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September 2018

Advances In The Law For The Simplified Corporation

Advances In The Law For The Simplified Corporation

Peru is the latest state in the region to initiate law reforms to simplify incorporation. By Legislative Decree No. 1409 on September 12, 2018, a regime was created to enable the simplified corporation (Sociedad por Acciones Cerrada Simplificada or “SACS”) and that has as its objective to formalize and revitalize MSMEs.

It may be recalled that in 2017 the OAS General Assembly took note of the Model Law on the Simplified Corporation that had been approved by the Inter-American Juridical Committee and instructed the Department of International Law to disseminate the Model Law as widely as possible. The General Assembly also invited states to adopt, in accordance with their domestic laws and regulatory framework, those aspects of the Model Law that are in their interest, with collaborative support from the Department.

In furtherance of that mandate, the Department has requested that each Member State consider the appointment of a Focal Point for the Model Law on the Simplified Corporation to enable a channel of communication between the OAS and those offices, ministries or bodies responsible for the modernization of corporate legislation and simplification of business incorporation (Verbal Note OEA/2.2/27/18). By means of this mechanism, a network will be established for the effective dissemination of the Model Law throughout the hemisphere and exchange of lessons learned in the course of its implementation. To date, three Member States have appointed a Focal Point, namely, Brazil, Mexico and Paraguay.

While the Model Law has as its objective to simplify incorporation, an effective process for dissolution is equally important. Accordingly, at the 93rd Regular Session of the Inter-American Juridical Committee held in August, members took the decision to include on the working agenda the topic of “dissolution of companies” and appointed Dra. Ruth Correa as Rapporteur. During the session the Committee had heard from Dr. Francisco Reyes, Superintendent of Companies in Colombia, who explained the various challenges for businesses that face outdated, complex and costly legal procedures for the dissolution and wind-up of a business at the end of its life. As work on this topic gets underway, inputs from the aforementioned Focal Points will be taken into account to ensure that end results meet the needs of businesses throughout the region.

» To obtain more information about the Model Law on the Simplified Corporation, click here

» For the Peruvian Legislation, click here

For further information on this matter, please contact the Department of International Law of the Secretariat for Legal Affairs of the OAS +1 202 370 0743.  

» For additional information about the Department, please visit our Website


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