Requirements to Transform your Company into a SAS in Uruguay

The new SAS legal entity in Uruguay aims to continue promoting entrepreneurship and benefit commercial actors interested in doing business in the country. In September 2019, the Uruguayan government approved the Entrepreneurship Law, including a new type of legal entity called Sociedad Anónima por Acciones Simplificadas, or SAS. In English, this is known as a Simplified Joint Stock Company or Simplified Stock Corporation.

The SAS was established to minimize costs and speed up the timeframe for setting up a company in Uruguay. This SAS structure takes into account the regulations promoting the use of existing digital media in all phases of the process.

Law 19.820 also provides that any type of company, except for Limited Companies (Sociedad Anónima, or S.A), may transition to a SAS structure if desired by its partners or shareholders.

We explain the procedures and requirements to transform your company into a Simplified Stock Corporation or SAS in Uruguay.

What does it mean to transform a company to a SAS in Uruguay?

Transitioning to a SAS in Uruguay means that a company constituted under another business type adopts the structure and governance practices of the new legal entity.

Note that by making this change the company will not be affected and neither will your previously established rights and obligations as the business owner.

Furthermore, when a company decides to become a SAS in Uruguay, it will not have to enter any liquidation process or affect its legal personality.

General characteristics of a SAS in Uruguay

The general characteristics of an SAS in Uruguay include:

• It can be established with one or more partners (natural or legal persons) without a maximum limit
• It allows business owners to create a ‘custom society’ by freely setting the organic structure of the company and its operating rules
• The company’s legal status and assets are independent of those of the shareholders, reducing personal responsibility for the company’s activities
• It allows meetings to be held anywhere, by simultaneous means of communication, and allows decisions to be made by written consent
• Regarding the tax regime, the SAS gets basically the same treatment as the Limited Liability Company (Sociedad de Responsabilidad Limitada, or SRL)
• The transfer of shares will have the same treatment as the transfer of shares of a S.A.

Requirements to transform a company to a SAS in Uruguay

There are certain requirements that those who are interested in transforming their company into a SAS in Uruguay must meet. It is important to remember that any commercial company, with the exception of S.A. can be transformed into SAS.

The requirements to do so include:

• The owners of the company must present a resolution adopted by their partners or shareholders in an assembly or meeting by a majority established by law or by the company statutes
• Approval of the SAS statutes, which must contain the stipulations provided by special national legislation (article 12)
• In the event that the transformation has not been unanimously agreed: the transformation resolution must be published for 3 business days in the Official Gazette and another newspaper with national circulation. Companies must publish an extract with the most important stipulations of the resolution. This publication will be available to members for 30 days to give the opportunity for interested parties to respond
• The resolution of the transformation and approval of the statutes of the SAS must be registered in the Registry of Legal Persons. The company will thereafter become subject to the legal regime established for the SAS.

How does the liability regime for shareholders change?

The transformation of the company to a SAS in Uruguay does not modify the prior responsibility of the partners. This includes obligations that must be fulfilled after the adoption of the new social type, except in the case that the creditors expressly consent to it.

In other words, the shareholders will be responsible only up to the amount of the respective contributions corresponding to the integration of the shares that they subscribe or acquire; unless it declares that the legal personality of the company cannot be enforced (Article 189, LSC).

Transformation of sole proprietors to a SAS in Uruguay

Given that Law 19.820 allows the formation of the SAS in Uruguay with a single partner, sole proprietorships may also transition into to SAS entities through a straightforward procedure.

For a period of 12 months from the entry into force of the Law (October 7, 2020), an established tax exemption supports sole proprietorships that transform to SAS. The transfer of the assets, rights and obligations related to the activity of a sole proprietorship to a S.A.S. will be exempt from:

• IRAE or Personal Income Tax, as applicable, on the income resulting from the transfer;
• VAT on the circulation of goods derived from the transfer, including the key value;
• ITP of the seller and buyer in the event that real estate is transferred to the S.A.S.

Certain conditions apply to this tax exemption; it is therefore important to consult a local legal expert on how to apply.

Additionally, sole proprietors transitioning to an SAS in Uruguay should note:

• No special certificates will be required for transfers
• Publications are not required by calling creditors
• Tax certificates from the Social Security Bank and the General Tax Directorate are not required.

Do you need help to transform your company into a Simplified Stock Corporation (SAS) in Uruguay?

Uruguay is considered one of the best countries in Latin America to start or expand a business. Its strong political, legal, social stability and support for entrepreneurship make the country a paradise for foreign businesses.

With the creation of a new legal entity to boost commercial activity, entrepreneurs can enjoy greater ease of doing business in the country. However, the process of transformation to a SAS in Uruguay can be somewhat challenging without sufficient knowledge of local Uruguayan law or regulation.

Ensure the transformation or creation of your company quickly and effectively with the support of local experts. Biz Latin Hub has the knowledge and experience to offer personalized advice in Uruguay and the wider Latin American region.

For more information on how to transform your company to a SAS in Uruguay, please contact our legal experts here at Biz Latin Hub. We offer customized business solutions tailored to your needs to ensure compliance every step of the way.

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