SEMANA I

193 countries with their own legal system but 3 traditions which they follow → Roman/Civil laws
tradition, Common law and Islamic law.

“Tradition”: A way to apply and interpret the law / legal reasoning

Roman/Civil Laws tradition: use it in continental europe (east and west europe, and
latam), China and Japan are formally here but they follow a sort of “own
interpretation” of this tradition due to the big influence of its culture.

Common Law: UK, Ireland, USA, Australia, New Zealand and former colonies)

Islamic Law: Saudi Arabia

Moral Rules VS Legal Rules

Disapproval Rule enforceable by the State
Based on beliefs

State: Set of institutions exercising power & control over a territory and population being
recognized by other states.

Law: Any legal rule (broad sense)

Law: Legal rule passed by the legislative brand (narrow sense)

Legislative brand as a congress, assembly, parliament, and so on.

The executive branch act and perform its duties based and limit by passed laws not
only from legislative but also other sources
The judicial branch (judges/courts): to solve disputes between individuals and
organizations within the territory of the State

Constitution: most important law within the state. Establish the roles and responsibilities of
the brands and also our essential rights. Population’s main agreement.

⤊
RULE OF LAW
Type of States:

→ Federal State (as US, Brazil, and so on)

Regional State (Spain with its autonomous communities)

→ Unitary State (Peru, …)

Sources of Law: means what are the sources of individuals and organizations’ rights and
obligations. Establish their rights and obligations.
RCL → The most important source of law is the Legislation

Legislation (written legal rule issued by a a body of the State)

then, less important: (minor sources cannot contradict the main sources)
● Case Law (is not so solid, it could be change quickly)
● Will (Testament/Contract)
● Customs
● Books of authority (Doctrina)

CL → Two most important source of law:

Case Law (judge-made law) → Laws created by judges/courts to issue any specific
dispute and controversy.
Set a precedent for future similar cases
Gradually courts/ case by case

Legislation
then, less important: (minor sources cannot contradict the main sources)
● Will
● Customs
● Books of Authority

Legislation: Is made up of different legal rules, different names, having a…

Hierarchy:
Constitution - general

Law (passed by the Congress) - specific

Regulations - more specific - detailed

Checks and Balances: equilibrium
An adjudicate then set the decision in a written document call it a jury sentence.
Branches at the same level and have mutual control to each other.
Form of governments: means the relationship between legislative and executive branch

“Head of State” is only a title to traditional functions/roles

The character that really governs the country and has a broader variety of functions/roles is
the PM - Head of Gov.
Most of the House of Lords inherited their seats. The House of Commons is elected
The most representative parties are the Labor and Conservative parties.
The House of Commons has the enough power to passed a law

Presidential System
The Senate and the House of Representatives have to agree to pass a law.
The Constitution establishes which form of government a country is gonna follow.
SEMANA 3
The laws at the bottom level can contradict the upper ones. Also, the upper level can change
any rule at the bottom level.

Constitution (L1):: only set/provides in very broad terms (not specific regulations)
L2: more specific and detailed (other legal rules equivalent (in power) to the “Law” passed by
the Congress)
L3: further detail on how it is gonna be applied (usually provided by the exec. branch)
The later norm prevails/substitutes (deroga) the old law.
L1: Constitution is made up with:
Part 1: Fundamental Rights/ Human (is inherited to our human nature) <> needs <>
wishes (every rights has a limit)
Part 2: Structure of the State: how the 3 branches work together
It’s not only the highest legal rule, it’s also a political document (the main agreement of ppl’s
country)
Very broad view at this level

L2: These rules can revoke any prior rule (at this level). A legal rule issued by the exec.
branch (pres) by prior authorization by the Congress in certain topics. If doesn’t make an
agreement, the Congress will passed a law nullifying the Legislative Decree

“Law Decree”: It exists in the legal system and it has been accepted ‘cause at that time
(when it was approved by a Dictatorship gov.) was accepted

Extraordinary Decree based on Urgency

What that not requires previous authorization is called a Decree based on Urgency
To issue an unexpected topic / Econ and Financial topics (interpreted it in a narrow sense
and excluding taxes)
Could be revoked and repealed by Congress later

Repealed, revoked = derogar/cambia/modifica

Null and Void = Nula

Any law will be enforceable when it was published in the Official Bulletin (El Peruano in the
Peruvian case) and “practical” enforceable since the next day that has been published.

L3: Comes after the previous levels. Supreme Decree: provides further details/specifics of
any rule at L2 and is issued/enacted by the gov. (executive branch)

Resolución Suprema y Ministerial: Use it to appoint changes of Ministers and congressman/

woman

Treaties: agreements between two or more states. States are equals, has to have a mechanism /or
follow certain procedures to be enforceable in the legal system of those states/countries → It needs a
signature and ratification in some way (confirmation) of both countries.
Each country will decide at what level to enter an International Treaty. Perú decides that in
case of contradiction between an internal legal rule and an International treaty, the latter
prevails.
In the US: “last in time” prevails

Judicial Branch
Each society/country decides its crimes through the “Criminal Code” → an extense law that lists all
the non-compliance with the law that is a crime.

Civil & Commercial procedures: Contracts, damages and family topics. Judges’d specialized
in these 2 different procedures.

The result: liable or not liable

Criminal procedures (the result): guilty or not guilty

The prosecutor is the most important character because it will investigate and defend the
claim against the Accused. (a legal battle between the prosecutor and the accused, then the
Judge will decides)

In Common Law: the judge will give the legal framework of the Jury’s decision.
SEMANA 5
The General Rule has the Immediate effect and one piece of legislation (tipo de ley - L1, L2
o L3) could have a deferred effect.

Three exceptions:
The deferred effect, the retro - activity and the ultra-activity. There is another exception of
Ultra-activity in a Law regarding Lease on apartment.

When your are doing business with another country, have to check if in that country there is
a Rule of Law and then known what are their Economic principles (Régimen económico)

Monopoly is not legal when it is not a free consumer choice.

Legal entities registered in Sunarp, its name is different from brand/trademark (™) concept
The website domain could be named as the company’s name and is registered in a
specific/local representative of the international org. that rules and regulates the INTERNET.
Brands/trademarks are registered in INDECOPI.

The distinction between non-profit and for profit of a legal entity is what are they gonna do
with their balance. In non-profit it’s reinvested and in for-profit, could be distributed,
reinvested and more.

Sociedades can have for founders/owners individuals and legal entities. Also, need at least
two founders/owners to form a Sociedad. It can be change to one and other legal entity (or
“vehicle” - structure)
EIRL need just one individual
S.A.: Is widely preferred due to the Limited Responsibility (liability) → put a limit to the risk. The
risk for the owners ends once they have contributed money/assets to the company. Also due to its
flexibility (SRL)
LR has 2 views/perspectives → the former one and the responsibility of the company to fulfill with its
obligations/liabilities with the funds that only has in its net worth (if doesn't has enough funds it
declares bankruptcy)
Sociedad Civil (Partnership) → for consulting, auditins and legal firms. (SCRL)
Sociedad Comercial de Resp Lim is less flexible than S.A

S.A. (Corporation) types

The company (legal entity) has 3 bodies: JGA, Board of Directors and Managers. The JGA
chooses the members’ Board. As S.A.C and S.A.C.S you may choose to not have a Board.
Preferred shares: “acciones sin derecho a voto” → you will pay before other shareholders given that
you don't have voting rights.

LGS - Corporate Law

Corporation Structure

Owners:
Only the shareholders of shares with voting rights will meet in the Shareholders’ meeting
(Top body of the structure). 1 share is enough to be part of the meeting and any legal entity or
individual could have shares → They’re not in the day to day of the business → majority vote rule →
statutes/corporates by law set out/build by shareholders (founders)

Business Adm:
The Board (of directors) / Chairman presides over the Board → is the liaison (enlace) between the
shareholder’s meeting and the CEO with its team. At least 3 to 11 individuals. Any person could be a
member of the Board. The board supervise and support the CEO’s actions → CEO (General
Manager) → Officers (Management Team)

The business management relies on these 2 bodies : The board and the CEO with its
management team.

The CEO could be an individual or a Legal entity.

In S.A.C or S.A.C.S the shareholders can decide if have or not Board of directors.
1 share 1 rule doesn’t apply to the election of the board

If there is a conflict of interest between the directors they cannot vote or don’t have voice to
vote into the issue

Notice of meeting (convocatoria) → 1st date (15 days in advance) and 2nd date (July 16 - July 30)

1st is the Quorum → how many shares the founders/shareholders have? Then if the enough amount of
shares have been reached, it goes to the 1st date or 2nd date

Simple Quorum → 1st date (50%) and 2nd date (any share even 1 is enough)

Qualified Quorum → 1st date (66%) and 2nd date (60%) of the shares

Absolute majority vote rule → 50% +1 of the shares in both Simple quorum but from the total of
voting shares that are present/attend the meeting → based on attending shares

In the QQ topics → it’s needed to has 50% +1 shares of the Book Matricula de Acciones

As the law indicates → it is possible to choose the Qualified majority vote rule (> 50% +1) in the
statutes or book by laws.

5 core characteristics of the Corporation

Contracts

“Entered into a contract with” → celebrar/acordar/firmar

There have been more contracts since the creation of the Internet, digital services and so
on.

New Shares
● Creation
 ● Subscription → payment
● Issuance

Every shareholder has the preferential rights to subscribe → Apply to all types of S.A. They will have
the same amount (that they already have in the old ones) of the new shares.

Subscription is related to New shares. Buying is related to Existing shares. Preferential rights
to buy exist in S.A.C

Contracts
In IB contracts we need to negotiate what would be the legal system to be applied or will govern the
contract. Then we need to define what would be the Jurisdiction that will solve any disputes → key
topics when we are drafting contracts.

An agreement between two or more parties. Each party has rights and obligations. F.i. → One to offer
a good and the other to pay for it. What if an infringement in the contract happens? / What if a breach
of contract happens? → what would be the legal/economic consequences/remedies → When a
contract is not fulfilled, a Breach of Contract occurs.

3 Breach of Contracts’ categories:

● Piracy is often considered as a Force Majeur/Act of God.

● Fire is between Fault/Negligence (culpa) and Force Majeur → it will depend on evidence and
the situations described/drafted in the contract.
 ● Force Majeur could be a subject or provoked by an individual if it is not involved to
the parties.

How is gonna be “duly proven” → it may go to a mediation or negotiation → choose between a third
party (Arbitration) or by default (a Judicial process).

In order to be more protected, it’s necessary to make an effort of drafting a contract with all the if’s
possibles that may occur → clarify, as best as possible, the rights and obligations of each party →
set an standard

A contract: economic relationship between parties (each other with its rights and
obligations), could be:
● Owner → tenant (provide a service, a service in being done) → lease or rental agreement
● Seller → buyer (product) → sales contract/purchase of goods contract
● Vendor/supplier → client/customer (product/service)

(Consideration in the Common Law → “Whereas,...” → Why are the parties involved in a
contract → “What are you giving me in exchange for what I’m giving you…”)

A Breach of Contract (Common Law)

That’s why is less flexible or more rigid than in Roman/Civil Law

It is necessary to be really explicit in the clauses, provisions or stipulations (All possible situations) →
in a insurance policy and, in general, on the written contract
Need to be drafted, explicit or written on the contract in order to be relieved of your
obligations and rights whatever be the case.

Contracts in IB endeavours

Agency contracts: it involves real estate, insurance, ship/cargo broker

International Sales of Goods contract → only products

The relation is between the principal’s agent (naviera) and the other party
(shipper/exporter/). It’s just a liaison between them and has the contract with its principal and
not with the other party. The 2nd contract is between the shipping company and the shipper → sea-
transport contract and then, the 3rd contract is an international sale of goods between the
shipper/seller/exporte and the buyer.

It will depend on the decision and the business but it is possible to draft a contract that
includes other kind of contracts (agency, distribution, service, and so on). In only one
contract includes the others but correctly separate.

Licensing and Distribution is for a certain territory and market. These contracts have an
specific scope and duration.

Contracts → the offer has to be accepted in identical terms

MERGER
When both companies reach an agreement to combine/add its balance sheets because that
Financial statement includes the whole activities/ops of the company. Whatever legal entity
(S.A, Corp, Inc., S.R.L, Sociedad civil and so on) decide.
The initial (independent) legal entity / vehicle, its erased/eliminated and becomes a new
legal entity (legal structure, new statutes, articles of incorporation) upon the BS has been
added.

You have to be careful when entering into a merger or accepting a merger proposal because
you inherited all the “past” of the other company (debts, disputes, and so on).

It is necessary to assess those key issues, do a due diligence of any future contingencies or
legal issues.
Exchange ratio: how many shares, as a shareholder I would get in exchange and establish
what’s gonna be the ratio (1:1 or 3:2).
Merger has no price and is related to combining, adding 2 or more BS. Transfers are done
“as a whole”. However, Acquisition is to buy (few or many) shares that have a price.