Company & Corporation Types in Peru

Company & Corporation Types in PeruCompany & Corporation Types in Peru
Denominations, Liabilities, Management & Transfer

There are different types of legal entities which investors can use in order to incorporate businesses in Peru. The main legal forms of companies according to law are: corporation, limited liability companies, branch offices, joint venture, etc. Any proceedings may be carried out directly or through a representative. The following corporation and company types are those most commonly used in the country.

Joint Stock Companies (S.A.)

A minimum of two shareholders is required. Non-domiciled shareholders must appoint an attorney-in-fact to sign off on the by-laws on their behalf. Funds in local or foreign currency for the initial capital contribution must be deposited in a local bank. There is no minimum amount required by law, but financial institutions generally require a minimum initial deposit of S/.1,000 (approximately US$357).

Features:

  • Denomination: must include the indication "Sociedad Anónima" or the abbreviation "S.A."
  • Limited liability: shareholders' liability is limited to the par value of the shares they hold.
  • Centralized management: Shareholders' Meetings, Board of Directors, and Chief Executive Officer (General Manager).
  • Stock transfer: the transfer of shares is free. However, in the case of closely held corporations, existing shareholders have the right of first refusal in the event that shares are proposed for transfer to a third party.
  • Continuity: death, illness, bankruptcy, and/or retirement or resignation of any shareholder does not cause the dissolution of the corporation.

Closely Held Corporations (S.A.C.)

Closely held corporations resemble limited liability companies and must have a minimum of 2 and a maximum of 20 shareholders. Shares cannot be registered in the Public Registry listed on the Stock Exchange.

Features:

  • Denomination: must include the indication "Sociedad Anónima Cerrada" or the abbreviation "S.A.C."
  • Limited liability: shareholders' liability is limited to the par value of the shares they hold.
  • Management: Shareholders' Meeting (which may be held without the physical presence of the shareholders) and the Chief Executive Officer (General Manager). A Board of Directors is optional.
  • Stock transfer: existing shareholders have the right of first refusal in the event that shares are proposed for transfer to a third party. This right may be eliminated in the by-laws.

Publicly Held Corporations (S.A.A.)

Publicly held corporations are intended basically for companies with a large number of shareholders (more than 750) or for which an Initial Public Offering has been made, or which have debts that can be converted into shares, or in which more than 35% of the capital stock belong to 175 or more shareholders. They must be registered in the Public Registry listed on the Stock Exchange.

Features:

  • Denomination: must include the indication "Sociedad Anónima Abierta" or the abbreviation "S.A.A."
  • Limited liability: shareholders' liability is limited to the par value of the shares they hold.
  • Centralized management: Shareholders' Meetings, Board of Directors, and Chief Executive Officer (General Manager).
  • Supervision: publicly held corporations are subject to the supervision of the Stock Exchange Superintendency (SMV).
  • Stock transfer: transfer of shares is completely free. No restrictions or limitations are permitted.

Limited Liability Companies (S.R.L.)

Limited liability companies may be established with a minimum of 2 and a maximum of 20 partners. This type of company does not issue shares. The incorporation procedures are the same as those for all other corporations. Its capital is divided into ownership interests, which are accumulative and indivisible.

Features:

  • Denomination: must include the indication "Sociedad de Resonsabilidad Limitada" or the abbreviation "S.R.L."
  • Limited liability: partners are not personally liable for corporate obligations.
  • Centralized management: Partners' Meeting and Chief Executive Officer (General Manager).
  • Stock transfer: transfer of ownership interests to third parties is subject to approval by the existing partners (right of first refusal is mandatory) and must be registered in the Public Records Office.
  • Continuity: death, illness, bankruptcy, and/or retirement or resignation of any partner does not cause the dissolution of the legal entity.

Branches

A parent company agreement is required to incorporate a branch in Peru, and must be certified by the Peruvian Consulate in the country of the home office and authenticated by the Peruvian Ministry of Foreign Affairs (MRE) where applicable, or otherwise have it stamped with the Apostille (Convention of The Hague) in the country of origin before it is put into the form of a notarial recorded instrument and registered in the Public Records Office of this country. A Certificate of Good Standing from the parent company is also required.

In accordance with the Business Corporation Act (LGS), branches of foreign companies may be legally incorporated in Peru as any type of legal business entity provided for in said law.

Associative Agreements (Consortium & Joint Venture)

The associative agreements create and regulate the participation and integration in specific businesses or companies in the common interest of the intervening parties. This type of agreement does not create a legal entity; it shall be written; and it is not subject to recording. There are two types of associative agreements: Consortium and Joint Venture.

The resources allocated for the above-mentioned agreements shall be considered a direct foreign investment when the foreign investor is provided with a kind of participation in the production capacity, but it does not involve any contribution to the capital. The operation will correspond to contractual trade operations through which the foreign investor provides the receiving company with goods or services in exchange for participation in physical production volume, in the global sales amount or in the net profits of the referred receiving company.

General Law for Companies #26887 (in Spanish)

All companies established in Peru are governed by the general law for companies #26887 that was approved and published by the Peruvian Congress on the 9th of December 1997.

To read the law (Spanish), please click on the below image:

General Law for Companies #26887 (in Spanish)

Sources

  • EY
  • PwC
  • SUNARP

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