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By Úrsula Cortés Gutiérrez
Llona & Bustamante Abogados
Peru

The Peruvian Corporate Law regulates the incorporation of several types of companies with different features, depending on the type of business to be developed by investors.

The most common companies to establish in Perú are: The Joint Stock Company (a limited liability company which requires a minimum of two shareholders and their shares are represented by certificates or book entries and could be listed on Lima Stock Exchange); Closely Held Corporation (resemble limited liability companies and must have a minimum of two and a maximum of 20 shareholders, but its shares can’t be listed on a Stock Exchange); Public Held Corporation (need more than 750 of shareholders or when more tan 35% of the capital stock belongs to 175 or more shareholders or has the possibility to convert debts into shares, but in all cases the shares must be listed on a Stock Exchange); Limited Liability Company (establish with a minimum of two and maximum of 20 partners, where its paid-in capital is divided into ownership interests, which are accumulative and indivisible).

For foreign investors doing business in the country, there is an additional option to consider which is the alternative to establish a branch.

The establishment of a branch in the country by a non-domiciled company requires a parent company resolution approving the incorporation of a Branch in Perú. According to our Corporate Law, branches are considered as the same legal entity as its parent company.

The corporate resolution to establish the branch in Perú, must be adopted by the competent corporate body of the parent company. This resolution must resolve for the amount of capital or equity allocated to the branch for the development of its activities in the country; the branch’s assigned activities that shall be within the scope of the corporate purpose of the parent company, which must be described expressly and in detail; the place of domicile that the branch will have; the appointment of at least one permanent legal representative in the country; the powers conferred on the legal representative; and finally the statement made by the parent company to submit to the laws of Perú to respond for the obligations contracted by the branch that will establish in the country.

A Branch in Perú is only subject to corporate tax on revenue obtained from Peruvian source of income, or generated by business activities in Peruvian territory. The tax rate is 29.5% and the tax on dividends is 5% is due when the profits are deemed to be distributed, after the application of income tax solely with the annual income tax return, which is filed each year to the National Superintendency of Tax Administration.

In accordance with the General Corporate Law, branches of foreign companies are subject to be converted or transformed into a company in Perú under any of the Corporate entity types mentioned above and stipulated by law in accordance to investors needs.