By Ricardo Guevara Bringas
I've been asked many times what kind of company a medium-scale business should set up in Peru. This article aims to shed some light on the matter. I will argue that a "Sociedad Anonima Cerrada" (S.A.C.) is one of the best types of company for doing business in Peru.
As with any other Peruvian company, there is no minimum share capital required for incorporating a S.A.C. At least 25% of each share must be paid upon incorporation. Shareholders are then free to decide when the rest of the shares are to be paid. Contributions may consist of monies and/or assets, but not services.
There must be at least two and no more than twenty shareholders, either individuals or corporations. The shareholders' liability is limited to the amount they contribute.
In contrast with standard Peruvian corporations (Sociedades Anonimas - S.A.), in a S.A.C., General Shareholders Meetings can be arranged by fax, email or any other means that offer confirmation of receipt and guarantee authenticity. Consequently, meeting announcements do not need to be published in a local newspaper, as they need to be with standard S.A's.
Moreover, it is possible to hold virtual General Shareholders Meetings by videoconference, telephone and other similar systems, which can be extremely useful if shareholders do not live in the same place.
Another advantage of a S.A.C. is that there is no need for a Board of Directors, whereas a standard S.A. must have a Board of Directors conformed by a minimum of three individuals.
In the event that a shareholder wishes to sell his or her shares, another company shareholder is entitled to buy these shares. The right of each shareholder to buy the shares should be proportional to his or her company shareholding, unless otherwise agreed.
Furthermore, Peruvian law permits the shareholders to state that transfers of shares may only take place with the company's consent. They may also state conditions under which shareholders lose their status as shareholder and are removed from the company.
In contrast with a "Sociedad Comercial de Responsabilidad Limitada", a Peruvian Limited Liability Company, the transfer of shares in a S.A.C. does not require a notarized deed.
Due to its flexibility and protection it offers to its shareholders, a S.A.C. is, without doubt, one of the best types of company available in Peru.
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