The corporation is the main legal entity that carries out commercial activities in Peru. This kind of company has two special forms: (i) the closed corporation, and (ii) the open or public corporation. The second form is important as it allows for a concentration of large amounts of capital.
The open corporation was envisaged as a means of allowing big enterprises to finance themselves, making use of public savings. It allows for large numbers of people (who may not be interested in participating in the company's direction and only want to make a profitable investment) to become shareholders.
It is essential that the invested capital be easily moveable, especially as the public investor has less of a personal investment in the corporation (compared to partners of a regular corporation). Therefore, agreements that limit the stock's transferability or negotiability, or that establish a pre-emption right, have not traditionally been allowed.
As this type of open corporation operates with public money, it is considered to be a matter of public interest. The law thus requires the shareholders to register their shares in a public registry. This registration allows potential investors to make informed decisions and guarantees transparency of the market. Registration also submits the company to the control of CONASEV (the arbitrator of the stock market), a body that can ask for any information it deems necessary.
Prohibition of the type of agreement that would limit the movement of shares, publicity, and public control have in the past stopped many companies (eg, family companies) from using the stock market as a way of financing themselves. This is because in doing so, they automatically become open corporations, and must meet all the conditions described above.
However, legislation enacted on July 10 2000 intends to counter this problem.
All corporations that have one or more special classes of stock containing limitations (described above) or pre-emption rights, will be allowed to convert to open corporations, while still maintaining the stipulations and without having to register the special classes of stock. This allows groups of stockholders to maintain the control of a company, and still be able to publicly offer shares.
This amendment only applies if one of the following applies:
- for the first time, the corporation has made a public offer of stock, or obligations that may be converted into stock;
- the corporation has more than 750 shareholders; or
- more than 35% of the stock capital belongs to 75 or more shareholders (without including shareholders with less than 0.2% or more than 5% of the stock capital).
For further information please contact Manuel Pablo Olaechea AC or Jose Antonio Olaechea at Estudio Oaechea by phone(+511 264 4040) or by fax (+511 264 4050) or by e-mail ([email protected] or [email protected]).
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