Corporations
Limited Liability Company
In Bolivia the most common forms of business association are the corporation (sociedad anónima) and the limited liability company (sociedad de responsabilidad limitada).
Incorporation
In a corporation, the capital is represented by shares and the liability of the shareholders is limited to the amount of shares each holds. The law states that there must be a minimum of three shareholders for the incorporation of a corporation. If the number of shareholders is less than three at any given time, there is a 90-day period provided by law to incorporate new shareholders (otherwise the company must be dissolved).
There is no minimum participation for each shareholder, so it is possible to have one shareholder with 99% of the shares and the other two with one share each. Several requirements must be met, and documents produced, to obtain the certificate of incorporation from the Commerce Registry. The process may take several weeks, depending on whether the promoters are local or foreign entities.
Capital
The capital of the corporation is represented by shares, with a nominal value of Bs100 (or multiples thereof). In general, the Commerce Code does not require a minimum level of capital to incorporate a corporation. However, the laws and regulations for specific fields (eg, banking) may require a minimum initial capital.
Unless otherwise established by specific regulation, corporations may issue both nominative and bearer stock. Likewise, if provided for in the company's by-laws, and subject to approval by the shareholders, the company may issue preferred shares.
Transfer of shares
Nominative shares are transferred by endorsement and registration in the company's share registration book. Bearer shares are transferred by delivery of the title. In both cases, the transaction is not subject to taxes.
Corporate structure
Each ordinary share represents one vote in the shareholders' meetings, which can be either ordinary or extraordinary, depending on the subjects to be covered at the specific meeting.
The shareholders must appoint a board of directors that will carry out the administration of the corporation. The board consists of a minimum of three, and a maximum of 12, individuals. A board member need not be either Bolivian or a foreign resident. The shareholders must also appoint one or more financial controllers.
The corporation must publish the company's annual report (once approved by a shareholders assembly) in a nationwide newspaper. The report must be made available to all shareholders upon request and must contain the general balance, financial statements and any other general information that should be made known to shareholders and creditors. With the exception of the foregoing, the company is not required to submit special reports regarding the administration and financial status of the company to shareholders or third parties.
In a limited liability company, the capital is represented by quotas of capital (not shares), each one with a nominal value of Bs100 (or multiples thereof). Bearer quotas are not allowed. The liability of the partners is limited to the amount of their corresponding capital contributions. For the incorporation of a limited liability company, two partners are required. They can be individuals or companies.
Structure
The highest decision-making and administrative group within the limited liability company is the partners assembly. The partners may appoint one individual (partner or not) to manage the day-to-day business of the company. The partners may also decide to create a board of directors, which will be governed by the same provisions that regulate the board of directors of a corporation. The partners have the right to control and examine the company's books and records at any time.
Transfer of quotas
Partners have a preferential right to acquire the quotas of other partners. Furthermore, in order to transfer the quotas to a third party, it is necessary that the other partners approve the incorporation of the new partner.
Transfer of quotas is subject to a 3% transaction tax. Other formalities (eg, publication and filing with the Commerce Registry) must be complied with before the transfer is effective against third parties.
For further information on this topic, please contact Ricardo Indacochea SM at Indacochea & Asociados, Abogados Sociedad Civil by telephone (+591 3 535 356) or by fax (+591 3 581 200) or by e-mail ([email protected]).
The materials contained on this web site are for general information purposes only and are subject to the disclaimer.