Special regime for the restructure of non-compliant corporations

22 December, 2021
Special regime for the restructure of non-compliant corporations

On December 21, 2021, the Official Gazette of Paraguay published Law No. 6872, which establishes a special and transitory regime for the reconduction of corporations in default of Law No. 5895/2017 “which establishes rules of transparency in the Regime of companies incorporated by shares as amended by Law No. 6399/2019.

1. Reconduction of he corporation

The partners may resolve to reconduct the corporation, when its dissolution is compulsory by Law No. 6399/2019 “which amends Articles 3 and 4 of Law No. 5895 establishing transparency rules in the regime of companies incorporated by shares”, provided that the following requirements are met: 

  1. By unanimous decision of those present at the extraordinary meeting in which the participation of holders of bearer shares shall be admitted for this sole purpose.  
  2. That in the same act the bylaws be amended to convert bearer shares to registered shares with the consequent exchange of bearer shares to registered shares.  
  3. That if there are shareholders who do not appear at the meeting to exchange their shares for the reconduction of the company, the issued capital must be reduced by the value of the shares not exchanged at the same time.  
  4. The reconduction must be carried out within six months of the effective date of the regulation.  
  5. The decision adopted must be registered in the public records.  
  6. That the fine corresponding to 150 minimum daily wages for unspecified miscellaneous activities has been previously paid to the corresponding Directorate.

2. Due date of the term

Once the term of 6 months of the effectiveness of the rule has expired and, in case the corporations have not proceeded with the reconduction and that are in default of the amendment of bylaws for the conversion of bearer shares to registered shares of the exchange of bearer shares to registered shares, they must proceed with their dissolution and liquidation following the provisions of Law No. 5895/2017.

3. Suspension of impediments and prohibitions

During the term of 6 months counted from the effective date of the rule, the application of the impediments, prohibitions and consequences ruled in the rules and regulations in force is suspended, only concerning the legal non-compliances of the non-amendment of bylaws for the conversion of shares or their communication outside the term and the non-exchange of bearer shares to registered shares.

4. Effective date

The regulation is effective from December 21, 2021. 

Source: Gaceta Oficial 22/12/21