{"id":5995,"date":"2017-10-09T17:31:00","date_gmt":"2017-10-09T21:31:00","guid":{"rendered":"https:\/\/www.vouga.com.py\/?p=5995"},"modified":"2024-11-27T17:32:08","modified_gmt":"2024-11-27T21:32:08","slug":"paraguay-promulga-ley-que-elimina-acciones-al-portador-10-preguntas-y-respuestas-fundamentales-para-entender-los-cambios-que-trae-la-nueva-ley","status":"publish","type":"post","link":"https:\/\/www.vouga.com.py\/en\/paraguay-promulga-ley-que-elimina-acciones-al-portador-10-preguntas-y-respuestas-fundamentales-para-entender-los-cambios-que-trae-la-nueva-ley\/","title":{"rendered":"Paraguay enacts law that eliminates bearer shares: 10 fundamental questions and answers to understand the changes introduced in the new law."},"content":{"rendered":"

In order to prevent money laundering and tax evasion through the use of joint stock companies, Law No. 5895\/2017 \u201cEstablishing transparency rules in the regime of companies incorporated by shares\u201d (the \u201cLaw\u201d) was enacted on October 05, 2017 in Paraguay, one of the main changes being the elimination of bearer shares.<\/p>\n\n\n\n

The regulation of the Law is pending.<\/p>\n\n\n\n

Vouga Abogados proposes these simple and concrete answers to eleven fundamental questions that help to understand the changes.<\/p>\n\n\n\n

1. What are the main changes brought about by the Law?<\/strong><\/p>\n\n\n\n

The main change that occurs with the enactment of the Law refers to the articles of the Civil Code that refer to the existence of bearer shares -specifically articles 1,050, 1,069 and 1,070-. In this sense, it is established as a requirement for the incorporation of companies the determination of the value and number of its shares, suppressing any reference to bearer shares. Also, in relation to the formalities of the shares and the provisional certificates, it is established as a requirement to identify the name of the holder of the share.<\/p>\n\n\n\n

2. Who is affected by the changes in the new Law?<\/strong><\/p>\n\n\n\n

The changes provided by the new law affect only those corporations with bearer shares.<\/p>\n\n\n\n

3. What happens if a corporation has registered shares?<\/strong><\/p>\n\n\n\n

Corporations with registered shares are not affected.<\/p>\n\n\n\n

4. What happens with the bylaws of corporations with bearer shares?<\/strong><\/p>\n\n\n\n

The bylaws of corporations with bearer shares are modified by operation of law, and therefore it is not necessary for the corporation to hold an extraordinary meeting to adapt its bylaws to the new Law.<\/p>\n\n\n\n

5. What obligations arise for the shareholders<\/em>?<\/strong><\/p>\n\n\n\n

The law requires shareholders to exchange their bearer shares for registered shares before the Company's Board of Directors within 24 months from the effective date of the law. <\/p>\n\n\n\n

6. What obligations arise for the companies<\/em>?<\/strong><\/p>\n\n\n\n

Companies must notify the Treasury Counsel's Office of the exchange of bearer shares for registered shares, although the requirements and conditions concerning such notification have not yet been established -subject to regulations to be prepared by the Executive Power through the Ministry of Finance-.<\/p>\n\n\n\n

7. What are the tax implications of the conversion and exchange of shares?<\/strong><\/p>\n\n\n\n

Conversions of bearer shares into registered shares and the exchange are exempt from all taxes.<\/p>\n\n\n\n

8. What happens in the event of a transfer of shares?<\/strong><\/p>\n\n\n\n

In the event of a transfer of shares, the buyer must notify the company within 5 business days, notwithstanding the fact that the communication is made by the seller. For such purpose, the name and surname, identity card or RUC and the domicile of the buyer must be indicated. In turn, the company must communicate such transfer to the Treasury Attorney's Office within 5 business days of having received the communication from the shareholders.<\/p>\n\n\n\n

It should be clarified that the obligation to notify the Treasury Solicitor's Office is not applicable to issuing corporations that operate in the stock market, since they are subject to different provisions on this matter.<\/p>\n\n\n\n

9. What are the penalties applicable to the shareholders<\/em> that do not comply with the established deadlines?<\/strong><\/p>\n\n\n\n

The economic rights of shareholders who have not exchanged their shares with the company's board of directors within the established 24 months will be automatically suspended, which means that they will not be able to receive dividends until they comply with the requirements. In addition, they will be subject to fines ranging from 50 to 500 minimum daily wages for unspecified activities (between Gs. 3,830,800 and Gs. 38,308,800, equivalent to approximately USD 680 to USD 6,820 at the current exchange rate). <\/p>\n\n\n\n

10. What are the penalties applicable to the companies<\/em> that do not comply with the established deadlines?<\/strong><\/p>\n\n\n\n

In the event that the degree of compliance with the share exchange has not reached at least 90% of the shares, the companies will be subject to the following penalties:<\/p>\n\n\n\n