What is the main source of law authorising this entity form?

Commerce Code, promulgated by Decree Law Nº 14379 dated February 25, 1977.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

Corporations have a separate legal personality.

(Maximum) period of existence

There is no limit to the period of existence; a corporation can be incorporated for an indefinite period.

Governing document(s)

A corporation is governed by its bylaws.

Liability of incorporators / shareholders

The shareholders' liability is limited to the amount of capital paid for shares that are issued.

(Governing) bodies

A corporation is governed by a board of directors.

Other particularities

Corporations can be incorporated in a single act by the founders or through the issuance of public shares.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Corporations can be involved in international transactions, asset acquisitions, equity acquisitions among others – i.e. a foreign company is allowed to acquire assets and equity from a Bolivian corporation. However a Bolivian corporation cannot merge with a foreign company, unless, it has corporate presence in Bolivia, whether as a branch or subsidiary.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

Yes.

Can this type of entity be used for a non-profit or charitable organization?

No.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

The incorporation of a corporation, requires the following information:

• Name, age, marital status, nationality, profession, domicile, and I.D. number of those people that will become partners or shareholders and/or name, nature, nationality, and domicile of those entities that will become partners or shareholders.
• There are no limitations or special restrictions for foreign partners or shareholders. In the case of a foreign entity, a certificate of good standing is required.
• Name and domicile.
• Purpose which must be specific and determined.
• Paid in capital. There is no minimum capital requirement, but it must be deposited in a Bolivian bank before the application for registration is submitted to the Bolivian Registry of Commerce.
• A minimum of three directors are required as board members, who can be of any nationality and may reside outside Bolivia. Corporations also require a comptroller and alternate who must be domiciled in Bolivia.
• A special power of attorney may be granted for purposes of incorporating a Bolivian entity.

Involvement of notary, company register, governmental authorities

The first step in incorporating a local entity is to notarise the Foundation Minute, the articles of incorporation, and the bylaws, before a Notary Public, and subsequently, file these with the Registry of Commerce. Provided that all documents are in good standing, the Registry of Commerce shall issue a certificate of registration allowing for the commencement of operations of the new entity.

Timing (estimate)

The incorporation of a corporation may take up to three weeks. Once the documents have been prepared, and notarised with a Notary of Public, the Registry of Commerce, carries out the appropriate registration within a period of 5 business days commencing from the next day after commencing the filing proceeding.

Main costs, including registration and similar fees (excluding legal fees)

The administrative costs typically amount to approximately USD 550.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Both, the articles of incorporation, and the bylaws must include a purpose for the entity.

Minimum number of incorporators / shareholders and residency requirements

The incorporation of a corporation requires a minimum of three shareholders, who can be Bolivian nationals or foreign natural or legal persons and can reside in Bolivia or abroad.

Minimum number of directors (or other applicable officers) and residency requirements

Corporations require a minimum of three and a maximum of twelve directors, who can be Bolivian nationals or foreign natural persons and can reside in Bolivia or abroad.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The law does not provide for a minimum capital; however, the capital will be divided into shares of equal value. They have a face value of 100 bolivianos or multiples of one hundred. The capital must be deposited in a bank account. Evidence of said deposit must be filed with the Registry of Commerce.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

Physical presence is not necessary, foreign shareholders can send a power of attorney to be represented in Bolivia. For enforcement purposes in Bolivia, the power of attorney must be dully apostilled and subsequently, notarised with a Notary Public in Bolivia.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

It is mandatory to obtain a Tax Identification Number (NIT) from the National Tax Service (SIN). Once the company is incorporated, the legal representative must file for a NIT with the SIN, which can be obtained the same day.

What is the title of the applicable company registry?

The title is the Plurinational Service of Registry of Commerce (SEPREC), a governmental agency.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

Name, age, marital status, nationality, profession, domicile, and I.D. number of those people that will become partners or shareholders and/or name, nature, nationality, and domicile of those entities that will become partners or shareholders.

In the case of a foreign entity, a certificate of good standing is required.

Provide a name and domicile.

The purpose must be specific and determined.

Paid in capital.

Bylaws.

Articles of incorporation.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Corporations are governed by a board of directors (Directorio), made up of a minimum of three members.

The members are the President, Vice-president, and Secretary.

The President of the board is the primary representative of the corporation.

To guarantee the responsibilities arising from the performance of the directorship, the directors, must secure a bond as provided by the bylaws.

How are the members of the executive body appointed, dismissed and replaced?

Members of the board are appointed or elected by the shareholders at a regular meeting (Junta Ordinaria de Accionistas) called for such purpose. Their removal is also handled at a regular meeting.

Is it possible to appoint corporate directors or must all directors be natural persons?

All directors must be natural persons.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

No.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

Shareholders' Meeting (S).

Meetings can be regular or special meetings.

The regular meeting is called for the purpose of resolving the following matters:

• Considering the annual report and the comptrollers report, the balance sheet and income statement, and all other matters related to the management of the corporation.
• The distribution of profits or, if appropriate, the handling of losses.
• The appointment and removal of directors and comptrollers and, if appropriate, the setting of their remuneration.
• Handle the responsibilities of the directors and comptrollers, if any.

The special meetings consider all matters that are not within the competence of the regular meeting and, exclusively, the following:

• Amendments to the bylaws.
• Issuance of new shares.
• Issuance of bonds or debentures.
• The increase of the authorised capital and reduction or reimbursement of the capital.
• The early dissolution of the company, its extension, transformation, or merger; appointment, removal, and set out the remuneration for liquidators; and
• Others provided under law, the articles of incorporation or the bylaws.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Quorum at regular meetings is met if more than half of the shares with voting rights are represented in person or by proxy. Special meetings, require the representation of two thirds of the shares with voting rights present in person or by proxy, unless the bylaws provide a higher number to reach quorum.

The resolutions adopted at the regular meetings, are approved by an absolute majority of the votes present, unless the bylaws provide for a greater number.

The resolutions adopted at special meetings, are approved by an absolute majority of the votes present unless the bylaws provide for a greater number.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

No.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

At the closing of the financial year, a general balance sheet is prepared for all the operations of the corporation, together with a statement of profits and losses for such period, including inventories and other pertinent documents, which are approved by the board of directors, prior to its handling at the regular meeting. The board of directors will present the balance sheet and other documents along with a report, concerning the corresponding period for consideration at the regular meeting. On an annual basis, corporations must publish the balance sheet, within three months of the closing of its financial year with the Registry of Commerce's Electronic Gazette.

Is the entity permitted to determine its own financial year?

No, the closing date of the financial year is determined according to the purpose of the entity. For example, the financial year for business enterprises commences on 1 January and ends on 31 December. Industrial companies close their financial year on 31 March, mining companies on 30 September.

Is the entity subject to any statutory (external) auditor obligations?

It is only mandatory for companies that invoice over 1,200,000 bolivianos to prepare and file their audited financial statements.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Members of the board of directors can be national or foreign natural persons and can reside in Bolivia or abroad.

The executive officer, or whomever is acting as representative of the company can be national or foreign natural persons and must reside in Bolivia.

The accountants must be affiliated to the Accounting Association of Bolivia, which requires them to hold a State-approved degree.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares (Acciones).

Are different classes of ownership interests possible? If so, what are some examples of different classes?

No.

What documentation is required for the transfer of ownership interests?

The endorsement of shares and the registration in the company's Book of Registered Shares.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

No.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.

How are shares issued? (including information on payment obligations, registration requirements)

Shares are represented through share certificates issued by the company. The share certificates can represent one or more shares and be registered or bearer shares. If the shares have not been paid in full, the company will only issue provisional certificates in registered form. Once the total amount of the shares has been paid, the interested parties can demand the delivery of the definitive certificates. If such delivery is not fulfilled, the provisional certificate will be considered final and negotiable. The share titles will be registered in the company's Book of Share Registry.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Shareholder contributions can be in kind. These will be valued in the manner foreseen in the contract reflecting the justifying background (which refers to justify the motives for carrying out the appraisal of the assets contributed in-kind, as to determine their value) of the valuation. When the partners (referring to the partners or shareholders of a company that made contributions in kind) or their representatives intervene in the valuation, they will be jointly and severally liable for the correct valuation (the purpose is for the appraisal to be legally carried out, and if the partners intervene in it, they are responsible for the appraisal to be made correctly). In the absence of an express stipulation in this regard, it will proceed through market prices or by one or more judicially appointed experts.

No.

If the shares have not been paid in full, the company will only issue provisional certificates in registered form. Once the total amount of the shares has been covered, the interested parties can request the issuance of the definitive titles.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

No.

Voluntary: A voluntary capital reduction and the reduction due to losses must be approved by the special shareholders' meeting and must be carried out with the authorisation of the Registry of Commerce. It will be published in the Gazette of the Registry of Commerce, for three consecutive times and the reduction may be made effective only when the company pays the credits of creditors or guarantees them satisfactorily.

As a result of losses: The capital reduction is mandatory when the losses exceed fifty percent of the capital, including free reserves. This issue must be communicated to SEPREC, published, and handled with respect to creditors, as indicated in the previous paragraph. Should the capital reduction, result insufficient to fulfil the purpose of the company, it will be dissolved and liquidated.

Mandatory: In any capital reduction, the share certificates will be exchanged or resealed, in accordance with the reduction made.

Any requirements with respect to distributions to shareholders?

The distribution of profits can only be made when they are effective and liquid, resulting from a balance prepared in accordance with the law and the bylaws and approved by the partners or the competent corporate body. Any stipulation to the contrary is void. (The term solvent can also be used).

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

The Bolivian Commercial Code (Código de Comercio Boliviano) does not recognise Shareholders' Agreements; however, these can be executed and for their validity they must be approved by special shareholders' meeting. These Agreements cannot supersede the bylaws of the company.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Updating the Commercial License for corporations, which amounts to Bs. 584,50 per annum.

Municipal annual operating fee for economic activities, the amount charged shall depend on the total square meters that the activity occupies. The approximate amount is Bs. 4.500 per annum.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The Company's Profits Tax is national. The single and general rate for a company's net profits is 25%.

Summary of any specific matters, e.g. recent or prospective major legal developments

Through Ministerial Resolution MDPyEP No. 146.2020 dated July 20, 2020, the Ministry of Productive Development and Plural Economy provided that commercial companies could hold Shareholders' Meetings and Board Meetings in three (3) ways:

• In person by physically attending the meeting at the place set out in the notice of meeting.
• Virtually by which technology allows attendees to participate virtually by making use of information and communication technologies.
• Mixed, whereby some of the attendees physically attend the place designated for the meeting and the others participate virtually.

Virtual or mixed corporate meetings must have as the main transmission point for holding the meeting at the company's legal domicile (it refers to which place of broadcast will be the legal domicile of the company):

• Board meetings may be held within or outside Bolivia. Attendees will be able to connect from transmission points other than the company's legal domicile.
• The minutes resulting from virtual or mixed corporate meetings may be signed by hand or electronically, the attendees being able to determine the form of execution.