Forms of Buisness

In general, business may be established either as sole proprietorships (explotaciones unipersonales) or as commercial companies (sociedades comerciales). Sole proprietorships are governed by the Commercial Code, and an exclusive list of available company formats is provided by the Company Law.

The most typical business forms are:

• the joint-stock company (sociedad anónima, SA); and
• the limited liability company (sociedad de responsabilidad limitada, SRL).

Other companies governed by the Company Law are:

• general partnerships (sociedad colectiva, SC);
• limited partnerships (sociedad en comandita simple, SCS); and
• partnerships limited by shares (sociedad en comandita por acciones, SCA).

The regular business of a foreign company may also be conducted through a branch, for this purpose registration is required

1. Public company (or joint-stock company)

Joint-stock companies (sociedad anónima, SA) may pursue any type of lawful business activity. There are no operational limitations of any kind with respect to business types, except for specific activities.

Shareholders’ liability is limited to the company´s subscribed capital.

These companies have no minimum capital requirement and may issue in principle:

• nominative shares (identified shareholder); or
• bearer shares.

For transferring ownership of bearer shares, it is only necessary to hand over possession of the share certificate as the holder of the share certificate is presumed to be the shareholder.
However, under Law 18,930 of 2012, its regulatory Decree 247/012 of 2012 and the BCU’s Communication BCU (Central Bank of Uruguay) 2012/153, a reporting system concerning bearer shares has been implemented. The BCU keeps a registry of bearer shares. Joint-stock companies, as well as any other commercial legal entity issuing bearer shares, including companies not incorporated in Uruguay that have a permanent establishment in the country, must report specific information to the BCU in order to keep the registry up to date.
If the bearer of the share’s changes, the company must be informed of the details of the new bearer within 15 days after the transfer. The company then has 30 days to submit the updated information to the BCU. The same applies if there is a variation in the total participation of any current shareholder in the company.

From 1 November 2014, Law 19,288 provides for the dissolution and liquidation of joint-stock companies that do not comply with reporting obligations concerning holders of bearer shares. Law 19,288 provides, inter alia, that:

• holders of bearer shares must report their identity within a 90-day period. If they do not comply with this reporting obligation, they will be disregarded as the holder of bearer shares ipso jure;
• joint-stock companies must report to the BCU the identity of holders of bearer shares that represent at least 50% of the capital of the company within a 90–day period. Companies that do not comply with this reporting obligation will be dissolved ipso jure;
• joint-stock companies that are dissolved must be liquidated within a 120-day period. If the company is not liquidated within this period, it will be subject to a fine equal to 50% of the total assets of the company. All powers to represent these companies are revoked at the end of this period;
• transfers of assets of the company following its liquidation are exempt from tax, provided that the transfer is carried out within the above-mentioned 120-day period; and
• dissolved companies are exempt from the joint-stock company tax (Impuesto de Control de las Sociedades Anónimas, ICOSA. as from the end of the tax year following the date of dissolution.

Registration of a joint-stock company with the BCU also grants various rights to shareholders, including preference for the reimbursement of the value of their shares in the event of dissolution. Only if the company is registered, the DGI (Tax authority) may issue the “Single Registration Tax Certificate”, which is a formal requirement for operation. The company, its shareholders and directors may also be fined in the case of failure to register.

The information that must be submitted to the BCU is confidential. The information may not be accessed through “fishing expeditions”. However, under specific circumstances, the registry may be accessed by certain state agencies for specific purposes. For example, the DGI may access the registry to exchange information with other tax authorities in compliance with international agreements. The registry information may also be accessed in the case of an order from a criminal court.

Nominative shares are mandatory for:

• financial entities;
• companies conducting broadcasting and television activities, which need authorization to operate; and
• companies holding rural real estate property rights and/or carrying on agricultural activities.

A joint-stock company must have two shareholders at the time of incorporation, but thereafter a single shareholder may own 100% of the share capital. It is usual practice that once incorporation has been completed, one or more shareholders hold 100% of the capital of non-operating companies.

Uruguay distinguishes between “closed” and “open” joint-stock companies. “Open” joint-stock companies are defined as those:

• incorporated through public subscription of shares;
• whose share are quoted on the local stock exchange;
• publicly issuing debentures; or
• attracting public savings to subscribe or increase their capital.

The highest governing body of the joint-stock company is the shareholders’ meeting which may delegate the running of the business to a board of directors or to a general manager. Both directors and general managers may be legal entities or individuals. There is no required minimum number of directors and they can be Uruguayan or foreign, residents or non-residents. Directors can meet within or outside Uruguay, but the shareholders’ meeting must be held in Uruguay. Proxies are acceptable if attendance at the meeting is not possible.

2. Limited liability company

The limited liability company (sociedad de responsabilidad limitada, SRL) has no minimum capital requirement. It may have between 2 and 50 members, individuals or legal entities without nationality restriction.
Capital is divided into quotas that are nominative. Liability of the members is limited to the capital to which they subscribe.
Management and representation of the company is vested in one or more individuals, whether members or not or, alternatively, in a management board. A management board is mandatory if the company has 20 members or more.
This type of company may carry on any type of business activities except for financial activities.

3. Partnerships

Partnerships are rarely used in Uruguay. The following types of partnerships are governed by the Company Law:

• general partnerships (sociedad colectiva, SC);
• limited partnerships (sociedad en comandita simple, SCS); and
• partnerships limited by shares (sociedad en comandita por acciones, SCA).

All partnerships have legal personality and there is no minimum capital requirement.
In a general partnership, partners are personally liable. In the other two types of partnerships, the liability depends on the type of partner: the limited partner (socio comanditario) is personally liable up to the capital contributed and the general partner (socio comanditado) has an unlimited personal liability.

4. Economic interest grouping

The economic interest group (grupo de interes económico, GIE) is defined in article 489 of Law 16,060. The economic interest group is created to facilitate and develop the economic activities of its members or to improve the results of its activities. The GIE has legal personality and its members are personally liable for the obligations undertaken by the GIE.

5. Holding company

There is no special holding company regime in Uruguay. However, article 47 of Law 16,060 establishes that companies are not allowed to participate in other companies in excess of their own equity, unless it is stated in the bylaws that the company’s main purpose will be to participate in other companies.

6. Offshore company

There is no offshore company form in Uruguay. An offshore company has the same tax treatment as a joint-stock company (SA). Nevertheless, offshore companies may still amend their by-laws and legally transform into joint stock companies or other forms of business.

7. Joint venture company

The joint venture form available in Uruguay is the consortium (consorcio), as defined in article 501 of Law 16,060. A consortium can be constituted by two or more persons and has no legal personality. The consortium links the participants for a given period to carry on a construction project and/or the provision of certain services or goods. The consortium is not intended to earn or distribute profits among participants; it only regulates the activities of each one.

8. Public-private ventures

The public-private agreements (participacion público privada, PPP) are regulated by Law 18,786 of 19 July 2011 and further decrees. The PPP are those agreements in which the Public Administration requests from a person governed by private law, for a given period of time, the design, construction and operation of infrastructure or other services, in addition to financing. Among others, the construction of infrastructure in the following areas is covered:

• roads, railways, ports and airports;
• energy infrastructure;
• disposal and treatment of waste; and
• social infrastructure (e.g. prisons, health centres, educational centres, etc.).