Simplified Joint Stock Companies

Dec 1, 2022 | Noticias

Simplified Joint Stock Companies

The Simplified Joint Stock Company or (SAS in Spanish) is a new type of company created by law 19.820 of September 18, 2020.It was created with the purpose of promoting entrepreneurship and contributing to productive economic development.It can be explained very briefly as a hybrid social type between the Limited Liability Company  and the Corporations  obtaining the best of both.

 

Among its benefits are:

  • Its capital is represented by shares and its shareholders are not liable for corporate obligations beyond the amount of their respective contributions.
  • It can be incorporated by one or several persons
  • The incorporation act can be granted in a public or private document or via web with electronic signature
  • The shareholders are liable only up to the amount of their respective contributions corresponding to the integration of the shares they subscribe or acquire
  • The shareholders are not liable for the labor, tax or any other type of obligations incurred by the corporation, except in the event that the legal personality of the corporation is declared unenforceable.
  • In the event of the appointment of an Administrator or Board of Directors, they are only jointly and severally liable for Income Tax on Economic Activities.
  • The capital is represented by registered or book shares, and classes and series of shares may be created.
  • The meetings of partners or shareholders may be held at the domicile of the corporation or in any other place that allows its members to participate and decide the matters to be discussed. Meetings may even be held by videoconference or other means of communication and valid resolutions may be adopted by written consent, which may be communicated, for example, by e-mail, without the need for authentication.

Advantages

Simplified Joint Stock Company have a number of advantages over other companies, which make their use attractive:

    1. Speed and economy in the incorporation

The existence of a model contract pre-established by the DGR guarantees, once the other assumptions are met, that the short term of registry qualification established in the aforementioned decree is met: five working days.
Also, unlike other types of companies, the incorporation of Simplified Joint Stock Company does not require publications (in the Official Gazette and another private newspaper) or the approval of the National Internal Audit Office, thus saving time and costs.
At the same time, and this is a novelty with respect to the other existing types of companies, the Simplified Joint Stock Company can be incorporated via web by signing the bylaws digitally.

    1. Development of any commercial or civil activity

The Law allows to establish expressly that the Simplified Joint Stock Company may carry out “any commercial or civil activity”, except those for which a regulation requires the adoption of a certain type of company, thus allowing to broaden the range of activity of the company.

    1. Representation

The Simplified Joint Stock Company does not require an Administrator or a Board of Directors. A single legal representative is sufficient.
The organization is free, having a minimum organizational structure: i) Shareholders’ Meeting, and ii) Legal representative, with the function of Administrator.  In the case of a sole shareholder, the latter may exercise all the powers conferred by law to the corporate bodies.

    1. Incorporation by a single person and transformation

The Simplified Joint Stock Company can be incorporated by only one person, which is a great advantage compared, for example, to the limited liability company (for which two or more founding partners are required). Likewise, the law establishes that any commercial company, with the exception of corporations, may be transformed into a Simplified Joint Stock Company when so decided by its partners or shareholders in a shareholders’ meeting by the same majorities provided by law or by its contract or bylaws for its reform.
Likewise, the Simplified Joint Stock Company may be transformed into a company of any of the types provided for in Law 16.060, provided that it is adopted by decision of shareholders representing the majority of the integrated capital with voting rights.

 

Conversion of sole proprietorships to Simplified Joint Stock Company

Another novelty is the possibility of converting sole proprietorships with commercial, industrial or service activity to this type of company. In order to do so, certain requirements must be met:

  1. that the owner of the sole proprietorship becomes the sole shareholder of the Simplified Joint Stock Company;
  2. that the company is in a regular payment situation; and
  3. the transfer of assets must be made free of charge or on account of the integration of capital.

The holder of the sole proprietorship will be jointly and severally liable for the obligations prior to the conversion into a Simplified Joint Stock Company. On the other hand, specifically in matters of tax liability, it is jointly and severally liable up to the statute of limitations that the sole proprietorship has.

 Limitations

The legal form of Simplified Joint Stock Company may not be adopted by those companies that:

  1. make a public offering of their shares.
  2. are owned, directly or indirectly, by the State, a Departmental Government, an Autonomous Entity, a Decentralized Service or a non-State public person.
  3. are engaged in activities for which the legislation provides for the adoption of a specific corporate form.

Corporations incorporated before the enactment of Law 19,820, which are transformed into another type of corporation after its enactment, may not adopt this legal form either.

In summary, the creation of this type of company is excellent news for national entrepreneurship, since through this tool the growth of the national and international economy may be boosted.