What are the Legal Entities in Bolivia?

Find out what legal entities in Bolivia are available for expanding businesses to carry out their commercial operations. There are several legal entities to choose from, and it is wise to seek expert guidance and advice on which is best for you. It is crucial to understand and comply with all legal and accounting requirements for that entity in Bolivia.

The Bolivian Commercial Code establishes the following types of Commercial Companies:

• Limited liability company
• Corporation ( S.A.)
• Branch
• Unipersonal company

This article will explain the most common types of legal entities in Bolivia for expanding businesses.

Common legal entities in Bolivia

Limited liability company (LLC) legal entity in Bolivia

LLCs are closed partnerships in which the identity of the quota holders is key. Capital is divided into installments of equal value, which will be one hundred or multiples of one hundred Bolivianos. This must be paid in full, in the act of social constitution, whether the contribution is in money or kind, in the latter case must be valued.

In Bolivia, the limited liability company (LLC) is known as a “Sociedad de Responsabilidad Limitada” (S.R.L.). This structure provides limited liability protection to the shareholders, meaning their assets are generally protected from business debts and liabilities.

The company name must be chosen according to the type of business activities or can be formed with the shareholder’s name adding ‘S.R.L. or Ltda.

• Shareholders- The shareholders  of an S.R.L. can be individuals or legal entities (foreign or national) The minimum shareholders required by law is (2) up to a maximum of (25)
• Management: The management structure is typically outlined in the company’s articles of incorporation. Shareholders must appoint a Legal Representative who must be Bolivian or a foreign person with legal residency in Bolivia, 
• Capital Contributions: Members contribute capital to the company, and their ownership stake is generally proportionate to their contributions. The S.R.L. structure allows for flexibility in terms of capital contributions.
• Transfer of shares: A shareholder’s meeting must be held to approve the admission of new shareholders. The approval must garner a 2/3 majority of the social capital to be considered valid. Subsequently, this document must undergo notarization and be registered with the Registry of Commerce office.
• Fiscal Address: The company must register a Fiscal Address before the Tax Authority 

Corporation – S.A.

A Corporation in Bolivia is known as Sociedad Anónima, or S.A. This type of company is popular for large companies. The main characteristics of an S.A. legal entity in Bolivia include:

• The share capital is divided into shares.
• The shareholders have limited liability up to the amount of their contributions, i.e. their assets are protected from company liability.
• An S.A. can be constituted by the sole act of the founders or by public subscription of shares.
• An S.A. can be constituted by the sole act of the founders or by public subscription of shares.
• Shares can be freely transferred, subject to any restrictions in the company’s bylaws.
• Minimum Capital Requirements: There may be minimum capital requirements for the establishment of a Sociedad Anónima, and this capital is divided into shares.
• Board of Directors: The company is typically managed by a board of directors, elected by the shareholders. The board makes major decisions on behalf of the company.
• .Sociedades Anónimas are usually required to file annual reports with the commercial registry, the Tax Authority and other relevant authorities.
• Bylaws: The company operates according to a set of bylaws that outline its internal rules, including procedures for shareholder meetings, distribution of profits, and other important matters.
• Audit Requirements: Depending on the size and nature of the business, there may be requirements for regular audits of the company’s financial statements.

Main differences between an S.A. and an S.R.L.

Branch of a Foreign Company

Foreign companies have the option to establish a branch as a representative office in Bolivia. The primary advantage of a branch lies in its ability to uphold the brand and reputation of the parent company. This allows the branch to leverage the existing resources and expertise of the parent company, particularly in the context of public auctions and engagement in governmental projects.

The establishment procedures for a branch in Bolivia may extend in duration, primarily due to the requirement for document apostillation at the company’s headquarters. The parent company is obligated to furnish authenticated and apostilled hard copies of the articles of incorporation, bylaws, and amendments if any, and the good standing certificate.

The main characteristics of a foreign branch in Bolivia are:

• The branch will adopt the identical name as the parent company, with the addition of ‘Sucursal Bolivia.’
• Is a separate legal entity from the parent company through financial dependence and is required to deposit a minimum authorized capital into a Bolivian bank account
• The branch will operate following Bolivian laws and regulations; while management decisions typically align with guidelines from the parent company, they can be adapted to suit the Bolivian context. 
• A legal representative, who legally resides in Bolivia, must be appointed, acting through a power of attorney on behalf of the branch before local authorities. 
• Formal registration with the Bolivian National Registry of Commerce (SEPREC) is a mandatory step.
• Has its own financial records and tax obligations in Bolivia.
• Subject to Bolivian taxes, including income tax, value-added tax (VAT), and social security contributions.

Note: The liabilities assumed by a branch extend to its parent company without restriction.

Unipersonal Company

A Unipersonal Company is a company made up of a natural person who carries out trade as a regular economic activity. This person may be a citizen or foreign national. To form this entity, they must present their Identity Card or the original documentation that proves their legal residence in Bolivia. Depending on the intended capital amount for the entity, owners may need to present an opening balance signed by the Owner or the Legal Manager and a Registered Accountant or Auditor.

If a Legal Representative is appointed, an original Power of Attorney or a certified copy must be attached to the registration documents. The Bolivian Commercial Registry will then register the entity, and owners can begin operations as a legally constituted company.

Note: The unipersonal Company does not have its own legal personality, unlike commercial companies. The owner of one of these companies is liable for company obligations with their personal assets.

Incorporating a legal entity in Bolivia

The Investment Law in force in Bolivia grants foreign business owners the same duties, rights, and guarantees as for national investors. Consequently, to establish a foreign capital company in Bolivia, prior authorization is not required; and once the company is established, it becomes a separate legal entity.

Additional registration for legal entities in Bolivia

Every company must register with the Commercial Registry to obtain the Administrative Resolution to start operations and the Commercial Registration that grants a registration number and accredits the legal personality of the company.

Likewise, every company must also have a TIN (Tax Identification Number) for tax purposes, which is obtained from the National Tax Service.

Do you need more information about the types of legal entities in Bolivia?

There are different and varied types of legal entities in Bolivia, each with distinctive characteristics. Business owners should think carefully about which entity is best suited for their business needs before incorporating in the country. To understand which legal entity in Bolivia is the best fit for your company, seek advice from trusted local experts.

For this, Biz Latin Hub is here to advise you in this process. Our specialists provide trusted, comprehensive accountancy, professional employment, legal services, and specialized company incorporation. We have a team with the necessary knowledge and experience to help you in this process. Contact us now to learn more.

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