In recent years, a number of investors have set up a company in Peru, but it doesn’t always work out. If you’re considering exiting the market, it is important to know how to do this legally according to the country’s dissolution and liquidation process. This involves a series of steps, involving dissolution before you liquidate a company in Peru. Doing so according to the law will keep you in good standing for the future.
Key Takeaways:
| Steps to liquidate a company in Peru | Shareholder’s meeting. The appointment of a liquidator. The registration of the shareholder’s meeting minutes. Informing the authorities. A written notice of the company dissolution. The company accounts are to be finalized and audited. All assets are to be liquidated. Preparation and registration of the final settlement act. |
| Time generally needed | Approximately, there is a maximum term of 4-6 months for the process of dissolution, liquidation, and extinction of the company. |
| Reasons to liquidate a company in Peru | Reasons include: The company completes its corporate purpose. Continued inactivity. Creditors approve an agreement of bankruptcy. Lack of plurality of shareholders. Judicial resolution by the Supreme Court. The agreement was approved by the shareholders. Any other cause established in the corporate by-laws |
| Involuntary liquidation | This can be triggered by not complying with legal responsibilities under the law such as those listed above |
Why dissolve a company in Peru?
There are several circumstances which could influence a company’s decision to dissolve in Peru:
- The term set out in the company by-laws for its operational life expires.
- The company completes its corporate purpose, doesn’t fulfill it for a prolonged period, or cannot possibly fulfill it at all.
- Continued inactivity in the General Shareholders Meeting.
- Total incurred losses that reduce the value of net assets to less than one-third of the company’s paid-in capital, (unless this capital is increased or reduced).
- Creditors approve an agreement of bankruptcy or insolvency, following due legal procedures.
- Lack of plurality of shareholders for more than 6 months.
- Judicial resolution by the Supreme Court.
- The agreement was approved by the shareholders.
- Any other cause established in the corporate by-laws or in a shareholders’ agreement duly registered before the company.
What is the process of liquidation in Peru?
Liquidation is the way towards finishing a business and distributing its assets to claimants. It is an occasion that normally happens when an organization is insolvent, which means it can’t pay its obligations when they are expected to.
The process of liquidation in Peru involves 3 steps:
- Step 1 – Dissolutions.
- Step 2 – Liquidation proceedings.
- Step 3 – Extinction.
As organization tasks end, the rest of the assets are utilized to pay creditors and shareholders. If the company does not have debts, in theory, the process should be faster, however, it is important to review the accounting documents (financial statements, balance sheets, annual statements, etc.) to ratify that information.
1. Dissolutions
Dissolution is the procedure by which an organization (or a part of an organization) is finished, and the assets and property of the organization redistributed.
Liquidation begins with the dissolution process. At this stage, the General Meeting of Shareholders is called to agree upon the dissolution of the company. The company is responsible for registering it in Superintendence of Public Records and published in 2 newspapers of greater circulation at the national level, 3 times daily in a row.
2. Liquidation proceedings
Once the company has been dissolved, liquidation proceedings in Peru can begin.
To liquidate a company in Peru, shareholders must appoint a Liquidator who will act on behalf of the company to carry out liquidation proceedings. If the liquidation is not voluntary, the company will work with a court-appointed Liquidator.
- The Liquidator takes inventory of company assets
- The Liquidator sells company assets
- The Liquidator repays any debts owed in order of the payment priority set out in Peruvian law
- Any assets remaining after all debts have been paid to get distributed among shareholders
The liquidator must present and publish the following documents:
- The final balance
- The liquidation report
- The proposal of distribution of the net assets among the partners
- The final balance of the liquidation, the profit, loss statement and other corresponding accounts must be presented and published
In these 2 stages, you have a maximum period of 50 business days, between publications and registration.
3. Extinction
Finally, once the company’s assets are sold and debts paid, the company will formally close. In Peru, this is known as ‘extinction.’ This implies the legal disappearance of the company, Only the literal copy of the company is presented, where the extinction of the company is recorded.
This is managed by the liquidator, which must be registered in the Public Registry and SUNAT (Superintendencia Nacional de Aduanas y de Administración Tributaria) At this stage, you have a maximum period of 60 business days to fully extinguish your company. Approximately, there is a maximum term of 4-6 months for the process of dissolution, liquidation, and extinction of the company.
FAQs for liquidating a company in Peru
Based on our extensive experience these are the common questions we receive from clients about liquidating an entity in Peru.
1. What is the process of liquidation in Peru?
The liquidation process involves the following principal activities:
- The conduct of a shareholder’s meeting in which the shareholders approve the company`s dissolution.
- The appointment of a liquidator who will be legally responsible for the liquidation process; this person may be the company’s legal representative or a third party designated to act in this role.
- The registration of the shareholder’s meeting minutes with the responsible local authority.
- The national tax authority (“SUNAT”) and “Public Registers (“SUNARP”) must be informed formally of such a decision.
- A written notice of the company dissolution must be published in the local media as formal notification to external parties.
- The company accounts are to be finalized and audited (with any outstanding issues resolved)
- All assets are to be liquidated.
- Preparation and registration of the final settlement act.
2. How long does it take to liquidate a company in Peru?
Approximately, there is a maximum term of 4-6 months for the process of dissolution, liquidation, and extinction of the company.
3. What are the reasons to liquidate a company in Peru?
There are several circumstances which could influence a company’s decision to dissolve in Peru:
- The term set out in the company by-laws for its operational life expires.
- The company completes its corporate purpose, doesn’t fulfill it for a prolonged period, or cannot possibly fulfill it at all.
- Continued inactivity in the General Shareholders Meeting.
- Total incurred losses that reduce the value of net assets to less than one-third of the company’s paid-in capital, (unless this capital is increased or reduced).
- Creditors approve an agreement of bankruptcy or insolvency, following due legal procedures.
- Lack of plurality of shareholders for more than 6 months.
- Judicial resolution by the Supreme Court.
- The agreement was approved by the shareholders.
- Any other cause established in the corporate by-laws or in a shareholders’ agreement duly registered before the company.
4. Can you be forced to liquidate a company in Peru?
Yes, under certain circumstances. In Belize, companies must regularly renew their operating licenses to do business in the country. The Belizean state can liquidate the organization if the business is unable to pay for the re-establishment of its operating license one year after its expiration date.
If the company chooses not to, or is unable to, renew its license and continue operations, it will be erased from the business register by the administrative experts in Belize. This liquidation procedure will only be performed after the end of the calendar year.
Liquidate your company in Peru with support from local legal experts
The Peruvian dissolution, liquidation and cancellation processes for a company can be complex. Make sure to connect a local legal expert to coordinate your company’s liquidation in Peru and exit from the market.
At Biz Latin Hub, our team of local and expatriate legal professionals in Peru can support your liquidation proceedings with due care and in full compliance with local law. As a market leader for corporate legal and accounting services in Latin America, we’re your single point of contact for multilingual market entry, exit, and back-office services.
Contact our specialists in Peru here at Biz Latin Hub for a personalized exit strategy and legal support.
Learn more about our team and expert authors.
