When deciding to establish a company in Uruguay, it is possible to choose between incorporating a new legal entity or setting up a branch of a foreign company.
The most commonly used types of commercial companies in Uruguay are the public limited companies (hereinafter “SAU”) and the public limited companies (hereinafter “SAU”).SAU“whose capital may be represented by nominative or bearer shares)) and limited liability companies (hereinafter “SRL“), which will be briefly described below. Other types of companies used to a lesser extent are the following: simplified joint stock companies, general partnerships, limited partnerships, capital and industrial partnerships and de facto partnerships.
It is also possible to operate as cooperatives, foreign branches, consortiums and economic interest groups (EIGs). In the case of individual undertakings, it will be as companies. one-person operations.
All types of corporations have legal personality, except consortiums and sole proprietorships.
The following is a brief description of the characteristics and requirements of the most commonly used types of companies in Uruguay.
Public limited company
It is a type of corporation used for the development of commercial or industrial activities in general. The Law also provides for the existence of special UAAs whose purpose is the development of certain activities, with different incorporation and operating requirements. This type of company is mainly used by large companies.
There are no maximum or minimum capital requirements, which must be expressed in local currency.
The liability of the shareholders is limited to the amount of capital they have undertaken to contribute. The persons are disassociated from the company, since it is a capital company.
Shares may be book-entry, registered or bearer shares, except for certain activities for which they must be registered.In principle, profits are distributed in proportion to the capital contributed.
There are two alternatives to start doing business in Uruguay through a corporation: i) to acquire a corporation already incorporated with no previous activity; or ii) to incorporate a corporation with the desired drafting of the Bylaws (which normally takes a minimum of 4 months).
Normally, the acquisition of a corporation already incorporated without previous activity and with a broad purpose is chosen, since they are available for immediate acquisition in order to avoid the aforementioned incorporation periods, and then it will be possible to adjust the points of the bylaws that need to be modified by amending the bylaws.
The cost of acquiring and starting up a pre-incorporated S.A. is approximately USD 5,000, depending on the type of UAA in question. After the purchase is made, the company is operational within 72 hours.
In the case of choosing to incorporate a corporation, the term may be extended by several months. During this period the company may operate as an “S.A. in formation”, with the founders being jointly and unlimitedly liable to the company and to third parties.
Limited liability company
This is the type of company in which the capital is divided into shares, which must be of equal value and cannot be represented in negotiable instruments. Each share gives the right to one vote, as opposed to what happens in Corporations, where there may be shares without voting rights. There may be a minimum of two and a maximum of 50 members without restriction of nationality or domicile and both individuals and corporations may be members.
As for the liability of the partners, it is limited to the integration of their quotas, being in any case, responsible for labor debts. Additionally, the managing partners will be subject to liability for the payment of the partnership’s income taxes in case of having acted with fraudulent intent or without due diligence.
To initiate the incorporation process, the articles of incorporation must be signed by the partners -at least two- before a notary public, registered in the National Registry of Commerce, and subsequently published in the Official Gazette and another newspaper. In the event that the partners are foreigners, they may grant a power of attorney to a person in Uruguay to represent them in the signing of the contract. In this case, the powers of attorney must be certified and legalized before the Uruguayan Consulate or apostilled.
The partnership may begin to operate as from the date of signature of the contract, taking into account that until the partnership is duly registered and published, the partners will be jointly and severally liable for the acts.
Unlike UAAs, there are no ready-made companies for immediate acquisition.
The incorporation period lasts approximately between one and two months, and activities may begin as from the execution of the corporate contract, with the founders being jointly and severally liable for the obligations of the company until the completion of the formalities.
If you are interested in expanding your European company to Latin America, Uruguay is a great option to enter new markets. It is a country that offers great benefits and investment opportunities, great economic stability, and excellent landscapes if you decide to reside in the country as well.
Contact the Gimbrere Legal team for more information and possibilities.