Volume 4, Number 23, Page 3

Bolivia: General Rules on Corporations

The Bolivian Commerce Code states that under the incorporation agreement of a commercial company two or more persons agree to contribute for a common purpose and distribute among them the benefits or undertake the losses.

The articles of incorporation must indicate, among other information, the following:

• name, age, civil status, nationality, profession, domicile and ID of individuals
• name, purpose, nationality and domicile of legal entities that will participate in the incorporation of a company
• amount of the capital
• amount contributed by each partner or shareholder
• the authorized, subscribed and paid-in capital
• type, number, nominal value and nature of the issuance and other characteristics of the shares of stock
• the form and terms that the contributions should be paid (not more than two years)
• capital increases
• duration of the company
• designation of board members and managers
• reserves, rights and obligations of the partners or shareholders
• arbitration and clauses related to annual and special meetings of shareholders and directors

Besides articles of incorporation, corporations require bylaws, share certificates and stock registry books.

Closely Held and Publicly Held Corporations

Corporations can be formed as a sole act of their founders or through public subscription of shares. If the incorporation is a sole act, a minimum of three shareholders is required, and the capital which has been totally subscribed cannot be less than 50% of the authorized capital. Twenty-five percent of the value of each subscribed share must be paid upon signing the articles of incorporation, and the bylaws must be approved by the shareholders.

If the incorporation is through a public subscription, the promoters must prepare a foundation program which has to be signed by such promoters and be approved by the Commerce Registry. Upon obtaining approval, the foundation program must be published. The subscription agreement must be prepared by a bank, and the monies paid for such subscription of shares must be deposited in that bank. Once the capital has been subscribed, the promoters must call a shareholders meeting to include the participation of a representative from the bank and one from the Commerce Registry, as well as representatives of the majority of the subscribed shareholders.

Before beginning operations, the newly incorporated company must register with the Commerce Registry.

Capitalization Requirements

Corporate capitalizations are made through a special shareholders meeting; approval requires the number of votes specified in the bylaws. If the capitalization has been approved, the respective document has to be published and registered at the Commerce Registry.

The same procedure has to be followed by other types of companies.

Other Issues

The articles of incorporation and bylaws must be notarized, and the partners or shareholders must sign the respective public deed. A copy of the public deed, after being published in a newspaper, must be registered before the Tax Office, Municipality and Commerce Registry.

No local participation is required for the incorporation of a company. The administration of the company can be run by local or foreign persons. Board members can be foreigners. However, the controller of the corporation must live in its domicile. Meetings of the board can take place abroad; however, shareholders must meet in the domicile of the corporation.

The law firm of C.R. & F. Rojas Abogados is located in La Paz. The law firm's practice areas include corporations, banking, tax and contracts.