On June 23, 2021, a bill was presented to the Honorable Legislative Assembly, the draft Legislative Decree comprising the REFORMS TO THE COMMERCIAL CODE , published in the Official Gazette Number 185, on September 29, 2021, volume N. 432, in which amendments were introduced to several articles of the Commercial Code related to founder's shares and bonds, which came into force as of October 11, 2021.

Among the most important amendments to the Code, there is the need to issue rules to abolish the validity of bearer shares and founder's bonds, since they can be used for illicit and fraudulent activities, such as evasion or avoidance of tax obligations, which as a result of these, prevent a greater control over the persons who own this type of shares and bearer bonds, and make the transparency of information for tax purposes impossible.

In view of the above, in order to avoid the continuity of this type of illicit acts, with the application of the reforms in force, the founder's shares and bonds must always be nominative, which obliges all capital companies to keep duly updated a registry of nominative shares with certain requirements mentioned in articles 155 and 212 of the Code of Commerce related to the founder's bonds, Among which we can mention the obligation to inform about its shareholders and about the distribution of dividends or profits, in accordance with the provisions of Article 124 of the Tax Code.

In conclusion, it is important to highlight that companies must issue founder's shares and bonds in nominative title, in order to have a greater control and registration of such shares as well as their shareholders in the respective registry, with the purpose of avoiding illicit activities and to obtain transparency before the Tax Administration.

For more information about how this may affect your company, please contact our specialized team at bvaldez@bvaldezlaw.com  or  benjamin@bvaldezlaw.com