Partially government-owned corporations (Sociedades de Economía Mixta) are formed between (i) the state, prefectures, public companies or other public entities and (ii) private capital, for the exploitation of companies that have as an objective the collective interest, implementation, promotion or development of industrial, commercial or service activities.

These corporations are considered to be entities organized under private law and are subject to the dispositions that regulate the activities of corporations. These corporations are incorporated with two or more partners, and require the prior issuance of a supreme decree authorizing the incorporation of the entity.

Contributions with which the state participates are determined in direct negotiations with the private sector. Final agreement must be approved and authorized through a supreme decree. The incorporating instrument must establish the conditions for payment for the transfer of shares from the private sector to the state and vice versa.

Directors representing the public sector and those from the private sector will be appointed in a shareholders meeting. Likewise, their removal requires a similar meeting. Directors must exercise their directorship personally and may not delegate this position. Both the public and the private sectors have the right to appoint a corporate comptroller or representative.

For further information on this topic please contact Ricardo Indacochea at Indocochea & Asociados, Abogados by telephone (+591 3535 3456) or by fax (+591 358 1200) or by e-mail ([email protected]).

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