Corporate Tax and Social Control Department (AEMP, for its acronym in Spanish) in Bolivia has established in Resolution N. 25/2017 (a modification of Resolution N. 99/2016) the obligation to implement a Corporate Governance that will be subject to penalties.
The Corporate Tax and Social Control Department
The Corporate Tax and Social Control Department is in charge of controlling supervising and regulating the companies’ activities related to corporate governance, competitors defence, companies restructuring and commercial registration.
Corporate governance
Corporate governance is defined as a group of procedures, regulations and principles that regulate the structure and functioning, either from governmental bodies or at a company’s management level. In the case of companies, these formal or informal practices define the relation between top management, directors and shareholders and establishes the rules that define the decision-making process at different levels in the company structure.
The main purpose of a good corporate governance is to protect the interests of the company and the members/shareholders through a transparent information management. Furthermore, a good corporate governance generates the investors trust, strengthens the brand image and attracts talent.
Most important aspects of the Resolution
Resolution No. 99/2016, modified by Resolution No. 25/2017, states that the compliance with the Corporate Governance Resolution is mandatory and creates a number of new obligations for companies that includes, but is not limited to:
- create a procedure to access information
- promote policies and ethical behaviour in which third parties are considered in the decision making process
- boost the administrators responsibilities regarding the transparency of information
- reassure that all individuals have the internal or external mechanisms that allow them to verify compliance of applicable legal dispositions
- establish or design a strategic plan of corporate governance measures implementation
- issue a corporate governance report on an annual basis.
Types of companies audited by the AEMP in Bolivia:
- Sole ownership companies
- Partnership
- Limited partnership (similar to “Sociedad en comandita simple”)
- Limited Liability Company
- Limited company (similar to “Sociedad anónima”)
- Partnership limited by shares (Similar to “Sociedad en comandita por acciones”)
- Account participation associations.
Documents verified by AEMP in a public inspection:
During the audit, the AEMP will verify a number of documents, including but not limited to:
- Legal documents related to the incorporation and administration of the company
- Public deed related to the incorporation of partnerships and modifications
- Opening balance sheet
- Updated commercial registration number
- Registry Book of Shareholders or stocks
- Board/Assembly minutes book
- Registration and witness documents of capital increase or reduction
- Authorization to use removable sheets of paper, through a specific resolution.
Financial and accounting company documents:
- Financial statements issued by the Company and by the Accounting System and notes to the financial statements, approved.
- Account statements and / or assistants.
- Accounts plan.
- Proof of Income, Expenses and Transfers.
- Accounting books: Journals, Inventories, Purchases and Sales VAT.
- Bank reconciliations.
- Contracts and Agreements signed during the fiscal term.
Failure to comply with this regulatory regime will be subject to sanctions such as: warning, fine, temporary suspension of duties or even the suspension of trade registration, or economic fines, calculated on the basis of 0.5% to 5% of the "Gross profit "or on" Capital "in the event that the financial statements report gross loss.
Get help from the experts
Within the framework of this regulatory scenario, TMF Bolivia offers a service for the implementation of good corporate governance practices in legal persons. This service, which will include the implementation of a Corporate Governance system that meets the requirements set forth in the Resolution, includes, among other things:
- preparation of corporate governance regulations.
- formalization and establishment of profit distribution policies.
- preparation of the procedure to access to information
- preparation of the procedure to control attendance at assemblies or meetings
- development of the succession plan
- preparation of a strategic plan for corporate governance measures
- preparation of the annual report.
Make an enquiry to receive more information about the tax requirements related to the Resolution and/or about our related services.