Hamburger
  • Form of entity

    Corporation (Sociedad Anónima or SA)

    Separate and distinct legal entity. Admits a minimum of two shareholders. Managed by a board of directors who are elected by the stockholders of the corporation.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Separate and distinct legal entity. Admits exclusively one shareholder. SAUs are not allowed to be incorporated or wholly owned by SAUs. Managed by a board of directors who are elected by the only stockholder of the corporation.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    Separate and distinct legal entity. Admits one or more shareholders. Managed by a board of directors who are elected by the stockholders. There is an established form of bylaws and public notice that, if used, shall enable the registration of the SAS within 24 hours in the City of Buenos Aires. This new corporate type aims to be more agile and economic alternative, both in its incorporation and in the administration and management. Its incorporation and development are entirely digital.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    Separate and distinct legal entity. Admits a minimum of 2 members and a maximum of 50. Managed by a single manager or several managers with full powers who may act individually, or by a Board of Managers acting by majority, appointed by the members.

  • Entity set up

    Corporation (Sociedad Anónima or SA)

    • Two or more shareholders
    • The local management is in charge of a board of directors, which may have at least one member, no maximum number (at least three directors and one alternative director in case the company's capital stock exceeds ARS$50 million). Directors shall last between one and three years in office, as provided in the bylaws. They may be reelected. The majority of the board of directors must be composed of Argentine residents
    • The president of the board is the legal representative of the company
    • Statutory auditor is optional. Mandatory if capital stock exceeds ARS$50 million
    • Typical charter document: bylaws
    • Corporate Books: stock ledger, shareholders' meeting minutes, board of directors' meeting minutes and attendance records book
    • Should cash be paid out as consideration for the stock; only 25% needs to be paid up upfront, and the balance is paid within two years after that. When considerations for the stock are contributions in kind, the stock must be fully paid off at the time of subscription of the shares

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    • Only one shareholder
    • The local management is in charge of a board of directors, which may have at least one member, no maximum number (at least three directors and one alternative director in case the company's capital stock exceeds ARS$50 million). Directors shall last between one and three years in office, as provided in the bylaws. They may be reelected. The majority of the board of directors must be composed of Argentine residents
    • The president of the board is the legal representative of the company
    • Permanent control by government
    • Statutory auditor is mandatory (at least one regular and one alternate statutory auditor)
    • Typical charter document: bylaws
    • Corporate books: stock ledger, shareholders' meeting minutes, board of directors' meeting minutes and attendance records book
    • Capital stock shall be fully paid up upon execution of bylaws
    • SAUs are not allowed to be incorporated or wholly owned by another SAU

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    • One or more shareholders
    • The managers must be individuals, who may be appointed for an indefinite period. At least one director needs to be an Argentinean resident (provided that the Argentinian resident director is the legal representative of the company)
    • Statutory auditor is optional
    • Corporate books: carried by electronic means (stock ledger, minutes and attendance records book)
    • Should cash be paid out as consideration for the stock; only 25% needs to be paid up upfront, and the balance is paid within two years after that. When considerations for the stock are contributions in kind, the stock must be fully paid off at the time of subscription of the shares

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    • Two or more members
    • The local management is in charge of single or several managers with full powers who may act individually, or a board of managers acting by majority. Managers may be appointed for an indefinite term. The majority of the board of managers must be composed of Argentine residents
    • The legal representative of the company can be a single manager. All managers or a president of the board of managers are entitled with full powers
    • Statutory auditor is optional. Mandatory if capital stock exceeds ARS$10 million (at least one regular and one alternate member)
    • Typical charter document: bylaws
    • Corporate books: minutes
    • Should cash be paid out as consideration for the stock; only 25% needs to be paid up upfront, and the balance is paid within two years after that. When considerations for the stock are contributions in kind, the stock must be fully paid off at the time of subscription of the shares.
  • Minimum capital requirement

    Corporation (Sociedad Anónima or SA)

    Minimum capital of SA is ARS$100,000.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Minimum capital of SAU is ARS$100,000.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    Minimum capital of SAS shall be twice the national minimum vital and mobile wage established at the time of its incorporation (as of March 2019: ARS$23,800).

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    No minimum capital requirement.

  • Legal liability

    Corporation (Sociedad Anónima or SA)

    Directors must act honestly and in good faith in best interests of the company. Directors can be held personally liable to the company, shareholders and third parties if they fail to comply with their general legal duties or specific duties contained in Argentine Law 19,550.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Directors must act honestly and in good faith in best interests of the company. Directors can be held personally liable to the company, shareholders and third parties if they fail to comply with their general legal duties or specific duties contained in Argentine Law 19,550.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    Liability of directors of a corporation under Law 19,550 is applicable to SAS managers. In addition, individuals who are not managers or legal representatives of an SAS, or legal persons acting as managers, are liable in the same way as managers, and their liability will be extended to the acts in which they did not intervene but which they habitually performed.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    In case of SRLs, when articles allow distribution of management powers among individual members of the board of managers, board's liability depends on the individual performance of each manager.

  • Tax presence

    Sociedad Anónima (Corporation) and SRL (LLC)

    An S.A., same as an SRL (LLC), is considered an Argentine resident for tax purposes and is obligated to pay taxes on income obtained worldwide, whether earned within Argentina or abroad. An S.A. may take the sums effectively paid abroad for analogous taxes, for activities carried out abroad as a payment for taxes (within certain limits).

  • Incorporation process

    Corporation (Sociedad Anónima or SA)

    File bylaws for registration with the Public Registry. Starting from April 4, 2018, an "urgent" registration process may be followed to obtain the company's registration and its tax ID within 24 hours, in case no observations are made by the Public Registry in the City of Buenos Aires.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    File bylaws for registration with the Public Registry. Starting from April 4, 2018, an "urgent" registration process may be followed to obtain the company's registration and its tax ID within 24 hours, in case no observations are made by the Public Registry in the City of Buenos Aires.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    File bylaws for registration with the Public Registry. There is an established form of bylaws and public notice that, if used, shall enable the registration of the SAS within 24 hours through digital means in the City of Buenos Aires.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    File bylaws for registration with the Public Registry. An "urgent" registration process may be followed to obtain the company's registration, its tax ID and corporate books within 24 hours, in case no observations are made by the Public Registry in the City of Buenos Aires.

  • Business recognition

    Corporation (Sociedad Anónima or SA)

    Well regarded and widely used.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    This new corporate type was introduced in Argentina in August 2016 pursuant the Argentine Civil and Commercial Code modification and is beginning to be used.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    This new corporate type aims to be more agile and economic alternative, both in its incorporation and in administration and management. Its incorporation and development will entirely be in digital form.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    Well regarded and widely used. This is the type of company usually preferred by foreign shareholders due to tax purposes.

  • Shareholder meeting requirements

    Corporation (Sociedad Anónima or SA)

    Required to hold annual meeting of shareholders to approve the financial statements of the company.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Required to hold annual meeting of shareholders to approve financial statements of the company.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    Required to hold annual meeting of shareholders to approve financial statements of the company.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    Required to hold annual meeting of members to approve financial statements of the company.

  • Board of director meeting requirements

    Corporation (Sociedad Anónima or SA)

    The board shall meet at least once every three months.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Periodical meetings of the board are not required.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    Periodical meetings of the board are not required.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    Periodical meetings of managers are not required.

  • Annual company tax returns

    All corporations must annually file tax returns with federal and state tax authorities.

  • Business registration filing requirements

    Corporation (Sociedad Anónima or SA)

    Initial registration is required, as well as annual filings (financial statements of the company before the Public Registry and the Tax Authority). Every appointment or resignation of directors, change of domicile or bylaws' amendments must be filed with the Public Registry for registration.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Initial registration is required, as well as annual filings (financial statements of the company before the Public Registry and the Tax Authority). Every appointment or resignation of directors, change of domicile or bylaws' amendments must be filed with the Public Registry for registration.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    Initial registration is required. SAS doesn't file its financial statements with the Public Registry, but these documents must be filed with the Tax Authority. Every appointment or resignation of directors, change of domicile or bylaws' amendments must be filed with the Public Registry for registration.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    Initial registration is required. Only SRLs which capital stock exceeds ARS$50 million shall file their annual financial statements with the Public Registry. However, all SRLs must file their fincancial statements with the tax authorities.

  • Business expansion

    Corporation (Sociedad Anónima or SA)

    No need to change as business expands.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    If the number of shareholders exceeds one, the SAU must convert to an SA or SAS.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    No need to change as business expands.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    If the number of members exceeds 50, the SRL must convert to an SA or SAS.

  • Exit strategy

    Any corporate type shall file dissolution documents with the Public Registry.

  • Annual corporate maintenance requirements

    Corporations and single-shareholders corporations must pay annual fee to the Public Registry.

  • Director / officer requirements

    Not applicable for this jurisdiction.

  • Local corporate secretary requirement

    Not applicable for this jurisdiction.

  • Local legal or admin representative requirement

    Not applicable for this jurisdiction.

  • Local office lease requirement

    In some circumstances, the Tax Authority requires evidence of the declared domicile.

  • Other physical presence requirements

    Not applicable for this jurisdiction.

  • Sufficiency of virtual office

    Not applicable for this jurisdiction.

  • Provision of local registered address by law firm or third-party service provider

    A company must provide its registered address. In certain circumstances, a law firm office can provide the registered address until the local entity hires an office. In this case, the company is requested to move its registered office to its new location.

  • Provision of local director or corporate secretary by law firm or third-party service provider

    A company shall provide a local director. In certain circumstances, a law firm may provide a local director service at a monthly rate.

  • Nationality or residency requirements for shareholders, directors and officers

    Corporation (Sociedad Anónima or SA)

    Majority of members of the board need to be Argentinean residents.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Majority of the members of the board need to be Argentinean residents.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    At least one director needs to be Argentinean resident (provided that the Argentinean resident director is the legal representative of the company).

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    Majority of the members of the board need to be Argentinean residents.

  • Restrictions regarding appointment of nominee shareholders or directors

    Not applicable for this jurisdiction.

  • Summary of director's, officer's and shareholder's authority and limitations thereof

    Not applicable for this jurisdiction.

  • Public disclosure of identity of directors, officers and shareholders

    Not applicable for this jurisdiction.

  • Minimum and maximum number of directors and shareholders

    Corporation (Sociedad Anónima or SA)

    • Two or more shareholders
    • Board of directors, which must have at least one member, no maximum number requirement (at least three directors and one alternative director in case the company's capital stock exceeds ARS$50 million)

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    • One shareholder
    • Board of directors, which must have at least one member, no maximum number requirement (at least three directors and one alternative director in case the company's capital stock exceeds ARS$50 million)

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    • One or more shareholders
    • The managers must be individuals, who can be appointed for an indefinite period

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    • Two or more members (within a maximum of 50 members)
    • The local management is maintained by a single manager, several managers with full powers who may act individually, or a board of managers acting by majority. Managers may be appointed for an indefinite term
  • Minimum number of shareholders required

    Corporation (Sociedad Anónima or SA)

    At least two or more shareholders.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    Only one shareholder is admitted.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    At least one shareholder.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    At least two or more members.

  • Removal of directors or officers

    Removal of directors or managers shall be approved by the shareholders meeting and then registered in the Public Registry.

  • Required and optional officers

    Not applicable for this jurisdiction.

  • Board meeting requirements

    Not applicable for this jurisdiction.

  • Quorum requirements for shareholder and board meetings

    Corporation (Sociedad Anónima or SA)

    The Board makes decisions by a simple majority of directors present at the relevant meeting, with a quorum of an absolute majority of total number of directors, unless the company's articles provide for a higher quorum and majority.

    In case of annual or regular shareholders' meetings, the required quorum shall be constituted by shareholders representing the majority of the voting shares. If quorum is not reached, the meeting can be held at a second call. In this case, the meeting is duly constituted with any number of shareholders present. On the other hand, special meetings require the presence of shareholders representing 60% of the voting shares, unless the articles provide for a higher quorum. If quorum is not reached, the meeting can be held at a second call. In this case, the meeting is duly constituted with the presence of shareholders representing 30% of the voting shares, unless the articles provide otherwise.

    Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

    The board makes decisions by a simple majority of directors present at the relevant meeting, with a quorum of an absolute majority of total number of directors, unless the company's articles provide for a higher quorum and majority.

    In the case of shareholders' meeting, quorum is reached if at least one shareholder of the company is present.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    Meetings may be held physically or through digital means (video or teleconference). Managers and members may call themselves to hold deliberations, with no need of prior notice. The management body's resolutions are valid as long as all members attend, and the majority as stated in the bylaws approve the agenda. Member's resolutions will be valid, provided that all partners attend and the agenda is passed unanimously.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    The board makes decisions by a simple majority of the managers present at the relevant meeting, with a quorum of an absolute majority of total number of directors, unless the company's articles provide for a higher quorum and majority.

    In case of annual or regular members' meetings, required quorum is constituted by the shareholders representing the majority of the voting shares. If quorum is not reached, meeting can be held at a second call. In this case, the meeting is duly constituted with any number of shareholders present. On the other hand, special meetings require the presence of members representing 60% of voting shares, unless articles provide for a higher quorum. If quorum is not reached, a meeting can be held at a second call. In this case, the meeting is duly constituted with the presence of members representing 30% of voting shares, unless the articles provide otherwise.

  • Must a bank account be opened prior to incorporation, and must the bank account be local?

    Not applicable for this jurisdiction.

  • Auditing of local financials. If so, must the auditor be located in local jurisdiction, and must the company's books be kept locally?

    All companies need to have at least annual financial statements audited. The auditor must be located in Argentina and the company's corporate and accounting books must be kept locally.

  • Requirement regarding par value of stock

    Not applicable for this jurisdiction.

  • Increasing of capitalization if needed

    Not applicable for this jurisdiction.

  • Summary of how funds can be repatriated from your jurisdiction (ie dividends or redemption)

    When approving annual financial statements, shareholders' meeting can resolve to distribute dividends, which will be transferred to respective shareholders.

  • Restrictions on transferability of shares

    Corporation (Sociedad Anónima or SA)

    No restrictions, unless otherwise provided in bylaws. Transfers are reported to the company and recorded in Stock Ledger Book.

    Single-Shareholder Corporation (Sociedad por Acciones Unipersonal or SAU)

    No restrictions, unless otherwise provided in bylaws. Transfers are reported to the company and recorded in  Stock Ledger Book.

    Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

    No restrictions, unless otherwise provided in bylaws. Transfers are reported to the company and recorded in Stock Ledger Book.

    Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

    No restrictions, unless otherwise provided in bylaws. Transfers shall be reported and registered with the Public Registry of Commerce.

  • Obtaining a name and naming requirements

    Corporate name must contain the type of company it adopted. Name may be reserved before registering the company by paying and filing a form with the Public Registry, in case chosen name is available.

  • Summary of "know your client" requirements

    Not applicable for this jurisdiction.

  • Approval requirements for amending charter document

    Amendments to bylaws in all companies must be approved by shareholders or members' meeting and then filed for registration by the Public Registry.

  • Licenses required to conduct business in jurisdiction

    Not applicable for this jurisdiction.

  • Process of purchasing and utilizing a shelf company

    Not applicable for this jurisdiction.

  • Key contacts
    Martin Mittelman
    Martin Mittelman
    Partner DLA Piper (Argentina) [email protected] T +5411 41145500 View bio
    Antonio Arias
    Antonio Arias
    Partner DLA Piper (Argentina) [email protected] T +5411 4114 5500 View bio

Entity set up

Argentina

Corporation (Sociedad Anónima or SA)

  • Two or more shareholders
  • The local management is in charge of a board of directors, which may have at least one member, no maximum number (at least three directors and one alternative director in case the company's capital stock exceeds ARS$50 million). Directors shall last between one and three years in office, as provided in the bylaws. They may be reelected. The majority of the board of directors must be composed of Argentine residents
  • The president of the board is the legal representative of the company
  • Statutory auditor is optional. Mandatory if capital stock exceeds ARS$50 million
  • Typical charter document: bylaws
  • Corporate Books: stock ledger, shareholders' meeting minutes, board of directors' meeting minutes and attendance records book
  • Should cash be paid out as consideration for the stock; only 25% needs to be paid up upfront, and the balance is paid within two years after that. When considerations for the stock are contributions in kind, the stock must be fully paid off at the time of subscription of the shares

Single-Shareholder Corporation (Sociedad Anónima Unipersonal or SAU)

  • Only one shareholder
  • The local management is in charge of a board of directors, which may have at least one member, no maximum number (at least three directors and one alternative director in case the company's capital stock exceeds ARS$50 million). Directors shall last between one and three years in office, as provided in the bylaws. They may be reelected. The majority of the board of directors must be composed of Argentine residents
  • The president of the board is the legal representative of the company
  • Permanent control by government
  • Statutory auditor is mandatory (at least one regular and one alternate statutory auditor)
  • Typical charter document: bylaws
  • Corporate books: stock ledger, shareholders' meeting minutes, board of directors' meeting minutes and attendance records book
  • Capital stock shall be fully paid up upon execution of bylaws
  • SAUs are not allowed to be incorporated or wholly owned by another SAU

Simplified Corporation (Sociedad por Acciones Simplificada or SAS)

  • One or more shareholders
  • The managers must be individuals, who may be appointed for an indefinite period. At least one director needs to be an Argentinean resident (provided that the Argentinian resident director is the legal representative of the company)
  • Statutory auditor is optional
  • Corporate books: carried by electronic means (stock ledger, minutes and attendance records book)
  • Should cash be paid out as consideration for the stock; only 25% needs to be paid up upfront, and the balance is paid within two years after that. When considerations for the stock are contributions in kind, the stock must be fully paid off at the time of subscription of the shares

Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL)

  • Two or more members
  • The local management is in charge of single or several managers with full powers who may act individually, or a board of managers acting by majority. Managers may be appointed for an indefinite term. The majority of the board of managers must be composed of Argentine residents
  • The legal representative of the company can be a single manager. All managers or a president of the board of managers are entitled with full powers
  • Statutory auditor is optional. Mandatory if capital stock exceeds ARS$10 million (at least one regular and one alternate member)
  • Typical charter document: bylaws
  • Corporate books: minutes
  • Should cash be paid out as consideration for the stock; only 25% needs to be paid up upfront, and the balance is paid within two years after that. When considerations for the stock are contributions in kind, the stock must be fully paid off at the time of subscription of the shares.

Australia

Branch

  • To establish a branch, the foreign company must be registered with ASIC and assigned an Australian Registered Body Number (ARBN)
  • A branch is not a separate legal entity. The foreign company has full legal responsibility for the actions of the Australian branch
  • Must appoint at least one local agent
  • The local agent is responsible for the foreign company's compliance with the Corporations Act and may be personally liable for any breaches or penalties
  • Must maintain a registered office in Australia
  • Taxed as a separate entity in Australia; taxed on all income sourced from Australia and
  • Foreign Investment Review Board approval may be required before agreements to acquire shares, assets or real property can be entered into

Proprietary company

  • Must have at least one but no more than 50 shareholders (excluding employees shareholders)
  • Generally, no personal liability of the shareholders beyond amount agreed to be subscribed for shares
  • Taxed on its earnings at the corporate level; can frank dividends distributed to shareholders
  • Usually has a constitution setting out operational procedures
  • Board of directors has overall management responsibility
  • Shareholders purchase shares in the company at an issue price per share which is generally determined by the Board of directors from time to time by reference to their directors' duties. May have numerous classes of shares
  • Cannot engage in fundraising activities that would require disclosure to investors under the Corporations Act (eg, requiring a prospectus to be issued)

Public company

  • Must have at least one shareholder, but can have any number
  • Generally, no personal liability of the shareholders beyond amount agreed to be subscribed for shares
  • Taxed on its earnings at the corporate level; can frank dividends distributed to shareholders
  • Usually has a constitution setting out operational procedures
  • Board of directors has overall management responsibility
  • Shareholders purchase shares in the company at an issue price per share which is generally determined by the Board of directors from time to time by reference to their directors' duties. May have numerous classes of shares
  • Can offer shares to the public, but must comply with requirements of the Corporations Act, including issuing a disclosure document such as a prospectus
Note: In addition to the above, there are other legal entities that can be established under Australian law, such as unlimited liability companies, companies limited by guarantee and no liability companies. However, these are very rarely used for business purposes and are not considered further.

Austria

Stock corporation (in German: Aktiengesellschaft or abbreviated AG)

  • In theory, unlimited number of shareholders (limited only by the number of shares since one share must at least correspond to €1.00)
  • Generally, there is no personal liability of the shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Minimum stated capital: €70,000; one share must at least correspond to €1.00
  • Two-tier board system: the management board is responsible for the day-to-day management, the supervisory board supervises management and grants its consent (in some cases mandatory) to certain business and transactions
  • Typical charter documents include: articles of incorporation; standing orders; organizational resolutions by the management board, the supervisory board and the AGM/EGM; shares must be registered shares (except for listed entities which usually have bearer shares), therefore a share register is required
  • Shareholders typically purchase stock in the corporation, usually common, hardly preferred, and annual financial statements must be audited by an auditor and filed with Austrian companies registry

Limited liability company (Gesellschaft mit beschränkter Haftung, GmbH)

  • Unlimited number of shareholders allowed (limited only by the number of shares since one share must at least correspond to €70.00)
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends Minimum stated capital: €35,000; one share must at least correspond to €70.00
  • One-tier management or two-tier board system, depending on the size of the company: the management is responsible for the day-to-day management; the supervisory board, if established, supervises management and grants its consent (in some cases mandatory) to certain business and transactions
  • Typical charter documents include:
    • Articles of incorporation
    • Standing orders
    • Organizational resolutions by the management board, if applicable, the supervisory board and the AGM/EGM
    • The shares of each shareholder is registered with the Austrian companies registry
  • Depending on the size (established by the balance sheet total, turnover and number of employees), annual financial statements must be audited by an auditor and filed with Austrian companies registry

Bahrain

With Limited Liability (WLL)

  • Number of shareholders must not exceed 50 and must not be less than 2
  • Shareholder's liability limited to their share in the capital
  • May not engage in the business of insurance and banking on behalf of other parties
  • May not issue any shares, negotiable warrants or debentures to the public
  • Capital must be divided into shares of equal value of not less than BHD 50 each
  • A percentage of the profits of the WLL must be set aside each year for depreciation
  • 10% of the profits thereafter must be set aside to build-up a compulsory reserve until the amount of the reserve equals 50% of the capital of the company

Closed Shareholding Company (BCS(c))

  • Incorporated with no less than two shareholders
  • Shares cannot be offered to the public
  • Allowed to carry out banking and insurance activities
  • Minimum capital of BHD 250,000 with each share valuing at a minimum of BHD 0.100 and a maximum of BHD 100

Single Person Company (SPC)

  • An SPC is a limited liability vehicle consisting of a sole shareholder
  • The sole shareholder owns 100% of the share capital in the company
  • The sole shareholder may be a natural or a legal person

Foreign Branch (Branch)

  • The competent department at the Ministry of Industry, Commerce and Tourism shall maintain a special register to enter the names of the foreign companies incorporated abroad and undertaking its activities in Bahrain
  • Legally regarded as part of its parent company (no separate legal identity)
  • Activities limited to those of its parents, as stated in its parent's objects

Belgium

Public limited company (société anonyme/naamloze vennootschap)

  • One incorporator (natural person or legal entity) -– unlimited number of shareholders
  • Limited liability of the shareholders
  • Subject to corporate income tax
  • Typical charter documents include:
    • Articles of incorporation
    • Bylaws
    • Shareholders' resolutions
    • Board resolutions and
    • Share register
  • Subject to the board structure that is chosen (ie, monistic or dualistic), the board of directors or the sole director has the overall management responsibility. In the dualistic board structure the board of supervision has the reserved competences and the executive board has the residual as well as the operational competences
  • Shareholders typically purchase shares in the company (either registered or dematerialized) – shares are freely transferable
  • Different types of stock can be issued (eg, shares with or without voting rights, profit sharing certificates, stock options, etc.) – can issue financial instruments such as bonds
  • Annual accounts to be filed with the National Bank of Belgium

Limited company (société à responsabilité limitée/besloten vennootschap)

  • One incorporator (natural person or legal entity) – unlimited number of shareholders
  • Limited liability of the shareholders
  • Subject to corporate income tax
  • Typical charter documents include:
    • Articles of incorporation
    • Bylaws
    • Shareholders' resolutions
    • Board resolutions and
    • Share register
  • Every director has the authority to conduct all acts which are necessary or useful to realize the limited company's corporate purpose, unless the law provides that such acts are the exclusive responsibility of the general meeting. Daily management can be attributed to one or more persons acting alone, jointly or as a college
  • Shareholders typically purchase shares in the company (in principle registered) – shares are not freely transferable – form less used for joint ventures
  • Different types of stock can be issued (eg, shares with or without voting rights, profit sharing certificates, stock options, etc.) – can issue financial instruments such as bonds
  • Annual accounts to be filed with the National Bank of Belgium

Belgian branch office of a foreign company

  • The competent corporate body of a foreign company can decide to open a Belgian branch office
  • No separate legal entity, so therefore the foreign company shall be liable for all the obligations entered into
  • Physical existence in Belgium for a "branch office" in which a foreign company carries out its activities
  • Presence in Belgium of a legal representative who may bind the foreign company
  • Regular exercise activities in Belgium
  • Various documents related to the foreign company will in principle have to be translated in one of the official Belgian languages and filed with the clerk's office of the competent enterprise court, such as the deed of incorporation, the latest version of the articles of association
  • A legal representative will have to represent the foreign company in Belgium, and
  • The (consolidated) annual accounts of the foreign company will, on an annual basis, have to be filed with the National Bank of Belgium

Brazil

Although the Brazilian Law sets forth other types of companies, the Brazilian companies usually adopt the form of a limited liability company, called "Sociedade Empresária Limitada" or of a corporation, called "Sociedade Anônima."

Limited liability company (Sociedade Limitada)

  • A Sociedade Limitada shall have, at least, two quotaholders
  • Capital divided into quotas. The ownership of quotas and any burden over such quotas are reflected in the articles of organization. It is possible to issue preferred quotas
  • In principle, the liability of the quotaholders is limited to the total subscribed capital which has not been paid in by them
  • Managers (quotaholders or not) are responsible for the day-to-day management of the company's business and for representing the company before third parties
  • An annual meeting shall be held by the quotaholders in the first four months after the end of the previous fiscal year in order to approve the management's accounts, and the company's balance sheet and economical results
  • No public subscription or participation in the capital is allowed and a Sociedade Limitada cannot publically trade its quotas or list on a stock exchange
  • Taxed on its profits and gross revenues at a corporate level and quotaholders are exempt from income tax on dividend distribution

Corporation (Sociedade Anônima)

  • Minimum of two shareholders
  • Capital divided into shares. Different classes of shares allowed
  • Generally, the ownership of shares and any burden over such shares are reflected in the corporate books
  • The liability of the shareholders is limited to the total subscribed capital which has not been paid in by them
  • Typical charter documents include: bylaws; minutes of shareholders' general meetings; resolutions of the board of officers and board of directors; corporate books
  • Board of directors, if existing, has overall management responsibility; officers have day-to-day responsibility
  • Shareholders typically purchase stock in the corporation, either common or preferred
  • An annual meeting shall be held by the shareholders in the first four months after the end of the previous fiscal year in order to approve the management's accounts and the corporation's financial statements
  • A Sociedade Anônima may be a publicly traded company and offer its securities for sale to the general public
  • Taxed on its profits and gross revenues at a corporate level and shareholders are exempt from income tax on dividend distribution

Canada

Corporate subsidiary

Corporation form (limited liability corporation)

  • Incorporate under either federal or provincial/territorial law
  • Most foreign businesses choose this form rather than branch office
  • Certain industries are subject to specific legislation and must incorporate under these laws, (eg, banking or insurance companies)
  • For corporations under federal law, 25% of directors must be residents of Canada. If a corporation has less than four directors, at least one director must be a resident Canadian. Certain corporations in prescribed activities require a majority of resident Canadian directors
  • Provinces/territories have different residency requirements for directors (some have no residency requirements)
  • Cannot consolidate income and loss with operations in other corporate entities for Canadian tax purposes

Flow-through form

  • Unlimited liability companies (ULCs) may be created in the provinces of Nova Scotia, British Columbia and Alberta
  • For Canadian income tax purposes, ULCs are treated as regular corporations, subject to Canadian tax on their worldwide income; however, for US tax purposes, ULCs are treated either as partnerships or "check the box" flow-through entities, possibly offering cross-border opportunities

Branch (permanent establishment)

  • Parent corporation must register and obtain an extra-provincial or extra-territorial license from each province/territory where it plans to conduct business
  • Must have a Canadian place of business where corporate records are kept
  •  Canadian branch operations of foreign corporations are subject to Canadian federal and provincial/territorial tax on income and gains sourced in Canada (primarily income from a business carried on in Canada). The branch will be required to calculate income or loss from the business carried on in Canada and may deduct expenses only in respect of that business carried on in Canada
  • A 25% branch tax levied on after-tax Canadian earnings carried on in Canada less amounts that are reinvested in Canadian business (which is intended to mirror the 25% withholding tax that would be payable on taxable dividends from a Canadian subsidiary corporation). Financial and tax accounting and reporting obligations may be more complex as the branch is not a legal entity. The rate of branch tax may be reduced under certain tax treaties between Canada and the country of residence of the foreign corporation
  • The parent company remains liable for debts and obligations of the branch
  • It is common to create a wholly owned subsidiary in home jurisdiction to consolidate losses from the Canadian branch operations but avoid direct liability
Note: The mechanics and operation of corporations are governed by the federal or provincial/territorial laws of incorporation.

Chile

Branch of a foreign corporation (Agencia de Sociedad Anónima Extranjera)

  • Unlimited number of shareholders settled by a foreign corporation
  • Foreign corporation is liable for all the activities and business carried out by the Chilean branch
  • An agent shall be vested with broad authorities to represent a foreign corporation and to manage the branch
  • Typical charter documents include:
    • Articles of incorporation of the foreign corporation
    • Bylaws
    • Certificate of good-standing of the foreign corporation
    • Power of attorney granted to the agent
  • The documents shall be registered with a local public notary and rendering a notarial public deed including certain declarations and representations regarding Chilean legal compliance
  • No limitations on remittance of profits from the branch to foreign corporation
  • The agent must publish financial statements of the branch every year in a newspaper located in the corporate branch's domicile in Chile

Corporation (Sociedad Anónima)

  • At least two shareholders
  • Can be public (generally publicly traded) or private
  • Shareholders are only liable in the amount they agreed to regarding subscribed shares
  • The law requires that open corporations distribute at least 30% of their profits each year
  • Financial statements of corporation must be audited by account inspectors or external auditors appointed during the shareholding meeting. This fulfillment may differ in case of private corporations. Public corporations must provide any required information to the Comisión para el Mercado Financiero
  • Typical charter documents include:
    • Articles of incorporation
    • Bylaws
    • Organizational board resolutions
    • Stock certificates
    • Stock ledger
  • Board of directors has overall management responsibility; officers have day-to-day responsibility

Limited liability company (Sociedad de Responsabilidad Limitada)

  • At least two partners and up to 50 partners
  • Partner liability is limited to the amounts each agreed to contribute, or to a higher amount specified in the by-laws
  • The terms and conditions of profit distributions may be freely set forth in the by-laws and according to the tax law compliance
  • Typical charter documents include:
    • By-laws
    • Capital contributions and others
  • Management is vested in one or more partners, in a third party or in a Board of Directors appointed for that purpose
  • Transfer of equity interests requires the unanimous consent of all partners and constitutes an amendment to the bylaws
  • No publication of financial statements is required

Limited liability partnership (Sociedad en Comandita)

  • Unlimited number of partners
  • Limited partner liability is capped at the amounts the partners have agreed to contribute. General partners have unlimited liability
  • Management by general partners of the company
  • Typical charter documents include:
    • By-laws
    • Capital contributions
    • A certification deed indicating that at least 25% of capital or all capital is subscribed and paid out in full
  • Transfer of equity interests requires the unanimous consent of all partners
  • No publication of financial statements is required
  • The terms and conditions of profit distributions may be freely set forth in by-laws according to tax law compliance

Partnership limited by shares (Sociedades por Acciones)

  • Unlimited number of partners and can be incorporated by a single shareholder
  • Shareholders are only liable in the amount partners agreed to pay
  • Management by one or more partners, a third party or a board of directors appointed for that purpose
  • Typical charter documents include:
    • Articles of incorporation
    • Bylaws
    • Organizational board resolutions
    • Stock certificates
    • Stock ledger
  • Shareholders may freely transfer their shares
  • SpA's may acquire their own shares
  • The law allows the creation of preferred stock, with no time limit, entitled to receive a dividend of a fixed amount or through and agreed upon formula, which must be paid out to investors prior to the common stock

China

Limited liability company (LLC)

  • Up to 50 shareholders
  • Generally no personal liability of shareholders
  • Taxed at two levels (commonly referred to as double taxation). First an LLC pays an enterprise income tax on its corporate income; then an LLC distributes its after-tax profits as dividends to shareholders who then pay income tax on those dividends
  • Typical charter documents include:
    • Articles of association
    • Business license
    • For foreign-invested LLCs, also include additional documents such as joint venture contract for Sino-foreign joint ventures
    • A recordal certificate (or approval letter and certificate of approval if establishment of an LLC is subject to approval of the commerce authority)
  • Shareholders typically subscribe and contribute to the registered capital of an LLC according to articles of association
  • An annual report should be filed with the Administration for Market Regulation (AMR). For foreign-invested companies, a joint annual report should, in addition, be filed with various authorities

Company limited by shares

  • There must be 2 to 200 promoters, of whom more than half must have domiciles in China
  • Generally no personal liability of shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Typical charter documents include:
    • Promoters' agreement
    • Articles of association
    • Business license
  • Shareholders typically purchase stock in company, but generally only one class of stock is allowed. China allows listed or non-listed public companies (with more than 200 shareholders) to issue preferred stock on a trial basis
  • An annual report must be filed with the AMR

Partnership enterprise

  • At least two partners; up to 50 partners for limited partnership unless otherwise provided by law
  • General partners have unlimited joint and several liability for the debts of the partnership; limited partners have liability for the debts of the partnership to the extent of the capital contributions they have subscribed for
  • Not taxed on earnings at partnership level, and profits and losses are passed through to the partners who are subject to taxes
  • Typical charter documents include:
    • Partnership agreement
    • Business license
  • Partners typically contribute money, property, intellectual property, land use right or other property right to the partnership. General partners may contribute labor services to the partnership. Partners receive an interest in profits and losses
  • An annual report must be filed with the AMR
Note: Because LLC is the most common investment vehicle used by foreign investors, we only introduce LLC in detail in the following sections and can provide information on other forms of entities upon request.

Colombia

General partnership (Sociedad Colectiva)

  • Minimum of two partners and there is no maximum
  • Partners have subsidiary personal liability; creditors must first pursue the General Partnership's patrimony
  • At a corporate level, general partnerships are taxed based on their earnings; at a natural person's level, partners are taxed based on distributed dividends
  • Private companies, meaning partners must manage the company themselves or unanimously authorize a third person to do so, as well as unanimously authorize total or partial assignment of participation in the company, or the possibility for partners to carry out similar lines of business on their own
  • Incorporation must be through public deed registered by the Registry of Commerce
  • Partnership board has overall management responsibility
  • Partners have a veto right and can oppose any proposal, and such opposition suspends the proposed activity or project until majority vote is obtained
  • Partnership board must meet by the end of every business activity and approve the company's financial statements at least once a year
  • Colombian law requires any foreign investment to be declared through the Colombian Central Bank
  • Colombian law does not require general partnerships to have a statutory auditor, unless the company exceeds a certain amount of assets

Limited partnership (Sociedad en Comandita Simple y por Acciones)

  • Two types of partners: managing partners (one or more) and a limited partner (one or more). In case of a share limited partnership, there must be at least five share limited partners
  • Managing partners have personal liability and limited partners have limited liability
  • At a corporate level, limited partnerships are taxed based on their earnings; at a personal level, partners are taxed based on distributed dividends
  • Limited partnerships are hybrid companies, meaning that to transfer participation of a managing partner, partners of the company must agree unanimously and amend company's bylaws. On the other hand, to transfer participation of a limited partner, rest of limited partners must agree unanimously and amend  company's bylaws
  • Incorporation must be through public deed registered by the Registry of Commerce
  • Partnership board is the highest corporate body; managing partners have the responsibility of managing and legally representing the company
  • Company's capital is composed by the limited partner's contribution. However, managing partners may also contribute to the company's capital
  • Managing partners each have a vote in the partnership board. Limited partners have a number of votes that proportionally corresponds to their ownership in the company
  • Partnership board must meet and approve the company's financial statements at least once a year
  • Colombian law requires any foreign investment to be declared through the Colombian Central Bank
  • Colombian law does not require limited partnerships to have a statutory auditor, unless the company exceeds certain amount of assets

Limited liability company (Sociedad de responsabilidad limitada)

  • Must be at least two partners and no more than 25 partners
  • Partners have no personal liability
  • At a corporate level, limited liability companies are taxed based on their earnings; at a personal level, partners are taxed based on distributed dividends
  • In a limited liability company, transfer of participation must be carried out through a bylaw reform, following procedures regarding preemptive rights
  • Incorporation must be through public deed registered by the Registry of Commerce
  • Partnership board is the highest corporate body
  • Company's capital must be totally paid by the time of incorporation, and any modification of the capital must be established through a registered amendment to the bylaws of the company
  • Partners' votes proportionally correspond to their participation in the company
  • Partnership Board must meet and approve the company's financial statements at least once a year
  • Colombian law requires any foreign investment to be declared through the Colombian Central Bank
  • Colombian law does not require a Limited liability company to have a statutory auditor, unless the company exceeds certain amount of assets

Corporation (Sociedad Anónima)

  • Must have a minimum of five shareholders and no maximum requirements
  • Shareholders have no personal liability
  • At a corporate level, corporations are taxed based on their earnings; at a personal level, shareholders are taxed based on distributed dividends
  • Shareholders have preemptive rights to subscribe and pay shares if the Shareholders General Assembly agrees to increase its capital
  • The incorporation must be through public deed registered by the Registry of Commerce
  • Shareholders General Assembly is the highest corporate body, and the board of directors is the managing body. Corporations must also have a legal representative and a statutory auditor
  • Company's capital is divided into stock
  • Shareholders typically incorporate a corporation or may purchase shares from existing shareholders
  • Shareholders of a corporation may execute a shareholders' agreement or determine certain provisions in the company's bylaws like certain rights and obligations regarding negotiation of shares, vote rights, majorities for decision-making, drag-along and tag-along rights, put and call options, deadlock solution procedures, issuance of non-voting shares, etc.
  • Shareholders General Assembly must meet and approve the company's financial statements at least once a year
  • Colombian law requires any foreign investment to be declared through the Colombian Central Bank
  • Colombian law does require a corporation to have a statutory auditor

Simplified stock company (Sociedad por Acciones Simplificada)

  • Must have a minimum of one shareholder and no maximum requirements
  • Shareholders have no personal liability
  • At a corporate level, simplified stock companies are taxed based on their earnings; at a personal level, shareholders are taxed based on distributed dividends
  • Shareholders have preemptive rights to subscribe and pay shares if the Shareholders General Assembly approves to increase its capital
  • The incorporation must be through public deed registered by the Registry of Commerce
  • Shareholders General Assembly is the highest corporate body. A simplified stock company must have a legal representative and can have board of directors if shareholders prefer to
  • Company's capital is divided in stock
  • Shareholders typically incorporate simplified stock company or may purchase shares from existing shareholders
  • Shareholders of a corporation may execute a shareholders' agreement or determine certain provisions in the company's bylaws, such as certain rights and obligations regarding negotiation of shares, vote right, majorities for decisions, drag-along and tag-along rights, put and call options, deadlock solution procedures, issuance of non-voting shares, etc.
  • Shareholders General Assembly must meet and approve the company's financial statements at least once a year
  • Colombian law requires any foreign investment to be declared through the Colombian Central Bank
  • Colombian law does not require a simplified stock company to have a statutory auditor, unless the company exceeds certain amount of assets

Czech Republic

Limited liability company

  • Unlimited number of shareholders allowed (limited only by the number of shares since one share must at least correspond to CZK1 unless articles stipulate otherwise)
  • Taxed on its earnings at a corporate level, and shareholders are taxed on any distributed dividends
  • Minimum stated capital: none prescribed; however, one share must at least correspond to CZK1
  • One-tier management (or two-tier board system, if supervisory board is set up), depending on the size of the company. Management is responsible for the day-to-day management; the supervisory board, if established, supervises management and grants its consent (in some cases mandatory) to certain business and transactions
  • Typical charter documents include:
    • Articles of incorporation
    • Organizational resolutions by managing directors, if applicable, supervisory board and AGM/EGM
    • List of shareholders
    • Share of each shareholder is registered with the Czech commercial register, share certificates may be issued
  • Depending on the size (established by the balance sheet total, turnover and number of employees), annual financial statements must be audited by an auditor and filed with Czech commercial register

Joint stock company

  • In theory, unlimited number of shareholders
  • Taxed on its earnings at a corporate level, and shareholders are taxed on any distributed dividends
  • Minimum stated capital: CZK 2,000,000 or €80,000
  • Governance system may be two-tier with a board of directors (představenstvo) and supervisory board (dozorčí rada), or single-tier with a statutory director (statutární ředitel) and administrative board (správní rada); the first arrangement is more common
  • Typical charter documents include:
    • Articles of incorporation
    • Organizational resolutions by management board, supervisory board and AGM/EGM
    • Shares must be either registered shares or, if bearer shares, then issued only as dematerialized shares registered by securities depository
  • Depending on the size (established by the balance sheet total, turnover and number of employees), annual financial statements must be audited by an auditor and filed with Czech commercial register

Denmark

Limited company (Kapitalselskab)

  • There are four types of limited companies: public limited companies (Aktieselskaber or A/S), private limited companies (Anpartsselskaber or ApS), limited partnership companies (Partnerselskaber or P/S) and entrepreneur companies (Iværksætterselskaber or IVS)
  • Recently enacted changes to the Danish Companies Act entail that new entrepreneur companies (IVS) cannot be established after April 15, 2019 and existing entrepreneur companies (IVS) shall be converted into a private limited company (anpartsselskab) with a registered minimum nominal share capital of DKK 40,000 no later than April 2021
  • Minimum one shareholder and no maximum
  • Generally no personal liability of the shareholders
  • Limited companies are taxed on their earnings at a corporate level, and shareholders are taxed on distributed profits and salary from the company
  • Limited companies are subject to a Danish corporate income tax rate which currently amounts to 22%
  • Typical corporate documents include:
    • memorandum of association
    • articles of association
    • rules of procedure for the board of directors
    • minutes of the general meetings
    • shareholder' agreement
    • register of shareholders
  • The board of directors holds the overall and strategic management responsibility; the executive board has day-to-day management responsibility of the company
  • Separate classes of shares with different rights (voting, dividends, etc.) are commonly used
  • Annual reports must be filed annually with the Danish Business Authority

General partnership (Interessentskab, I/S)

  • Minimum two partners are required, which can be either natural persons or legal entities, such as limited companies
  • No startup capital requirement
  • Founded by an agreement between the partners; registration with the Danish Business Authority is possible and mandatory if all partners are legal entities
  • A general partnership is tax transparent. Each partner is taxed individually for its part of the profits of the general partnership (income tax)
  • The partners are personally liable for the debt of the general partnership
  • An authorized or approved auditor and filing of annual reports are required where the general partnership meets certain criteria regarding partners, number of employees, balance sheet total and net turnover

Limited partnership (Kommanditselskab, K/S)

  • Minimum two partners are required, which can be eiher natural persons or legal entities, such as limited companies
  • At least one partner of the limited partnership must take status as the general partner (Komplementar) and at least one as the limited partner (Kommanditist)
  • The general partner has unlimited, personal liability (jointly and severally) for the agreements and debts of the limited partnership. The limited partner is only liable for the subscribed capital, which is similar to the liability of limited companies. The liability includes debts that already exist at the time of becoming a partner
  • There is no startup capital requirement for the general partner, but a capital requirement for each limited partner is minimum DKK 1
  • A limited partnership is tax transparent like a general partnership. Partners are taxed individually for their part of the profits of the limited partnership (income tax and social security contributions)
  • A limited partnership is incorporated by filing with the Danish Business Authority
  • An authorized or approved auditor and filing of annual reports are required where the limited partnership meets certain criteria regarding partners, number of employees, balance sheet total and net turnover

Branch office (Filial)

  • A company based within the EU or EEA or based in the US, Switzerland, South Korea or Georgia that engage in business activities in Denmark may register a branch office with separate management in Denmark. Companies based in other countries may register a branch in Denmark as well; however, a declaration from the business authorities in the country in which the company is incorporated is required

  • A branch is not a separate legal entity but is part of the foreign-based company

  • It has no independent capital and the assets and liabilities are a part of the total assets of the foreign-based company

  • One or more branch managers must be appointed to run the business activities in Denmark

  • The branch is subject to a Danish corporate tax rate which currently amounts to 22%

  • The branch is incorporated by filing with the Danish Business Authority

  • The business name must contain the name of the foreign-based company and the word "filial" added hereto

  • A branch must file annual reports of the foreign company with the Danish Business Authority

Egypt

JSC

  • Minimum of 3 shareholders is required with no maximum limit

  • Foreign shareholders in JSC are permitted. Foreign shareholders must pass security clearance

  • Taxed on its annual net profits and on its distributed dividends

  • Typical charter documents include:

    • Articles of Association (AoA)
    • Bylaws
    • Organizational board resolutions
    • General assembly resolutions
    • Share certificates
    • Share ledger
    • Commercial register

In an effort to achieve dematerialisation by moving to replace materialised share certificates (ie, physical shares) with centralized electronic book keeping, the amendments recently introduced to the Companies Law require all existing JSCs to register and deposit their shares with Misr ("Misr" means Egypt in Arabic language) for Central Clearing, Depository and Registry (the MCDR).

  • BoD has overall day-to-day management responsibility

LLC

  • Minimum of 2 quota-holders and a maximum of 50 quota-holders

  • Taxed on its annual net profits and on its distributed dividends

  • Typical charter documents include:

     

    • Articles of Incorporation
    • General assembly resolutions
    • Commercial register
  • The company's AoI sets forth how the business is to be managed. It must be managed by one or more managers appointed from its quota-holders or from third parties.

OPC

  • Wholly owned by one person  can be a natural or juridical person

  • Taxed on its annual net profits and on its distributed dividends

  • Typical charter documents include:

    • AoI
    • Founder's resolutions
    • Commercial register
  • Founder has overall management responsibility in person or through appointed manager(s)

Branch

  • No partners are required
  • GAFI approval is required to establish a branch and it must be registered with the Commercial Registration Department (CRD)
  • Typical charter documents include:
    • Commercial register
    • A foreign-based company's resolution of establishing a branch in Egypt
  • A branch must comply with applicable companies, taxation, labor, social insurance law and foreign exchange control regulations

RO

  • No partners are required

  • A parent company submits an application to establish RO to GAFI and it must be registered with the CRD

  • Such application must specify foreign parent company's name, nationality, purpose, capital, head office location abroad, its Egyptian branch (if any) and the type of the RO required to be established in Egypt, its purpose and permanent/temporary address

  • All the aforementioned are to be attached with

    • The parent company's by-laws, AoA and a translation of their summary
    • The resolution of the parent company approving the establishment of the RO in Egypt
    • The name of the RO’s manager or temporary agent and
    • The proper fees
  • Typically, a charter document includes:
    • Commercial register
    • A parent company's resolution of establishing an RO in Egypt
  • RO must comply with applicable taxation, labor and social insurance law, and foreign exchange control regulations

Finland

Osakeyhtiö (Oy)

  • Unlimited number of shareholders
  • Generally no personal liability of the shareholders
  • Taxed on its earnings at a corporate level (currently 20%) and shareholders are taxed on any distributed dividends
  • Typical charter documents include:
    • Articles of association
    • Agreement of incorporation
    • Organizational board resolutions
    • Stock certificates
    • Stock ledger
  • Incorporated by registration with the Finnish Trade Register (Fi: Kaupparekisteri)
  • Board of directors has overall management responsibility; managing director has day-to-day responsibility
  • Shareholders typically purchase stock in the company; separate classes of shares with different rights (voting, dividends, etc.) are commonly used
  • Annual report is filed annually with the Finnish Trade Register (Fi: Kaupparekisteri)

France

Société par actions simplifiée (SAS)

  • Unlimited number of shareholders
  • Generally no personal liability of the shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Typical charter documents include:
    • By-laws
    • Organizational shareholders' meeting resolutions
    • Stock certificates
    • Stock ledger
  • The president is the only required officer by law who gets the broadest powers to act in the name and on behalf the company and to represent the company towards third parties
  • Shareholders typically purchase stock in the SAS, either common or preferred
  • SAS does not have access to the capital markets and its shares cannot be listed on a stock exchange

Société à responsabilité limitée (SARL)

  • Up to 100 shareholders; only one class of stock allowed
  • Generally no personal liability of the shareholders
  • Typical charter documents include:
    • By-laws
    • Organizational shareholders' meeting resolutions
  • Managing director(s) get(s) the broadest powers to act in the name and on behalf the company and to represent the company towards third parties
  • Shareholders typically purchase stock in the SARL, but only one class of stock is allowed

Société anonyme (SA)

  • SA enables public offering of shares
  • Unlimited number of members allowed
  • Generally no personal liability of the members
  • Typical charter documents include:
    • By-laws
    • Organizational shareholders' meeting resolutions
    • Stock certificates
    • Stock ledger
  • Shareholders typically purchase stock in the SA, either common or preferred

Germany

Partnerships

GbR (Gesellschaft bürgerlichen Rechts), oHG (Offene Handelsgesellschaft), KG (Kommanditgesellschaft), GmbH & Co. KG

  • Require no minimum share capital, and
  • At least one partner is personally unlimited liable

Corporations

GmbH (Gesellschaft mit beschränkter Haftung) – Limited Liability Company:

  • One or more partners
  • €25,000 minimum share capital
  • Liability limited to share capital
  • Most popular legal form in Germany, and
  • Individual formation possible due to very few mandatory provisions

UG (Unternehmergesellschaft haftungsbeschränkt) – Limited Liability Entrepreneurial Company:

  • One or more partners
  • €1.00 minimum share capital
  • Liability limited to share capital, and
  • Strict requirements to accumulate yearly earnings

AG (Aktiengesellschaft) – Stock Corporation:

  • One or more partners
  • €50,000 minimum share capital
  • Liability limited to stock capital
  • Generally addresses a larger number shareholders, and
  • Stocks fungible and can be traded at the stock markets

KGaA (Kommanditgesellschaft auf Aktien) – Partnership limited by Shares:

  • Two partners or more: at least one as general partner and one as limited partner
  • €50,000 minimum share capital
  • General partner is personally liable without limitation (but a limited liability partner can be the general company), and
  • Limited partner's liability is limited to his share

Greece

Societe anonyme (S.A.)

  • Unlimited number of shareholders
  • Generally, no personal liability of the shareholders
  • Typical documents:
    • The Act of establishment of a societe anonyme
    • The Articles of Association of a societe anonyme, which are subject to publicity
  • Shareholders are not personally liable, but the company is liable with its own assets
  • Taxed on its earnings at a corporate level, and partners are taxed on any distributed dividends (withholding tax)
  • The societe anonyme can be formed before a notary public with a notarial deed or with a private document where the articles of association are included
  • Board of directors has overall main management responsibilities; officers have day-to-day responsibilities
  • Shareholders typically purchase the stock of the company

Limited liability company (L.T.D.)

  • Can be formed as a single member company, namely as company with one partner, either a natural or a legal person
  • There is no restriction to the number of partners, who can be either individuals or legal entities
  • Partners are not personally liable, but company is liable with its own assets
  • Taxed on its earnings at a corporate level, and partners are taxed on any distributed dividends (withholding tax)
  • The LTD can be formed before a notary public with a notarial deed or with a private document where the articles of association are included
  • Articles of association set forth how the business has to be managed
  • Partners typically contribute in cash or in kind (eg, real estate property), only capital contributions are made

Private company (P.C.)

  • Can be formed as a single member company, namely as a company with one partner, either a natural or a legal person
  • There are no restrictions on the number of partners, who can be either individuals or legal entities
  • Partners are not personally liable, but the company is liable with its own assets
  • Taxed on its earnings at a corporate level and partners are taxed on any distributed dividends (withholding tax)
  • Formed by a private document with few exceptions, where the articles are included
  • Articles of association set forth how the business is to be managed
  • Partners typically contribute in cash or services to the P.C. (capital and non-capital contributions)
  • Any person can become a partner only by accepting the obligation to cover any company debt to any third party at any time in the future up to a specific amount, which has to be stated in the articles of association, either during incorporation or during any other future amendments thereof (guarantee contributions)

Hong Kong

Limited private companies

  • Up to 50 shareholders
  • Right to transfer shares restricted
  • Invitation to public to subscribe for any shares or debentures prohibited.
  • Generally no personal liability of the shareholders
  • Taxed on its profits at a corporate level. No tax on capital gains or dividends
  • Typical corporate documents include:
    • Articles of Association
    • Certificate of Incorporation
    • Business Registration Certificate
    • Board resolutions
    • Shareholders' resolutions
    • Share certificates
    • Common seal (optional)
    • Registers, etc.
  • Board of directors has overall management responsibility
  • Annual return, notification of changes (such as share capital and directors) and creation of certain charges need to be filed with the Companies Registry

Limited public companies

  • No restrictions on number of shareholders, right to transfer and invitation to public to substitute for shares or debentures
  • Interim and annual report also to be filed with Hong Kong Stock Exchange if the public company is listed in Hong Kong Stock Exchange

Companies limited by guarantee (without a share capital)

  • Same as limited private companies except liability of shareholders limited by the company's articles to the amount that the shareholders undertake to contribute to the assets of the company in the event of it being wound up

Hungary

Private company limited by shares (Zrt.)

  • Unlimited number of shareholders
  • Generally no personal liability of shareholders
  • Taxed on its worldwide income at a corporate level, and shareholders are taxed on any distributed dividends, both subject to conditions of double tax treaty provisions
  • Typical charter documents include: articles of association, stock certificates and stock ledger
  • Board of directors has overall management responsibility
  • At least one shareholders' meeting must be held each year
  • Shareholders purchase stock in a Zrt. (instead of cash or in-kind contributions), either common or preferred
  • Annual financial statements to be filed with the Court of Registration

Limited liability company (Kft.)

  • Unlimited number of quotaholders allowed
  • Generally no personal liability of quotaholders
  • Typical charter documents: articles of association or deed of foundation, list of quotaholders
  • At least one quotaholders' meeting must be held each year
  • Quotaholders contribute cash or in-kind contributions to Kft.
  • Quotaholders may be required to provide a Kft. with supplementary capital contributions in order to cover losses of a Kft.
  • Taxed on its worldwide income at a corporate level, and quotaholders are taxed on any distributed dividends, both subject to conditions of double tax treaty provisions

India

Private limited company

  • Preferred choice of corporate entity by foreign investors because it is simpler to administer
  • Minimum number of shareholders required is two, with a maximum of 200 non-employee shareholders, share transfers are restricted
  • Minimum capitalization requirement: No Minimum capitalization requirement. However companies continue to use INR 0.1 million
  • Must apply and register with the Registrar of Companies (ROC)
  • Must have a Board of Directors with a minimum of two Directors (only individuals) and must appoint an auditor; Board of Directors should consist of at least one India resident local director
  • Directors must secure a Directors Identification Number (DIN) and Digital Signature, prior to incorporation
  • Typical charter documents include: Certification of incorporation; Articles of Association (AOA); Memorandum of Association (MOA)
  • Board of directors has overall management responsibility; officers have day-to-day responsibility
  • Shareholders typically purchase shares in the company, either equity (equivalent to common) or preference (equivalent to preferred)
  • Taxed on its earnings at a corporate level and also taxed on any distributed dividends. Shareholders are taxed on dividends received in excess of INR 1 million. Sale or redemption of shares in the company is taxed as capital gains. Any indirect transfer of India shares can trigger indirect tax provisions

Limited liability partnership

  • The Limited Liability Partnership (LLP) Act which was notified in April 2009 allowed LLPs to be incorporated in India
  • LLP is a hybrid form of business with the features of both a legal entity as well as traditional partnership
  • Government approval dispensed with for foreign Investments in LLP where FDI is allowed under the automatic route, in sectors /activities where 100% FDI is allowed and no-FDI linked performance condition has been stipulated
  • Minimum of 2 partners (owners) are required. There is no limit to the maximum number of Partners. A legal entity can be a member of an LLP
  • Every LLP must have at least 2 designated partners who are individuals and at least one of them must be a resident in India. In case of an LLP where all partners are legal entities or one or more partners are individuals and legal entities, at least 2 individuals who are partners of such LLP or nominees of such legal entities must act as designated partners
  • Designated partners are responsible for all acts of an LLP and designated partners must also be accountable for regulatory and legal compliances
  • No minimum capitalization requirements
  • Similar process of incorporation as a Private Limited Company
  • Designated partners must secure a Designated Partners Identification Number prior to incorporation
  • Typical charter documents include the LLP agreement.
  • An LLP is required to get audit done only in case:
    • Contributions of an LLP exceed INR2.5 million or
    • annual turnover of an LLP exceeds INR4 million
  • Taxed on its earnings at a corporate level and not taxed on any dividend distributions. Partners are not taxed on dividends
  • While Compliance may be less cumbersome than a PLC, the cost of non-compliance is severe
  • The FDI policy allows Foreign Direct Investment under automatic route in an LLP in specified sectors and has removed the specific prohibition on LLPs availing External Commercial Borrowings (ECBs). The ECB policy framework was recently amended to include LLPs as eligible borrowers
  • May not be suitable for all types of business, even though may be more tax efficient than a corporate structure in terms of repatriation. Suited best for professionals and small to medium businesses

Branch office

  • Foreign company needs prior approval of the Reserve Bank of India (RBI) to establish a branch and is not permitted to expand its activities or undertake any new trading, commercial or industrial activity other than that expressly approved by the RBI
  • Must register itself with Registrar of companies and file audited accounts
  • Only specified activities permitted, cannot undertake any manufacturing activity in India

Liaison office

  • Suitable for foreign companies that wish to set up a representative office as a first step to explore and understand the business and investment climate in India
  • Serves as a communication channel between parent company overseas and its present or prospective customers in India
  • Must obtain prior approval from RBI before establishing liaison office
  • Must register itself with Registrar of companies and file audited accounts
  • Limited activity: Can establish business contacts and may gather market intelligence to promote the products or services of the overseas parent company but cannot undertake any business activity in India or earn any income in India

Indonesia

Limited liability company

  • A separate legal entity
  • Typical charter documents and main features include:
    • The deed of establishment containing the articles of association and its approval from the Ministry of Law and Human Rights (MOLHR)
    • The limited liability of the shareholders
    • The board of directors has overall management responsibility
    • The board of commissioners has overall supervisory responsibility
    • The general meeting of shareholders must convene annually (within six months of the end of the financial year) and an extraordinary general meeting of shareholders may convene at any time required to make necessary decisions

Ireland

  • Private company limited by shares (LTD)
  • External company (ie, an Irish branch)

Israel

Company

  • Unlimited number of shareholders. However, having over 50 shareholders will subject the company to different reporting requirements.
  • Generally no personal liability of the shareholders.
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends.
  • Typical charter documents include: Certificate of Incorporation; and Articles of Association.
  • Board of directors has overall management responsibility; general manager has day-to-day responsibility within the framework set by the board of directors and is subject to the board’s supervision.
  • Shareholders typically purchase shares in the corporation, either common or preferred.
  • The Company is subject to various annual corporate maintenance requirements such as: annual fee to the Registrar of Companies, appointment of auditors and filing of an annual report with the Registrar of Companies.

Branch / representative office

  • Registration of an already existing corporate entity (excluding a partnership) organized outside of Israel (the Original Entity) with the Israeli Registrar of Companies
  • Defined under the Israeli Companies Law – 1999, as a “Foreign Company”, and
  • Not a separate legal entity (same entity as the Original Entity)

Italy

Società a responsabilità limitata (S.r.l.)

Typical documents include:

  • A list of Italian company's quotaholders and all the information regarding the foreign company wishing to incorporate it
  • Power of attorney, notarized and apostilled, if necessary, issued in favour of the persons who are requested to carry out the incorporation meeting in Italy
  • Certificate of existence and good standing of the quotaholders
  • Specific information about the company management
  • Italian Fiscal Code of the Italian company's directors the auditing body (if any) and of the quotaholders (at this respect, please note that any non-Italian citizen director must request the issuance of an Italian tax code)
  • By-laws and deed of incorporation of the company, which must have the specific requirements provided by the Italian Civil Code

At least 25% of the contributions in cash of the corporate capital must be deposited in a temporary deposit, in proportion of the interest underwritten by each quotaholder and all of the capital must be duly underwritten, otherwise the incorporation meeting cannot take place. The remaining contributions of the corporate capital must be paid in when requested by the Board of Directors or the sole director. In case of sole quotaholder, all of the corporate capital must be paid in at time of incorporation.

Società per azioni (S.p.A.)

Typical documents include:

  • A list of Italian company's shareholders and all the information regarding the foreign company wishing to incorporate it
  • The company shareholder's ledger and shares' certificates
  • Italian Fiscal Code of the Italian company's director and of the shareholders (at this respect, please note that any non-Italian citizen director must request the issuance of an Italian tax code)
  • By-laws and deed of incorporation of the company, which must have specific requirements provided by the Italian Civil Code

The entity set-up is subject to the following:

  • The share capital must be entirely underwritten
  • The provisions contained in Articles 2342, 2343 and 2343-ter of Italian Civil Code must be respected
  • The authorizations and the other conditions provided by special laws for the incorporation of the company, in relation to its particular purposed, shall apply

Branch office

  • Not a separate legal entity from its parent company. However, it still has the power to permanently represent the parent company in Italy
  • It is autonomous with respect to the way in which it organizes its activities in Italy
  • It has decision-making ability to carry on the business of its parent company in Italy
  • One or more persons are granted with the ability to represent the branch office in Italy
  • It is taxed on its earnings at a corporate level. Once the gross profits have been taxed in Italy at the branch level, they can be transferred to the parent company (foreign headquarter) without further Italian taxation
  • Technically they are not dividends since the net profit of an Italian branch already belongs to the parent company) and
  • Typical charter documents include:

    • Registration with the appropriate Companies' Register
    • Issuance of an Italian fiscal code and VAT code
    • Statement of new activity in Italy
    • Power of attorney/proxy to be provided to the persons entitled to represent the branch office

Representative office

  • Not a separate legal entity from its parent company
  • It does not has the power to represent the parent company in Italy
  • It can only carry out promotional and advertising activities in Italy, receive and provide information on behalf of the parent company, carry out scientific research activity, create relationship with possible clients and monitor the Italian market
  • Cannot bind the parent company to any third party
  • It is not subject to taxation in Italy (by definition a representative office does not carry out a business activity) and
  • Typical charter documents include:
    • Registration with the Economic and Administrative Register (R.E.A.)
    • Issuance of an Italian fiscal code

Japan

Registered branch

  • This form is used by foreign companies which wish to gain presence in Japan without establishing a subsidiary
  • Appointment of a representative in Japan who has an address in Japan is needed. Other than that, there are no requirements regarding corporate maintenance
  • This form is taxed on its income arising within Japan in principle

Kabushiki-Kaisha (KK)

  • Unlimited number of shareholders
  • No personal liability of the shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • The corporate formalities are fairly strict
  • Directors have overall management responsibility. A KK may be established with or without a board of directors.

Godo-Kaisha (GK)

  • Unlimited number of members allowed
  • Liability of members is limited to the amount of equity participation
  • Taxed on its earnings at a corporate level and members are taxed on any distributed profits
  • There are few formal corporate governance requirements that must be observed
  • Members are designated to manage the business

Luxembourg

On July 13, 2016 the Luxembourg Parliament adopted a major company law reform, which is:

  • Modernizing the Luxembourg corporate law
  • Granting legal certainty for certain practices that were previously subject to legal practices
  • Introducing the simplified company limited by shares (société par actions simplifiée or S.A.S.), and
  • Introducing added flexibility in the mostly used form of companies

The two underlying principles to this reform are enhancement of the contractual freedom and the promotion of a business friendly environment. This reform adapts the legal framework to the economic realities and improves the consistency of Luxembourg corporate law and the competitiveness of the Grand Duchy of Luxembourg.

The forms of entities that are most commonly used in Luxembourg are the private limited liability company (société à responsabilité limitée or S.à r.l.), the public limited liability company (société anonyme or S.A.) and the special limited partnership (société en commandite spéciale or SCSp).

Other forms of entities commonly used in Luxembourg include the common limited partnership (société en commandite simple or SCS) and the corporate partnership limited by shares (société en commandite par actions or SCA).

Private limited liability company (Société à responsabilité limitée or S.à r.l.)

  • From 1 up to 100 shareholders
  • Capital can be divided into several classes of shares
  • Generally no personal liability of the shareholders
  • Typical incorporation documents include: notarial incorporation deed including articles of association and share register
  • Managed by a sole manager or a board of managers
  • Annual accounts have to be filed with the Luxembourg Register of Commerce and Companies
  • For US tax purposes, an S.à r.l. qualifies as a check the box company

Public limited liability company (Société anonyme or S.A.)

  • At least 1 shareholder, no maximum number
  • Capital can be divided into several classes of shares
  • Generally no personal liability of the shareholders
  • Company can be organized as a one-tier company (ie managed by a sole director or a board of directors composed of at least 3 directors) or two-tier company (ie an executive board (directoire) and a supervisory board (conseil de surveillance))
  • Typical incorporation documents include: notarial incorporation deed including articles of association and share register
  • If organized as a one-tier company (which is the most common), managed by a sole director (only if a sole shareholder) or a board of directors composed of at least 3 directors
  • Annual accounts have to be filed with the Luxembourg Register of Commerce and Companies
  • For US tax purposes, an S.A. does not qualify as a check the box company

Special limited partnership (Société en commandite spéciale or SCSp).

  • Inspired by the Anglo-Saxon limited partnership
  • At least one general partner (associé commandité) and one limited partner (associé commanditaire)
  • No legal personality and tax transparent
  • No minimum capital requirement, partnership units may be issued
  • Generally no liability for the limited partners
  • The general partner(s) jointly and severally liable for the partnership's commitments
  • The partnership may be managed by its general partner(s) or by a board of managers
  • Typical formation documents include: limited partnership agreement and a register of partnership interests
  • High level of contractual freedom and structuring flexibility, and
  • Annual accounts, if any, must be filed with the Luxembourg Register of Commerce and Companies for statistical purposes, but they are not published.

Malaysia

Private Limited Company (Sendirian Berhad)

  • Liability of shareholders is limited to the amount of shares held by the shareholder
  • The minimum number of shareholders is 1 and the maximum number of shareholders is 50. If the number of shareholders exceeds 50, a private limited company will have to convert its status to a public company, which is an unlimited public company
  • Director will be appointed by the shareholders of a private limited company to manage such company. A director may or may not be a shareholder of the company
  • A private limited company is restricted from offering any of its shares to the public
  • The Companies Act 2016, Malaysia, largely regulates the power and duties of a private limited company

Mexico

There are three types of commercial entities that generally are incorporated or formed under Mexican federal law:

  • Sociedad Anónima de Capital Variable (S.A. de C.V.) (similar to a corporation in the United States)
  • Sociedad de Responsabilidad Limitada de Capital Variable (S. de R.L. de C.V.) (similar to an LL C in the United States), and
  • Sociedad Anónima Promotora de Inversión de Capital Variable (S.A.P.I de C.V.) (a subtype of S.A. de C.V., regulated under the Stock Markets Law (Ley del Mercado de Valores)

S.A. de C.V.

  • Unlimited number of shareholders.
  • Generally no personal liability of the shareholders.
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends.
  • Shareholders have preemptive rights to subscribe and pay shares if the S.A. de C.V. approves to increase its capital.
  • Typical charter documents include: articles of incorporation; bylaws; stock certificates; and (a) stock ledger, (b) shareholders meetings ledger; (c) board of directors ledger, and (d) capital variations ledger.
  • Board of directors (or sole administrator) has overall management responsibility; officers have day-to-day responsibility.
  • Shareholders typically incorporate the corporation or may purchase shares from existing shareholders.
  • Shareholders can enter into shareholders’ agreements in which they agree to certain rights and obligations such as drag-along and tag-along rights, put and call options, deadlock solution procedures, the issuance of non-voting shares, among others. Such provisions can likewise be included in the company’s by-laws.
  • Relevant law requires a shareholders annual meeting to approve:
    • Preceding year-end-financial statements
    • Ratification or appointment of new director(s) and statutory examiners
    • The fees paid to directors and statutory examiners, and
    • Separation of 5% of the profits, if any, for a legal reserve, which shall reach an amount equivalent to the 20% of the social capital
  • Federal law requires, when there is foreign investment in the capital of the S.A. de C.V., to register before the National Registry of Foreign Investments and file an annual report with such agency, reporting the preceding year year-end-financial statements.

S. de R.L. de C.V.

  • Up to 50 partners; contributions of the partners to the capital are represented by equity interests (not shares) which are not negotiable instruments.
  • Generally no personal liability of the partners.
  • Taxed on its earnings at a corporate level and partners are taxed on any distributed dividends.
  • Subject to US tax law (check the box related) requirements, the Mexican S. de R.L. de C.V. may qualify as a pass through entity.
  • Partners have preemptive rights to subscribe and pay equity interests if the S. de R.L. de C.V. approves to increase its capital, as well as, to acquire any equity interest of a selling partner, in case that the relevant sale is made to a non-partner.
  • Typical charter documents include: articles of formation; bylaws; and (a) partners ledger, (b) partners meetings ledger; (c) board of directors ledger, and (d) capital variations ledger.
  •  Board of directors (or sole administrator) has overall management responsibility; officers have day-to-day responsibility.
  • Partners typically form the company or may acquire equity interests from existing partners, subject to the waiver of other partners’ preemptive rights.
  • Relevant law requires a partners annual meeting to approve:
    • Preceding year-end-financial statements
    • Ratification or appointment of new director(s) and statutory examiners, if any
    • The fees paid to directors and statutory examiners, if any, and
    • Separation of 5% of the profits for a legal reserve, which shall reach an amount equivalent to the 20% of the social capital
  • Federal law requires, when there is foreign investment in the capital of the S. de R.L. de C.V., to register before the National Registry of Foreign Investments and file an annual report with such agency, reporting the preceding year year-end-financial statements.

S.A.P.I de C.V.

  • Same legal requirements and provisions for the S.A. de C.V., although relevant law provides certain differences in the operation of the S.A.P.I. de C.V., particularly in the possibility to adopt the administration regime of the S.A.B. (public company), and the possibility of the company to acquire its own shares.
  • A S.A.P.I de C.V. must be managed by a board of directors (sole administrator is not allowed).

Netherlands

Branch office (local office of a non-Dutch legal entity in the Netherlands)

  • Not a separate legal entity, it is a local business office of a non-Dutch legal entity in the Netherlands (the head office)
  • A branch office is ‘established’ by a resolution of (the appropriate corporate body under the governing law of) the head office to establish a branch office, followed by registration thereof in the Dutch Trade Register
  • Governing law of the head office applies in respect of all corporate legal matters (such as liability of the shareholders, charter documents, responsibility of directors and capital requirements), and
  • If the head office under its governing law requires to file annual accounts in its country of origin, then such annual accounts shall also be filed for the branch office with the Dutch Trade Register

B.V. (a private company with limited liability)

  • Unlimited number of shareholders
  • Generally no personal liability of the shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Typical charter documents include: articles of incorporation (included in its deed of incorporation or later deed of amendment, which both require to be executed before a civil-law notary in the Netherlands) and shareholders register
  • Board of directors has overall management and day-to-day responsibility
  • Shareholders typically acquire shares at incorporation of the BV or by deed of issue thereafter. Shares in the capital of a BV are registered shares for which in general no (non transferable) share certificates are issued. Different types of shares can be created (common, preferred, without voting rights or without profit entitlement), and
  • A BV requires to file annual accounts with the Dutch Trade Register (exemptions can apply, for instance in case of consolidation and certain conditions are met)

Co-operative U.A. (a co-operative association with exclusion of liability)

  • Unlimited number of members (with a minimum of two)
  • Generally no personal liability of the members (which is indicated by use of “U.A.” in the name of the Co-operative). Please note there can also be co-operative associations in the Netherlands with a different level of liability for its members, such as the Co-operative B.A. (with limited liability of its members to contribute to a deficit) and the Co-operative W.A. (with statutory liability for its members). This overview is limited to the (most commonly used) Co-operative U.A. (with exclusion of liability for its members), hereinafter also referred to as “Co-operative”
  • Taxed on its earnings at a corporate level and members are taxed on any distributed dividends
  • Typical charter documents include: articles of incorporation (included in its deed of incorporation or later deed of amendment, which both require to be executed before a civil-law notary in the Netherlands), a membership agreement (agreement between the members and the Co-operative) and a members register
  • Management board has overall management and day-to-day responsibility
  • Members typically acquire a membership interest at incorporation of the Co-operative or at a later date by being admitted as a new member of the Co-operative. A Co-operative does not have a capital divided by shares. Capital contributions made by each member to the Co-operative are kept in the member accounts kept by the Co-operative in the name of each member, and
  • A Co-operative requires to file annual accounts with the Dutch Trade Register

C.V. (a Dutch limited partnership)

  • Unlimited number of partners (with a minimum at least one general partner and at least one limited partner)
  • A general partner is jointly and severally liable for any indebtedness of the CV towards third parties. The liability of a limited partner is limited to the amount of its contribution to the CV, provided that the limited partner does not act on behalf of or for the benefit the CV towards third parties
  • A CV is not a legal entity under Dutch law. It is an (partnership) agreement between one or more general partners and one or more limited partners. The partners can either be legal persons or natural persons
  • Since the CV is not a legal entity it is not possible for the CV to own goods. Therefore, in most limited partnership agreements it is provided that the general partner will hold all assets (for example shares in subsidiaries) of the CV from a property law perspective. The general partner and the limited partner will jointly hold the beneficial ownership of the assets on behalf of the CV
  • A CV that qualifies as a so-called “open” CV, meaning that the limited partners may be admitted or replaced without the consent of all partners (both limited and general partners) is opaque for Dutch tax purposes. A “closed” CV is transparent for Dutch tax purposes
  • Typical charter documents include: partnership agreement to be signed by all partners, and a partners register
  • The general partner has overall management and day-to-day responsibility. The partnership agreement can provide for the possibility that the partners elect a management committee, which will manage the day-to-day business activities of the CV and carry out the business and activities of the CV on behalf of the general partner in accordance with the power granted to them by the general partner
  • A CV is being established by means of execution of the partnership agreement and contribution of capital or other assets as to be agreed by the partners. Capital contributions made by each partner to the CV are kept in the capital accounts kept by the CV in the name of each partner, and
  • A CV only requires to prepare and file annual accounts with the Dutch Trade Register if (in short) all its general partners are capital companies under foreign law.

New Zealand

Limited liability company

Must have at least one shareholder and one share.

Generally, no personal liability of the shareholders beyond amount agreed to be subscribed for shares.

Taxed on its earnings at the corporate level; can attach imputation credits to its dividends to shareholders.

Usually has a constitution setting out operational procedures (but is not required to have one).

Board of directors has overall management responsibility.  

Directors are subject to a number of duties that are owed to the company. 

At least one director must be either a New Zealand resident, or be a person who is a resident of Australia and is also the director of an Australian registered company.

Shareholders can purchase shares in the company at an issue price per share which is generally determined by the Board of directors from time to time by reference to their directors' duties.

Subject to the company's constitution, a company may have numerous classes of shares

Capital raising must be done in accordance with the FMCA. 

Branch

To establish a branch, an overseas company must be registered with the New Zealand Companies Office and be assigned a New Zealand Company Number (NZCN).

A branch is not a separate legal entity. The overseas company has full legal responsibility for the actions of the New Zealand branch.

A branch must appoint one person who is authorized to accept service of documents in New Zealand.   

A branch must also provide its "principal place of business in New Zealand." A branch is taxed as a separate entity in New Zealand. A branch is taxed on all its New Zealand taxable profits, which will include income sourced from New Zealand less attributable expenses. A foreign company with a branch in New Zealand may be required to provide its financial statements (or specifically prepared financial statements) to the Companies Office and/or the Inland Revenue. 

Overseas Investment Office approval may be required before it is able to acquire shares and assets of a certain value, or to purchase certain land that is considered "sensitive."

Branches are not required to display the identity of their shareholders on the Companies Office.

Norway

Private LLCs

  • Unlimited number of shareholders
  • No personal liability for shareholders
  • Taxed on its earnings at a corporate level. Shareholders are taxed on any distributed dividends
  • Typical charter documents include: memorandum of incorporation, articles of association and shareholders' register
  • Board of directors has the overall management responsibility. General manager has the day-to-day responsibility
  • Shareholders subscribe for shares in a company. A company may have different share classes, for instance preference shares
  • Incorporation has to be registered in the Norwegian Register of Business Enterprises (the NRBE), within three months of incorporation

Public LLCs

  • Unlimited number of shareholders
  • No personal liability for shareholders
  • Taxed on its earnings at a corporate level. Shareholders are taxed on any distributed dividends
  • Typical charter documents include: Memorandum of incorporation and articles of association
  • Shareholders' are registered in a shareholders' register at a securities depository

Partnerships with unlimited liability

  • Unlimited number of partners
  • As a general rule partners jointly have an unlimited liability for all of the company's obligations. However, partners may agree to the partnership agreement that they will be severally liable according to its pro rata ownership in a partnership
  • Not taxed on its earnings at a corporate level. Partners are taxed at their individual rates based on each partner’s part of the profits
  • Typical charter documents include: partnership agreement
  • Every partner has to sign the partnership agreement. Since this agreement is registered with the NRBE, identity of partners of a company is public information

Philippines

Subsidiary

  • 1 or more persons (but not exceeding 15) must act as incorporators and sign the articles of incorporation of the subsidiary
  • Any person, partnership, association or corporation, singly or jointly may organize a corporation for any lawful purpose. Previously, only natural persons may act as incorporators. The Revised Corporation Code has removed the minimum requirement of 5 incorporators, but has retained 15 as the maximum number of incorporators
  • Not more than 15 natural persons should act as directors
  • There is no limitation on the number of shareholders. However, if the subsidiary would sell/issue shares of stock to more than 19 persons during a 12-month period, it must register its securities with the Philippines Securities and Exchange Commission (SEC). If the issuance would be to less than 20 persons (who are not existing shareholders) in a 12-month period, in lieu of registration, a notice of exemption may be filed with the SEC
  • Generally no personal liability of shareholders
  • Taxed at 30% of its net income from all sources within and out of the Philippines or 2% of its gross income from all sources within and out of the Philippines, whichever is higher. The Philippines is presently implementing tax reform in phases and expects to pass a new tax reform bull which will lower the income tax rate. Dividends received by a nonresident foreign corporation from a Philippines subsidiary are subject to 30% withholding tax, subject to reduction pursuant to applicable tax treaties
  • Typical charter documents: articles of incorporation and by-laws
  • Shares are either common (always voting) or preferred (voting or non-voting)
  • Reportorial requirements to be submitted to the SEC annually, including Audited Financial Statements (AFS)

Branch office

  • As an extension of its head office/foreign parent, the liabilities of the branch are deemed liabilities of the head office
  • May operate only with a resident agent, who may also be the general manager, as its officer
  • Taxed at 30% of its net income from Philippine sources only. There is also a 15% branch profit remittance (to head office) tax
  • Reportorial requirements to be submitted to the SEC annually, including AFS

Representative office

  • As an extension of its head office/foreign parent, the liabilities of the representative office are deemed liabilities of the head office
  • May operate only with a resident agent
  • Not obligated to pay income tax, value added tax, or local business taxes, since derives no income from the Philippines
  • Reportorial requirements to be submitted to the SEC annually, including AFS

Regional or area headquarters

  • As an administrative branch of its head office/foreign parent, the liabilities of the regional or area headquarters are deemed liabilities of the head office
  • Not allowed to participate in any manner in the management of any subsidiary or branch that it might have in the Philippines
  • Granted tax incentives and benefits such as exemption from corporate income tax, and local taxes, fees or charges
  • Reportorial requirements to be submitted to the SEC annually, including AFS

Regional operating headquarters

  • As an administrative branch of its head office/foreign parent, the liabilities of the regional operating headquarters are deemed liabilities of the head office
  • Subject to a tax rate of 10% of its taxable income and is subject to value-added tax. It is entitled to tax incentives
  • Reportorial requirements to be submitted to the SEC annually, including AFS

Partnership

  • At least 2 persons binding themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits between/among themselves. A foreign individual or foreign company may be a partner in a domestic partnership. A foreign company must obtain a license to transact business in the Philippines from the SEC to be a general partner. No such license is required for a limited partner (foreign partner entered the partnership for investment purposes only and in no case will it participate in the management and control of the business operation)
  • Partners are liable pro rata with all their property and after all the partnership assets have been exhausted, for contracts entered into in the name and for the account of the partnership
  • Generally, every partner is an agent of the partnership, and the act of every partner binds the partnership
  • Articles of Partnership is the contract or agreement of the partnership

A partnership is taxed as a corporation, thus, subject to regular corporate income tax of 30% of its taxable income. Since a partnership is taxed as a corporation, the tax rate might be reduced in light of the pending tax reforms in the Philippines, as indicated above.

Note: Under the Foreign Investment Act of 1991 (FIA), 100% foreign equity may be allowed in all areas of investment, except those reserved wholly or partially to Filipino citizens, by mandate of the Philippine Constitution and other existing laws. The Foreign Investment Negative List (FINL) indicates the industries where foreign equity is restricted.

Poland

Partnerships

General partnership (Spółka jawna, sp. j.)

  • A partnership which runs an enterprise under its own business name and is not any other commercial partnership
  • Has no legal personality of its own, which means that partners bear joint and several liability for the obligations of the partnership
  • In general, each partner may represent the partnership and manage its affairs
  • Decisions regarding management of the partnership are made at partner meetings
  • No share capital requirements exist

Professional partnership (Spółka partnerska, sp. p.)

  • Runs an enterprise under its own business name
  • Formed for the purpose of practicing one or more freelance professions
  • Partners must be licensed to practice a freelance profession – as defined by Polish law, ie, advocates, pharmacists, architects, building engineers, expert auditors, insurance brokers, tax consultants, securities brokers, investment advisers, accountants, physicians, dental surgeons, veterinary surgeons, notaries, nurses, midwives, legal counsels, patent agents, property experts and sworn translators
  • Partners are not liable for actions or omissions of other partners or personnel supervised by other partners
  • Partners may appoint a management board to run and represent a partnership  

Limited liability partnership (Spółka komandytowa, sp. k.)

  • An enterprise under its own business name
  • At least one partner (general partner) has unlimited liability for the partnership's obligations towards the partnership's creditors and at least one partner (limited partner) has limited liability in this respect
  • Business name of a limited partnership must include surname(s) of one or more of  general partners and an additional designation of "spółka komandytowa

Limited joint-stock partnership (Spółka komandytowo-akcyjna, SKA)

  • An enterprise under its own business name
  • Considered to be a partnership, whilst incorporating elements of a joint-stock company, eg, it has a general meeting and a supervisory board (the latter only being mandatory in respect of larger enterprises)
  • At least one partner (general partner) has unlimited liability towards partnership's creditors and at least one partner is a shareholder
    Initial capital is at least PLN 50,000
  • There must be at least two partners: one general partner and one limited partner

Corporations (commercial companies)

Limited liability company (Spółka z ograniczoną odpowiedzialnością) 

  • One or more shareholders
  • PLN 5,000 minimum share capital
  • Liability limited to share capital
  • Procedures of formation and dissolution prescribed by statute
  • Most popular legal entity form in Poland
  • Represented by its management board
  • May be required to appoint a supervisory board

Joint-stock company (Spółka akcyjna)

  • One or more shareholders
  • PLN 100,000 minimum share capital
  • Liability limited to share capital
  • Generally suited for a larger number of shareholders
  • Stocks fungible and can be traded on stock markets
  • Represented by its management board
  • Obligatory supervisory board and/or audit committee 

Branches and representative offices of a foreign company

Branches

  • May only conduct business activity of the same scope as that conducted by the foreign parent company in its home state
  • Must be registered with the relevant registry court
  • Must conduct business under a business name which includes the business name of the parent company as well as the designation "branch"
  • Separate books and accounts must be kept in Polish by the branch 

Representative offices

  • May only conduct promotion and advertising activity in Poland for the benefit of the foreign parent company (no sale of products or services in Poland is permitted)
  • Must be entered in a register of foreign representative offices (with exceptions made for banks and credit institutions)
  • Must include business name of the foreign parent company and a designation "representative office" in its name

Portugal

Sole shareholder private limited liability company (LDA with 1 shareholder)

One sole shareholder. A physical person may not be the shareholder of more than one sole shareholder private limited liability company.

A sole shareholder private limited liability company is an entity with limited liability. There is no personal liability for the shareholder, with the exception of when a company is going through bankruptcy, if evidenced that the shareholder did not comply with provisions regarding the division of the shareholder’s patrimony and that of the company. Taxed on earnings at a corporate level. Shareholders are taxed on any distribution of dividends.

Typical charter documents include:

  • Written deed of incorporation (signatures must be certified by a notary or a lawyer, in the presence of the signatories)
  • By-laws and
  • Requires registration with the Commercial Registry Department.

Additional formalities may apply if the shareholder makes contributions in kind. A minutes’ book for the shareholders’ meetings is also required. A minutes’ book for the directors’ meeting may be required in the case of more than 1 director.

Costs involved are €700, including appointment of members of corporate bodies.

Private limited liability company (LDA)

Unlimited number of shareholders, but a minimum of 2 shareholders is required.

Individuals or corporations may be the shareholders.

Entity with limited liability – no personal liability of the shareholders.

Taxed on earnings at a corporate level and shareholders are taxed on any distribution of dividends.

Typical charter documents include:

  • Written deed of incorporation (signatures must be certified by a notary or a lawyer, in the presence of signatories)
  • By-laws and
  • Requires registration with the Commercial Registry Department.

Additional formalities may apply if shareholders make contributions in kind. A minutes’ book for the shareholders’ meetings is also required. A minutes’ book for the directors’ meeting may be required in case of more than 1 director. 

Costs involved are € 700, including appointment of corporate bodies’ members.

Joint stock company (SA)

Unlimited number of shareholders.

Individuals or corporations may be shareholders, but minimum of 5 shareholders is required, unless a sole shareholder is a company.

Entity with limited liability – no personal liability for the shareholders. Exception may apply if one of the shareholders holds 100 percent of the company’s share capital.

Taxed on earnings at a corporate level and shareholders are taxed on any distribution of dividends.

Typical charter documents include: written deed of incorporation; by-laws (signatures must be certified by a notary or a lawyer, in the presence of the signatories), and requires registration with the Commercial Registry Department. Additional formalities may apply if the shareholder makes contributions in kind. Required to have a shareholders’ minutes book and a Board of Directors’ minutes book. Required to have a share registration book.

Costs involved are €700, including the appointment of members of the corporate bodies.

Puerto Rico

Puerto Rico corporate matters are regulated by the Puerto Rico General Corporations Law and the Internal Revenue Code of 2011. Puerto Rico offers several attractive alternate vehicles for persons doing business in Puerto Rico. Corporations and limited liability companies are the most common entities by which investors enter the Puerto Rican marketplace.

Corporations

  • Unlimited number of shareholders
  • Generally no personal liability for shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Typical charter documents include articles of incorporation, bylaws, organizational board resolutions, stock certificates and stock ledger
  • Board of directors has overall management responsibility; officers have day-to-day responsibility

Limited Liability Companies

  • Unlimited number of members allowed
  • Generally no personal liability for the members
  • May elect to be treated as a corporation or partnership under Puerto Rico tax laws
  • Under US tax laws, a Puerto Rico LLC is automatically treated as a foreign corporation. However, it may elect to be treated as a partnership or disregarded entity by filing Form 8832 with the IRS
  • Typical charter documents include: certificate of formation; operating agreement
  • Operating agreement sets forth how the business is to be managed; a member (owner) or manager can be designated to manage the business
  • Members typically contribute money or services to the LLC and receive an interest in profits and losses

Romania

Joint stock company (JSC)

  • Unlimited number of shareholders; minimum number of shareholders is two
  • Personal liability of shareholders is limited to their contribution to the share capital; however, in certain situations, their liability may be extended (eg, piercing the corporate veil)
  • A JSC is registered automatically by the Trade Registry as micro enterprise with an opportunity to switch to the corporate income tax regime (ie, taxing the profits) after the turnover threshold of €1 million is reached
  • A fiscal registration number is allocated by the Trade Registry at the moment JSC is incorporated; other types of fiscal registrations (ie, for VAT purposes, for social security contributions, etc.) should be considered depending on the economic activity to be performed
  • Fiscal year is generally a calendar year with a possibility to change it with another period
  • Typical charter documents:
    • Articles of association
    • Resolutions of the general meeting of shareholders
    • Resolutions of the board of directors
    • Shareholders' register
  • Shares can be either common or preferred

Limited liability company (LLC)

  • Up to 50 shareholders; may be incorporated/owned by a sole shareholder subject to the following restrictions:
    • A person cannot be sole shareholder in more than one LLC and
    • An LLC cannot have another LLC with sole shareholder as a sole shareholder
  • Personal liability of shareholders is limited to their contribution to the share capital; however, in certain situations, their liability may be extended (eg, piercing the corporate veil)
  • An LLC is registered automatically by the Trade Register as micro enterprise with an opportunity to switch to the corporate income tax regime (ie, taxing the profits) after the turnover threshold of €1 million is reached
  • A fiscal registration number is allocated by the Trade Registry at the moment LLC is incorporated; other types of fiscal registrations (ie, for VAT purposes, for social security contributions, etc.) should be considered depending on the economic activity to be performed
  • Fiscal year is generally the calendar year with the possibility  to change it with another period
  • Typical charter documents include:
    • Articles of association
    • Resolutions of the general meeting of shareholders
    • Resolutions of the board of directors
    • Shareholders' register
  • Only one class of shares is allowed

Russia

Public joint-stock company

  • Unlimited number of shareholders
  • Generally no personal liability of the shareholders
  • Typical documents include: charter; regulations; board resolutions; resolutions of the general shareholders' meetings
  • General shareholders’ meeting is the highest management body; Board of Directors (obligatory when 50+ shareholders) exercises overall management of the company; Sole Executive Body (management board) responsible for day-to-day management, and
  • The shares are freely transferable. It is prohibited to establish the company’s or its shareholders’ pre-emptive right (or more correctly the right of first refusal) to acquire shares alienated by the shareholders of the company.

Non-public joint-stock company

  • Generally no personal liability of the shareholders
  • Typical documents include: charter; Board resolutions (if any); resolutions of the general shareholders' meetings
  • General shareholders’ meeting is the highest management body; Board of Directors (if any) exercises overall management of the company; Sole Executive Body (management board) responsible for day-to-day management
  • Non-public joint-stock company may not conduct open subscription for shares or otherwise offer them for acquisition to an unlimited number of people, and
  • The company’s shareholders enjoy the pre-emptive right to purchase shares offered to be sold by other shareholders in the company at a price offered to a third party and in proportion to the number of the shares held by each of them unless another procedure is provided for by the company’s charter.

Limited liability company (LLC)

  • Up to 50 members
  • Generally no personal liability of the members
  • Typical documents include: charter; Board resolutions (if any); resolutions of the general shareholders' meetings
  • Members have the right to sell its participatory interest in the charter capital or a part thereof to one or several members of this company. No consent shall be required from the company or other members of the company to do so unless otherwise stipulated by the company’s charter. The company’s members have the pre-emptive right to acquire participatory interest(s) from other participants; waiver from the pre-emptive right is allowed.

Saudi Arabia

Limited liability company (LLC)

  • LLC is one of the most common forms of legal entity chosen by foreign investors in the Kingdom of Saudi Arabia (KSA)
  • Establishing an LLC is a multistep process. Incorporating an LLC may take several months from the date of submission of application to the Saudi Arabia General Investment Authority (SAGIA)
  • The Ministry of Commerce and Investment (MOCI) subsequently issues a commercial registration certificate before the LLC is considered fully registered in KSA
  • After the incorporation, various governmental files and documents must be applied for in order for the LLC to be fully operational. This post-incorporation phase can take a couple to several months

Branch of a foreign company

  • Foreign investors may also choose to establish a branch instead of an LLC to do business in the KSA
  • A branch operates on behalf of the parent company (foreign registered company) and has no separate legal existence in KSA
  • Registration of a branch in relation to issuance of the foreign investment license by SAGIA and the commercial registration certificate by MOCI follows the same general procedure as that of an LLC
  • Incorporation of a branch may take several months from the date of submission of application to SAGIA (subject to any delays caused by government authorities)
  • The parent company of the branch has liability for the branch's activities that it undertakes in KSA
  • The paid-up capital for a branch does not confer limitation of liability as compared to an LLC. The capital in a branch simply serves as a security for the Saudi market and
  • With regard to tax and a number of other matters, a permanent branch is treated in the same manner as a 100% foreign-owned LLC
  • After the registration, various governmental files and documents must be applied for in order for the branch to be fully operational. This post-registration phase can take a couple to several months

For future consideration, please note that an LLC can add shareholders if the company intends to expand in KSA. On the other hand, a branch cannot add shareholders as it is an extension of its foreign parent company.

Singapore

Limited liability company

  • Separate legal entity
  • A company with a share capital may be incorporated as a private company if its constitution contains a limitation on the number of shareholders to not more than 50 members and provides for restrictions on the right to transfer its shares whereas a public company (ie, a company which is not a private company) can have more than 50 members and its Constitution need not provide for similar share transfer restrictions

  • Limited liability for the shareholders, though in exceptional circumstances a court may lift the corporate veil and look up to the members of the company which may result in personal liability

  • One tier tax system; taxed on its profits at a corporate level and dividends are distributed to shareholders tax free

  • Typical charter document is company's constitution

  • The business of the company is managed by and under the board of directors who may exercise all powers of the company except any powers reserved for the members in general meeting by the CA or its constitution. Ownership and management of a private company can be separated though we note that in some cases, a member of a private company may also be a director in the same company

  • Shareholders subscribe and or purchase shares in the company. Shares can come in the form of different classes such as ordinary or preference shares

South Africa

Private company

A private company is a non-state owned company, its memorandum of incorporation (MOI) prohibits any share-offering to the public and restricts transfer of its shares.

A private company is a separate legal entity which is owned by shareholders with limited liability. There must be at least one shareholder. Relationship between shareholders and company is regulated by the company's MOI and may be further regulated by a shareholders agreement.

A private company is required to have at least one director.

A director of a private company can be held liable in the following instances:

  • In terms of principles of common law relating to delicts for any loss, damage or costs sustained by the company as a consequence of any breach by a director of a duty of care, skill and diligence
  • In terms of those sections of the Companies Act 71 of 2008 (Companies Act) which provide for director's liability or
  • In terms of any provision of the company's MOI which provides for director's liability

When compared to a public company a private company is subject to limited accountability and transparency requirements. For example, a private company is not required to prepare audited financial statements.

A private company must every year lodge its annual returns with the Companies and Intellectual Property Commission (CIPC) and must have a registered physical address in South Africa.

Public company

A public company is a non-state owned company, a private company or a personal liability company. It is a requirement for a public company to be audited and the audited financial statements must be lodged with the CIPC.  Depending on the size of the company, it might also be required to have an Audit Committee and a Social and Ethics Committee.

A public company must have at least three directors.

The circumstances under which a director of a public company could be held liable are the same as that of a private company.

The circumstances under which a director of a public company could be held liable are the same as that of a private company.

External company (branch office)

A foreign company that doesn’t want to incorporate a subsidiary in South Africa may set up a branch office or an external company in terms of the Companies Act.

A foreign company may register as an external company with the CIPC within twenty business days after it first begins to conduct business, or non-profit activities in South Africa. A foreign company will be regarded as conducting business in South Africa if it is either:

  • A party to one or more employment contracts in South Africa or
  • Engaging in conduct or a pattern of activities in South Africa over a period of at least six months, that would lead a person to reasonably conclude that the company intended to continually engage in business activities in South Africa

To effect registration with the CIPC, the company will need to submit its foreign constitution and certificate of registration.

It is not required for a company to set up a local board of directors but there must be at least one person present in South Africa.

An external company must lodge its annual returns with the CIPC every year, and must also have a registered physical address in South Africa.

South Korea

Joint-stock company (Jusik Hoesa)

  • Unlimited number of shareholders
  • Generally no personal liability of the shareholders outside of their financial contribution in the form of purchased shares
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Typical charter documents include: articles of incorporation; share certificates; and shareholders' registry
  • Board of directors decides important matters related to daily operations and the representative director or executive officer has authority to make decisions binding the company
  • Shareholders purchase shares in the company, either common or preferred, and
  • An external audit is required for:
    • Publicly listed companies, or companies that will be publicly listed within that fiscal year or the following fiscal year
    • Joint-stock companies with total assets or annual sales revenue of at least KRW 50 billion, or
    • Joint-stock companies that meet three or more of the following thresholds:
      • Total assets of at least KRW 12 billion
      • Total debt of at least KRW 7 billion
      • Total annual sales revenue of at least KRW 10 billion
      • At least 100 employees

Limited company (Yuhan Hoesa)

  • Unlimited number of members allowed
  • Generally no personal liability of the members outside of their financial contribution in the form of purchased units
  • Taxed on its earnings at a corporate level and members are taxed on any distributed dividends
  • Typical charter documents include: articles of incorporation, unit certificates, and members' registry
  • Directors decide important matters related to daily operations and director (in case a limited company has one director) or representative director who is elected at the general meeting of members (in case a limited company has two or more directors) has authority to bind the company
  • Members purchase units in the company, but only one class of units is allowed
  • An external audit is required for limited companies with total assets or annual sales revenue of at least KRW 50 billion, or limited companies that meet three or more of the following thresholds
    • Total assets of at least KRW 12 billion
    • Total debt of at least KRW 7 billion
    • Total annual sales revenue of at least KRW 10 billion
    • At least 100 employees
    • At least 50 members

Branch

A foreign company intending to directly engage in business in Korea may appoint a representative in Korea and establish a branch in Korea:

  • Not a separate and distinct entity; unlike other separate and distinct entities, legal liabilities extend to the foreign company (head office)
  • Taxed on its domestic source income in Korea at a branch level; must file tax returns with tax office within three months after the end of each fiscal year
  • Establishment process: report to foreign exchange bank; court registration
  • Business registration is required
  • Representative in Korea has authority to bind the branch; identity of the representative in Korea is publicly disclosed, and
  • Net income can be remitted abroad from Korea after closing of accounts for each fiscal year; however, funds remitted to a branch as operating funds cannot be repatriated abroad from Korea until liquidation of the branch is completed

Spain

Branch (Sucursal)

  • Secondary establishment that is subordinated to the principal one economically and legally
  • Autonomy to operate with its own organization different from the principal establishment
  • Without legal personality (ie, branches are not a separate legal entity)
  • Permanent activity
  • Total or partial conduction of the principal establishment's activity
  • Branches are taxed under the general provisions of the Corporate Income Tax. Moreover, if the branch is also a permanent establishment for VAT purposes, quarterly VAT tax returns will need to be filed (as a general rule)
  • The organizational documents are the principal company's bylaws (estatutos sociales)

Limited liability company (Sociedad Limitada)

  • Unlimited number of members is allowed
  • Generally no personal liability of members
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends, although double taxation relief may apply
  • The organizational documents are the company's own bylaws (estatutos sociales)
  • Management body has management responsibility. Sole directors, joint directors (if they all sign, administradores mancomunados) and joint and several directors (administradores solidarios) have authority to bind the company. If the company has a board, directors do not have authority to bind the company unless powers are delegated to them. Powers can be delegated to attorneys
  • Ordinary shares and preferred shares are possible. Shares are transferable but typically have some restrictions (eg, preferential acquisition rights)
  • Annual accounts are registered at the Commercial Registry, reporting the economic status of the company

Joint-stock company (Sociedad Anónima)

  • Unlimited number of shareholders
  • Generally no personal liability of the shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends, although double taxation relief may apply
  • The organizational documents are the company's own bylaws (estatutos sociales)
  • Management body has management responsibility. Sole directors, several directors (if they all sign, administradores mancomunados) and joint and several directors (administradores solidarios) have authority to bind the company. If the company has a board, directors do not have authority to bind the company unless powers are delegated to them. Powers can be delegated to attorneys
  • Ordinary shares and preferred shares are possible. Shares are generally freely transferable. Can be listed in a stock market and
  • Annual accounts are registered at the Commercial Registry, reporting the economic status of the company

Sweden

Limited company (Sw. aktiebolag, AB)

  • Minimum of one shareholder
  • Generally no personal liability of shareholders
  • AB is taxed on its earnings at a corporate level and shareholders are taxed on salary withdrawn and distributed profits from AB. AB is subject to a Swedish corporate income tax rate which currently amounts to 21.4%
  • Typical charter documents include:
    • Articles of association
    • Rules of procedure for the board of directors
    • Organizational board resolutions
    • Share certificates
    • Share ledger
  • Board of directors has overall management responsibility; managing director and other officers have day-to-day responsibility
  • Shareholders typically purchase shares in an AB. Separate classes of shares with different rights (voting, dividends, etc.) are commonly used
  • Annual report shall be filed annually with the Swedish Companies Registration Office (Sw. Bolagsverket, SCRO)
  • There are two types of AB: private and public

Trading partnership (Sw. handelsbolag, HB)

  • Two or more partners (natural persons or legal entities) are required
  • No startup capital requirement
  • HB is tax transparent. Partners are taxed for their part of the HB's surplus (income tax and social security contributions)
  • Incorporated by registration with the Swedish Companies Registration Office (Sw. Bolagsverket, SCRO)
  • Partners are personally responsible for HB's debts, including debts that already exist when becoming a partne
  • Business name must contain the word "handelsbolag"
  • An authorized or approved auditor and filing of annual accounts are required where an HB meets certain criteria regarding the partners, number of employees, balance sheet total and net turnover

Limited partnership (Sw. kommanditbolag, KB)

  • Two or more partners (natural persons or legal entities) are required of which one shall be a general partner and one a limited partner
  • General partners have unlimited personal responsibility (jointly and severally) for the agreements and debts of a KB. Limited partners are only responsible for the amount contributed. The responsibility includes debts that already exist when becoming a partner
  • No startup capital requirement for general partners, capital requirement for each limited partner is at least SEK 1
  • KB is tax transparent. Partners are taxed for their part of KB's surplus (income tax and social security contributions)
  • Incorporated by registration with the Swedish Companies Registration Office (Sw. Bolagsverket, SCRO)
  • Business name must contain the word "kommanditbolag"
  • An authorized or approved auditor and filing of annual accounts are required if a KB meets certain criteria regarding partners, number of employees, balance sheet total and net turnover

Branch office (Sw. filial, Branch)

  • A foreign-based company that engages in business activities in Sweden can register a branch office, with separate management in Sweden
  • A branch is not a separate legal entity but is a part of a foreign-based company
  • Does not have independent capital and assets and liabilities are a part of total assets of a foreign-based company
  • One managing director is appointed to run the business activities in Sweden. The managing director and any deputy managing directors are normally required to be resident within the EEA
  • A branch is subject to a Swedish corporate tax rate which currently amounts to 21.4%
  • Incorporated by registration with the Swedish Companies Registration Office (Sw. Bolagsverket, SCRO)
  • A business name must contain the word "filial"
  • A branch is to keep its own accounting records, and these are to be kept separate from the foreign-based company. Annual report of a branch office and a foreign company are normally required to be filed with the SCRO
  • An authorized or approved auditor is required where the branch office meets certain criteria regarding the number of employees, balance sheet total and net turnover

Switzerland

This is an overview of certain aspects of Swiss corporate law as of the date hereof which does not purport to be comprehensive, and may not be relied upon as legal or other advice or in any other way.

Stock corporation (Aktiengesellschaft, AG / Société Anonyme, SA)

  • Unlimited number of shareholders allowed but at least one founder (individual or legal entity)
  • Shareholder's liability is limited to the amount subscribed
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Board of directors is the managing body and has the authority to represent the company with respect to third parties. The day-to-day management can be delegated to third persons by respective board resolution and enacting of organizational by-laws and
  • Annual audit report required (waiver possible for small companies)

Limited liability company (Gesellschaft mit beschränkter Haftung, GmbH / Société à Responsabilité Limitée, SARL)

  • Unlimited number of quota-holders allowed but at least one founder (individual or legal entity)
  • The limited liability company has sole liability of debts, although, articles of incorporation can impose obligation to pay in additional capital
  • Taxed on its earnings at a corporate level and quota-holders are taxed on any distributed dividends
  • In absence of any rules to the contrary, the management is delegated to all partners
  • Generally, annual audit report required (waiver possible for small companies) and
  • Legal form intended for small and medium sized companies

Taiwan

  • Company limited by shares
  • Closely-held company limited by shares

  • Limited company
  • Branch office of a foreign company

Thailand

Private limited company

  • At least three shareholders are required
  • Unlimited number of shareholders
  • No personal liability of shareholders
  • Taxed on its earnings at a corporate level, and shareholders are taxed on any distributed dividends
  • Typical charter documents include:
    • Certificate of incorporation
    • Memorandum of association and articles of association
    • Company's affidavit
    • List of shareholders and share certificates
    • Share register book
  • Board of directors has overall management responsibility
  • No invitation to subscribe for shares can be made to the public
  • Two classes of shares may be issued (ie, common shares and preference shares) concurrently
  • Private limited company may not own its own shares, ie, treasury shares are not allowed
  • A shares is indivisible, but a share par value could be amended
  • A shareholder cannot avail himself or herself of a set-off against the company as to payments on shares, ie, debt to equity conversions are generally not permissible

Public limited company

  • At least 15 shareholders are required
  • Unlimited number of shareholders
  • No personal liability of shareholders
  • Taxed on its earnings at a corporate level, and shareholders are taxed on any distributed dividends
  • Typical charter documents include:
    • Certificate of incorporation
    • Memorandum of associations and articles of association
    • Company's affidavit
    • List os shareholders and share certificates
    • Share register book
  • Board of directors has overall management responsibility
  • Stock offerings can be categorized into two types: public offering and private placement.  Public limited company may make a private placement of its shares without prior approval. If a public limited company intends to make a public offering, it must obtain prior approval from the Securities and Exchange Commission of Thailand. Shares of public limited company may or may not be traded on the Stock Exchange of Thailand

Partnerships

Unregistered ordinary partnership

  • Two or more partners join together for a common undertaking to share profits by virtue of a contractual relationship between member partners
  • Not legally recognized as a legal person which exists separately from the partners
  • All partners are jointly and unlimitedly liable for acts made by any partner in the ordinary course of business of a partnership. Even if partners agree to restrict the powers of certain partners, such restriction will not have effect on third persons. Creditors can directly seek performance from any individual partner without first claiming against the assets of a partnership

Registered ordinary partnership

  • Two or more partners join together for a common undertaking to share profits by virtue of a contractual relationship between member partners
  • A legal entity separate from the partners themselves.
  • Personal liabilities of each partner are generally unlimited. Creditors may demand performance under an obligation from the partnership itself or any of its partners

Limited partnership

  • Two or more partners join together for a common undertaking to share profits by virtue of a contractual relationship between member partners
  • A legal entity separate from the partners themselves
  • There are one or more partners who are limited in their liability to the extent of their contributions; there must be at least one partner who is unlimitedly liable for all obligations of a partnership and eligible to act as Managing Partner

Turkey

Incorporation procedures for a JSC and an LLC are very similar and include:

  • Preparation of a company's articles of association
  • Registration of a company with the relevant Trade Registry
  • Announcement of a company in the Trade Register
  • Registration with the relevant tax office

United Arab Emirates

LLC

  • Number of shareholders must not exceed fifty and must not be less than two (please note however that UAE ownership may fall below 51% where there is 100% GCC ownership)
  • Shareholders' liability limited to their share in the capital
  • A UAE national or a company wholly owned by UAE nationals must hold at least 51% of the shares, but for circumstances where FDI mitigates this requirement
  • Maximum ratio of profit and loss shared is 80% to the non-UAE shareholder and 20% to the UAE shareholder
  • May not engage in the business of insurance, banking or investment on behalf of other parties

Branch office

  • Used by foreign companies wishing to establish a business presence in the UAE
  • Permitted to perform contracts or conduct activities as specified in its license but is prohibited from conducting activities relating to trading in tangible goods
  • Legally regarded as part of its parent company (no separate legal identity). Activities limited to those of its parents, as stated in its parent's objects articles of association/bylaws
  • Required by law to appoint a national agent, who must be a UAE national or a company wholly owned by a UAE national and who has no entitlement to the business or the management of the branch office
  • Managed by a sole manager who will operate pursuant to a power of attorney issued by the parent company
  • Required to be registered with the UAE Ministry of Economy (MOE) and to provide a bank guarantee in the amount of AED 50,000 that is payable in favour of the MOE and to provide a bank guarantee in the amount of AED 50,000 that is payable in favour of the MOE

Representative office

  • Used by foreign companies wishing to establish a business presence in the UAE
  • Activities limited to gathering information and soliciting orders and projects to be performed by the parent company's head office
  • Serves as an administrative and marketing center for the parent company
  • Required by law to appoint a national agent, who must be a UAE national or a company wholly owned by UAE national
  • Identical in all respects to a branch office except that it is not permitted to perform contracts or any other activities other than marketing of the parent company's products and services and not allowed to issue invoices in its name
  • Required to be registered with the MOE and to provide a bank guarantee in the amount of AED 50,000 that is payable in favour of the MOE

FZ-LLC

  • Can be owned by one or more foreign shareholders (individuals or corporate bodies)
  • No foreign ownership restrictions
  • Used by foreign companies wishing to establish a business presence in the UAE
  • As the free zone is deemed to be offshore, it allows for 100% foreign ownership
  • Shareholders' liability limited to their share in the capital
  • No corporate or income tax for a guaranteed 50-year period; 100% repatriation of capital possible
  • Activities cannot be carried out directly in mainland UAE
  • An FZ-LLC wishing to carry out business in mainland UAE should appoint a mainland UAE registered company to act as its distributor. Alternatively, it may set up a branch office in the respective Emirate
  • Exemption from customs duty for goods entering the free zone. Customs duties will apply to goods leaving the free zone into the mainland UAE market

FZ-Branch

  • Used by foreign companies wishing to establish a business presence in the UAE
  • Legally regarded as part of its parent company
  • No share capital requirements as it is not a separate legal entity, and
  • Can conduct all or some of the operations inherent in the parent company's business

Dual Licence Branch

  • Used by foreign companies wishing to establish a business presence in the UAE and to operate onshore
  • It is only an option in certain free zones (such as Dubai International Financial Centre, Dubai Airport Free Zone and in all of the Abu Dhabi free zones)
  • Permitted to perform contracts or conduct activities as specified in its licence but is prohibited from conducting activities relating to trading in tangible goods
  • Legally regarded as part of its parent company (no separate legal identity). Activities limited to those of its parents, as stated in its parent's articles of association/bylaws
  • Managed by a sole manager who will operate pursuant to a power of attorney issued by the parent company
  • Can operate out of the same office as its parent company located in the free zone
  • The parent company must not have any other branches in the UAE and cannot itself be a branch

United Kingdom

The below summary provides an overview of three corporate structures that can be used in the UK. A further alternative, being a public limited company, could be useful in some instances (as it enables capital to be raised from the public), but is less commonly used.

Private limited company

  • Separate and distinct legal entity. Subject to certain exceptions (such as fraud), shareholders are not liable for debts and obligations of the company
  • Taxed on its earnings at a corporate level and shareholders taxed on any distributed dividends
  • Management and organization governed by articles of association. Board of directors have overall management responsibility
  • Must file a confirmation statement at least every 12 months confirming there have been no changes since the last filing, or otherwise setting out (amongst other things) details of any changes to the company's share capital, people with significant control and directors
  • Must maintain a register of individuals or legal entities that have control over them (people with significant control) and maintain the public register with details of such individuals or legal entities (as applicable)
  • Must file annual accounts (subject to certain exceptions for small and dormant companies). Accounts are publicly available
  • Event driven filings need to be made from time to time (such as changes to the directors or other corporate details)

Limited liability partnership (LLP)

  • Distinct legal entity separate from its members
  • Must file a confirmation statement at least every 12 months setting out (amongst other things) details of LLP's membership
  • Must maintain a register of individuals or legal entities that have control over them (people with significant control) and maintain the public register with details of such individuals or legal entities (as applicable)
  • Must file annual accounts (subject to certain exceptions for small and dormant LLPs). Accounts are publicly available
  • Event driven filings need to be made from time to time (such as changes to the members of the LLP)

Registered UK establishment

  • Alternative to establishing a separate UK private limited company. Not a separate legal entity. Represents a local registration of the overseas company
  • Registration mandatory if operating an establishment in the UK. Registration must be effected within one month of opening the UK establishment. Cost of registration subject to the country of incorporation of the overseas company
  • Generally subject to UK corporation tax on any profits attributable to the establishment
  • Generally subject to similar reporting requirements as a UK private limited company. Requires a UK registered address
  • If the overseas company is required (by the laws of its country of incorporation) to prepare annual accounts, such accounts must also be filed in the UK within a specified timeframe. The accounts must relate to the overseas company as a whole, not just the UK establishment. Other event driven filings (such as changes to the registered office of the establishment) are required from time to time (in respect of both the establishment and the overseas company)

United States

C corporation

  • Unlimited number of shareholders
  • Generally no personal liability of the shareholders
  • Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
  • Typical charter documents include: articles of incorporation; bylaws; organizational board resolutions; stock certificates; and stock ledger
  • Board of directors has overall management responsibility; officers have day-to-day responsibility
  • Shareholders typically purchase stock in the corporation, either common or preferred, and
  • Most states require an annual report to be filed with the Secretary of State, typically reporting the officers and directors of the corporation

S corporation

  • Up to 100 shareholders; only one class of stock allowed
  • Generally no personal liability of the shareholders
  • With the filing of a IRS Form 2553, a C corporation becomes a S corporation, whereby the profits and losses are passed through to the shareholders
  • Typical charter documents include: articles of incorporation; bylaws; organizational board resolutions; stock certificates; stock ledger; IRS and state S corporation election form
  • Board of directors has overall management responsibility; officers have day-to-day responsibility and
  • Shareholders typically purchase stock in the corporation, but only one class of stock is allowed

Limited liability company (LLC)

  • Unlimited number of members allowed
  • Generally no personal liability of the members
  • Not taxed (unless chosen to be taxed); profits and losses are passed through to the members
  • Typical charter documents include: articles of organization or certificate of formation; operating agreement
  • Operating Agreement sets forth how the business is to be managed; a member (owner) or Manager can be designated to manage the business and
  • Members typically contribute money or services to the LLC and receive an interest in profits and losses
Note: The mechanics and operation of corporations are governed by individual state corporate laws.

Vietnam

Joint stock company (JSC)

JSC is a separate and distinct legal entity. Generally, it is managed by a GSM that makes decisions on the most important affairs of a JSC. The BOD is responsible for implementation of GSM's decisions and overseeing the general affairs of the JSC. Directors of the BOD are appointed by a GSM which consists of all shareholders with voting rights. General Director (or CEO), who runs the day-to-day operations of the JSC, is appointed by a BOD. When a JSC has 11 or more shareholders, a Board of Supervisors (BOS) appointed by the GSM assists GSM to supervise all operational affairs of a JSC.

Multi-member limited liability company (2M-LLC)

2M-LLC is a separate and distinct legal entity. Generally, it is managed by an MC that makes decisions on the most important affairs of the 2M-LLC and oversees general affairs. An MC consists of all company members that collectively contribute their parts to the charter capital of a 2M-LLC. General Director (or CEO), who is appointed by an MC, is responsible for running day-to-day operations of a 2M-LLC. In a 2M-LLC that has 11 or more shareholders, a BOS, whose supervisors are appointed by the MC, assists the MC to supervise operational activities of the 2M-LLC.

Single-limited liability company (IM-LLC)

1M-LLC is a separate and distinct legal entity. Company president or Members' Council (MC) (which consists of individuals appointed by the sole member of the 1M-LLC) makes decisions on the most important affairs and oversees the general affairs of the 1M-LLC. General Director (or CEO), who is appointed by MC or The company president is responsible for running day-to-day operations of 1M-LLC. If a sole member of a 1M-LLC is a legal entity, a supervisor appointed by a sole corporate member is required to assist the sole member in overseeing all operational matters of 1M-LLC.

Note: In general, the term "director" under the foreign laws might be equivalent to the member of BOD (in case of JSC). Additionally, "officer" under foreign laws generally might be equivalent to the director (in JSC, 1M-LLC and 2M-LLC) under Vietnamese laws.
For the purpose of this summary, we shall use "director" and "officer" with the general meaning implied by the Vietnamese laws as noted above.