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July 2017

Model Law on the Simplified Corporation


Model Law on the Simplified Corporation

On June 20, 2017, the General Assembly of the Organization of American States adopted a resolution regarding the Model Law on the Simplified Corporation that had been approved by the Inter American Juridical Committee (IAJC).1 Mindful of the contribution that these new forms of companies may make to economic development, the General Assembly resolved to take note of the Model Law and requested the IAJC and the Department of International Law to disseminate the Model Law as widely as possible. OAS Member States have been invited 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.

As its name suggests, the Model Law provides a simplified corporate structure and by doing so, extends the benefits of incorporation to many small- and medium-sized business enterprises (MSMEs) without the complexity and cost that is frequently required under existing domestic legislation in the Americas. The benefit of such simplified business models to economic development is supported in practice. For example, simplification of incorporation can serve as a useful first step to simplify the process of business registration. This, in turn will encourage formalization2 and improve the likelihood of access to credit. This simplified model can also benefit larger businesses that seek expansion into international markets and facilitate foreign investment to improve economic growth.

The Model Law, which had been inspired by the successes of Law 1258 that had introduced the simplified corporation to Colombia in 2008, was approved first by the IAJC in 2012. It was then referred by the Permanent Council for consideration by its Committee on Juridical and Political Affairs (CAJP). To assist the CAJP in that regard, the Department of International Law (Secretariat for Legal Affairs) of the OAS arranged for presentations about the Model Law to be made by Professor David Stewart, former IAJC member and rapporteur for the topic; Professor Francisco Reyes Villamar, primary author of Colombia’s Law; and Ms. Jeannette Tramhel, Senior Legal Officer of the Department of International Law.

In furtherance of its mandate to disseminate information about the Model Law, the Department has already begun its activities, which have included a presentation to the Inter-American Bar Association.  

» For the 2017 OAS General Assembly Resolution, click here 

» For the Model Law on the Simplified Corporation, click here 

» For the 2012 IAJC Resolution and accompanying report, click here 


1 Model Law on the Simplified Corporation, AG/RES.2906 (XLVII-O/17), adopted at the first plenary session held on June 20, 2017.
2 In Latin America and the Caribbean, employment in the informal sector ranges from 40-75%. 

For further information on this matter, please contact the Department of International Law of the Secretariat for Legal Affairs of the OAS +1 202 370-0741. 

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

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