10 things to know about M&A in Peru

Commercial entities are generally established as limited liability companies, usually in the form of sociedades anónimas.

As a general rule, companies require a minimum of two shareholders, either Peruvian or foreign individuals and/or legal entities.

There is no minimum capital, except for certain regulated entities such as financial institutions and insurance companies. Shares are only issued once they have been subscribed and at least twenty-five percent of their nominal value has been paid. Limited companies may issue different classes of shares, including non-voting shares.

Funding for corporations is flexible and not very regulated. Different tax rates and tax regulations are applicable on shareholder loans depending on certain factors, such as whether there is an economic link between the shareholder and the company benefiting from the loan and whether the shareholder is an individual or a legal entity.

There are no foreign exchange regulations or controls in general. Legal Stability Agreements are available if certain investment requirements are met.

Management belongs to different corporate bodies depending on the type of corporation, such as the Board (Directorio) and the CEO (Gerencia General), being the Board the ultimate responsible for the management decisions. It is very important to review the responsibility standards of the Board under the company’s bylaws and Peruvian law

Particular attention should be paid to regulatory, property, environmental, tax and labour matters in a legal due diligence process. Risks may be mitigated through the M&A structure and inclusion of appropriate contractual protections and guarantees.

The share transfer mechanics depend on the structure of the company. Shares in a closed corporation (Sociedad Anónima Cerrada) are transferred by way of notification to the company and annotation of the relevant share registers.

M&A transactions require prior approval of the Peruvian Competition Authority (Indecopi) if the companies involved meet certain thresholds related to annual gross sales or revenues, and value of assets in Peru. Other governmental approvals are required for certain regulated entities.

SPAs and similar agreements may be subject to foreign governing law and jurisdiction or international arbitration, subject to certain limitations. It is a common practice for foreign investors to agree on Peruvian or international arbitration. At the request of the party or the arbitral tribunal, an arbitration award may be enforced before the competent judicial authority.