What is a Simplified Joint Stock Company (and why more and more entrepreneurs are choosing it)

Details of a model that is recommended by the United Nations and the Organization of American States and continues to advance by leaps and bounds in the region.

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What is a Simplified Joint Stock Company (and why more and more entrepreneurs are choosing it)
What is a Simplified Joint Stock Company (and why more and more entrepreneurs are choosing it)

What is the most important thing when undertaking? Without a doubt, concentrating efforts on offering a solid, validated value proposal that meets a specific need is essential. However, although they may be somewhat tedious, accounting, administrative and legal issues also represent a crucial link if the business is to be successful.

Here we find one of the biggest dilemmas that entrepreneurs face: choosing which legal figure to confer on the business. To make that decision, the first step is to determine issues such as:

  • The initial capital of the company
  • Your corporate purpose, that is, what you will do
  • The number of partners and how much capital will each invest

With all these answers, the next step to find the figure that best suits your needs is to know what types of companies exist in your country and their particular characteristics.

Possible partnerships

In Argentina you can choose between five types of companies when establishing your business:

Limited Liability Company (SRL)

It was, until 2017, the most chosen by entrepreneurs across the country. However, it is an instrument created in 1932 and, therefore, it does not manage to cover all the needs of those who want to start a business in the 21st century. A disadvantage, for example, is that the social capital of the venture is divided into installments of the same value, which does not allow differentiation between investment partners.

Sociedad Anónima (SA)

It was created with a focus on large companies. This means that you will have to meet excessive requirements and that they will slow down your daily operations. Some examples? SAs must renew all their boards and re-register every three years. In addition, to make any decision it is necessary to call the partners through the Official Gazette and contract insurance to guarantee compliance by the administrators, among other things.

Simple Society

This new type of company replaced the Company in fact with the reform of the Civil and Commercial Code, in 2015. Although it does not require registration, it does not limit the liability of the partners: in the event of any eventuality you must respond with your personal assets. Also, being a more informal type of company, you will find it difficult to open a bank account.

Unipersonal Public Limited Company (SAU)

It is also incorporated with the 2015 reform. The main problem is that you will not be able to set it up alone, since it requires the existence of three directors and three trustees, that is, seven people in total.

Simplified Stock Company (SAS)

The most recent and newest of all societies. In Argentina, this corporate figure was approved in 2017 with the approval of the s Law (No. 27,349), which was drafted by the Association of s of Argentina (ASEA). In less than three years, more than 27,000 SASs have been established throughout the country and, since 2019, it is the corporate type most chosen by entrepreneurs.

What are its main advantages?

  • It streamlines the incorporation process – it is possible to do it in 24 business hours – and reduces the initial capital required compared to other types of companies.
  • You can form it by yourself or with several partners.
  • You should not limit your corporate purpose, being able to establish a broad and plural one. This gives you the flexibility to iterate your business model according to need.
  • You can set different classes of shares according to the investment partner.
  • It will help you get investments more easily, since you can prohibit the transfer of shares for up to 10 years. In this way, your investors can trust that the founding partners will remain in the venture long enough to develop it.
  • You can decide the internal structure of your SAS and set the rules according to your particular needs.

SAS and its progress in the region

This type of society arises from the need to update the legal vehicles to create a structure according to the context in which we live: the knowledge economy.

What is it about? The industrial economic pattern is migrating towards one in which ideas are the ones that bring true value. In this way, companies and especially startups based on ideas will be more likely to experience exponential growth and generate wealth in less time.

The SAS, in this sense, is positioned as an instrument with numerous advantages for entrepreneurs as it offers solutions to their three substantial difficulties: lack of time, limited capital and bureaucracy to start a business.

In Argentina, particularly, other international legislation such as France, a pioneer country in incorporating a figure such as the SAS in 1996, has been taken as a reference. In regional terms, this figure was systematically adopted by countries such as:

  • Chile, in 2007. Here it is called a Share Company (SpA)
  • Colombia, in 2008
  • Dominican Republic, in 2011. In this country it was set up under the name Simplified Limited Company
  • Mexico, in 2016
  • Peru, just two years ago, in 2018. It is called the Simplified Closed Action Society (SACS)
  • Guatemala in 2018. It adopted the name of ship Society (SE)
  • Ecuador in 2020
  • Uruguay in 2020

Choosing the right type of company for your needs as an entrepreneur is extremely important, since it will be what ultimately drives or limits the possibilities of escalation of your company. Now you know, SAS offers you an agile, flexible tool, at low cost and, therefore, perfect for starting up.

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