Social Enterprise Law Surveys |
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Peru |
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| (Latin America/Caribbean) Firm Estudio Olaechea | |
| What jurisdiction(s) do you practice in? | Peru |
| What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ... | The most common for-profit organizational forms utilized in Peru are the Sociedad Anonima (SA) and Sociedad de Responsabilidad Limitada (SRL) equivalent to the corporation and the limited liability company (LLC), where the shareholders’/partners´ liabilities are limited to the amount of their contributions and at least 2 shareholders/partners are required at all times.
Recently in Peru, a new law has been enacted on November 24th 2020, the Sociedad de Beneficio e Interés Colectivo (BIC) or Collective Interest and Benefit Law, applicable to any for-profit company established under the Peruvian Corporate Law, which are detailed above (the most used ones).
Finally, Peru has a cooperative law for cooperative organizations (“CO”) structure that is often used for generating a direct benefit to its members, as work, goods or services, and as a platform to reach them; having a non-profit purpose with its shareholders, but generating a direct benefit for its members (like agricultural, savings and credits, mining and others cooperatives).
a. It is certainly possible to work with a SA and with a Sociedad Anonima Abierta (SAA) that allows many members and investor backing. In addition, in Peru it is possible to use them for entering into the public market and receive multiple investments with multiple shareholders. It is very difficult to get outside investment into a CO, and investments in these entities are often debt rather than equity. b. BIC´s are a new qualification for companies under the scope of the Peruvian Corporate Law, and the only per se benefit qualification that exists in Peru for for-profit organizations.
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| Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required... | SAC and SRL: No requirement. The bylaws are the main regulation for these purposes. |
| Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ... | Yes, BIC´s qualification is applicable to any of the already existent corporate for-profit companies according to Peruvian Corporate Law. a. The BIC qualification is available for any company under the Peruvian corporate Law, such as SA, SAC, SCRL and SRL; as mentioned SA, SAC and SRL are the most used ones. b. and c. As long as they preserve its social benefic purpose, include it into its bylaws and comply with it, there are no more differences than the ones derived from its corporate form. Regarding the benefit, they are not clear yet, as the Regulation to the BIC Law is pending to be published. If they do not comply with such purposes, it is possible to lose the BIC qualification, but the Company will still exist. d. No, but BIC law regulation is pending. e. No, but BIC law regulation is pending. f. Since the BIC law has been enacted on November 24th 2020, there is no company registered as BIC up to this date. |
| Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat... | As BIC, the only existent social enterprise per se, no. |
| Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms. | Yes, as worker-owned cooperatives allow for worker control and management as well as alignment of worker and investor interests. Enterprises that form as Cooperatives may experience difficulties in raising capital and scaling and must abide by additional governance requirements. Further, outside investors are also not incentivized to make large investments since the level of financial investment does not determine control. |
| Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to. | Up to this date, if a company decides to adapt and to qualify as a BIC, the Institute for Protection of Competition and Industrial Property (Indecopi) can supervise and punish a Company that violates Anti-Trust Law or Consumer Protection Law; and even remove its BIC condition. In addition, a Social Impact Management Report is required, it must be performed by a certified third company, reviewed and approved by the shareholders/partners, published on the company web page and available in its offices. |
| In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples. | Since BIC requirements are to be detailed into its Regulation, there is not much case law on point. Many questions remain opened. |
| Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe. | No. |
| Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe. | The BIC qualification requires that the entity have a positive impact, or to reduce a negative one, on society and the environment. Enabled for-profit companies may choose their mission. |
| Does your jurisdiction have any ESG requirements for investors? If it does, please describe. | No. |
| Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi... | In the case of pensions funds and insurance companies, it would depend on the kind of investment that they are thinking to do. For example, in the case of forest funds, there are some requirements that need to be considered in order to invest in such kinds of funds: One of the requirements is that the forest fund should have included social conflicts resolution and environmental guidelines. For the rest of the major investors such as investments funds or mutual funds, there are not any major requirements regarding ESG issues. However, there is not any prohibition or restriction to consider such factors. Other relevant factors that are considered are the Good Corporate Governance rules in the case of pensions funds and insurance companies. |
| What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)? | There are not any specific philanthropic funding rules that Social Enterprises could attend to. If any Social Enterprise would like to raise funds from the public or in a private way the Social Enterprise should comply with the general regulations applicable for the rest of the companies (banking regulation and capital market regulation). |
| How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)? | There is not any special treatment or prevalence regarding the new for-profit impact investments. |
| What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government... | There is no special government funding specifically available to Social Enterprises as such. |
| Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)? | No. |
| To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction. | According to the Report on Compliance with Principles of Good Corporate Governance, publicly traded Enterprises are required to disclosed ESG factors on their web page. |
| How prevalent, if at all, are impact bonds in your jurisdiction? | No impact. |
| In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)? | No. |
| Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a... | Crowdfunding is legal. Yes, there are rules under applicable securities laws. According to with the Urgent Decree N° 013-2020, crowdfunding is the activity in which, through a platform, individuals domiciled in the country or legal entities incorporated in the country, who request financing in their own name, called recipients, are put in contact with a plurality of individuals, legal entities or collective entities, called investors, who seek to obtain a financial return. In the case of natural persons, they are over eighteen (18) years old. |
| Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe... | No. There are tax exemptions available for Nonprofits generally, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form. In regard to Nonprofits, tax exemptions vary depending on the type of entity. Foundations (whether or not Social Enterprise) exclusively devoted to cultural activities, advanced research, charitable activities, social assistance and hospital care, and/or social benefits for employees do not have to pay income tax themselves. On the other hand, temporary income tax exemption applies to the income derived by Nonprofit associations (whether or not Social Enterprise), provided they exclusively carry on charitable, social care, educational, cultural, scientific, artistic, literary, sports, political, guild and/or housing programs. In both cases, donors may take deductions on their reported income. |
| Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations? | No. |
| Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.) | No. |
| Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions? | No. |
| Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe. | No. |
| What government operational support, resources, training or services, are available for small businesses or Social Enterprises? | For small businesses, there are training sessions. |
| Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are. | Directors and managers of a BIC must ensure the real achievement of the social and environmental benefit propose defined in the statute. The directors and managers must also weigh the impact that their actions or omissions have on their partners, workers, community, local and global environment, and the long-term expectations of the partners in the realization of the corporate and social benefit purpose. The board of directors or the legal representative of the BIC must introduce practices of organizational transparency. It must also entrust to a third party the elaboration of a management report on the impact to the BIC in relation to the social and environmental benefit purpose. |
| Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness. | No. |
| Is there a different bankruptcy system available for Social Enterprises? | No. |
| What are the average time and filing fees to form an Enterprise in your jurisdiction? | Approximately two weeks since we receive the necessary documents, those are general requirements for for-profit companies. In the case of BIC companies, the are no available requirements for its registration yet. Filing fees for registration comprehend: (i) Notary Fees and (ii) Public Registry Fees, which will be calculated based on the capital stock on the company. |
| What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well... | As of today, not applicable. |
| Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction. | Yes, startups can easily form and flourish in Peru. They have a number of Enterprise forms available to choose from. As SAC, there are relatively few reporting requirements for private for-profit businesses and incorporation processes are fast, cheap and simple. An increasing amount of start-ups in Peru is permanently growing over the last five years. |
| Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction. | Social Enterprises can form relatively easily if they want to organize as a for-profit company, but we do not yet know additional requirements for its registrations as BICs, as applicable regulations are scheduled to be available into the next two months. |
| Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc... | As of today, not applicable. |
| In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects. | No. |
| What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction? | Despite not having the BIC regulation: making crowdfunding easier, cheaper and more accessible to broaden public investment in Social Enterprises. |
| What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)? | N/A to BIC yet. In general, benefits in order to promote or enhance social responsibility (derived from public policies) where there are social needs in Peru. For example, tax benefits or fewer regulations for certain purposes or projects. |
| Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not? | No. |
Social Enterprise Law Surveys
Peru
The most common for-profit organizational forms utilized in Peru are the Sociedad Anonima (SA) and Sociedad de Responsabilidad Limitada (SRL) equivalent to the corporation and the limited liability company (LLC), where the shareholders’/partners´ liabilities are limited to the amount of their contributions and at least 2 shareholders/partners are required at all times.
- The SRL, in comparison with the SA, does not have a board of directors and all the transfers of interests in it shall be mandatorily made through a Public Deed and registered with the Peruvian Public Registry.
- In addition, the Sociedad Anonima Cerrada (SAC), equivalent to the closely held corporation, is another form derived from the SA. This company cannot have more than 20 shareholders and its shares cannot be registered in the Capital Markets Registry. The board of directors is optional. In case the shareholders decide to not have a board, such corporate body’s obligations and responsibilities are assumed by the general manager.
Recently in Peru, a new law has been enacted on November 24th 2020, the Sociedad de Beneficio e Interés Colectivo (BIC) or Collective Interest and Benefit Law, applicable to any for-profit company established under the Peruvian Corporate Law, which are detailed above (the most used ones).
- Companies that voluntarily look forward to generating a positive impact; or to reduce a negative one, into the society or environment, are eligible to be under the scope of this new BIC Law. They must integrate its benefic social/environmental social purpose within its economic profitable activity. Nevertheless, in the term of 90 days since November 24th 2020 will be enacted: (i) the regulations of BIC Law and (ii) the concrete steps for registering these new qualifications for companies into the Public Registry.
Finally, Peru has a cooperative law for cooperative organizations (“CO”) structure that is often used for generating a direct benefit to its members, as work, goods or services, and as a platform to reach them; having a non-profit purpose with its shareholders, but generating a direct benefit for its members (like agricultural, savings and credits, mining and others cooperatives).
a. It is certainly possible to work with a SA and with a Sociedad Anonima Abierta (SAA) that allows many members and investor backing. In addition, in Peru it is possible to use them for entering into the public market and receive multiple investments with multiple shareholders. It is very difficult to get outside investment into a CO, and investments in these entities are often debt rather than equity.
b. BIC´s are a new qualification for companies under the scope of the Peruvian Corporate Law, and the only per se benefit qualification that exists in Peru for for-profit organizations.
SAC and SRL: No requirement. The bylaws are the main regulation for these purposes.
Yes, BIC´s qualification is applicable to any of the already existent corporate for-profit companies according to Peruvian Corporate Law.
a. The BIC qualification is available for any company under the Peruvian corporate Law, such as SA, SAC, SCRL and SRL; as mentioned SA, SAC and SRL are the most used ones.
b. and c. As long as they preserve its social benefic purpose, include it into its bylaws and comply with it, there are no more differences than the ones derived from its corporate form. Regarding the benefit, they are not clear yet, as the Regulation to the BIC Law is pending to be published. If they do not comply with such purposes, it is possible to lose the BIC qualification, but the Company will still exist.
d. No, but BIC law regulation is pending.
e. No, but BIC law regulation is pending.
f. Since the BIC law has been enacted on November 24th 2020, there is no company registered as BIC up to this date.
As BIC, the only existent social enterprise per se, no.
Yes, as worker-owned cooperatives allow for worker control and management as well as alignment of worker and investor interests. Enterprises that form as Cooperatives may experience difficulties in raising capital and scaling and must abide by additional governance requirements. Further, outside investors are also not incentivized to make large investments since the level of financial investment does not determine control.
Up to this date, if a company decides to adapt and to qualify as a BIC, the Institute for Protection of Competition and Industrial Property (Indecopi) can supervise and punish a Company that violates Anti-Trust Law or Consumer Protection Law; and even remove its BIC condition.
In addition, a Social Impact Management Report is required, it must be performed by a certified third company, reviewed and approved by the shareholders/partners, published on the company web page and available in its offices.
Since BIC requirements are to be detailed into its Regulation, there is not much case law on point. Many questions remain opened.
No.
The BIC qualification requires that the entity have a positive impact, or to reduce a negative one, on society and the environment. Enabled for-profit companies may choose their mission.
No.
In the case of pensions funds and insurance companies, it would depend on the kind of investment that they are thinking to do. For example, in the case of forest funds, there are some requirements that need to be considered in order to invest in such kinds of funds: One of the requirements is that the forest fund should have included social conflicts resolution and environmental guidelines.
For the rest of the major investors such as investments funds or mutual funds, there are not any major requirements regarding ESG issues. However, there is not any prohibition or restriction to consider such factors.
Other relevant factors that are considered are the Good Corporate Governance rules in the case of pensions funds and insurance companies.
There are not any specific philanthropic funding rules that Social Enterprises could attend to. If any Social Enterprise would like to raise funds from the public or in a private way the Social Enterprise should comply with the general regulations applicable for the rest of the companies (banking regulation and capital market regulation).
There is not any special treatment or prevalence regarding the new for-profit impact investments.
There is no special government funding specifically available to Social Enterprises as such.
No.
According to the Report on Compliance with Principles of Good Corporate Governance, publicly traded Enterprises are required to disclosed ESG factors on their web page.
No impact.
No.
Crowdfunding is legal. Yes, there are rules under applicable securities laws. According to with the Urgent Decree N° 013-2020, crowdfunding is the activity in which, through a platform, individuals domiciled in the country or legal entities incorporated in the country, who request financing in their own name, called recipients, are put in contact with a plurality of individuals, legal entities or collective entities, called investors, who seek to obtain a financial return. In the case of natural persons, they are over eighteen (18) years old.
No. There are tax exemptions available for Nonprofits generally, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form.
In regard to Nonprofits, tax exemptions vary depending on the type of entity. Foundations (whether or not Social Enterprise) exclusively devoted to cultural activities, advanced research, charitable activities, social assistance and hospital care, and/or social benefits for employees do not have to pay income tax themselves. On the other hand, temporary income tax exemption applies to the income derived by Nonprofit associations (whether or not Social Enterprise), provided they exclusively carry on charitable, social care, educational, cultural, scientific, artistic, literary, sports, political, guild and/or housing programs. In both cases, donors may take deductions on their reported income.
No.
No.
No.
No.
For small businesses, there are training sessions.
Directors and managers of a BIC must ensure the real achievement of the social and environmental benefit propose defined in the statute. The directors and managers must also weigh the impact that their actions or omissions have on their partners, workers, community, local and global environment, and the long-term expectations of the partners in the realization of the corporate and social benefit purpose. The board of directors or the legal representative of the BIC must introduce practices of organizational transparency. It must also entrust to a third party the elaboration of a management report on the impact to the BIC in relation to the social and environmental benefit purpose.
No.
No.
Approximately two weeks since we receive the necessary documents, those are general requirements for for-profit companies. In the case of BIC companies, the are no available requirements for its registration yet.
Filing fees for registration comprehend: (i) Notary Fees and (ii) Public Registry Fees, which will be calculated based on the capital stock on the company.
As of today, not applicable.
Yes, startups can easily form and flourish in Peru. They have a number of Enterprise forms available to choose from. As SAC, there are relatively few reporting requirements for private for-profit businesses and incorporation processes are fast, cheap and simple. An increasing amount of start-ups in Peru is permanently growing over the last five years.
Social Enterprises can form relatively easily if they want to organize as a for-profit company, but we do not yet know additional requirements for its registrations as BICs, as applicable regulations are scheduled to be available into the next two months.
As of today, not applicable.
No.
Despite not having the BIC regulation: making crowdfunding easier, cheaper and more accessible to broaden public investment in Social Enterprises.
N/A to BIC yet.
In general, benefits in order to promote or enhance social responsibility (derived from public policies) where there are social needs in Peru. For example, tax benefits or fewer regulations for certain purposes or projects.
No.