What are the Legal Entities in Bolivia?

Find out what legal entities in Bolivia are available for expanding businesses to carry out their commercial operations. There are several legal entities to choose from, and it is wise to seek expert guidance and advice on which is best for you. It is crucial to understand and comply with all legal and accounting requirements for that entity in Bolivia.

The Bolivian Commercial Code establishes the following types of Commercial Companies:

  • Collective society
  • Simple limited partnership
  • Limited liability company
  • Anonymous society
  • Limited partnership for shares
  • Accidental association or joint accounts
  • Cooperative societies.

This article will explain the most common types of legal entities in Bolivia for expanding businesses.

Common legal entities in Bolivia: Joint stock company

The capital is represented by shares
The Joint Stock Company legal entity in Bolivia is popular for large companies.

The Joint Stock Company in Bolivia is known as Sociedad Anónima, or S.A. This type of company is popular for large companies. The main characteristics of an S.A. legal entity in Bolivia include:

  • The share capital is represented by securities known as shares
  • The partners (shareholders) have limited liability up to the amount of their contributions, i.e. their personal assets are protected from company liability
  • An S.A. can be constituted by the sole act of the founders or by public subscription of shares.

Constituted by a single act

The S.A. legal entity in Bolivia can be established by a single act. It’s constitutive contract must have the following requirements:

  • At least 3 or more shareholders
  • The share capital has been fully subscribed
  • Each subscribed share has been paid for at least 25%
  • The articles of association are approved by the shareholders.

Constituted by public subscription of shares

If the S.A. is established by the public subscription of shares, its constitution must contain the following:

  • General laws of the founding partners
  • Class, value, and amount of the shares
  • Number of shares corresponding to the promoters
  • Draft statutes
  • Eventual sales or benefits
  • Subscription term of the shares, which cannot exceed 6 months
  • Contract between a Bank and the promoters
  • The capital is represented by shares, which according to their form of issue can be “registered”, (where each share has the name of its owner registered) and “to the bearer”, where its owner is the person who has possession of the actions
  • They operate under the direction of a board, which must be made up of a minimum of 3 members and a maximum of 12
  • The shareholders, or at least a number of partners representing at least twenty percent (20%), meet annually through “Shareholders Meetings”, which can be of two types: Ordinary Shareholders Meeting or Extraordinary Shareholders Meeting
  • The Receiver is that person who may or may not be a shareholder, assigned to the internal and permanent supervision of the S.A.

Limited liability company (LLC) legal entity in Bolivia

Person using tablet.
For an LLC in Bolivia, the liability of each partner is limited to the amount of capital contributed by each of them

The Limited Liability Company (LLC) in Bolivia is called the Sociedad de Responsabilidad Limitada. In this type of legal entity in Bolivia, the material liability of each partner is limited to the amount of capital contributed by each of them. The administration may be done by 4 or more managers or administrators, whether they are partners or not, appointed for a fixed or indefinite period. An LLC in Bolivia may have up to 25 partners.

The name or company name will be formed with the name of one or some of the partners, including one of the following variations of the legal entity:

  • ‘limited liability company’
  • ‘L.L.C.’
  • ‘Limited,’
  • ‘Ltd.’

Capital is divided into installments of equal value, which will be one hundred or multiples of one hundred Bolivianos. This must be paid in full, in the act of social constitution, whether the contribution is in money or in kind, in the latter case must be valued.

Collective name company

The main characteristic of a collective company name is that all members respond to agreed social obligations in solidarity and without limits. The company name will be the name of all the partners. The name of people who are not partners may not be included, and if the name of someone who was not a member was included, he/she would be jointly and severally liable for the debts of the company. The name must include the initials S. C., or S.R.C., for the partnership.

A collective name company can be established through the contract or it can be administered by any of the collective partners. This type of company should be made up of at least 2 partners, and has no limit on the number of partners.

There is no legal minimum of required share capital. The contributions of the partners can be economic or can be in the form of work.

Unipersonal Company

A Unipersonal Company is a company made up of a natural person who carries out trade as a regular economic activity. This person may be a citizen or foreign national. To form this entity, they must present their Identity Card or the original documentation that proves their legal residence in Bolivia. Depending on the intended capital amount for the entity, owners may need to present an opening balance signed by the Owner or the Legal Manager and a Registered Accountant or Auditor.

If a Legal Representative is appointed, an original Power of Attorney or a certified copy must be attached to the registration documents. The Bolivian Commercial Registry will then register the entity, and owners can begin operations as a legally constituted company.

Note: the Unipersonal Company does not have its own legal personality, unlike commercial companies. The owner of one of these companies is liable for company obligations with their personal assets.

Incorporating a legal entity in Bolivia

The Investment Law in force in Bolivia grants foreign business owners the same duties, rights, and guarantees as for national investors. Consequently, to establish a foreign capital company in Bolivia, prior authorization is not required; and once the company is established, it becomes a separate legal entity.

Branches or Subsidiaries of Foreign Companies

A business owner speaking with her legal representative in Bolivia
A subsidiary can take the form of a Limited Liability Company (L.L.C.) or a Public Limited Company (P.L.C.).

Foreign companies can choose to establish a branch or a subsidiary as a representative office in Bolivia.

A subsidiary can take the form of a Limited Liability Company (L.L.C.) or a Public Limited Company (P.L.C.). Procedures to establish a Branch can take much longer since the documents must be legalized at the Bolivian consulate where the company has its headquarters. These documents must be legalized in the Bolivian Foreign Ministry, and then proceed to the constitution of the company in Bolivia.

Additional registration for legal entities in Bolivia

Every company must register with the Commercial Registry to obtain the Administrative Resolution to start operations and the Commercial Registration that grants a registration number and accredits the legal personality of the company.

Likewise, every company must also have a TIN (Tax Identification Number) for tax purposes, which is obtained from the National Tax Service.

Do you need more information about the types of legal entities in Bolivia?

There are different and varied types of legal entities in Bolivia, each with distinctive characteristics. Business owners should think carefully about which entity is best suited for their business needs before incorporating in the country. To understand which legal entity in Bolivia is the best fit for your company, seek advice from trusted local experts.

For this, Biz Latin Hub is here to advise you in this process. Our specialists provide trusted, comprehensive accountancy, professional employment, legal services, and specialized company incorporation. We have a team with the necessary knowledge and experience to help you in this process. Contact us at here to learn more.

Learn more about our team and expert authors.

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