Government policies have played a key role in encouraging investment in Peru, bringing significant benefits to investors, local communities and the economy as a whole. The country offers a wide range of business opportunities, attracting the interest of both local entrepreneurs and foreign investors. Below, we describe five types of legal entities in Peru, providing information on the various structures available for conducting business in this dynamic market. Understanding the nuances and characteristics of these types of legal entities in Peru is essential for individuals and companies seeking to establish a presence and thrive in the Peruvian business landscape.
Peru is one of the fastest-growing economies in Latin America. Peru’s economy has grown by an average of 6.4 percent per year since 2002 and is projected to continue on an upward trajectory in 2022, fueled by external demand and the return on fixed investment to grow.
LatinFocus panelists expect GDP to accelerate and increase over the coming years. This growth in the Peruvian economy has resulted in an increase in FDI, particularly in the mining and export sectors.
Types of legal entities in Peru – Which Legal Entity Should You Use?
Here are the 5 types of legal entities in Peru:
- Joint Stock Company (Sociedad Anónima or S.A).
- Private Closed Corporation (Sociedad Anónima Cerrada or S.A.C).
- Public Corporation (Sociedad Anónima Abierta).
- Limited Liability Company (Sociedad Comercial de Responsabilidad Limitada or S.R.L).
- Branch (Sucursal).
Do you have a great business idea and are looking to understand the differences in legal entities in Peru? Depending on the activity that you plan to undertake, there are different legal entities in Peru that are regulated by the Peruvian Companies Law under which you can set up your new venture.
Below is a list of 5 types of legal entities in Peru to set up your business, that are most commonly used by foreign investors. Should you require more information regarding each of these legal entities, we recommend that you make contact with a professional company that has an extensive understanding of the legal entities in Peru and has experience in the formation and incorporation of companies depending on the types of operations being conducted.
1. Joint Stock Company (Sociedad Anónima or S.A)
This type of company is the most popular type of legal entity in Peru for business entities as it’s fairly easy to open. The legal entity requires a minimum of two shareholders and an initial capital contribution of s/.1000; approximately $350. Liability is limited to the amount of the contribution and the joint-stock company must have a Board of Directors and General Manager.
2. Private Closed Corporation (Sociedad Anónima Cerrada or S.A.C)
One of the types of legal entities in Peru is the Private Closed Corporation. This legal entity requires a minimum of two and a maximum of twenty shareholders. Although a Board of Directors is not necessary, the corporation must have a General Manager.
3. Public Corporation (Sociedad Anónima Abierta)
For companies with a large number of shareholders, a publicly held corporation can be a good option. To create this legal entity, an initial public offering should be made, the company must have more than 750 shareholders, and/or over 35% of share capital distributed among more than 175 shareholders.
4. Limited Liability Company (Sociedad Comercial de Responsabilidad Limitada or S.R.L)
A minimum of two and a maximum of twenty partners are allowed. All partners have limited liability and capital is divided up amongst them. This company corporation does not issue shares and its procedures are the same as those of other corporations.
5. Branch (Sucursal)
Another one of the legal entity in Peru is the Branch (Sucursal). Established outside its legal address, the branch should realize the same activities as its head office. The branch has the same status as a head office but can be considered as an independent company for tax purposes. To open a branch, a permanent legal representative or General Manager must be present.
Our recommendation: The Limited Liability Company (Sociedad Comercial de Responsabilidad Limitada or S.R.L) structure typically involves simpler incorporation procedures compared to other legal entity types, making it an attractive option for businesses looking for efficiency and ease of establishment. It is well-suited for small to medium-sized enterprises and foreign businesses seeking to establish a presence in Peru.
FAQs on Types of Legal Structures in Peru
1. Can a foreigner register a company in Peru?
Yes, the Peruvian government encourages foreign investment and has established clear regulations for foreigners looking to establish businesses in the country. However, certain restrictions and requirements may apply depending on the type of legal entity chosen and the nature of the business.
2. What type of legal entity is a Joint Stock Company (Sociedad Anónima or S.A) in Peru?
A Joint Stock Company (Sociedad Anónima or S.A) in Peru is a type of corporation where ownership is represented by shares of stock. It is a legal entity separate from its shareholders and offers limited liability protection to its owners. Joint Stock Companies are regulated by Peruvian corporate laws and are commonly used for large-scale business ventures.
3. How do I create a Private Closed Corporation (Sociedad Anónima Cerrada or S.A.C) in Peru?
To create a Private Closed Corporation (Sociedad Anónima Cerrada or S.A.C) in Peru, one must follow the legal procedures outlined by the Peruvian government. It’s recommended to consult with a legal expert or business advisor familiar with Peruvian corporate law for personalized guidance.
4. What is an LLC in Peru?
In Peru, a Limited Liability Company (Sociedad Comercial de Responsabilidad Limitada or S.R.L) is a business structure that combines the limited liability protection of a corporation with the operational flexibility of a partnership. An LLC is a separate legal entity from its owners (known as members) and provides protection against personal liability for business debts and obligations.
Biz Latin Hub can help you with types of legal entities in Peru
At Biz Latin Hub, we can be your single point of contact for entering and doing business in Peru. Our bilingual team of corporate support experts based in Lima is available to provide you with legal services in Peru as part of an integrated package tailored to your needs, including the likes of company formation, accounting & taxation, corporate legal support, hiring & PEO, and visa processing.
Contact us today to discuss how we can assist you in Peru, or any of the other 17 markets around Latin America and the Caribbean where we have teams in place.
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