Business Entities - Procedures For The Registration And Supervision In Paraguay

This report deals with the different requirements and procedures for the registration and supervision of corporations (sociedades annimas) and limited liability companies (sociedades de responsabilidad limitada) in Paraguay, as established by the recently issued Decree No. 14122 of July 31, 2001.

Corporations and limited liability companies (LLCs) are the two mostly used legal entities for doing business in Paraguay.

Corporations are basically the unique form of business organization offering public share subscription. They have a minimum requirement of two shareholders who are liable for the debts of the company solely to the limit of their investment.

LLCs are closed and more simple entities most commonly utilized for small businesses. Like corporations, the liability of members is limited and the entity is legally distinct from the quotaholders and the company's losses may not be set off against quota holders' personal assets.

Organization of companies. Procedure before the Treasury Attorney's Office.

The legal status of both types of legal entities is acquired through the registration of their By-laws in the public registries (Public Registry of Juridical Persons and Public Registry of Commerce) that has to be ordered by a first instance civil and commercial judge. A prior favorable legal opinion of the Treasury Attorney Office of the Ministry of Finance is required. The dissolution of the company and cancellation of the legal status also demand analysis and study of the requisites and conditions established by law.

Department in charge of the registration and supervision of companies

In accordance with administrative laws establishing the functions of the Treasury Attorney's Office of the Ministry of Finance, the Department of Registration and Supervision of Companies (DRSC) of that office is in charge of the study and analysis of the charter documents of the companies as well as the supervision of the compliance with the applicable legal provisions regarding shareholders' meetings.

Study of By-laws of the Corporations and LLCs

The DRSC of the Treasury Attorney Office (Ministry of Finance), shall verify that the By-laws of the companies in process of organization are in accordance with the provisions of the Civil Code, specifically the following:

The name, nationality, civil status, profession and domicile of the shareholders, and the number of shares paid in by each one of them;

The company's name and domicile and that of the...