Mercantile Companies

Mercantile Companies

Mercantile Companies

Published on july 03 , 2023

Foto de Mario Concepción Martínez Sandoval

Mario Concepción Martínez Sandoval - Partner

The commercial enterprise is constituted by a coordinated set of material elements and incorporeal values, with the purpose of offering goods or services to the public, for profit and in a systematic manner. Furthermore, it does not lose its character by the variation of its elements, nor by lack of permanent establishment or seat. These premises are the starting point of our Code of Commerce, precisely to determine the scope and strength of its existence; therefore, its understanding and interpretation is very relevant. Notwithstanding its nature as a movable property, the transfer and encumbrances of its real estate elements must be governed by the rules of common law, precisely because it transcends its legal effects before third parties.

Any transaction involving the concept of a company, if part of its essential elements are not excluded, includes: the clientele and commercial fame, the commercial name and commercial signs, leasing contracts, furniture and machinery, labor liabilities, merchandise, credits and other similar goods and values, including the establishment, if any; therefore the relevance of having clarity in its context.

A company responds to its own dynamics, precisely because it depends on its commercial or business line to achieve its results; for this reason it is necessary for potential buyers to evaluate their projections in terms of repaying their investment in the estimated terms and being able to grow against the competition, even more so with the technological advances presented by the market and its environment, since these are variables that must be monitored with due frequency.

We must be clear and precise when we talk about the concept of commercial companies, since its connotation is formal and integral for business matters, even more so when the legal norms of our country seek the speed of a sustainable development and to comply with the existing legal order.

Considering the scope of what constitutes a commercial company, we must take into consideration that, prior to its acquisition, a due diligence (due diligence process) would be recommended, precisely to know the details of the same, its integral organization, administrative, financial, legal and fiscal operation to evaluate its contingencies and thus have the certainty of the investment of potential buyers; for this, the advice of a legal firm such as ours is necessary.
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Last June, the new Instructions for the Prevention, Detection and Control of Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction, issued by the Attorney General's Office (FGR), under the framework of the Anti-Money Laundering Law (LCLDA), came into force. In its Article 2, the LCLDA establishes that every person must submit information to the FGR that allows demonstrating the licit origin of any transaction he/she carries out. This leads us to conclude, then, that every person must prepare the manual and internal policies for the implementation of a money laundering prevention system, and the continuous development of these.

What is the difference between the new Instructions and the prevention systems elaborated before it came into force? Article 4 of the Instructions requires individuals to apply a risk-based approach, which consists of identifying, assessing and understanding the risks of their sector and operation, and applying resources aimed at ensuring that they are effectively mitigated. Therefore, it is necessary to update the manuals and policies that companies had developed in the past, so that they have a risk-based approach and comply with the new provisions.

From the manuals prepared, it is necessary to comply with other obligations, among them, to develop due diligence and KYC policies to identify the final beneficiary of the company's business relationships, to detect and mitigate all unusual or suspicious transactions and report them to the FGR (not only cash transactions), to train employees, to keep a historical record of the files analyzed, and above all, to appoint a compliance officer.

Why is it important to comply? Article 8 of the LCLDA establishes that, if there is any encumbrance due to negligence, impertinence or ignorance of the directors or employees of the companies, there will be a sanction of two to four years in jail.

Therefore, as a Firm we recommend:


We offer you our services, in order to comply with these legal obligations, so that your company has the peace of mind and support of a money laundering prevention system.

For more information about how this may affect your company, please contact our specialized team at bvaldez@bvaldezlaw.com  or  benjamin@bvaldezlaw.com