This article aims to explain to the reader the main differences in the regulation of limited liability companies (LLCs), stock corporations (SA), and the new simplified corporations or simplified joint-stock company (SAS), introduced by the recent “Law for the Promotion of Entrepreneurship” No. 19.820.
The objective is to provide the reader with a comparative understanding of the main characteristics of each company type, enabling them to select the one that best suits their operations or business project.
1. ⏳ Term
- In both SAS and stock corporations, a term exceeding 30 years can be established.
- In LLCs, the term cannot exceed 30 years with the possibility of renewal.
2. 🎯 Corporate Purpose
- SA and LLC: The articles/memorandum of association must clearly establish the activities the company will carry out.
- SAS: Its articles of association may define an indeterminate corporate object: “any lawful activity“, avoiding the need for frequent amendments.
3. 👥 Number of Members or Shareholders
- SA and LLC: Require two or more individuals or legal entities to incorporate.
- SA: Only one shareholder may remain after incorporation.
- LLC: Must always have at least two and no more than 50 shareholders.
- SAS: A single shareholder may incorporate the company and remain in this form for the entire life of the company (unipersonal).
4. 💰 Capital Contributions
- SA: At least 25 % of the authorized capital must be paid in at incorporation.
- LLC: At least 50 % of cash contribution and 100 % of in-kind contributions must be subscribed/paid in at signing; they have 2 years to pay the remaining cash capital.
- SAS: 10 % of cash contribution and 100 % of in-kind contributions must be paid in at incorporation; they have a term of 2 years to pay the remaining amount.
5. 🗳️ Vote per Share and Share Premium
- Vote per Share: In LLCs and SA, each share/interest is entitled to one vote. In the SAS, single or multiple votes may be attributed to different classes of shares (flexibility).
- Share Premium: An important innovation of the SAS is that it allows different share premiums within a single share issue. This is expressly prohibited for SA and LLC.
6. 🔄 Transfer of Shares
- SAS: Bylaws can stipulate restrictions on the sale of shares that even imply a prohibition on sale for up to a maximum period of 10 years.
- SA: Transfer of shares is free, although restrictions that do not imply a prohibition to sell may be provided for.
- LLC: Transfer to third parties requires approval of 75 % or unanimity (depending on the number of members).
7. 📍 Venue of the Members’/Shareholders’ Meeting
- SAS and LLCs: Meetings must be held at the company’s registered office.
- SAS: Shareholders’ meetings can be held in any location where shareholders can participate (increased flexibility).
8. 🚫 Exclusion of Members or Shareholders
- SA: No possibility of excluding a shareholder.
- LLC: Members may be excluded for serious noncompliance.
- SAS: Provides for the possibility of establishing the exclusion of the minority shareholder (holding up to 15 % of the issued shares) in the bylaws.
9. 📜 Enforceability of Partnership Agreements against the Company
- LLC: Partnership agreements are not enforceable against the company.
- SA: Enforceable only if certain requirements are met.
- SAS: Agreements delivered to the offices where the administration operates shall be enforceable against the company (greater legal certainty).
10. 🛡️ Liability of Members or Shareholders for Labor and Tax Obligations
- SAS and SA: Shareholders’ liability is limited to their contributions, without exception (unless fraud/abuse).
- LLC: Partners’ liability is also limited to contributions, with two exceptions: they are jointly and unlimitedly liable for debts of a salary nature and for the payment of the Tax on Income from Economic Activities (IRAE).
- Representatives: They may be held jointly and severally liable for tax debts (including IRAE), even if they have not acted negligently or with fraudulent intent.
11. 🏦 Inform about Holders and Beneficial Owners to the Central Bank of Uruguay
- LLCs, SA, and SAS are required to report the holders and beneficial owners to the Central Bank of Uruguay.
- Only LLCs are exempted from this obligation when all their members and beneficial owners are individuals.
12. 🔎 Control by the National Internal Audit (AIN)
- LLC: Not under the AIN’s control.
- SA: Subject to the AIN’s control from the moment of their incorporation.
- SAS: AIN will control them when their annual income exceeds 37,500,000 UIs.
13. 📈 Public Offering of Shares and Debt Securities
- Public Offering: Only stock corporations (SA) may make public offerings of their shares.
- Issuance of Debt Securities: Both SA and the SAS may issue debt securities.
14. 📰 Publication of Incorporation and Corporate Amendments
- SA and LLC: Amendments require publication.
- SAS: Amendments do not require publication (administrative simplification).
15. 💸 Tax Regime (IRAE and ICOSA)
- SA: Taxpayers of Corporate Income Tax (IRAE) under the real regime (25 % tax profit). Must pay the Tax on the Control of Corporations (ICOSA).
- LLC and SAS: May choose to pay IRAE (real or presumptive regime) provided their annual income does not exceed 4,000,000 UI. Do not pay ICOSA.
- All companies are taxpayers of wealth tax and potentially VAT.
