FDI regulations and setting up a subsidiary company in Peru

Foreign Direct Investment Regulations

The Peruvian government is set on attracting foreign investors. The Peruvian law on Promotion of Foreign Investment together with its decree-law no. 662 of 1991, governs foreign investments in Peru which holds as a basic principle that national and foreign capital are treated equally. Therefore, foreign capital can be invested in all sectors of economic activity (including the seafood sector) without prior authorization, with the exception of activities regarding natural protected areas and manufacturing of war weapons. In order to be recognized and benefit from the legislation, the investment must be registered by ProInversion, which is the Private Investment Promotion Agency set up by the government in 2002. Registration takes around 30 days and is only compulsive when there is a contract on legal stability. A majority holding interest in the capital of a local company is legal in Peru, including fisheries, aquaculture, trading and processing.

Setting up a subsidiary company

If you want to start a business in Peru, there is a large variety of companies that can be established. In Peru a minimum share of capital is not required for setting up a business. However, financial institutions usually require a minimal deposit of 1000 Sol, which converts to around 306 US$ or 290 Euros and you need a particular migratory status. The latter requires that a foreign investor has a minimum share capital of US$ 30,000 in order to apply for a ‘Investor visa’. The corporation is the most common form of business organisation, but limited liability companies are also used sometimes for tax purposes. Peruvian corporations are governed by the General Law of Companies, which states that a business must have at least two shareholders at the time of incorporation, which may be individuals or corporate legal entities and can be of any nationality. Standard Corporation – Sociedad Anónima  In Peru, there are three types Sociedad Anónima: Sociedad Anónima Oridinaria (S.A.), Sociedad Anónima Abierta (S.A.A), Sociedad Anónima Cerrada (S.A.C.). A Sociedad Anónima Ordinaria must have at least 2 but is allowed to have up to 750 shareholders. A Sociedad Anónima must appoint at least 3 directors who must be individuals that do not reside in Peru. Foreign shareholders also need to appoint attorney-in-fact to sign off laws on their behalf. The initial capital contribution, in local or foreign currency, must be deposited in a local bank. The corporate name should be followed by the abbreviation “S.A.”. The Sociedad Anónima Abierta is similar to the Ordinaria but must have more than 750 shareholders. This kind of structure is normally used by big corporations. The corporate name must be followed by the abbreviation “S.A.A”. Sociedad Anónima Cerrada is the most popular form as it is very flexible. The number of shareholders can be between 2 to 20 and a board of directors is optional. The company name must be followed by the abbreviation “S.A.C.”. (Practical Law, 2017; Expat Peru, 2015; Lima Easy, 2015) Limited Liability Commercial Company – Sociedad Comercial de Reponsabilidad Limitada (SRL)   A Sociedad Comercial de Reponsabilidad Limitada is a commercial partnership that is divided in equal participations. An SRL has both the characteristics of a capital company and a partnership; the liability of the partners involved is limited to the amount of their contributions and there are no transferable company shares. A SRL must have at least two and no more than twenty partners, which can be of any nationality and don’t have to reside in Peru. The corporate name must include “Sociedad de Resonsabilidad Limitada” or the abbreviation “S.R.L.” (Lima Easy, 2015; Expat Peru, 2015).    

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