The corporation is a form of business organization recognized in Honduras. According to Honduran law, a corporation is one that exists under one name and has a founding capital divided into shares, whose partners limit their liability to the payment of the shares they have subscribed.
This type of companies are constituted by simultaneous foundation which consists of the appearance before a notary of at least two natural or juridical persons through their representative, who grant the corporate deed, formalizing themselves as shareholders or partners and creating the bylaws of the company and subscribing the corresponding shares that must be paid at least twenty-five percent (25%) of the value of each one. In the articles of incorporation, the founding partners establish aspects such as the name of the company, its corporate purpose, domicile, duration, capital stock which may not be less than twenty five thousand Lempiras (L 25,000), number and value of the shares, administrative and supervisory bodies, as well as the powers of each body. Once the corporate deed is granted, the notary registers it in the Mercantile Registry so that the corporation acquires legal personality. The simultaneous foundation is the most used procedure to incorporate corporations in Honduras, since it allows the founding partners to have greater control over the definition of the bylaws; however, there is another way to create or incorporate a corporation, and that is through or by public subscription, in this case, the founding partners personally draft and deposit in the Public Registry of Commerce, the program or draft of the bylaws of the corporation, accompanied by the authorization of the Secretary of State in the Office of Finance to offer the shares of the corporation to third parties through a public offering. Once the shares have been subscribed and paid in full, the company is formally incorporated before a notary public. The public subscription of shares allows a greater participation of third parties in the capital stock of the corporation. By offering the shares to a wider group of investors, it is possible to attract greater capital contributions for ventures that require it.
Administration of the Corporation.
Corporations establish two scenarios for being managed:
- Through a Sole Administrator
- Through a Board of Directors acting through its Chairman.
The administrators may be partners or persons outside the company, their position will be temporary and revocable, also, they are responsible for the judicial and extrajudicial representation of the company, conferring powers on behalf of the company, business management, ensuring the good of the company, will have the use of the corporate signature, among others. The position of administrator or director is personal and cannot be performed through a representative. Therefore, the administration of a corporation in Honduras must be carried out by a group of persons capable of seeking and preserving the interests of the corporation, as such, it is the responsibility of the Board of Directors or Sole Administrator to carry out the decisions of the partners, as well as the accounting information of the corporation according to the Law.
Shareholders.
A shareholder may be a natural or legal person who is the holder of shares issued by a corporation, thus forming part of the individual owners of the corporation.
They have the following rights and obligations:
- Right to vote
- Right to receive dividends
- Preemptive subscription right on shares
- Right to participate in the distribution of the net assets resulting from liquidation
- Obligation to pay for each share to which it is entitled.
- Liability for losses.
- Comply with the resolutions of the General Shareholders' Meeting.
Together they form the General Shareholders' Meeting, which is the supreme body of the corporation and expresses the collective will in matters within its competence. Minutes will be taken of the resolutions adopted both at the Shareholders' Meeting and at the duly called meetings of the Board of Directors, which must be recorded in the respective book; However, Article 7 of the Law for the Generation of Employment, Promotion of Entrepreneurship, Formalization of Businesses and Protection of the Rights of Investors indicates that the mercantile companies, which have been constituted through said provisions, may keep control of the acts of the shareholders' meeting or of their administrative bodies in electronic format, therefore no authorization or notification from any central, departmental or municipal government authority of the corporate and accounting books of the company will be required.
Advantages of the Corporation.
- The company can continue to operate even after the death of one of its partners.
- Creditors have rights to the assets of the partnership but not to the assets of the shareholders.
- The shares can be easily sold.
- Shares may be issued according to the momentary needs of the company and different amounts may be offered for each share.
- Long-term credits are usually quite easy as long as large assets are offered as payment guarantees.
- Assets or economically valuable rights may be contributed.
Investment in Honduras.
For the owners of an investment in Honduras, such as capital in a corporation, these investors have the protection of a public entity whose main purpose is to protect investors, guide their investment to strengthen their economic relations in the country as established in Article 46 of the Law for the Promotion and Protection of Investments, which states the following: "In order to procure the permanence of already existing investments, the National Investment Council shall also provide the services required by investors for the facilitation of the development and expansion of the same, for which purpose it shall maintain a database of investments and keep in permanent contact with the directors of companies and government entities involved, in order to detect potential problems that may arise after the establishment of the investment and facilitate their solution in the most efficient manner possible."
Conclusion.
In summary, Honduran law recognizes the corporation as a corporate form in which the partners limit their liability to the capital contributed. A minimum amount of capital, partners and cash contributions are required for its incorporation. The corporation in Honduras can be constituted by simultaneous foundation before a notary or by public subscription of shares. The corporation is a widely used corporate form in Honduras that allows the development of large business ventures with limited liability of the partners.
Investments in Honduras have a great attraction to grow as an entrepreneur, not only will you be investing in a country with many opportunities to grow, but you will also be supported by different institutions whose purpose is to enhance your projects and grow your investments in the country, this way you can implement all these ideas and capital through your legally constituted corporation.
Carlos Padilla
