Starting a business

Starting a business - Punta del Este
In Uruguay, the government promotes investment in general and maintains a favorable policy toward foreign investment. The general system is completely open and does not discriminate between foreign and domestic investors. As such, the foreign investor enjoys the same benefits as the local investor, and no prior authorization is required for foreign investments.

From a business standpoint, the foreign investor may select from several methods if he or she wishes to create a company in the country. Operations can be performed by creating a corporation (sociedad anónima or SA in Spanish), the most frequently used vehicle where 100% of shares may be owned. A limited liability company (sociedad de responsabilidad limitada or SRL in Spanish) may also be established, made up of partners that may be physical or legal persons (national or foreign). Another alternative for the investor is to operate in the country through a branch of a foreign company. Other less frequently used company types include the general partnership? (sociedad colectiva), limited partnership (sociedad en comandita), silent partnerships (sociedad de capital e industria) and de facto partnerships (socieded de hecho). Consortiums and economic interest groups may also be established as well as sole proprietorships for undertakings by individuals.

- Corporation (SA)
- Limited liability company (SRL)
- Branch of a foreign legal entity

Corporation (SA)

There are no operational limitations of any kind with respect to industry type. As such, corporations may carry out any type of activity. One of the reasons that corporations are attractive is that the responsibility of investors (shareholders) is limited to the amount of capital they supply.

There are no minimum or maximum limits on capital for corporations. Shares may be issued in street name or in bearer form, except for financial activities where they must be in street name and for owners of rural establishments or agriculture-livestock activities, where they must be held in street name and owners must be physical persons. Bearer securities are transmitted by simple delivery. Transfers of shares in street name to the corporation must be endorsed and communicated.

After establishment, the corporation may have only one shareholder holding all capital. The investor can finance the corporation through loans, under conditions similar to those of an independent third party.

There are two types of corporations: (1) open corporations that use public funds for capitalization, are listed on exchanges and can take on debt through the issuance of negotiable obligations and (2) closed corporations that do not have the characteristics of open corporations.

With regard to operations, corporations are directed by a board or administrator, according to the determination of the shareholders. The administrator or directors may be national or foreign legal persons and may be domiciled outside the country.

The shareholders' assembly is the governing body of the corporation. An annual ordinary assembly is required to evaluate the overall balance, profit distribution and any measures related to the management of the company and to make decisions on the designation, removal, retribution or responsibility of administrators, directors, trustees or members of the fiscal commission. To consider issues different from those discussed at the ordinary assembly, an extraordinary assembly must be called.

Corporations are subject to control by the National Internal Audit (AIN) with regard to its establishment, statute reform, dissolution and transformation. For open corporations (shares listed on the exchange or negotiable bonds issued), AIN control undertakes operations. For Free Zone corporations, the AIN is only involved in capital pay in and subscription.

Limited liability company (SRL)

This type is the most commonly used for small and medium companies. In this case, there are no operational limitations, except that financial activities may not be carried out. Between two and 50 partners may make up the company and there are no restrictions on nationality. As an exception, only one partner is allowed for a temporary period. As with corporations, there are no minimum or maximum capital limits. Capital consists of contributions that are of equal value, cumulative and nominative. Responsibility is limited to the amount of capital contributions.

Dissolution may be agreed upon death or disability of one of the partners.

Transfer of ownership among partners is not limited. Transfers to third parties are subject to the approval of the partners of age, when there are five partners or less.

Branch of a foreign legal entity

A company established abroad may perform certain actions and be held legally accountable, but must create a branch to be able to carry out activities established in its charter.

Although there are no operational limitations, the branch must maintain the same line of business as headquarters.

The foreign company, whose capital is inseparable from that of the branch, is responsible for the branch's obligations.


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