Paraguayan law provides for a number of business forms for investors. These include:

Corporation

A corporation, or sociedad anónima (SA), is a business form in Paraguay with capital participation represented by shares. Shareholders have limited liability as long as the corporation is registered.

Key aspects of a corporation include:

Formed by a minimum of 2 shareholders, who may be represented by proxy
Must have at least 1 director, who may or may not be a shareholder
Must have at least 1 trustee who is domiciled in Paraguay
The incorporation documents of the corporation must be drawn up under a notary public
The capital stock of the corporation must be fully subscribed
Shares of the corporation can be in the form of nominal shares or bearer shares and must be paid in full before being issued
Shareholders are given nominal provisional certificates until their shares are paid in full
Shareholders, directors or any other persons who have authorized activities, transactions or operations of the corporation prior to registration will be fully liable

Limited Liability Company

A Paraguayan limited liability company (LLC), or sociedad de responsabilidad limitada (SRL) can be formed by 2 or more partners and can conduct most business activities, with a few exceptions.

Key aspects of an LLC include:

May be formed by a minimum of 2 or more partners and a maximum of 25
May not engage in banking, insurance, or savings and loan business activities
Provides limited liability protection for its shareholders as long as it is registered as a commercial entity
Is not required to register as a commercial entity, but failure to do so will result in unlimited liability for all partners
Capital is divided into nominal quotas of at least PYG 1000 or multiples of PYG 1000
No set minimum capital requirements but must be adequate for the business
Capital must be fully subscribed and at least 50% paid in upon incorporation
Transfer of quotas is limited and requires approval by unanimous decision if less than 5 partners, and approval of partners holding at least 75% of the capital if 5 or more partners

Branch Office

Foreign companies are allowed to establish a branch office in Paraguay. Once registered a branch office can engage in all business activities which its parent is able to conduct in its home country. A branch office must comply with the same rules and regulations as a domestic company, and subject to the same taxation and disclosure requirements.

Joint Ventures

There is no specific legislation in regard to joint ventures in Paraguay. In general, they may be formed under contract as long as the provisions of the contract are not prohibited under Paraguayan law.

Other Business Forms

Other business forms available in Paraguay, though rarely used for foreign participation, include:

Limited liability partnerships
Capital and industry partnerships
Cooperatives
Sole proprietorships with limited liability.

Further information on the general investment, tax and regulatory regime about the country is available at the following external references:

“Doing Business” report from World Bank – click here.
Reports and publications from OECD – click here.
Reports and publications from IMF – click here.
Taxation Overview – click here.

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