Venezuela

• Author: Fulvio Italiani - Arnoldo Troconis - Carlos Omaña - Paula Serra Freire
• Pages: 375-396

375

Venezuela

Fulvio Italiani

Arnoldo Troconis

Carlos Omaña

Paula Serra Freire

D’Empaire Reyna Abogad os

COUNTRY OVERVIEW

Venezuela is one of the largest Latin A merican economies and one of the world’s

largest oil producers and expor ters, with the fi fth-largest proved oil res erves in

the world (the largest in the Western Hemisphere) and, if we include the e stimated

reserves of extra-heavy crude oil in the Orinoco B elt region, the largest hydroc ar-

bons reserves in the world.

The Bolivarian Republic of Venezuela is a federal republic. T he Venezuelan

government is divided into three levels: the n ational, state, and mun icipal levels.

The political str ucture of Venezuela is set forth i n the Constitution of 1999, as

amended in February 2009. At the national level, the Venezuelan government is

mainly divided into the exec utive, legislative, and judicial bra nches.

CHA PT ER 10

376 Chapter 10

ESTABLISHING A BUSINESS PRESENCE

Permanent Structures

The options available for foreign companies to set up business in Venezuela are

(i)the registration of a branch ; (ii)the corporation; (iii) the limited l iability com-

pany; (iv)the general partnership; (v)the limited partnership; (vi)the stock limited

partnership; and (vii) the consortium (in th is chapter, the term “company” indis-

tinctively refers to any of the options descr ibed in this parag raph, including the

branch, the corporation, or any of the pa rtnerships, but excluding the cons ortium).

Suitable Corporate For ms

The branch and the corporation are t he two most common options used by foreign

companies to do business in Venezuela. The corporate features of the companies

are set forth in the Venezuelan C ode of Commerce.

The registration of a branch (sucursal) in Venezuela by a foreign company does

not result in a separate legal entit y being formed in Venezuela. Therefore, the foreign

company (head office) will be liable for all the obligations assumed by the branch.

The branch must be registered with a Venezuelan commercial regis try located in

the city of domicile of the branch, a nd such registration must then be publi shed in a

Venezuelan newspaper. The foreign company can choose the domici le of the branch.

The branch must have at least one representative. The branch repre sentative

will have full powers to represent a nd manage the branch, except for the power to

sell or transfer the busines s (unless such power is expressly granted to the repre sen-

tative). Any limitations to the powers of the representative are not ef fective against

third parties.

The foreign company must assign a capital to the bra nch (capital asignado).

The branch capital does not constit ute a limitation of the liabil ity of the foreign

company (head office), since the branch is not considered a legal entit y separate

from the foreign company. The branch capital must be paid by the foreign com-

pany, either in cash or in kind. In cas e of payment in cash, an amount in b olivars

equal to the branch capital must be deposited i n an account opened with a Venezu-

elan bank under the na me of the branch. In case of payment in kind, assets for a

value equal to the branch capital must be contributed to the branch.

Unlike the corporation, t he branch is not required to appoint statutory auditors

or file annual bala nce sheets with the com mercial registr y. However, the branch is

required to keep accounting book s for tax purposes —that is, the jour nal, ledger,

inventory, and VAT books.

The Venezuelan corporation is owned by shareholders and is a lega l entity sep-

arate and distinct f rom its shareholders. The corporation is ind istinctively known

as compañía anónima (CA) or sociedad anónima (SA).

The liability of the sha reholders of a corporation is limited to the payment of

the nominal value (and premium, if a ny) of the shares such shareholder owns. As a