September 25 2000
The legal entities most commonly used in Peru to carry out commercial activities are the corporation and the limited liability company. However, the branch office is another useful legal form used by foreign businesses.
There are two types of corporation: the closely-held corporation and the openly-held corporation.
A closely-held corporation has the following characteristics:
A corporation is considered to be openly held if any of the following events occur:
Generally, the articles of incorporation and bylaws may not limit the free transferability of shares or restrict stock negotiations, nor may they give shareholders the preferential right to buy shares when shares are transferred. There are certain exceptions to this rule.
All of a closely-held corporation's shares (with certain limited exceptions) should be registered in a public registry and are therefore subject to the control of the National Commission of Companies.
Limited liability company
A limited liability company is very similar to a closely-held corporation, but has the following additional traits:
A foreign branch of a company can be established in Peru by public deed which must be registered at the commercial registry. The public deed must contain at least the following:
Peru's foreign investment regime is mainly governed by two laws, both of which are regulated by Supreme Decree 162-92-EFC of October 12 1992.
The Foreign Investment Promotion Law (Legislative Decree 662 published on September 9 1991) creates mechanisms to guarantee foreign investors tax and legal stability, availability of foreign currency and non-discriminatory treatment. It was enacted to stimulate the flow of foreign investment.
The Framework Law for Private Investment (Legislative Decree 757 published on November 13 1991) contains provisions to stimulate private investment, including the elimination of all legal and administrative barriers that restrict free private initiative. This law also includes provisions that protect investors from arbitrary changes to taxation policy.
All economic activities are open to foreign investment with no restriction on the amount of participation of foreign investors. Foreign investors' rights are the following:
For further information on this topic please contact Jose Antonio Olaechea at Estudio Olaechea by telephone (+51 1 264 4040) or by fax (+51 1 264 4050) or by e-mail (email@example.com).
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