Before assessing the various company structures in Peru, we must first learn a little about the country’s market. Peru is one of the fastest growing economies in Latin America and therefore an attractive emerging market for foreign investors. Out of 190 countries, Peru is ranked 54th on the ease of doing business index, according to the World Bank Group. From 2002 to 2012, the country has been growing at an average rate of 1.5 percent on a quarter over quarter basis due to a rise in exports of commodities. As a result, the national poverty rate fell from 48.5 percent in 2004 to 27.8 percent in 2001. Peru is diversifying its’ economy, improving their infrastructure and providing more funds for the development of non-coastal areas.
Peru is the world’s third-largest producer of copper, zinc and silver. Because of their free market economy, the conditions for foreigner and local investors are similar. There are several free trade agreements and freedom for importing and exporting different kinds of lawful goods and services. To incorporate a business in Peru, investors need to know about the different types of legal structures in Peru. We will go over these for you so that you can see which type of legal entity best suits your business needs! Pay attention to the ways in which each company structure differs.
The Most Common Types of Companies in Peru:
- 1.Joint Stock Companies (Sociedades Anónimas, S.A.)
- 2.Closely Held Corporations (Sociedad Anónima Cerrada, S.A.C.)
- 3.Publicly Held Corporations (Sociedad Anónima Abierta, S.A.A.)
- 4. Limited Liability Companies (Sociedad Comercial de Responsabilidad Limitada, S.R.L.)
We will be going over each of these company structures below in detail so you can see which one is best for you!
Joint Stock Companies (S.A.)
Joint Stock Companies are highly favored in Peru for their simplicity in business establishment. They only need a minimum of two shareholders, and an initial capital deposit must be made in a local bank. While there is no legal requirement for a minimum capital amount, financial institutions typically ask for a minimum deposit of $1,000 SOLES. The company name must include either “Sociedad Anónima” or the abbreviation “S.A.” Liability is limited to the value of the held shares, and the company must appoint a General Manager and establish a Board of Directors. You can find a helpful video at the end of this article that provides a comprehensive overview of the steps involved in opening a Joint Stock Company in Peru.
Closely Held Corporations (S.A.C.)
Closely held corporations must have a minimum of two and a maximum of twenty shareholders. Shares cannot be registered in the Public Registry listed on the Stock Exchange. The Denomination must include the indication “Sociedad Anónima Cerrada” or the abbreviation “S.A.C.”. The corporation must have a General Manager, but a Board of Directors is optional.
Publicly Held Corporations (S.A.A.)
Publicly held corporations are a good option for companies with many shareholders (750 or more), or if they have debts that can be converted into shares. More than 35% of the companies capital must belong to 175 or more shareholders. The denomination must include the indication “Sociedad Anónima Abierta” or the abbreviation “S.A.A.”, and they must be registered in the Public Registry listed on the Stock Exchange. There are no restrictions or limitations on the transfer of shares; it is completely free.
Limited Liability Companies (S.R.L.)
Limited liability companies require a minimum of 2 and a maximum of 20 partners. This type of company does not issue shares, and the incorporation procedures are the same as those for all other corporations. The capital is divided into the ownership interests, which are indivisible and all partners have a limited liability. The denomination must include the indication “Sociedad de Resonsabilidad Limitada” or the abbreviation “S.R.L.”. If owners want to transfer ownership interests to third parties, they have to be approved by the existing partners and must be registered in the Public Records Office. Death, bankruptcy, illness, retirement or resignation of any partner does not cause the closing of the legal entity.
Foreign companies can easily incorporate a branch in Peru. However, they must first be registered in the “Ministerio de Relaciones Exteriores” (RREE) and must include the indication “Sucursal” in the company. The mother company must send a permanent legal representative, and the branch has to fulfill the same operations as the head office. Furthermore, the mother company must prove with a legal confirmation with the country of origin that neither associative agreements nor their articles of incorporation are prohibited for an establishment of branches abroad.
Biz Latin Hub can assist you doing business in Peru
At Biz Latin Hub, we provide integrated market entry and back office services throughout Latin America and the Caribbean, with offices in 17 key cities around the region, including Peruvian capital Lima.
Our unrivaled regional presence means we are ideally placed to support multi-jurisdiction market entries and cross-border operations, and our portfolio includes company formation, accounting & taxation, legal services, due diligence, and hiring & PEO, among others.
Contact us today to find out more about how we can assist you.
If you found this article on the Peru minimum wage rise of interest, check out the rest of our coverage of this South American market. Or read about our team and expert authors.
If you want to learn more about forming a company in Peru, using the most common legal structure in the country, check out this video!