A constitutive act is the document that certifies the birth of a legal entity or legal person. It is like a birth certificate, but in this case, it indicates that several people have joined together for a common purpose.
Articles of incorporation are created and validated by a public notary - either a broker or a notary public - and function as a social contract to legally operate companies or corporations.
Articles of Incorporation: What is it for?
A legal entity acts like a person of flesh canada phone data and blood; although it is not physically perceptible, it legally has rights and obligations like a natural person.
Companies or associations – with or without profit motives – need this document to start operations in Mexico. Without it, it is impossible to carry out other essential procedures to start a business, such as: registration with the SAT , opening of business accounts, land use license, building and construction or operating license, to mention just a few examples.
A charter also serves to identify which legal entity is responsible for the business activity; it also helps to determine the degree of financial responsibility of each partner or shareholder of a company based on the percentage of participation and the powers they have in it.
That is, a constitutive act indicates the name of the company, the percentage of expenses and profits that the shareholders will obtain, as well as the persons who will have the authority to carry out certain administrative activities, to bind themselves on behalf of the created company or, even, to represent it in a trial.