Peru

• Author: Jean Paul Chabaneix
• Pages: 281-337

281

Peru

Jean Paul Chabaneix

Rodrigo, Elías & Medrano A bogado

COUNTRY OVERVIEW

For the past 25 years Peru has been undergoing comprehensive economic growth

followed by a modernization and development process, wh ich includes the estab-

lishment of a reliable legal framework gea red toward maintaini ng the stability

required for boosting private busines s activity and investment. This perma nent

growing process has been the best incentive to att ract substantial foreign i nvest-

ment in diverse economic sectors.

The development of the agribusiness, f ishing, and mi ning industries —as well

as the completion of major infrastruc ture projects pri marily in the fields of energ y,

gas, and transpor tation—have all contributed to the g rowth of the domestic ma r-

ket and to the increase of internat ional trade, maki ng Peru one of Latin America’s

most attractive countrie s to invest in (and the rising star of the re gion). Peru is

ranked second in the reg ion as the best place to do business in a nd is the fastest-

growing economy in South A merica for the 2013–2015 period, as foreca sted by the

International Monet ary Fund.1 In this context, Peru continues to develop and enter

into free-trade agreements with key commercial pa rtners, while st rengthening its

CHAPTER 8

282 Chapter 8

business ties with nations throughout the Pacific basin , including the United State s

and China.

This chapter briefly des cribes the legal fra mework that applies to any indi-

vidual or entity interested in doing business in Peru. Reg ulations regarding foreign

investment, alternative corporate st ructures, and other relevant provisions are sum-

marized in order to expla in the legal means avail able for conducting business in

Peru. It goes without saying that the mos t favorable structure for any business must

be determined on a cas e-by-case basis, a nd therefore, this document does not aim

to substitute appropri ate legal advic e.

Table 8.1 provides an overview of basic con siderations to be taken into accou nt

in connection with i nvesting in Peru.

Tab le 8.1

Basic Considerations for Investing in Peru*

Limitations to foreigners acting as

shareholders

Unrestricted

Minimum capital required to

incorporate a company

As a general rule, no minimum

capital required

Average time of incorporation 15 business days

Restrictions to foreign investment Unrestricted

Legal stability agreements For investors who meet the minimum

amounts set forth by law, legal

stability agreements aim to protect

investors on matters such as income

tax applicable to divide nds and right

to free availability of foreign currency,

among others

Restrictions to foreign exchange Unrestricted

VAT 18 percent

Restrictions to hiring foreign workers Corporations may hire foreign

workers for up to 20 percent of the

total number of their employees

Limitations to foreigners’ propert y

ownership rights

Foreigners are forbidden to own land

within 50 kilometers of the border

Remittance of profits Full remittance of profits allowed

* Exceptions to this general description may apply.

Peru 283

ESTABLISHING A BUSINESS PRESENCE

Permanent Structures

Frequently Used Corporate St ructure s

The corporation and the lim ited liability company are the most important and mos t

frequently used company struct ures regulated u nder the General Law of Compa-

nies (Ley General de Sociedades), which was enacted Januar y 1, 1998.

In general, Peruvian reg ulations regarding cor porations are similar to t hose

found in other jurisdict ions.

Peruvian legislation recog nizes and regu lates three ty pes of corporations:

(i)ordinary, (ii)closed, a nd (iii)open. All t hree struct ures share the essential fea-

tures of any corporation, mea ning they issue capital sto ck, their ownership is

divided into shares, and t heir shareholders enjoy limited liabilit y.

An ordinary cor poration is a capital stock company, the capital of which is rep-

resented by shares, which g ives titleholders the rights set fort h in the General Law

of Companies and in the relevant bylaws. Spe cific regulations dealing with closed

corporations recogniz e their essential n ature as a capital stock company and also

provide a suitable corporate structu re for a limited number of shareholders who are

usually involved in managi ng the company. Given the importance of personal fac-

tors in owning and man aging capital, its sha res may not be publicly traded on the

securit ies market .

An open corporation satisfies one or more of the followi ng conditions: (i)it

has made an initial public offering of stock or of corporate obligations convertible

into stock, (ii)it has over 750 shareholders, (iii)over 35 percent of its capital stock

is held by 175 or more shareholders, (iv)it is incor porated as such, or (v)all vot-

ing shareholders unani mously approve the motion to adopt such a structure. The

open corporation must publicly register its stock in the Public Registr y of Securities

and have it listed in the Lima S tock Exchange, mean ing that its stock may not be

limited regarding its free transfer and negoti ation, save for the exceptions expressly

provided by the General Law of Companies. T his type of cor poration is subject to

the supervision of the Stock Excha nge Superintendence (SMV).

Regulations applicable to the lim ited liability company (also known as SRL) are

similar to that of the close d corporation, given the import ance of personal factors

involved in this type of company and wh ich the General Law of Companie s tries to

preserve. This is a company t he capital of which is represented by part icipations.

General Features

Table 8.2 describes the most relevant features of t he ordinary and closed c orpora-

tion, and the limited l iability company.