Libro I · Título I Capítulo XI. De la disolucion y liquidacion de las sociedades

The exclusion or the separation of one or more partners in non-share-based companies causes the partial dissolution of the company. In public limited companies, the provisions of Article 111 shall apply.

Grounds for excluding one or more partners are, in addition to the violations of the provisions of Articles 29, 39 and 40 of this Code, the failure by the partner or partners to comply with the obligations imposed on them by the law or by the articles of incorporation, and the commission of fraudulent or willful acts against the company.

Grounds for the exclusion of one or more partners in non-share-based companies are the following:

1º.Conviction for forgery or for a crime against property.

2º.Bankruptcy.

3º.Interdiction judicially declared to be a merchant.

The exclusion agreement shall be adopted by the vote of the majority and takes effect thirty days after the date of the communication to the excluded partner. The partner has no right to vote regarding the exclusion agreement that affects him or her.

Within this term, the excluded partner may make opposition before a Judge of First Instance for Civil Matters, in a summary proceeding.

The exclusion of a partner shall be resolved in the same manner at the request of the other, in companies composed of two partners.

The excluded partner shall be liable to the company for the damages caused by the acts that gave rise to the exclusion.

In non-share-based companies, the partners may obtain their separation not only for the grounds indicated in Articles 16, 58 and 261 of this Code, but also in the following cases:

1º.If the company, despite having sufficient profits during the two immediately preceding consecutive fiscal years, does not distribute profits of at least eight percent (8%) of the paid-in corporate capital.

2º.If the guilty partner is not excluded in the cases provided for in Article 226 of this Code, despite the company being requested to do so.

3º.If the company has been incorporated for an indefinite duration and the partner states his or her will to separate; in this case, prior notice is necessary, at least, one fiscal year in advance.

The right of separation may only be exercised by the partners who have voted against the decisions referred to in subparagraph 1º. of the preceding article and in Articles 16, 58 and 261 of this Code, or who have made the request for exclusion of the partner mentioned in subparagraph 2º. of the preceding article.

The rights referred to in Articles 226 and 229 of this Code shall lapse if the company or the partners do not exercise them within the three months following the date on which they learn of the fact that may give rise to the exclusion or the separation.

In share-based companies, the partners may obtain their separation in the case of subparagraph 1º. of Article 229 and when the company changes its purpose, extends its duration, moves its domicile to a foreign country, transforms or merges.

The right of separation corresponds only to the shareholders who voted against the resolution, and must be exercised within the fifteen days following the date on which the general meeting that adopted the corresponding agreement was held.

The company may proceed to the sale of the shares of the partner who has separated, provided that it obtains at least a price equal to the amount it disbursed to settle with the said partner.

If within the term of six months the sale has not been achieved, the capital must be reduced, in observance of the legal requirements.

The partner who separates or is excluded from a company shall remain liable to third parties for all the operations pending at the time of the separation or exclusion, according to the nature of the company.

Any agreement to the contrary shall not produce effect to the detriment of third parties.

In the cases of exclusion of a partner, the company may retain the part of capital and profits of that partner until the operations pending at the time of the exclusion are concluded, and the liquidation of the share in the corporate assets corresponding to him or her must then be made.

The term of retention may not be greater than three years, but if the excluded partner is replaced by another, the liquidation and payment of his or her share shall be made immediately.

Once the exclusion of a partner is resolved, the part corresponding to him or her shall be liquidated, and once that liquidation is approved, the company shall fix a reasonable time limit to make the payment, in accordance with the provisions of the preceding article.

In case of disagreement between the excluded partner and the company, the time limit and the conditions shall be fixed by the Judge of First Instance for Civil Matters. All the actions to which this article gives rise shall be heard in a summary proceeding.

In non-share-based companies, the heirs of the deceased partner may use, but only in a consumptive manner, the right that may derive from Article 43 of this Code, within the term of three months counted from the date of the death of the deceased.

If the heirs decide not to enter the company or the legal term elapses without them expressing their consent to continue in it or nothing was provided in the articles of incorporation, the company shall be partially dissolved, and the part corresponding to their deceased shall be liquidated as of the date of his or her death, and they shall not participate in the results after that date, except insofar as they are a necessary consequence of the transactions begun before the death.

Once the part of the deceased partner is liquidated, the partners who continue the company shall have the right to a term not exceeding two years to pay it. In case of disagreement, the procedure determined in the preceding article shall be followed.

In the case of the rights that Articles 229, 230 and 231 of this Code grant to the partners, the liquidation and payment must be made immediately.

Companies are totally dissolved by any of the following grounds:

1º.Expiration of the term fixed in the articles of incorporation.

2º.Impossibility of continuing to carry out the principal object of the company or because the said object has been accomplished.

3º.Resolution of the partners adopted in general meeting or extraordinary general meeting.

4º.Loss of more than sixty percent (60%) of the paid-in capital.

5º.Concentration of the shares or the contributions of a company in a single person.

6º.Those provided in the articles of incorporation.

7º.In the cases specifically determined by the law.

In the case of subparagraph 1º. of the preceding article, the dissolution of the companies shall take place by the mere expiration of the term fixed in the articles of incorporation, except as provided in Article 25 of this Code.

As soon as the administrators learn of the existence of any ground for dissolution, they shall record it in a record signed by all of them and shall convene the general meeting, which must be held in the shortest possible term and in all cases within the month following the date of the record.

If in the general meeting it is decided to cure the ground for dissolution and to amend the articles of incorporation in order to continue its operations or, alternatively, to agree the dissolution of the company, what is resolved shall be executed as a public deed that shall be registered in the Mercantile Registry.

If, a ground for dissolution existing, the partners resolve to continue the company and to amend the articles of incorporation, the creditors shall enjoy the rights set forth in Article 25 of this Code.

If, despite the existence of a ground for dissolution, no resolution is adopted that allows the company to continue, any interested party may apply to a Judge of First Instance for Civil Matters, in a summary proceeding, so that he or she declares the dissolution, orders the registration in the Mercantile Registry and appoints the liquidator in default of the partners.

The declaration of dissolution shall be published ex officio by the Mercantile Registry, three times during a term of fifteen days in the Official Gazette and in another of the largest circulation in the country. Within the month following the last publication, any interested party may judicially demand the cancellation of the registration of the dissolution, if there was no legal ground to declare it.

The administrators may not begin new operations after the expiration of the term of duration of the company, the agreement of total dissolution or the verification of a ground for total dissolution. If they contravene this prohibition, the administrators shall be jointly and unlimitedly liable for the operations undertaken.

Once the company is dissolved, it shall enter into liquidation, but it shall keep its legal personality until the said liquidation is concluded and, during that time, it must add to its designation or corporate name the words: In liquidation.

The term for the liquidation shall not exceed one year and when it elapses without the liquidation having been concluded, any of the partners or of the creditors may ask the Judge of First Instance for Civil Matters to fix a reasonable term to conclude it, and the judge, after knowledge of the cause, shall so order.

The liquidation shall be made in the form and by the persons expressed in the articles of incorporation. If nothing was stipulated about it, the appointment of liquidators shall be made by agreement of the partners, adopted by majority in the same act in which the dissolution is agreed or recognized. If it is not possible to reach such majority, at the request of any partner, the appointment shall be made by a Judge of First Instance for Civil Matters, in an incidental proceeding.

Once the liquidators are appointed and accept their offices, the appointment shall be registered in the Mercantile Registry.

The fees of the liquidators shall be fixed by agreement of the partners, before they take possession of their office and, if such agreement is not possible, at the request of any partner, a Judge of First Instance for Civil Matters shall decide, in an incidental proceeding.

The Mercantile Registry shall bring to the knowledge of the public that the company has entered into liquidation and the name of the liquidators, by means of notices that shall be published three times within the term of one month, in the Official Gazette and in another of the largest circulation in the country.

The administrators of the company shall continue in the performance of their office until they make delivery to the liquidators of all the property, books and documents of the company, in accordance with inventory.

The liquidation shall be subject to the rules that have been set forth in the articles of incorporation, provided that they are not contrary to the provisions of Articles 248, 249 and 251 and, in their absence, it shall be made in accordance with the provisions of this section.

If there are several liquidators, they must proceed jointly and their liability shall be joint. The discrepancy of opinions among them shall be resolved with the partners, who shall decide by majority and, in their absence, by a Judge of First Instance for Civil Matters, in an incidental proceeding.

The liquidators appointed judicially must post security for their liability before entering the exercise of their office. The Judge himself or herself shall fix the amount. Any liquidator may be removed by the partners, who shall decide by majority, and the substitute must be appointed in the same resolution.

In all cases a Judge of First Instance for Civil Matters may remove the liquidators at the request of one or several partners, in an incidental proceeding and by just cause.

The liquidators shall have the following powers:

1º.Represent the company legally, judicially and extrajudicially. By the fact of their appointment they are authorized to represent it judicially, with all the pertinent special powers established by the Judicial Branch Law.

2º.Conclude the operations pending at the time of the dissolution.

3º.Require the account of their administration from anyone who has managed interests of the company.

4º.Liquidate and pay the debts of the company.

5º.Collect the outstanding credits, receive their amount, cancel the liens that secure them and grant the corresponding settlements.

6º.Sell the corporate property, even when there is any minor or incapacitated person among the partners, provided that it has not been contributed by them with the condition of being returned in kind.

7º.Submit a statement of liquidation when any of the partners requests it.

8º.Render account of their administration at the end of the liquidation.

9º.Order the preparation of the general balance sheet, which must be submitted to the approval of the partners, in the form that corresponds, according to the nature of the company.

10º.Liquidate to each partner his or her share in the corporate assets.

11º.Deposit in the Mercantile Registry the final general balance sheet, once approved, and obtain from the Registry itself the cancellation of the registration of the articles of incorporation.

12º.In general, carry out all the acts of liquidation.

In the payments, the liquidators shall observe in all cases the following order:

1º.Liquidation expenses.

2º.Debts of the company.

3º.Contributions of the partners.

4º.Profits.

The liquidators may not distribute the corporate property among the partners, not even partially, while the creditors of the company have not been paid or the sums necessary to pay them have not been set aside.

If the available funds are insufficient for the payment of the corporate debts, the liquidators shall require from the partners the disbursements still owed on their participation and, if they are needed, the sums necessary within the limits of the respective liability and in proportion to the part of each one in the losses. In the same proportion the debt of the insolvent partner shall be distributed among the partners.

If the property of the company is not enough to cover the debts, the provisions on insolvency proceedings or bankruptcy shall be followed.

The partners may not demand the restitution of their capital before the liquidation of the company is concluded, unless it consists of the usufruct of the property contributed to the common fund.

In the liquidation of share-based companies, the liquidators shall mandatorily proceed to distribute the surplus among the partners, subject to the following rules:

1º.In the final general balance sheet, the distributable corporate assets and their proportional value, payable for each share, shall be indicated.

2º.The said balance sheet shall be published in the Official Gazette and in another of the largest circulation in the country, three times during a term of fifteen days. The balance sheet, the documents, books and records of the company shall remain at the disposal of the shareholders until the day before the general shareholders' meeting, inclusive.

The shareholders shall have a term of fifteen days, counted from the last publication, to submit their claims to the liquidators.

3º.In the same publications the call to the general shareholders' meeting shall be made, so that it decides definitively on the balance sheet.

The meeting must be held at least one month after the first publication and at it the partners may make the claims that have not been attended to previously or formulate those they deem pertinent.

Once the general balance sheet and the profit and loss statement are approved, the liquidators shall proceed to make to the shareholders the payments that correspond, against delivery of the share certificates duly cancelled.

The sums that belong to the shareholders and that are not collected in the course of two months counted from the approval of the final general balance sheet shall be deposited in a banking institution with the indication of the shareholder, if the share is registered, or of the number of the share, if it is bearer. If five years elapse without any person claiming the delivery of the deposited amounts, the banking institution must award them gratuitously to the Universidad de San Carlos de Guatemala.

To the extent compatible with the state of liquidation, the company shall continue to be governed by the stipulations of its articles of incorporation and by the provisions of this Code.

The liquidators may not undertake new operations. If they contravene such prohibition, they are personally and jointly liable for the transactions undertaken.

The rules referring to the administrators shall be applicable to the liquidators, with the limitations inherent to their status.

The nullity of the corporate contract, whatever its cause, does not prejudice the rights of third parties in good faith, against the partners, whose liability shall be determined according to the nature of the company they intended to form.

If it is not possible to determine it, the case shall be governed by the provisions of the general partnership.

Once the nullity is declared, the liquidation shall proceed immediately.