, recording in the Commercial Register is obligatory.
Article 112. Location and authorization for functioning - The auctioneer, in order to carry out his activity, must have an adequate place open to the public for auctioning and obtain authorization from the respective Municipality.
Article 113. Record of the right to auction - Persons who deliver assets to the auctioneer for competitive bidding must accredit the right of disposal of them. Without such justification the auctioneer may neither receive them nor sell them.
Article 114. Acts of auctioning - The auction shall begin on the day and hour fixed, and previously announced with due anticipation; the auctioneer shall announce the state and characteristics of the assets which are the object of the auction in a loud voice and in an intelligible manner, inviting the public to make bids.
Whether or not a minimum base is established, it shall be enough that a bid is produced in order that the
auction not be suspended.
Final adjudications shall be indicated by means of a blow of the auctioneer in favor of the higher bidder.
Article 115. Adjudication on account - Any action effected by means of an auctioneer shall be on account and he shall extend the respective receipt in favor of the adjudicator.
Notwithstanding the preceding, the adjudicator who may not pay immediately shall deposit at least 10% of
the value of the auctioned asset and shall have a period of three days from the auction to pay the balance
owed, without necessity of any other requirement.
If after three days the balance owed had not been paid, the adjudication shall remain without effect and the deposit shall be confiscated by the owner of the asset and the auctioneer, who will share equally in its
amount.
Article 116. Books - The auctioneer is obligated to keep the following books:
(1) "Consignments", noting in chronological order the assets, merchandise or species that have been
received , indicating the amount, weight or measure and other characteristics, as well as the name and
address of the person for whose account the item is to be auctioned and the estimated price;
(2) "Sales"". in which the assets, merchandise or species sold shall be registered specifically, indicating
the name of the purchaser, his address and the price, along with the account and order of the principal.
(3) "Current Accounts", between the auctioneer and each one of the principals.
The three books mentioned above shall have the same value in evidence as accounting books, if they are
kept with the requirements and formalities of the Law.
Article 117. Prohibitions - All the prohibitions set forth for brokers shall be applied to auctioneers.
Article 118. Sanctions - The broker who adjudicates the asset to be auctioned to any person who does not express his bid in a loud voice and in an intelligible manner, shall be fined with a sum equal to the value of auctioned asset. This sanction shall be imposed by the municipal authority without prejudice to those provided in the Penal Code.
Article 119. Rendition of accounts- Within three days from verifying the auction, the auctioneer shall render accounts and, within five days following the auction, shall pay the principal the net balance of the bid.
An auctioneer who is late in rendering the accounts and in paying the net balance of the bid may be sued,
losing in this case his right to commission, without prejudice to corresponding suits for losses occasioned.
Article 120. Commission - In the absence of a rate adequately regulating the commission of an auctioneer, it shall not exceed 10% of the value of the sale including costs of publicity, storage, etc., unless those costs are accountable to the principal due to the nature of the asset to be sold or due to the time exceeding normal time for realizing the competitive bidding and delivery of assets to the purchaser.
Article 121. Bond - Auctioneers, before beginning their activities, must secure a bond to the order of the respective municipality for the amount determined in its ordinances. The bond shall cover the liabilities of the auctioneer.
Article 122. Auctioneers considered consignees - When the owners of the assets are not present at the auctioning, the auctioneers are considered as consignees, and as such subject to the provisions of the chapter, "Commissions and Consignments".
Article 123. Supplementary application of provisions - In the cases not provided in this chapter, the provisions for mandate shall be applied whenever they are
compatible.
Article 124. Fraudulent bankruptcy - Bankruptcy of an auctioneer shall be considered fraudulent unless there is evidence to the contrary.
TITLE III. COMMERCIAL COMPANIES
CHAPTER I. GENERAL PROVISIONS
Article 125. Concept - For a commercial company contract, tow or more persons shall be obligated to make contributions to be applied for the benefit of the common purpose and the profits or losses from the activity are to be divided between them.
Article 126. Types of companies - Commercial companies whatever their object, may only be constituted in one of the following types:
(1) Collective or General Partnership (Sociedad Colectiva);
(2) Simple Limited Partnership (Sociedad en Comandita Simple);
(3) Limited Liability Company (Sociedad de Responsabilidad Limitada);
(4) Corporation (Sociedad Anonima);
(5) Partnership Limited by Shares (Sociedad en Comandita por Acciones);
(6) Joint Venture or Accidental Associations (Cuentas en Participation or Association Accidental).
Cooperative companies shall be regulated by a special law. The prescriptions of the limited liability
companies shall be applicable to them also, insofar as such prescriptions are not contrary to the special
law: but, if they engage in any commercial activity apart from their object, they shall remain subject to the
provisions of this Code insofar as it is pertinent.
Article 127. Content of the Articles of Association - The articles of association of commercial companies must contain at least the following:
(1) Place and date of execution of the act;
(2) Name, age, civil estate, nationality, profession, domicile and identity card number of individuals, and
name, nature, nationality and domicile of legal entities who are constituting the company;
(3) Firm name or trade name and domicile of the company;
(4) Business object, which must be precise and determined;
(5) Amount of capital stock, indicating the minimum amount if it is variable;
(6) Amount of contribution made by each associate in cash, assets, securities or services and their
valuation. In corporations the authorized capital, subscribed and paid in, must also be indicated; the
class, number, nominal value and nature and other characteristics of stock issues; the form and term in
which the promised contributions must be paid in (which may not exceed two years). If such is the case,
rules for increasing authorized capital must also be recorded;
(7) Period of duration, which must be determined;
(8) Form of organization of the administration; method of designating directors, administrators or legal
representatives; internal control organ and its powers, which depends upon the type of company; time of
duration of offices;
(9) Rules for distributing profits or losses. In case of absence of such rules, profits or losses shall be
distributed in proportion to contributions;
(10) Provisions for the constitution or reserves;
(11) Necessary clauses relating to rights and obligations of partners or shareholders among themselves
and with respect to third parties;
(12) Clauses on winding up the company and the bases for liquidation, as well as the manner of
designating liquidators;
(13) Agreement on arbitral jurisdiction, if necessary;
(14) In corporations, the time and manner of convening meetings or of constituting shareholder meetings,
ordinary or extraordinary sessions for directors; the form of deliberating and making agreements in the
matters of their competency.
In addition to the general requirements set forth herein, the articles must contain requisites specially
established for each type of company.
If requirements listed in Nos. (6) to (14) are omitted, the pertinent provisions of this tile must be applied.
Article 128. Articles of Association - The contract of association or modification of a company, shall be authorized by public instrument, except in the case of accidental association or joint ventures, which may be authorized by private instrument.
Any person who is a partner or shareholder may summarily request the authorization of the public
document and its recording.
Article 129. Registration, steps and appeals - In the case of collective companies, simple limited partnerships and limited liability companies, the constituting contract or its amendments is subject to registration in the Commercial Registry, which shall proceed as a consequence of fulfilling all the legal and fiscal requirements.
In case of refusal of the Commercial Registry to register this type of company, the formulated observations
shall be corrected or, if such is the case, within five days of notification of the refusal, it may be appealed
before the Superior Court of Justice of the District in which the company is legally domiciled, The decision of the court is final and no other appeal is allowed.
Article 130. Request for approval of the articles of association and by-laws of stock companies -
For registration in the Commercial Registry, corporations and companies limited by shares shall request
approval of the articles of association and by-laws as well as their amendments, along with the act of
foundation and other necessary documents, from the Director of Stock Companies.
Article 131. Resolution - The Director of Stock Companies shall make sure that all legal and fiscal requirements have been fulfilled and, on the basis of this, shall, within a maximum period of ten days from the date of the request was presented, dictate a resolution approving or disapproving the request. In the first case, registration in the Commercial Registry, is resolved and may not be refused. In the second case, antecedents for correcting the deficiencies or observations shall be developed.
Article 132. Publication - The articles of association, amendments and winding-up of companies in general shall be published once in a periodical with ample national circulation, except in the case of accidental associations or joint ventures.
The interest parties must present a copy of the publication to the Commercial Registry for its verification
and records.
Article 133. Judicial personality of companies and annulment of the Act of Constitution
Companies shall acquire juridical personality, that is, a quality subjecting them to the law as established in
this title, from the moment of registration in the Commercial Registry, without necessity of any other
requirement.
Annulment of the Act of Constitution, declared judicially, shall have no retroactive effect and shall determine the winding up and liquidation of the company.
Article 134. Irregular companies, accidental companies and joint ventures (sociedades dehecho)
Authorized types of companies which are not constituted regularly and "sociedades de hecho" affecting
third parties, shall be considered existent solely for the purposes of liability towards third parties, and for
exercising rights emerging from validly executed contracts.
In such cases, the partners listed in the partnership contract may not exercise rights or reclaim loans; their
reciprocal relations shall be regulated by common law.
Article 135. Liabilities - Whoever operates in the name of an irregular company or a "sociedad de hecho" and those who act as their juridical representatives shall be jointly and severally and unlimitedly liable before third parties.
Any interested party and even the partners who are not at fault for the irregularity, may demand payment of
damages and losses from the guilty parties and from the representatives or mandators of the company.
Any partner may demand the winding up and separation of the company. The liquidation shall be
regulated by the norms set forth in this title.
Article 136. Action for proving the regular existence of a company - Interested third parties may, by way of summary action, demand proof from the court of the regular existence of a company. If the company is not registered in the Commercial Registry, the court shall order its liquidation and shall designate liquidators.
Article 137. Nullity of typical companies - The constitution of commercial companies is null when they have a different structure from the types authorized by this code.
If the essential requirements for typical companies are absent, the contract is voidable; notwithstanding,
they may be corrected by means other than judicial action.
Article 138. Absence of consent - Absence of consent, declared judicially, when it affects the obligation of the partners, shall annul the contract only in relation to that partner; except when the participation of that partner is essential to the object of the company contract, the company shall proceed to be wound up and liquidated.
Article 139. Illegal Object - A company having an illegal purpose is null. The managing partners and whoever acts in company management shall be unlimitedly and jointly and severally liable for the company's liabilities and for losses caused. The nullity may be demanded by any interested party or by the Public Ministry, and the court shall sustain it summarily.
No partner may invoke the existence of the company in order to reclaim his contributions, division of gains
or losses, neither may he reclaim from third parties.
Third parties in good faith may plead the existence of the company against the partners, without which they
may oppose the nullity.
Once the nullity is judicially declared, the company shall be liquidated by whoever is designated by the
court; whatever remains, after the assets are realized and the liabilities are paid, shall be delivered to the
State.
Article 140 Illegal or prohibited activity - When a company with a legal purpose engages in activities which are illegal or prohibited by legal provisions, the court, upon demand of an interested party or by the Public Minister, shall order the suspension of those activities or resolve the company be wound up and liquidated, in accordance with the provision of the preceding article.
Article 141. Null stipulations - Any of the following stipulations are null and void:
(1) That a partner shall not be excluded from the company even with just cause;
(2) That the contributions of the limited partners shall be returned to them with a pre-established premium, or with their yields or an additional amount, whether or not gains are made;
(3) Guaranteeing the integrity of a partner's contribution or guaranteeing eventual gains;
(4) The entire gains or obligations of a company, belongs to the surviving partner or partners;
(5) That any partner will not suffer losses, or that others shall only receive gains or that any should be
deprived of benefits.;
(6) The establishment, in order to acquire the share of one partner for another, of an exaggerated price at
the time of the transaction.
Article 142. Authorized Capital - The authorized capital shall be established in a precise manner, but may be increased or decreased in accordance with clauses established in the articles of association or the by-laws, unless legal provisions establish minimum capital for certain commercial activities.
The resolution increasing or reducing the capital shall be established in a precise manner, but may be
increased or decreased in accordance with clauses established in the articles of association or the
by-laws, unless legal provisions establish minimum capital for certain commercial activities.
Increase of capital by re-valuation of assets shall be subject to the legal provisions regulating the matter.
Article 143. Opposition to Reduction - Company creditors may judicially oppose such reduction within 30 days following the publication mentioned in the preceding article. In that case the reduction may be made effective only when the company pays off the credits of the opposing creditors or guarantees them to their satisfaction or to that of the court, or if the court should reject the demand of the opposing creditors.
Article 144. Husband and Wife Company - For the liability derived from the types of company recognized by this Code, spouses, among themselves and with third parties, may only participate in stock companies or limited liability companies. When they participate in a general or simple limited partnership, such a company must be transformed into a stock company or limited liability company within 6 months, or the share of one of the spouses must be transferred to the other or to a third party within the same period.
Non-compliance with the preceding provision shall result in the annulment of the partnership contract and
the liquidation of the company.
Article 145. Minor Heirs - When a surviving spouse and minor children receive an enterprise in an inheritance, they have a right to continue its operations, either in common or with the participation of third parties.
In this case, and even in the constitution of a new company, minors may only participate in stock companies or limited liability companies, under approval of the competent court.
If a conflict of interest exists between the surviving spouse, a guardian shall be designated for execution of
the contract and for control of the administration of the company.
Violation of this rule shall necessitate the transformation of the company into an authorized type, without
prejudice to the liability of the legal representative for damages and losses occasioned by the minors.
Article 146. Participation in Other Companies - Only corporations and partnerships limited by shares may form part of stock companies or limited liability companies.
No company, except those whose object is financial or for investment, may acquire or maintain a
participation in one or more other companies for an amount exceeding one-third of the capital and free
reserves of the other company.
The participation, whether in quotas or shares, which exceed that limit, must be alienated within six months
following the general balance sheet in which such excess appears; the contrary shall result in a
proportional reduction of authorized capital with re-distribution of the excess capital.
Article 147. Reciprocal Participation - The constitution of companies or the increase of their capital by means of reciprocal participation is null, whether in shares of interest, quotas or stock.
Violation of this rule shall cause the founders, directors, administrators and auditors to be jointly and
severally, unlimitedly liable.
Once the violation is proved, the unduly integrated capital must be reduced within a period of thirty days
from written notification.
Article 148. Commencement of rights and obligations - The contractual rights and obligations of partners or shareholders in relation to the company shall commence from the date set forth in the company contract.
Article 149. Liability of the new partner - A new partner shall be liable, in accordance with the type of company, for all the business, obligations contracted before his admission, even when the firm or trade name has been changed. Any agreement to the contrary is not opposable before third party creditors.
Article 150. Contributions in Kind - In the case of contributions in kind, the goods must be determined and understood that they are the object of a transference of ownership. Such goods shall be in the charge of the company from the moment of delivery.
If the delivery is not made, the obligation of the partner shall be converted into an equivalent sum of money which he must pay in within 30 days.
In the case of real property, the corresponding public documents must be written up and recorded in the
Office of the Registry of Real Rights and in the Commercial Registry.
The contribution of property rights on assets shall not exempt the contributor from guarantees of
indemnification for eviction and defects.
Article 151. Contribution of Encumbered Assets - Encumbered assets are contributable provided that their value is subject to deduction of the real encumbrance affecting them, which must be clearly specified by the contributor.
Article 152. Contribution of Rights - Rights belonging to contributable assets are contributable, as long as they are not subject to litigation and are duly documented.
Article 153. Contribution of Credits - Contributions of credits against third parties shall be transferred to the company by transfer or endorsement, in accordance with their nature, at which moment the partner shall guarantee the legitimacy of the title and the fulfillment of the obligation. If the credits are not paid by their maturity date, the partner shall be liable for contributing an equivalent sum of money or other assets to the satisfaction of the company, which must be made within 30 days.
Article 154. Contribution of a Commercial Establishment - If the contribution consists of a commercial establishment, its transference may be made in the same document of constitution or by means of a separate public document. In any case, inventory, valuation and a balance sheet must be taken on the date of transference, proceeding to recording in the Commercial Registry.
Article 155. Contribution of the Use and Enjoyment of an Asset - If a partner contributes the right to use and enjoy an asset, the loss of same or of its rights shall cancel the contribution of the partner and shall authorize his separation from the company, unless he pays the corresponding value.
Contributions of use and enjoyment shall not be admissible in corporations and limited liability companies.
Article 156. Contribution of work and services - If the promised contribution consists in the rendering of personal services and the partner does not comply with his obligations, the company has the right to separate him from the company. If the non-compliance is due to negligence or fraud, he may also be judicially ordered to restore the damages and losses he has caused.
This class of contributions must be specifically stipulated, Its value shall not form part of the authorized
capital. It shall have a right to gains in the agreed proportion, and shall not suffer the losses.
This class of contributions is in admissible in corporations and limited liability companies.
Article 157. Contribution of Securities - If the contribution consists of quotable securities, they shall be accepted up to the quotation value. If they are not quotable, or if they have not be quoted in a period of three months prior to the contribution, they shall be valuated in accordance with the procedure of the following article.
Article 158. Valuation of contributions in Kind - Contributions in kind shall be valuated in the manner provided in the contract with an indication of antecedents justifying the valuation.
In the absence of an express stipulation, valuation shall be made by means of local prices or by one or
more judicially designated experts.
Article 159. Delaying the contribution - If a partner, for any reason, does to deliver his contribution under the conditions and periods agreed upon, the company may proceed executively against his assets or declare him separated from the company, without other requirements. He must also restore any losses and damages caused with interest. Articles 243 and 246 shall be applied in the case of stock companies.
Article 160. Undue use of funds or effects of the company - A partner who uses to his own advantage or to that of third parties the funds or effects of the company is obligated to cede to the company's favor all gains resulting, the losses and damages being his exclusive liability.
Also, he shall be liable for the damages from his abuse or his position as partner, where he has received
advantages or personal benefits affecting the rights of the other partners to the profits of the company.
Article 161. Execution of sentence against company - A sentence ordering the company to comply with any obligation may be executed subsidiarily against the general partners of a company, in accordance with the type of company.
Article 162. Garnishment by partners' private creditors - In general and simple limited partnerships, creditors of a partner may collect his indebtedness to them with the amount of his profits and his liquidation quota, but may not obligate him to sell his share or interest. If the obligation is not paid in the manner provided above, the company contract may not be extended and may not carry prescription terms for creditor rights.
In stock companies and limited liability companies, the shares or quotas owned by the stockholder may be
attached and the stockholder forced to sell them, under the conditions of the applicable provisions.
Article 163. Administration and representation - All acts comprising the activity provided as the object of the company or those necessary for compliance with the same which are executed by the administrators or representatives of the company in accordance with the contract or by provision of the Law, shall obligate it insofar as they are not notoriously extraneous to its business. Also, they shall obligate the company within the limits of its objective, even when the representation is jointly liable, in the case of obligations contracted by means of securities, for contracts in absentia or contracts of a cession, unless the third party recognizes that the act was realized in transgression of the joint representation.
These legal faculties of the administrators or representatives of the company in respect to third parties,
shall not free them from internal liabilities for violation of contractual restrictions.
Article 164. Liability of administrators and representatives - The administrators and representatives of the company must act with diligence, prudence and loyalty, under penalty of being unlimitedly, jointly and severally liable for damages and losses resulting from their action or omission.
Article 165. Registration of the appointment and retirement of administrators and representatives
The appointment and retirement of administrators and representatives must be recorded in the
Commercial Registry with an express indication of the powers granted in the document of constitution or in the power conferred before a Notary Public. Failure to record shall not prejudice third parties.
Article 166. Liability for fraudulent acts - Administrators and representatives of the company shall be liable, with respect to third parties, unlimitedly and jointly and severally for fraudulent acts performed in their name, without prejudice to the provision of Article 140.
Article 167. Violation of rules of the administration and auditors - The directors, administrators and auditors who violate the rules regulating the administration and control of companies, are liable for damages and losses occasioned by the company and shall be separated, provisionally or finally, from their functions, in accordance with that established in the company contract or the provisions of the Law, in accordance with the type of company.
Article 168. Requirements for Distribution of Profits - Distribution of profits may only be made when they have been effected and paid, resulting from a balance drawn up in accordance with the Law and by-laws, and approved by the partners or the competent business organ. Any other stipulation to the contrary is null and void.
The company as well as the creditors may demand restitution for the distribution of profits made in violation of the provision of this article, from the persons benefiting from same, or demand reimbursement from the administrators who have authorized such distribution, being one or more of them jointly and severally liable for the distribution.
Article 169. Legal Reserve - In corporations and limited liability companies a 5% minimum reserve must be constituted from profits effected and paid, up to half of the paid in capital, except in the case of establishment of special laws.
The reserve must be reconstituted with the profits obtained before their distribution, when it has diminished
for any reason.
A company, whatever its type, may accord, however, the formation of special reserves which shall be
reasonable and liable to prudent administration. Their percentages, limited and determined shall be
accorded by the partners or by the meeting of shareholders.
Article 170. Non-compliance with the constitution of reserves - The directors, administrators and auditors are jointly and severally liable for non-compliance with the provision in the first part of the preceding article and, if such is the case, remain obligated to deliver an amount equal to the reserve which should have been constituted to the company, claiming restitution from the partners for the amount unduly distributed.
Article 171. Losses from preceding fiscal years - Profits may not be distributed if losses from previous fiscal years have not been covered.
When directors, administrators and auditors are remunerated with a percentage of profits, the meeting of
shareholders or the competent business organ, may arrange for their pay in each case, even when losses
from preceding fiscal years have not been covered.
Article 172. Remuneration to directors, administrators and auditors - Partners or shareholders who exercise functions of directors, administrators and auditors of the company, may, unless there is an agreement tot he contrary, be remunerated with a fixed sum or a percentage of the profits of the fiscal year, assigned in the company contract or by-laws or by resolution in the meeting of shareholders or the competent business organ, but not by themselves.
CHAPTER II. GENERAL PARTNERSHIP
Article 173. Characteristics - (Amended by Decree Law No. 15184 of December, 1977)
In a general partnership all the partners are liable for company obligations unlimitedly, jointly and severally.
Article 174. Firm Name - The name must contain the words "general partnership" or their abbreviation.
When acting under a firm name, the firm name must be composed of the surname of one or more of the
partners, and when all the partners' names are not used, the words "and company" or its abbreviation must
be added.
In the event of a firm name which has served another company, whose rights and obligations have been
transferred to the new company, the words "successors of" must be added.
A person who permits his name to be included in the firm name of a general partnership, without being a
partner, is liable for business debts unlimitedly, jointly and severally with the partners.
Article 175. Administration - The contract shall set up the regulation of the administration. In its absence, the company maybe administrated by any of the partners.
One or more administrators may be designated, whether partners or not, whose attributions and powers
may be exercised jointly or separately. In the absence of precise stipulations, it shall be understood that
they may perform any act of administration. If it has been stipulated that the administration shall be joint,
one administrator may not act without the other or others, none of them may work individually;
notwithstanding that which, with respect to third parties, shall be applied in accordance with the provision of Article 163.
Article 176. Removal of Administrators - The administrator, whether a partner or not, may be removed at any time, without necessity of giving a cause, by decision of the majority, unless there is an agreement to the contrary.
If just cause for removal is demanded in the contract, the administrator shall maintain his position until the
case is judicially resolved, unless provisional separation is ordered by the competent court.
Any partner may request the removal of the administrators if he can prove just cause.
The following constitutes just cause for removal or administrators; fraudulent or guilty acts against the
common interest, incapacity or non-compliance with obligations and impediment or prohibition from
carrying on business.
Article 177. Revocation of Powers - If administrative powers are conferred by the public constituting document, such powers must be revoked by another public instrument.
Article 178. Resignation and Liability of Administrators - An administrator, whether a partner or not, may resign at any time, unless subject to a period of contractual compromise.
If the resignation was fraudulent or without due notice, the administrator is liable for damages and losses
occasioned by the company.
Article 179. Control of Partners - The non-administrative partners may supervise the acts of the administrators and examine the accounting system, books and documents of the company at any time.
Article 180. Authorization of Powers - (Amended by Decree Law No. 15184 of Dec. 1977)
The administrators, under their own liability, may not delegate totally or partially their mandate, except upon express authorization of the principal.
Article 181. Admission and withdrawal of Partners - The admission of new partners or the transference of interested parties into the company shall require the consent of all the partners, unless there is an agreement to the contrary, and shall imply the amendment of the company contract.
The effects of the withdrawal of a partner are exceptionable by third parties up to the registration of the
withdrawal on the Commercial Registry.
Article 182. Resolutions - The resolutions shall be adopted by absolute majority of votes with respect to capital, unless a different rule is set up in the contract.
Article 183. Competitive Acts - The partners may not, neither for themselves, through an intermediary agent, nor for the account of third parties, be dedicated independently to negotiations the same in nature as the object of the company, or carry on any other competitive act, except under the express consent of all the other partners.
In case of violation, they separate the partner and demand payment for damages and losses.
CHAPTER III. SIMPLE LIMITED PARTNERSHIPS
Article 184. Characteristics - The simple limited partnership is constituted by one or more limited partners who shall be liable up to the amount of their capital contributions for the debts of the company, and by one or more managing or general partners who shall be unlimitedly liable, jointly and severally for the debts of the company, whether or not they have contributed to the authorized capital of the company.
Article 185. Firm Name - The name must include the words "sociedad en comandita simple" (Simple limited partnership) or its abbreviation.
When acting under a firm name, the firm name must be composed of the surname of one or more of the
managing or general partners, adding "sociedad en comandita simple (simple limited partnership) or its
abbreviations; "S. en C.S." or "S.C.S.". The omission of the preceding provision shall result in the company being considered a general partnership.
Article 186. Sanction against including the name of a limited partner in the firm name
A limited partner or any other person who permits his name to be included in the firm name of the company shall become subject to the liability of the managing or general partners, simultaneously.
Article 188. Administration - The administration and representation shall be the duty of the general partners or third parties which they shall designate; the rules for administration of general partnerships shall be applied.
Limited partners may not interfere in any act of administration or act as attorneys for the company. If the
limited partner violates this provision, he shall be liable as if he were a managing or general partner with
respect to such acts.
If the limited partner habitually intervenes in the administration of the negotiations of the company he shall
have the same liability, even in operations in which he has not taken part.
Article 189. Non-Administrative Acts - Examination, inspection, control and auditing authorized in the constituting document, as well as opinion or counsel are not acts of administration.
Article 190. Examination of books and balance sheets - Limited partners may examine accounting books, documents and balance sheets of the company, in the period provided in the articles of association and, if not provided, at the time or immediately after the accounting statements have been presented to the competent authorities. They have the right, also, to demand the delivery of a copy of the balance sheet and any complementary statements which are necessary; such delivery must be made within a period no greater than thirty days from the date of presentation, under the liability of the managing or general partners.
Article 191. Resolutions - Any modification of the articles of association shall require the consent of all the partners, including a transference of a share of interest in the company, unless there is agreement to the contrary.
With respect to other resolutions, Article 182 shall be applied.
Limited partners have the right to vote on the consideration of the accounting statements and the
designation of an administrator.
Article 192. Appointment of Administrators or managers - Appointment of administrators or managers shall necessarily be made by proposition of the managing or general partners and by majority vote of the limited partners, in proportion to the contributed capital. However, any managing or general partners who have made contributions to the authorized capital shall participate in the vote.
Article 193. Rules applicable to the partners - The rules established for members of limited liability companies shall be applicable to limited partners whenever pertinent.
Managing or general partners shall be subject to the rules regulating general partnerships, where pertinent.
Article 194. Exception for limited partners - In case of death, bankruptcy, incapacity, or incompetence of all the managing or general partners, the limited partner, stating the provision in Article 188, may carry out urgent acts of management of the negotiations of the company until the situation is regularized, without incurring the liabilities of managing or general partners.
The company shall be wound up if, in the period of ninety days, the situation has not been regularized or the company transformed, under penalty of the limited partners becoming unlimitedly, jointly and severally
liable.
CHAPTER IV. LIMITED LIABILITY COMPANY
Article 195. Characteristics - In limited liability companies the members are liable up to the amount of their contributions.
The common fund is divided up into shares (or quotas) of capital, which in no case may be represented by
stock or securities.
Article 196. Number of members - The limited liability company may not have more than 25 members.
Article 197. Name or Firm Name - The limited liability company must use the name of one or more of its members in its firm name. To this name shall be added: "sociedad de responsabilidad limitada" (limited liability company) or its abbreviation, "S.R.L." or, simply the word "Limitada" (Limited) or the abbreviation "Ltds." If this requirement is omitted the company shall be considered as a general partnership.
Article 198. Capital in quotas of equal value - The authorized capital shall be divided in quotas of equal value, which shall be 100 Bolivian Pesos or multiples thereof.
Article 199. Totally Paid-in Contributions - (Amended by Decree Law No. 15184 of Dec. 1977.)
In this type of company the authorized capital must be paid in full, at the act of constitution.
Article 200. Contributions in cash and in kind - Contributions in cash and in kind must be paid in fully at the constitution of the company. Fulfillment of this requirement shall be shown expressly in the constituting document and, if it is not fulfilled, the members shall become unlimitedly, jointly and severally liable.
Contributions in kind must be valuated before the authorization of the constituting document, in accordance with Article 158.
Article 201. Increase in Capital - (Amended by Decree Law No. 15184 of December 1977.)
Increase in the authorized capital may be granted by means of a vote of the members representing the
majority of authorized capital. The members shall have preferential right in proportion to their capital
shares. Any resolution to increase the capital shall be communicated to those who did not meet in the
assembly in which the increase was approved by means of certified mail, return receipt requested. If none
of these persons exercise their rights within thirty days following receipt of the notification, their waiver shall be presumed and the capital increase may be subscribed by the other partners or by persons outside the company; in the latter case, the assembly must have given its express authorization.
No agreement or provision in the constituting document may deprive the members of their preferential right to subscribe to the increase of authorized capital.
Before publication and registration in the Commercial Registry, the members are obligated to pay in their
new subscription.
Article 202. Registry of Members - The company shall keep a registry book of members, where their names, addresses, amount of contributions, and if such is the case, the transference of their shares of capital, as well as attachments and encumbrances shall be kept.
A transference shall be effective before third parties only after its recording in the Commercial Registry.
Any person with a legitimate interest has the power of consulting the registry book, which shall remain in the care of the administrators, who shall be personally, jointly and severally liable for its regular existence and for the exactitude of its data.
Article 203. Administration of the company - The administration of a limited liability company shall be handled by one or more managers or administrators, whether members or not, designated for either a fixed or indefinite period.
Their removal, revoking their powers and liabilities shall be subject to the provisions in Articles 176, 177
and 178.
If the administration is joint, in charge of a directorate or administration council, the rules established for
corporations under directorate shall be applied.
Article 204. Assembly of members and its powers - The assembly of members shall have the following powers.
(1) To discuss, approve, modify or to contradict the general balance sheet corresponding to the fiscal year
in question;
(2) To approve and distribute profits;
(3) To appoint and remove managers or administrators;
(4) To constitute the directorate or administration council and to appoint among the members an internal
control organ;
(5) To approve the regulations;
(6) To authorize any increase or reduction of authorized capital, as well as the transfer of capital shares and
the admission of new members. The reduction of capital is obligatory in the terms and manner set forth in
Article 354, in that which is pertinent;
(7) Amendment of the constituting document;
(8) Decisions relating to the winding up of the company, as well as the withdrawal of members; and
(9) Others given by the articles of association.
Article 205. Annual Meeting - An ordinary meeting shall convene at least once a year at the address and at the time set forth in the articles of association and, at the latest, within three months of the closing of the fiscal year of the company.
The constituting document may establish cases in which certain items shall not require the approval of the
meeting; in order to adopt agreements on such items the texts of the propositions shall be remitted to the
members. Their votes shall be issued in writing.
At the request of the managers or administrators or of the members representing more than one-fourth of the authorized capital, an extraordinary meeting may be convened, even when the constituting document only demands a vote by correspondence. In such meetings only the items set forth in the notice or convocation may be discussed, under penalty of nullity.
Article 206. Convocation to meetings - Meetings shall be called by managers or administrators and, in their absence, by the directorate or administrative council and, in their absence or failure, by members representing more than one-fourth of authorized capital.
If the articles of association does not establish the form and method of giving the convocation notice, it shall be given by certified letter.
The publication or notice must contain the order of the day and shall be given eight days before the date
set up for the meeting.
Article 207. Legal quorum - A legal quorum for a meeting is constituted with the presence of members representing at least half of the authorized the constituting document requires a larger representation.
Participation of the members in the deliberations and decisions of the meetings may be personal or by
means of a representative or mandate, in the manner determined by the articles of association.
Article 208. Vote of the members - Every member shall have a right to participate in the decisions of the company and shall have one vote for each capital share (quota), except for limitations stipulated in the articles of association.
Article 209. Votes necessary for resolutions - In order to amend the articles of association, change the object of the company, increase or reduce authorized capital, admit new members, authorize the transference of capital shares and wind up the company, the vote of members representing two thirds of the capital shall be required.
Other resolutions shall be approved by the vote of members constituting one half of authorized capital.
Article 210. Concentration of capital shares - A limited liability company shall be wound up as a matter of law when all the capital shares are concentrated in the hands of one member only, this member shall be unlimitedly liable for the business obligations until the total liquidation of the company.
Legal action may be taken by any person with a legitimate interest, duly proceeding in a summary
proceeding. Proof being established, the court shall appoint the respective liquidators.
The action may not be weakened by the inclusion or appearance of former members.
Article 211. Control - Members have a right to examine the accounting, books and documents of the company at any time. An organ of control and audit may also be established, whose functions and faculties shall be regulated by the rules established for auditors in corporations.
Creation of a permanent control organ shall not mean the loss of the right to individual control on the part of the members.
Article 212. Transference because of death - The transference of shares because of the death of any of the members shall be regulated by Article 209 when a different stipulation does not exist in the contract. If the articles of association permit the incorporation of the members' heirs, the agreement shall be obligatory for the members. In the other hand, the members shall have the right to acquire the shares of the deceased member in proportion to the shares of capital and for their commercial value on the date of his death. If no agreement has been made with respect to the price and conditions of payment, such shall be determined by experts designated by the parties or by the court.
Article 213. Co-ownership - When one share of the business is co-owned, the provisions of joint ownership shall apply. The company may demand unification of representation for exercising rights and fulfilling business obligations.
Article 214. Transfer of shares among members - Shares may be transferred freely among members, except for any limitations established in the articles of association.
The transfer of shares, even between members, implies the reform of the constituting document.
Article 215. Preference of the other members in the offer of transfer - A member who proposes to transfer his shares, shall notify the other members in writing, in order that they might within 15 days of receiving the notice, show whether they have an interest in acquiring them.
If the other members do not express their interest within the period set forth, it shall be presumed that they
have waived their right and the officer is free to sell his shares to third parties.
Article 216. Disagreement of the members in the transfer - If the members have not taken advantage of their preference, only partially exercised it or if they have not given the authorization of the majority provided for the admission of new members, the company is obligated, within 60 days of the offer, one or more person to acquire the shares.
If the transfer has not been totally made within the following 20 days, the other members shall choose
between winding up the company or excluding the member interested in transferring his shares, by paying
their price established by expert appraisal.
CHAPTER V. CORPORATIONS (SOCIEDAD ANONIMA)
SECTION I. GENERAL PROVISIONS
Article 217. Characteristics - In the corporation the capital is represented by shares of stock. The liability of the members remain limited to the amount of the shares of stock they have subscribed.
Article 218. Firm Name - The corporation shall have a name referring to the principal object of its business, followed the words "Sociedad Anonima" Corporation), or its abbreviation "S.A.".
The name must be different from any other existing company.
SECTION II. CONSTITUTION
Article 219. Form of Constitution - A corporation may be constituted in a single act by the founders or by means of public subscription of shares.
Article 220. Requirements for constituting by a single act - In order to constitute a corporation in a single act, the document of constitution must contain, in addition to the items set forth in Article 127, the following requirements:
(1) There must be at least three shareholders;
(2) The capital stock must have been totally subscribed, and must not be less than 50% of authorized
capital. For the purpose of this Chapter, "capital stock" and "subscribed capital" shall have the same
meaning;
(3) Each subscribed share must be at least 25% paid up at the moment of execution of the constituting
contract;
(4) The by-laws of the company must be approved by the shareholders.
Article 221. Contributions in cash - The founding shareholders shall open a current account in a bank in the name of t in formation, and shall deposit any cash contributions therein. The expenses of constitution of the company may be charged to this account, in accordance with the directives established in the articles of incorporation.
Article 222. Constitution by public subscription - If the constitution of the corporation shall be by public subscription, the promoters must formulate a foundation program subscribed by them to submit to the Directorate of Stock Companies for approval; such program must contain:
(1) Name, age, civil estate, nationality, profession, and domicile of the promoters and their identity card
numbers;
(2) Class and value of shares, amount of programmed issues, conditions of the subscription contract and
advance payments to which the subscribers are obligated;
(3) Number of promoters' shares;
(4) Development of by-laws;
(5) Possible advantages of benefits which the promoters shall reserve for themselves;
(6) Subscription period, which shall not exceed six months from the date of approval of the program by the
Directorate of Stock Companies;
(7) Contract between a Bank and the promoters, by which the Bank shall prepare the corresponding
documentation, receive the subscriptions and the advance payments in cash.
Article 223. Approval of the program for offering shares on public subscription - In order to offer shares on public subscription, approval of the foundation program and authorization for its publicity must be obtained from the Directorate of Stock Companies, after fulfillment of the legal provisions
and regulations. Subscription of shares by the public shall not be authorized unless the exactitude of the
valuation of assets contributed in kind and the entire subscription of the part of capital stock belonging to
the founding shareholders has been previously verified.
Once the program is approved, it must be recorded in the Commercial Registry within a period of fifteen
days; it is not recorded, the authorization shall be canceled automatically.
Article 224. Subscription contract - The subscription contract shall be prepared by the Bank in two copies, and shall contain the transcription of the program, as well as:
(1) The name, nationality and domicile of the subscriber;
(2) The number of subscribed shares, their class and value;
(3) Advance payment of cash fulfilled in that act and the manner and period in which the subscriber shall
make payments on the corresponding balance;
(4) In the case of contribution of assets which are not in cash, the precise determination of their value in
accordance with the provisions of this Title;
(5) The notice calling the constituting meeting and the rules to which it shall be subject in its development
and the order of the day. This meeting shall take place within a period no longer than three months from the date of maturity of the subscription period;
(6) The declaration stating that the subscriber knows and accepts the plan of the by-laws. The receipt of
payment made and a copy of the document delivered to the subscriber as well as the original shall remain
in possession of the Bank;
(7) Place and date of subscription.
Article 225. Cash deposit of the subscription - Cash contributions must be deposited in the Bank designated to receive subscriptions.
Article 226. Contributions of assets - Trust - Contributions of assets which are not in cash shall be paid to the company once it is constituted. In the meantime, such contributions shall be entered into trust at the Bank charged with receiving the subscriptions and contributions.
Article 227. Failure of subscription - Return of Contributions - If the legal period or the period set up in the program for the subscription of stock comes due, and the minimum capital stock required has not been subscribed, or for any other reason the company has not been constituted, the promotion of the company shall be terminated and the Bank shall immediately restore the sums of money deposited and the assets given in trust to each interested party, without any discount.
Article 228. Excessive subscription - If the subscription exceed the amount of capital provided, the constituting meeting shall decide its increase up to the amount of the subscriptions of their pro rate reduction.
Article 229. Notice calling the general constituting meeting - Once the capital required in the program is subscribed, the promoters shall call a general constituting meeting which shall be executed in the presence of the representative of the intervening Bank, in the presence of an official of the Directorate of Stock Companies and with the concurrence of at least one-half plus one of the subscribed shares.
Article 230. Duties of the general constituting meeting - The duties of the general constituting meeting are as follows:
(1) To verify the existence of cash deposits as well as the contributions in kind;
(2) To approve the valuation of assets contributed in kind or to determine a new valuation by experts.
Subscribers whose contributions are in question shall not have voting rights until the valuation is definite;
(3) To approve or reject the negotiations and expenses made by the promoters, after their report;
(4) To approve or modify the advantages of benefits the promoters have reserved for themselves;
(5) To analyze and approve the by-laws;
(6) To appoint the directors, representatives or administrators of the company;
(7) To appoint auditors;
(8) To appoint two subscribers to sign the act of the general meetings; as well as appointing shareholders
to subscribe the public document of constitution;
(9) To consider the period established for the payment of the balance of the subscribed shares;
(10) To consider and resolve any other matter of interest of the company.
Article 231. Voting rights - For the purposes of the preceding article, each subscriber has a right to as many votes as shares to which he has subscribed and paid in the corresponding advance payment.
The decisions shall be adopted by the majority of subscribers present who shall represent not less than
one-third of the subscribed capital with voting rights, unless there is a different stipulation.
The promoters may be subscribers, but may vote on item (3) of the preceding article.
Article 232. Registration, procedure, recourse and publicity - Once the constitution of the corporation is approved by the general constituting meeting, the procedure shall follow Articles 129 and 132.
Article 233. Founders - The following persons are founders of a corporation:
(1) The persons who authorize the document of constitution of the company when it is constituted by a single act;
(2) In the case of formation by public by public subscription, those that sign the program.
Article 234. Delivery of funds to the administrators - At the presentation of the certificate of registration of the company in the Commercial Registry, the fiduciary Bank shall place the funds and assets received from the subscribers at the disposal of the administrators of the company.
Article 235. Delivery of documentation by the promoters - The promoters are obligated to deliver all documentation related to the organization of the company and any corresponding to acts carried out during the formation of the company to the directors or administrators, as well as documents pertaining to acts not approved by the meeting of shareholders.
Article 236. Liability of the founders - The founders are unlimitedly, jointly and severally liable for obligations contracted for the constitution and formation of the company, including expenses and commissions of the fiduciary Bank, even in the case of failure of the program.
Once the company is constituted, it shall assume the obligations legitimately contracted by the founders,
reimbursing them for their expenses, after approval of the general meeting.
Article 237. Benefits for promoters and founders - Promoters and founders may not receive any benefit that will reduce the capital stock. Any agreement to the contrary is null and void.
The return on annual profits granted to promoters and founders shall not exceed in any case 10%, neither
may they receive such return for more than ten years from the constitution of the company. This return may not be paid unless a minimum dividend of 5% on the paid in value of their shares is paid to the
shareholders.
SECTION III. SHARES
Article 238. Concept and nominal value - The capital stock shall be divided into shares of equal value. Such shares shall have nominal value of 100 Bolivian pesos or multiples thereof.
Article 239. Titles or provisional certificates - Titles may represent one or more shares and be nominative or to the bearer.
If the shares have not been fully paid up, the company shall only issue provisional certificate in nominative
from. In this case bearer certificates are null and void.
Once the total amount of the shares is paid in, the interested parties may demand that final titles be given
them. In the meanwhile, until the final titles are delivered, the provisional certificate shall be considered as
final and negotiable.
Article 240. Indivisibility of the shares and joint ownership - Shares are indivisible with relation to the company.
In case of the existence of several co-owners, the company shall recognize only one common
representative for exercising the rights and fulfilling the business obligations; such common representative
shall be named by the co-owners or by the court in the event of a disagreement.
In that case, the provisions of the Civil Code on matters of joint ownership shall be applied.
Article 241. Prohibition of issuing shares under par - Corporations may not, in any case, issue shares for a price less than their nominal value.
Shares may be issued with a bonus authorized by an extraordinary meeting, conserving their equality in
each issue.
The amount of the bonus, discounting the costs of issuance, shall constitute a special reserve.
Article 242. Issuing bearer shares - Bearer shares shall be issued only when the value of the shares is fully paid in.
Article 243. Non-payment of shares - When a period for making payments and their amounts is contained in the subscription contract or in the by-laws, and such payments are not made in the allotted period, the shareholder is considered in default and the company shall proceed to demand executively the fulfillment of payment, the sale of the shares or shall use any other method provided in the articles of incorporation or the by-laws.
Article 244. Delay in payment of subscribed shares - In case of delay in the payment of subscribed shares, the rights of the shareholder shall be automatically suspended.
Article 245. Sale and application of the product - Court costs, auction or sales expenses and late interest are payable by the default subscriber, without prejudice to his liability for damages caused by his non-payment.
Article 246. Cancellation of shares - If in the period of thirty days from the day on which payment must have been made, executive action has not been initiated for the balance of the debt, or if it has not been possible to sell the shares, the consequent extinction or suspension of the rights of the defaulted shareholder shall be accomplished. At that time the company shall proceed to the reduction of capital stock and return the subscriber's balance to him after deduction of expenses, or the amount not paid in shall be reduced, in which case fully paid up shares shall only be delivered for the amount of the payments.
Article 247. Content of titles or provisional certificates - Titles representative of shares or provisional certificates shall be taken from numbered notebooks and shall contain the following items:
(1) Name of the shareholder, if it is nominative;
(2) Firm name and domicile of the company, date and place of constitution and duration;
(3) Date of registration in the Commercial Registry;
(4) Amount of capital stock and of authorized capital;
(5) Nominal value of each share, series to which it corresponds, whether common or preferred, total number of shares in which the series is divided and rights belonging to it;
(6) Number of shares representing the title;
(7) Place and date of their issue and correlative number;
(8) On provisional certificates, notation of payments to be made;
(9) Autographed signatures of not less than two directors or administrators and the auditor.
Article 248. Liability for the issue of titles and certificates - Signatories of titles or provisional certificates shall be jointly and severally liable for the omission of essential requirements or for the violation of legal provisions or statues, as well as for payment of damages and losses to their holders.
Article 249. Adhered coupons - Titles of shares may have coupons attached for the collection of dividends, which shall make them to the bearer even when the shares are nominative.
Article 250. Share register book - Corporations shall keep a register of shares with the formalities of accounting books, for free consultation by the shareholders; the share register books shall contain:
(1) Name, nationality and domicile of the shareholder;
(2) Number, series, class and other particularities of the shares;
(3) Name of the subscribers and statement of payment of the shares;
(4) In the case of bearer shares, the numbers and in the case of nominative shares, the detail of transmissions with an indication of the dates and name of purchasers;
(5) Liens which have been put upon the shares;
(6) Conversion of the titles with data on the new ones;
(7) Any other information deriving from the juridical situation of the shares, and from their possible
modifications.
Article 251. Registration of shares - The company shall consider that nominative shares are owned by whoever is recorded as owner on the title and in the share register. Unjustified removal of a shareholder's registration in the register, shall obligate the company and its directors or administrators to be jointly and severally liable for damages and losses occasioned.
Article 252. Transfer of shares - The transferor who has not completed payment for the shares shall be jointly and severally liable for the payments with the successive transferees. A transferor who makes any payment is co-owner of the shares in proportion to the payments made.
Article 253. Transmission of shares - The transmission of shares shall be free; however, the articles of incorporation may impose conditions on the transmission of nominative shares which, in no case , signify a limitation, such conditions must be shown on the Title.
Article 254. Bearer or nominative shares - Transmission of bearer shares shall be accomplished by simple delivery.
Transmission of nominative shares shall be accomplished by means of endorsement and shall be
effective before the company and third parties from registration in the share register.
Article 255. Preferential right - Shareholders shall have preferential right for subscribing to new shares in proportion to the number they possess.
The company shall make the offer by means of notices in a printed organ of national circulation for three
consecutive days. The shareholders may exercise their preferential right within the period of thirty days,
from the date of the last publication, if the by-laws do not prevent a longer period.
Article 256. New Issues - The issuance of new shares may only take place when preceding issues have been entirely subscribed.
Article 257. Prohibition of a company from acquiring its own shares - Corporations may not acquire their own shares, except for judicial adjudication in payment of credits to the company.
Such shares shall be sold in the period of 90 days from the date of their adjudication and, if that is not
possible, the capital shall be reduced, leaving such shares without value. While they belong to the
company, they may not be represented in the meeting of shareholders.
Article 258. Other prohibitions- Under no condition may corporations make loans, advances or negotiations with the guarantee of their own shares.
Article 259. Liability - The directors or administrators are, personally and jointly and severally liable for damages and losses that they cause to the company or to third parties by violation of the two preceding articles.
Article 260. Applicable rules - The rules on securities in this Code are applicable to shares, when compatible with the present Title.
SECTION IV. CLASSES OF SHARES
Article 261. Classes of shares - Shares may be common or preferred.The articles of incorporation shall establish the rights and obligations that each class of shares shall give to its holders, with regard to the provisions of this Code.
In classes of shares are not established in the articles of incorporation, it shall be understood that all shares
are common.
Article 262. Common shares - Each common share gives the right to one vote in general meetings.
Article 263. Preferred shares - Preferred shares are those which establish preferential benefits. They shall not vote in ordinary meetings, only in extraordinary meetings, without prejudice to the attending of ordinary assemblies with a right to a voice in discussions.
Article 264. Right of preferred shares - A dividend no greater than that established in the by-laws shall be assigned to preferred shares before dividends for common shares are established.
When in any company fiscal year dividends are not paid or are less than that which is set forth, the
dividends or the difference shall be paid in the following years with the indicated preference.
The by-laws may state that a higher dividend may be fixed for preferred shares than for common shares.
In liquidation of the company preferred shares shall be refunded before common shares.
Preferred shares on which dividends have not been distributed for more than three fiscal years, even when
the years are not consecutive, shall acquire the voting right and other rights of common shares, until the
amount of dividends owed is paid.
Shareholders who own preferred shares have the rights that this Code confers upon minorities opposing
resolutions of general meetings, in that which affects them.
Article 265. Redemption and transformation of preferred shares - Preferred shares are redeemable and may be transformed into common shares, under the conditions and periods established at the time of their issue.
Article 266. Amount of preferred shares - Preferred shares shall not exceed half of the subscribed capital.
Article 267. Prohibited shares - The issuance of shares with a plural vote is prohibited to corporations, and shall be null and void.
SECTION V. SHAREHOLDERS
Article 268. Quality of shareholders - Those who are registered in the registry of shareholders of the company are considered shareholders, if the shares are nominative, and if they are to the bearer, the holder is considered a shareholder.
Article 269. Shareholders' rights - The following are fundamental rights of a shareholder, which shall be exercised in accordance with the provisions of this Code and with the prescriptions of the by-laws:
(1) To intervene in general meetings with a right to a voice and a vote;
(2) To fill the elective organs of administration and internal control;
(3) To participate in company profits, duly observing equality of treatment for the shareholders of the same
class;
(4) To participate, under the same conditions established in the preceding item, in the distribution of the
company assets, in case of liquidation;
(5) To receive preferential right to the subscription of new shares;
(6) To impugn the resolution of general meetings and of the directorate in accordance with the provisions of this Code. A shareholder who is a debtor in default of the company for any reason may not exercise this
right, if the obligation is shown by certified title and is incontestable;
(7) To freely negotiate their shares, excepting the provision in Article 253.
Article 270. Distribution of profits and right of credit - The shareholder has a right to request that the general meeting called to consider the balance sheet deliberate upon the distribution of profits consigned in that document.
The profits shall be distributed in proportion to the amount paid on the shares.
The approval of the distribution of profits by the general meeting of shareholders confers a right of credit for collecting the corresponding dividends from the company.
Dividends shall be paid in cash, unless a shareholder allows payment in other assets.
Article 271. Quota - At the liquidation of a company the shareholders shall receive their quota share of the patrimony, in proportion to the value paid for their shares.
Article 272. Restrictions on the right to vote - Restrictions on the right to vote may be established in the by-laws for preferred stock; nevertheless, for no reason may preferred shares be restricted in extraordinary meetings which are held for the following purposes:
(1) To modify the period of duration of the company;
(2) To change the purpose of the company;
(3) To approve its merger or transformation;
(4) To authorize the issue of bonds or debentures;
(5) To approve the reform of the articles of association;
(6) To resolve to increase or reduce capital stock.
Article 273. Representation in general meetings - Shareholders may be represented in general meetings by another shareholder or by a person outside the company. In the absence of a statutory rule regulating the constitution of representatives, it shall be made in writing.
Directors, administrators, auditors and other employees of the company may not be mandates or
representatives.
Article 274. Shares given in pledge, usufruct or lien - In the case of shares constituted in pledge, encumbered in usufruct, sequestered or attached, the right to vote shall be exercised by the owner of the shares.
In order to facilitate the rights of the owner, the creditor shall be obligated to deposit the shares or choose
another procedure that shall guarantee the rights of the owner.
Article 275. Null provisions - Any statutory provision that restrains the liberty of the vote of the shareholders is null and void, except that established for the preferred stock.
Article 276. Prohibition of administrators and auditors from voting - Directors or administrators, auditors and managers of the company may not vote on the approval of the balance sheet and accounts related to their management, neither may they vote on resolutions in reference to their liability.
In case of violation of this provision, they shall be liable for the damages and losses suffered by the
company or by third parties.
Article 277. Propositions affecting a particular class of shares - If there are several classes of shareholders, any proposition that may prejudice the rights of one of them must be approved by an absolute majority of votes from the shares belonging to the affected class reunited in a special meeting.
Article 278. Rights recognized by Law - Neither the constituting document nor the by-laws may discount the rights granted to shareholders by Law.
SECTION VI. TITLES OF PARTICIPATION
Article 279. Founder Bonds - Founder bonds shall be issued to accredit a founder, as defined in Article 233; a founder only has the right to participate in the profits provided in the title. Such bonds shall not give a right to intervene in the administration of the company; they may not be converted into shares, neither shall they represent participation in the capital stock.
Article 280. Contents of founders bonds - Titles representing founders' bonds must contain:
(1) Mention of the founder's bond inserted in the text of the document;
(2) Firm name of the company, address, duration, capital stock, date and Commercial Registry registration
number;
(3) Bond number and an indication of the total number of bonds issued;
(4) The share of profits and the time during which it must be paid, and
(5) Place and date of issue and signature of the authorized directors or administrators.
Article 281. Rules applicable to founder bonds - The provisions of articles 240, 249 and 260, shall be applied to founder bonds in matters pertaining.
Article 282. Profit-sharing bonds - When so stipulated in the articles of incorporation or the by-laws, profit-sharing bonds may be issued to workers of a company. Such bonds shall only grant the right to participate in the profits of the fiscal year under the conditions established in the by-laws. Such bonds are not transferable and their rights shall expire with the termination of the labor relationship, whatever the cause.
SECTION VIII. SHAREHOLDERS' MEETING
Article 283. Competency of general meetings - The general meeting of shareholders, legally called together and convened, is the highest organ representing the corporate will and has exclusive right to decide the matters stated in articles 285 and 286.
It shall be convened at the corporation address and shall be presided over by the president of the board of
directors or by whoever takes his place in case of his impediment, absence or incapacity, in accordance
with the by-laws, or, if there is no provision in the by-laws,, by the person designated by the meeting itself.
Resolutions of general meetings are obligatory for all the shareholders, even for those who are absent and
dissident, except in the case set forth in Article 302, and must be fulfilled by the board of directors.
Article 284. Classes of general meetings - General meetings may be ordinary or extraordinary.
Article 285. Ordinary meetings and their competency - An ordinary general meeting is obligatory at least once a year, in order to consider and resolve the following matters:
(1) The annual report of the auditors, the general balance sheet and profit and loss statement, and all other
matters relative to the management of the company;
(2) The distribution of profits, or, if such is the case, the treatment of losses;
(3) The appointment and removal of directors and auditors and, the establishment of their remuneration, and
(4) The liabilities of directors and auditors, if they are liable.
In the cases of nos. (1), (2) and (3), the meeting shall be called necessarily within the three months of the
closing of the fiscal year.
Article 286. Extraordinary meetings and their competency - General extraordinary meetings shall consider all matters not within the competency of ordinary meetings, particularly the following:
(1) Modification of the by-laws. Once approved, the procedure set forth in Article 129 must be followed, and they shall duly enter into force from the date of registration;
(2) The issue of new shares;
(3) The issue of bonds or debentures;
(4) The increase of authorized capital and the reduction or reintegration of capital;
(5) The anticipated winding-up of the company, the company's extension, transformation or merger; the
appointment, removal and compensation of liquidations, and
(6) Others established by the Law, the articles of incorporation or the by-laws.
Article 287. Rights not affected by decisions of meetings - Resolutions of general meetings may not affect credit rights of shareholders before the company.
All clauses or acts which damage or cancel rights conferred upon minorities by this Code shall be null and
void.
Agreements which cancel rights granted to shareholders by Law are also null and void.
The general meeting, by majority vote, in accordance with articles 296 and 297, may modify or cancel the
rights conferred by the by-laws to one or more classes of shares, provided that the shareholders who own
them consent in the manner indicated in Article 277.
Article 288. Content of the meeting notice - Notice of the general meeting shall be effected by means of notices published in a periodical having full national circulation and shall indicate the nature of the meeting, the place, hour, order of the day and requirements that must be fulfilled in order to participate in it. Such notices must be published for three discontinuous days, the last notice being published not less than five days and not more than thirty days before the meeting date.
Article 289. Convocation by directors or auditors - Ordinary and extraordinary meetings shall be called by the board of directors or auditors in the legally provided cases or when necessary in the opinion of any of