ComplianceJune 23, 2020

Paraguay Introduces a New Legal Entity: Simplified Shares Company, Law No. 6480

Paraguay – To encourage business development and attract foreign investment, the Paraguayan government has introduced a new entity type called the Empresas por Acciones Simplificadas (EAS), otherwise known as the Simplified Shares Company.

Enacted in January 2020, Law No. 6480 establishes a more simplified process of entity incorporation via the EAS, with faster processing times and reduced administrative costs for companies looking to do business in this jurisdiction.

The main characteristics of a Simplified Shares Company or EAS are:

  • Can be incorporated with a single shareholder. This is the first entity type in Paraguay allowed to do this. Important to note that in all cases a legal representative must be appointed.
  • Centralized registration through the Unified System for Opening and Closing of Companies. Entity registrations must be completed at the SUACE (its acronym in Spanish), who will process and simultaneously notify tax authorities, social security and the ministry of labor, among other public institutions, of the new registration. This saves the registrant time from having to apply in each of these offices, allowing for registrations to be completed in approximately 72 hours.
  • Recognized as a separate legal entity. Shareholders/Members of an EAS have limited liability.
  • Minimal capital requirement. The minimum share capital required is 1 Paraguayan Guarani.
  • Can be transformed into another entity type at any time. Likewise, companies incorporated as any other type of entity, may be transformed into an EAS.
  • Board of directors or supervisory board are optional. Entity governance procedures can follow the instructions laid out by the company's bylaws.
  • Annual general meetings can be held remotely. In place of in person meetings, virtual shareholder/member meetings are allowed.

Some legal and regulatory aspects of the EAS are yet to be defined. For example, financial institution are still in process of establishing procedures allowing an EAS to open a bank account as quickly as possible.

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