Nicaragua: Does any reform or modification to the Social Pact need judicial approval?
On April 21, 2020, the National Directorate of Registries issued Circular No. 210420, in which it was agreed that the Commercial Registry will not require judicial approval in cases of reforms to the constituent agreements of Corporations and it will be sufficient that the agreement be elevated to a public instrument in accordance with the provisions of Articles 206 and 209 of the Public Registry.
In order to avoid any affectation, and with the purpose of protecting the rights of the shareholders or third parties, the Registrar will verify that the agreement has been approved in accordance with the rules that govern the company, that is, the Code of Commerce, the Articles of Incorporation and the By-laws, and if any discrepancy is found, he will suspend or deny the procedure, as the case may be.
It should be noted that the following cases are exempted from the application of the Circular
- Modification to the Corporate Name
- Increase of Social Capital
- Reduction of Social Capital
I consider that these changes are a key factor that contribute to the increase of the business activity in the country, since the fundamental purpose is the streamlining of the procedures and services of the public administration, since, being the Code of Commerce of the year 1904, its creation does not respond to the essential foundations of the economic model of the country.
Valeska Fonseca Torrez
Associate
García & Bodán
Nicaragua