The Mexican senate approved a draft decree to amend the General Corporations and Partnerships Law (“GCPL”) aimed at establishing a simplified procedure to dissolve and liquidate commercial corporations, in order to expedite such process and reduce the costs associated therewith.
Mexican senators argued that the process of dissolving a company is expensive and burdensome. Hence, the proposed amendment to the GCPL seeks to simplify administrative procedures to liquidate commercial corporations.
However, the new liquidation process will not apply to all types of enterprises. In order for a company to be entitled to carry out the new liquidation procedure, the following conditions must be met:
The company’s partners should be individuals (as opposed to entities) and the partnership structure of the company shall be published at the official website of the Secretary of Economy.
Companies that initiate the new liquidation procedure, must be up to date in the compliance of their tax, labor and social security obligations and their legal representatives must not be involved in criminal proceedings.
The partners or shareholders’ meeting shall approve the dissolution and liquidation of a given entity, appoint a liquidator and publish the resolutions at the official website of the Secretary of Economy, under oath.
Afterwards, the Secretary of Economy will verify that the entity has no outstanding obligations and trials, prior to the company’s closure at the public commercial registry.
The entities that do not meet the above requirements shall follow the traditional path which is summarized as follows:
I) The company approves its dissolution for any of the reasons provided by article 229 of the GCPL, through a partners or shareholders’ meeting. The start of the liquidation process will also be approved and one or more liquidators will be appointed by the meeting.
II) The public deed formalizing the minutes of the above shareholders or partners’ meeting must be registered at the public commercial registry.
III) Once the liquidators have been appointed, the administrators will deliver all books, documents and goods to the liquidators.
IV) Generally, the liquidators will carry out the following activities:
(i) concluding the company’s transactions,
(ii) collecting the company’s credits and paying debts,
(iii) selling the company’s goods,
(iv) distributing the company’s assets to the partners or shareholders,
(v) preparing the liquidation final balance that will be submitted to the consideration of the partners or shareholders’ meeting and once approved, the balance shall be recorded at the Public Commercial Registry, and,
(vi) once the liquidation is concluded, obtaining from the Public Commercial Registry the closure of the company.
There are specific liquidation measures to be performed by the liquidators depending upon the type of corporation. Those measures will be developed in a separate post.