Invalidity affecting one member: effect on the company (LGS art. 16)
Section 16 of the General Companies Law establishes the principle of partial invalidity of the membership relationship: invalidity affecting one member's relationship does not, as a rule, invalidate the whole agreement, unless that member's participation is essential or there is a sole member.
What article 16
Section 16 limits the effects of invalidity affecting a member: as a rule it does not contaminate the entire agreement.
The nullity or avoidance affecting the relationship of any member shall not cause the nullity, avoidance or termination of the agreement, except where that member's participation or performance must, in light of the circumstances, be regarded as essential, or where there is a sole member.
In a simple limited partnership, a partnership limited by shares, or a capital-and-industry partnership, a defect of consent affecting the sole member of one of the categories of members renders the agreement voidable.
Source: Law 19,550, art. 16 - InfoLEG (updated official text)
Commentary
The principle protects continuity of the company: if one member gave defective consent, that member's relationship may be terminated while the company continues with the others. The exception is an essential participation (the company would not exist without that member) or a single-member company, where the defect affects the agreement itself.
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