Single-Owner <em>Sociedades</em> Within the Corporate Landscape of Latin America

The concept of a sociedad in Latin America has undergone profound changes throughout this century. Following the example set by the French Code de commerce of 1807, the sociedad was initially viewed as a contractual arrangement between two or more partners who make contributions to a business for purposes of sharing in the resulting profit or loss, wherein a plurality of partners was an intrinsic component. Nonetheless, the notion of a sociedad has evolved to entail the establishment of a separate legal entity, making the plurality of partners requirement increasingly obsolete for its formation and/or operation. This Article describes the most salient features exhibited by each of the major categories of corporate vehicles in Latin America, covering traditional multi-partner companies such as the sociedad anónima (S.A.) and the sociedad de responsabilidad limitada (S.R.L.), as well as the various single-owner entities that have arisen over the past two decades, beginning with the sociedad por acciones simplificada (S.A.S.), initially promulgated in Colombia in 2008 but quickly adopted in other countries, along with the Chilean sociedad por acciones (SpA). The contractual arrangement versus separate legal entity dichotomy surrounding the nature of a sociedad appears to be clearly leaning towards the latter, at least in Latin America, given the recent proliferation of single-owner entities. This Article concludes by discussing how the S.A.S. has emerged as the favorite mercantile vehicle across Latin America for both local entrepreneurs and foreign investors seeking greater flexibility to manage their commercial affairs with less formalities while still enjoying limited liability.