Peru

3 Chapter Corporate Laws

    • Kinds of Corporate Systems

       

       

      1-Joint Stock Company (Sociedad Anónima or S.A)

       

      -The minimum number of shareholders is two.

      -Funds must be in local or foreign currency for the initial capital contribution of 1000 PEN (Must be deposited in a local bank).

      -Liability is limited to the amount of the contribution and must have a Board of Directors and a General Manager.

       

      2- Private Closed Corporation (Sociedad Anónima Cerrada or S.A.C)

       

      -Must have 2 as mnimum and 20 as maximum shareholders.

      -Shareholders liability is limited to the par value of the shares they hold.

      -The shareholders meeting can be held without the physical presence of each shareholder and the Chief Executive officer.

      -A board of directors is optional.

       

      3- Public Corporation (Sociedad Anónima Abierta)

       

      -Requires an initial public offer.

      -The company must have more than 750 shareholders and/or over 35% of share capital distributed among 175 shareholders.

      -Liability of shareholders is limited to the par value of the shares they hold.

       

      4-Limited Liability Company (Sociedad Comercial de Responsabilidad Limitada or S.R.L)

       

      -May be established with a minimum of 2 and a maximum of 20 partners.

      -Does not issue shares.

      -Partners are not personally liable for corporation obligations.

       

      5-Branch (Sucursal)

       

      -To incorporate a branch in Peru a parent company agreement is required and must be certified by the Peruvian Consulate in the home office country and authenticated by the Peruvian Ministry of Foreign Affairs. (Or it can be stamped with an Apostille)

      -A Legal representative or General Manager is required to open the branch.

      -The branch has the same status as the head office.

      -For tax purposes the company can be considered independent.

       

    • Corporate System.

       In Peru the Joint Stock company is known as “Sociedad Anónima” (S.A.) is a type of company with legal character in which the capital is divided according to the contributions of the Shareholders.

      This Corporate System has three subdivisions according to the size of the Company (Ordinary Corporations, Closed Corporations and Open Corporations), but the three kinds share the same characteristics:

      -The equity of this companies is independent of the equity of their Shareholders.

      -They require Social Name, a fictional denomination always followed by the acronyms “S.A.”, “S.A.A.” and “S.A.C.”, depending on the kind of company.

      -The Capital Stock must always be represented in Shares.

      -The responsibility of the shareholders is limited to their contributed capital.

       

       

       

      1.1.  General Shareholders Meeting.

      It is the supreme organ of the corporation. The constituted shareholders and the quorum make the decisions. All shareholders, even if they do not agree, are subjected to the resolutions submitted by the general meeting. The meeting will take place at the company's address, unless the By-Laws indicate otherwise.  

       

      1.1.1.     Obligation and rights for shareholders

      The shareholders with the right to vote that are registered in the stock register can exercise their rights. Directors and general managers who are not shareholders may attend the general meeting but will not have the right to vote.

      Shareholders with the right to vote may ask their proxy person to present to the meeting, as long as the By-Laws may limit this power. The power of attorney must be registered before the company within 24 hours with notice at the time fixed for the general meeting.

       

       

       

      1.1.2.     Process for holding GSM.

      The Meeting takes place when the corporate law requires it, the By-Laws establish it, the board of directors agree, or when requested by a number of shareholders representing at least 20% of the subscribed shares with the right to vote.

      It should be at least once a year, within three months of the end of the fiscal year.  

      The notification of the convening of the annual mandatory general meeting and of the other meetings provided for in the By-Laws must be published with an anticipation of not less than ten days from the date set for its convening. If the statute does not indicate longer term, the anticipation of publication will be no less than three days.

      The notification specifies the place, date and time of the general meeting, in addition to the matters of discussion. The board cannot deal with matters other than those indicated in the notice. (Unless the law indicates otherwise).

       

      1.1.3.     Requirements for resolution.

      Simple Quorum.

      This is accomplished when the 50% of Shares with right to vote are represented and

      presented in the Meeting in the first convening.

      When a second convening may take place, the attendance of any numbers of shares with right to vote shall be sufficient.

      In all cases the Meeting may be legally established even if the owner of the attending

      shares is only one person.

       

      Qualified Quorum.

      Qualified quorum must be met in order for the meeting to legally adopt the resolutions on the following matters:

      -By-Laws Modifications.

      -Capital Stock Increases or Decreases.

      -Issuing Corporate Bonds.

      -Disposal of assets is greater than the 50% of the Company's Capital Stock .

      -When deciding over mergers, acquisitions, company restructuring, spin-off´s, dissolutions and liquidations.

      It is necessary the attendance of at least two thirds of shares with right to vote, in the first convening.

      When the second convening may take place, the attendance of the three fifths of the shares with right to vote shall be sufficient.

       

      Right to Suspend Vote.

      The right to vote cannot be exercised by shareholders who have, on their own or a third party, an interest in conflict with the Company. The shares in respect of which the right to vote cannot be exercised are computable to establish the quorum of the meeting and incomputable to establish the majority in the voting.

       

      1.1.4.     Minutes.

      The general meeting’s resolutions are recorded in the minutes representing a summary of the meeting.

      The minutes can be set in a book specially opened to that effect, in loose sheets or any other form allowed by law. If the minutes are written in notarized books or documents, they will be legalized according to the law.

      The minutes of each meeting must state the place, date, and time; the indication of whether the first, second or third convening is held: the name of the attendant shareholders or their representatives; the number and kind of shares of which they hold; the name of those who take in charge as president and secretary; the indication of the date and the newspapers in which the announcements were published; the form and result of the votes and the adopted resolutions.

      When the contents of minutes are approved at the same meeting, they must contain proof of such approval and signature, at least, by the president, the secretary and the designated shareholders.

      When the content of minutes are not approved at the same meeting, no less than two shareholders will be appointed to review and approve them jointly with the presence of president and the secretary. The contents of minutes must be approved and signed within ten days following the holding of the meeting and placing at the disposal of the concurrent shareholders or their representatives, who may leave evidence of their observations or disagreements by means of a notarized letter.

      In the case of general meetings, the description of the minutes by all the attending shareholders is mandatory, unless they have signed to the attendance list and the number of their own shares and the subjected matters of the convening notice. In this case, it is enough that it is signed by the president, the secretary and a designed shareholder for this resolved purpose and the attendance list is considered an essential and inseparable part of the minute.

      Any concurrent shareholder has the right to sign the minute. The minute has legal force since its approval.

       

      1.2. Board of Directors.

      The management of the company is in charge of the Board of Directors and one or more managers.

      The Board of Directors is an administrative body. By-Laws must state the maximum number of director members, but the minimum must be three. By-Laws can also define their substitutes and their duration in exercise of its members.

       

      1.2.1.     Requirements for a director.

      The candidates with more votes from the shareholders, according to the kind of shares they hold, shall be elected.

      The charge of director cannot be executed by:

       

      -Legally incapacitated persons.

       

      -Persons with bankruptcy declare

      -Persons whom current charges does not allow them.

       

      -Persons who have official governmental or public charges.

       

      -Persons who have not finished lawsuits against the Company.

      -Persons who are related to shareholders, directors, representatives of companies that have opposite purposes of the Company.

       

       

       

      1.2.2.     Election and Dismissal.

      The members shall be voted by the shareholders.

      The member of board of directors must be changed or re-elected every year, unless  By-Laws state different duration for the charge, which can never be greater than three years. The members can be removed by the Shareholders at any time.

       

       

       

      1.3. Corporate Auditor.

      By-Laws or the resolutions of the general meeting adopted by 10% of the attendant shares with the right to vote, may provide that the Joint-Stock company (S.A.) have an annual audit. The companies subjected to annual external auditing, will appoint their external auditors annually. The auditors' report will be presented in the general meeting together with the financial statements.

       

      In Closed Corporation (S.A.C.) By-Laws or the 50% agreement of the shares with the right to vote in the general meeting may force the company to have an annual external audit. In Open Corporations ( S.A.A.) there is an annual audit conducted by external registered auditors in the Sole Registry of Audit Companies (Registro Único de Sociedades de Auditoria).

       

    • Shares

       

      Because shares represent a constitution of capital, they grant the right of one vote, exemptions depending on the kind of shares, and the resolution of elect board of directors members.

      Shares can be created in the By-Laws or later in a General Meeting.

      There cannot by a kind of shares that grant the right to earn an amount of  yield without existing profits.

      The amount to be paid for the shares is established by the By-Laws or by the general meeting agreement for a Capital Increase.

      The sum obtained in the placement of Shares over their nominal value is a capital premium.

      The terms and conditions of the payment of the premium capital and the application thereof are subject to the provisions of the Law, the By-Laws or the resolutions of the General Meeting.

      If the value of the placement of the Shares is less than its nominal value, the difference is reflected as a loss of placement.

      Shares placed for an amount lower than their nominal value are considered to be fully paid when their placement value is canceled.

      Shares cannot be divided, all the Shares belonging to one shareholder must be represented only by one person, the owners of the shares must be registered in the Corporate minutes for this purpose.

       

      1.1. Kinds of Shares.

      The Law allows the By-Laws of the Company to set various kinds of shares, the differences may vary by the right the obligation or both that correspond to each kind. By-Laws may also set the procedure to follow when changing one kind of share after another.

      Shares can represent monetary amounts, non-monetary amounts and also mixed.

      Additional obligations may be determined by the By-Laws or in the resolutions of a Capital Increase at the General Meeting. This obligations may be determined whether share can be monetary or not and whether they will correspond to all the shares of the company or an specific kind of share. The right to a maximum, minimum or fixed income of yield, or cumulative or not, may be granted to certain kinds of shares[u1]  and always subject to the existence of distributable profits. Shares with no voting rights may be also created.

      When voting the members of the Board of Directors, the Law states that one share gives the same number of votes as the candidates to the Board of Directors, the Shareholders can decide whether they can give all their votes to one person or distribute them. If one kind of shares is modified or deleted from the company, this act may require the approval of the shareholders of this kind of shares and the modification of the By-Law.

       

      1.2. Dividend.

      The rules are the following:

      1-Dividends can only be paid based on profits obtained or from freely available reserves as long as the provided net worth is less than the paid capital.

      2- All the shares of the corporation (even if they are not paid in full) have the same right to the dividend.

      3-The distribution of interim dividend is valid (unless there are legal prohibitions)

      4-If the general meeting agrees on an interim dividend but the board of directors does not agree, the responsibility for the payment of the dividends will be of the shareholders who voted in favor.

      5- It is valid to delegate the faculty of the distribution of  interim dividends.

       

      Mandatory Dividend.

      The distribution of dividends is mandatory in money up to the amount equal to half of the profit of each year after subtracting the amount applicable to the legal reserve. This request is made by the shareholders and they can only request the profits of the previous year.

       

      Dividend Expiration.

      The right to collect the dividend expires in three years, according to the declaration of the dividend, it starts from the due date of its payment. Dividends with a due date that has already expired increase the legal reserve.

       

      1.3. Capital increase.

      The increase of capital is agreed by the general meeting with the requirements established for the amendment of the By-Laws.

      It can be originated by new contributions, the capitalization of credits against the corporation, the capitalization of profits, reserves, benefits, capital premiums, revaluation surpluses and other cases indicated by law.

      When there is an increase of capital for new contributions or for the capitalization of credits against the corporation, it is a prerequisite that all the subscribed shares are paid in full.

      When the capital increase is made through the capitalization of credits against the company, it must have a report from the board that supports the agreement to receive the contributions.

       

      1.4. Capital decrease.

      The reduction of capital is agreed by the general meeting according to the statutes and the law. It is carried out through the delivery to its holders of the depreciated nominal value, the delivery of the amount of their share in the net equity of the corporation, the cancellation of the passive dividends, the re-establishment of the balance between the share capital and the net assets decreased by losses.

       [u1]Que significa maximum y minimum en esta oracion?

    • Dissolution

       

      According to the law, a corporation can be dissolved by the following:

       

      1-Expiration of the term of duration.

       

      2- Conclusion of the corporation´s objective, (not realizing its object for a prolonged period or if it's not possible to carry it out).

       

      3- Continuous inattention of the general meeting.

       

      4- Losses that reduce the net worth to an amount less than one third of the paid-in capital, unless it is restored or if the capital already is paid increased or reduced.

       

      5- By agreement with the creditors' meeting or bankruptcy.

       

      6- Lack of diversity in the partners.

       

      7- By resolution of the Supreme Court.

      8- By agreement with the general meeting or other creditors established by law.

       

    • References

       Bibliography:

      Ley General de Sociedades, LEY Nº 26887

       

      Web sites:

      http://www.limaeasy.com/business-guide/company-and-corporation-types-in-peru

       

      https://www.bizlatinhub.com/five-types-legal-entities-business-peru/

       

      http://www.leyes.congreso.gob.pe/Documentos/Leyes/26887.pdf

       

      https://mba.americaeconomia.com/articulos/notas/las-ventajas-de-inscribir-una-sociedad-anonima-en-registros-publicos-en-peru