The Executive Branch enacted Law 6480/2020 (“Law”) creating the Simplified Joint Stock Company (“EAS”).

Vouga Abogados was the law firm selected to provide external technical-legal advice in the drafting of the Bill. The collaboration was carried out within the framework of an external consultancy contract signed between the Firm and the public institutions promoting the Law.

The main reasons for the enactment of the Law are, on the one hand, the need to promote the formalization of economic activities and, on the other hand, to improve and expedite the processes of incorporation and operation of companies, and at the same time reduce administrative costs. Ultimately, the Law seeks to modernize the business system and improve the business climate in Paraguay.

Among the novelties introduced by the Law, we can highlight the following aspects:

1. The possibility of incorporating the EAS with a single shareholder.

2. In order to simplify the procedures for the incorporation of an EAS, the Ministry of Finance, upon registration of the user, shall make available an on-line form for the incorporation of the company, which shall also contain a standard model of bylaws.

3. The process of opening an EAS will be centralized through the Unified System for the Opening and Closing of Companies (SUACE), administered by the Ministry of Industry and Commerce. It will be SUACE who will refer the request to the Treasury Attorney's Office, under the Ministry of Finance, to proceed with the registration of the same.

4. Once the registration is approved, the approval opinion will be sent simultaneously to the other interested parties (SET, IPS, MTESS).

5. At any time the EAS may be transformed into a company of any of the types provided by the Civil Code or special laws. Likewise, any company incorporated under another type may be transformed into an EAS.

6. The Governing Body of the EAS may convene itself and shall be validly constituted as long as the members with 100% of the shares with voting rights meet at the same place.

7. The syndicate or any other auditing and oversight body shall be optional.

8. It is estimated that, if the implementation is successful, the opening of an EAS will take approximately 72 hours.

On the other hand, the financial entities will establish the necessary mechanisms so that, as soon as possible, the EAS can open bank accounts. The maximum opening term is pending to be defined by regulation.

Another aspect to highlight is that, although the new corporate form will be particularly beneficial for small and medium-sized businessmen, it is still a good alternative for all kinds of entrepreneurs who wish to start an economic activity in our country, regardless of the size or capital to be allocated to the company.

Partners Rodolfo G. Vouga and Perla Alderete, as well as associates Andrés Vera and Manuel Acevedo participated in the advice and drafting of the Law project, and are currently working on the drafting of the future regulation of the Law.