Having explored the general overview and economic opportunities of Uruguay, today we delve into the practical aspects of starting a business. Uruguay offers a stable and transparent legal framework that promotes investment and facilitates the company formation process.
Business in Uruguay: Equal Treatment for Foreign and Local Investors
A fundamental advantage of Uruguay is the equal treatment for foreign and local investors. Foreign investors enjoy the same rights and obligations as Uruguayan citizens, apart from some specific industry-related restrictions. Uruguayan law recognizes the legal capacity of foreign legal entities, provided they do not conflict with public policy.
There is no discrimination regarding taxation or restrictions on the transfer of profits abroad. The inflow and outflow of funds is free, subject to anti-money laundering and counter-terrorism financing controls.
Key Company Types and Their Characteristics
Various common company types are available in Uruguay, each tailored to different needs. The most common include:
- Sociedad Anónima (S.A.): This is the most commonly used legal form in the business sector. A minimum of two shareholders is required for constitution, although an S.A. can be 100% owned by a sole shareholder after incorporation. The liability of shareholders is generally limited to the amount of their contributions. Capital is expressed in shares, which can be bearer or nominative and are subject to disclosure requirements.
- Sociedad de Responsabilidad Limitada (S.R.L.): This form is often used for small and medium-sized businesses. It must be formed by a minimum of two and a maximum of 50 partners. The liability of partners is limited to the amount of their contributions, though they may also be liable for salary, tax, and social security debts.
- Sociedad por Acciones Simplificadas (SAS): A more modern option, existing since 2019, which can be formed by a single shareholder. Capital is expressed in nominative or book-entry shares, which cannot be publicly traded. Shareholder liability is limited to their contributions. This form offers flexible management and fewer bureaucratic requirements than an S.A.
- Branch of a foreign company: Foreign companies can also establish a branch to conduct business on a regular basis. Although a branch is required to keep separate accounting records, it is not legally considered a separate entity but rather a part of the foreign company.
Business in Uruguay: Formation Process and Duration
The formation process for an S.R.L. or SAS typically involves choosing and checking a name, making capital contributions, agreeing on the articles of association, filing with the Registrar of Companies, and publishing an extract. This process usually takes approximately 45 to 60 days.
The formation of an S.A. is more complex and takes longer, as it requires an additional review by the governmental oversight body (Auditoría Interna de la Nación). To expedite the process, the acquisition of “shelf companies” (pre-formed companies) is a widespread alternative.
Intellectual Property Protection
Uruguay places great importance on the protection of intellectual property. Copyrights, trademarks, and industrial patents are legally protected:
- Copyright: Protects original literary, scientific (including software and information systems), and artistic works. Uruguay is a party to the Berne Convention for the Protection of Literary and Artistic Works.
- Trademarks: Exclusive rights to trademarks are acquired through registration with the Dirección Nacional de Propiedad Intelectual.
- Patents: Industrial patents, utility models, and industrial designs are protected. Protection for inventions is 20 years, and for utility models and industrial designs, it’s 10 years (renewable for 5 years). Uruguay is also a party to the Paris Convention for the Protection of Industrial Property.
Anti-Money Laundering and Data Protection Regulations
Uruguay is committed to combating anti-money laundering (AML) and terrorism financing (CTF) and has a legal framework that meets the basic requirements of the Financial Action Task Force (FATF). This includes due diligence and reporting obligations for financial and non-financial sectors. Suspicious transactions must be reported to the Unidad de Información y Análisis Financiero (UIAF), and courts are empowered to order the seizure and confiscation of assets.
Data protection is also regulated by law. The law mandates the protection of personal data, requiring explicit and informed consent from the owner for information sharing. Databases must be registered with the Agencia de Gobierno Electrónico y Sociedad de la Información y del Conocimiento (AGESIC). International data transfer is also subject to specific regulations.
These robust legal foundations contribute to creating a trustworthy and secure environment for businesses and investors in Uruguay.
This is the third post in our series on Uruguay. In the next post, we will delve into Uruguay’s tax system for companies and individuals, providing you with a comprehensive insight into the fiscal framework.
