Uruguayan law regulates practically all known legal forms of organization structure, including the formation of a new legal entity or the installation of a subsidiary of a foreign entity.
Between the possible legal forms to adopt, the most usual are the Corporation (SAU) , Limited LiabilIty Company (LLC), the Simplified Corporation (SAS) and a subsidiary of a foreign company.
The Corporation is regulated by Law No. 16,060 of 1989.
However, the main regulations related to the activities carried out by these corporations are included in their statutes. The main element of the corporation is its capital, which is divided into shares that can be represented in negotiable securities. The shares may be bearer or registered.
The Corporation with nominative shares is the most frequent type of corporate structure used for carrying out commercial or industrial activities in general, and is almost always the structure adopted by large business entities. They have no operating restrictions and can engage in any type of business. The shareholders and the directors can have Uruguayan or foreign nationality or residence.
The Limited Liability Company (LLC) is regulated by Law No.16.060 from 1989. However, the main regulations related to the activities carried out by these LLC are included in their Deed of Incorporation and by-laws. The LLC is the type of legal structure most often used by small and medium size business entities. Their partners are liable up to the amount of their capital contributions. The partnership can have from two up to fifty partners, which can be legal entities, with no restriction of nationality. The LLCs are administered and represented by one or several persons, partners or not, designated in the articles of incorporation.
The Simplified Corporation (SAS) is a type of hybrid commercial company, which takes the most important elements from the corporations and limited liability companies. They may be constituted by a natural person, a legal person (other than a corporation) or several natural or legal persons (whatever their social type). Its capital will be represented by shares and its shareholders will not be responsible for corporate obligations, beyond the amount of their respective contributions.
Companies that make a public offering of their shares, those in which the State, a Departmental Government, an Autonomous Entity, a Decentralized Service or a public person is a
shareholder, directly or indirectly, may not adopt the legal form of SAS. not state, nor those that are dedicated to activities for which the law provides for the adoption of a specific social type beyond the amount of their respective contributions.
Foreign companies operating in Uruguay are mainly regulated by Articles 192 to 198 of the Commercial Companies Law. These will be governed in terms of their existence, capacity, operation and dissolution by the law of the place of their constitution and will be recognized in our country by right. This allows them to hold isolated acts and appear in court, as well as they can act in Uruguay through a permanent establishment or the opening of a branch. They have no operational restrictions, but must participate in the same activities as their central office. The foreign Head Office, whose net worth cannot be separated from that of the branch, is responsible for the branch’s obligations. The branch must maintain separate accounting records in Uruguayan currency and in Spanish. The branch is a foreign company and consequently cannot be transformed by adopting a different type of legal structure.
In Uruguay, the trust law has been in force since November 2003 and regulates this type of alternative structure for doing business in the country. Trusts have been very useful in
various sectors of the local economy, including manufacturing, services, and infrastructure. Foreign investors generally use this instrument privately to provide guarantees to their own investors in the country and to make quick investments. This instrument is much more flexible than traditional corporate ways of doing business.