Mergers, spin-offs and conversions of companies in Uruguay

Corporate groups change shape over time: two companies doing the same business combine, a business line is carved out to sell it or ring-fence its risk, a family-owned SRL becomes a corporation to bring in investors. In Uruguay these transactions are known collectively as corporate reorganisations, and Law 16,060 on Commercial Companies provides a specific procedure that avoids winding up one entity and incorporating another. This guide explains how mergers work in Uruguay, how they differ from spin-offs and conversions, which steps and deadlines the law sets, when the AIN is involved and how these transactions are taxed under IRAE.

Mergers, spin-offs and conversions: key concepts

• Merger (fusión, article 115): by formation, when two or more companies dissolve without liquidation and transfer their assets and liabilities as a whole (a título universal) to a new company; by absorption, when they transfer them to an existing company. Shareholders of the disappearing companies receive interests in the resulting company, and any cash consideration may not exceed 10% of the nominal value allotted to each of them (article 124).
• Spin-off (escisión, article 116): a company transfers portions of its assets and liabilities, as a whole, to newly formed companies, whether or not it dissolves. Article 117 treats contributions of parts of the business to existing companies in the same way.
• Conversion (transformación, article 104): a duly incorporated company adopts another corporate form. It is not dissolved, it keeps its legal personality, and its rights and obligations remain unchanged.

Goal	Usual structure
Simplify a group with several companies in the same business	Merger by absorption
Carve out a business line, a property or a trademark	Spin-off without dissolution
Split a business between partners or family branches	Spin-off with dissolution
Change the corporate form to bring in investors or limit liability	Conversion

These structures reorganise the group itself. When a third party buys a business or a shareholding, the analysis is different; see sale and purchase of companies in Uruguay. If a foreign company wants to move its domicile to Uruguay without dissolving, the relevant route is redomiciling companies to Uruguay.

Main guide: corporate and cross-border services, where we explain how we support local and international groups with their corporate structure in Uruguay.

The merger procedure step by step

Companies of the same or different types, even companies in liquidation, may merge, and each one decides with the majorities required to amend its articles (article 118). The process runs as follows:

1. Special balance sheet for each company, using uniform valuation criteria across all participants (article 119).
2. Merger agreement (compromiso de fusión) signed by the representatives, setting out the terms, the articles of the new company or the amendments to the absorbing company, and the exchange ratio; the special balance sheets form part of it (article 125).
3. Publications for ten days in the Official Gazette and another newspaper of a summary of the agreement, calling on creditors to file their claims or object within twenty days of the last publication (article 126).
4. Creditor objections: the final merger contract cannot be signed until objecting creditors are paid or secured; if there is disagreement on the security, a court decides (article 128).
5. Withdrawal right: if the merger was not unanimous, shareholders who voted against and those absent may withdraw within thirty days of the last publication and are paid on the basis of the special balance sheet (article 129).
6. Final merger contract, with the balance sheets updated to its date and a list of withdrawing shareholders, if any (article 133).
7. Registration with the Public Commercial Registry (article 134).

In the meantime, each company keeps operating under the supervision of representatives of the others (article 131), and the agreement may be amended or revoked by mutual consent until the final contract is signed (article 132).

Spin-offs and conversions: procedural differences

Spin-off

The company adopts a spin-off resolution specifying which portions of its assets and liabilities are transferred, with a list of the assets, rights and obligations involved, together with the special balance sheet (article 136). It is published as in a merger, shareholders may withdraw and creditors may object (articles 137 and 139). The key difference is liability: the new companies and the spun-off company, if it survives, are jointly and severally liable for debts notified in time and for those shown in the special balance sheets, and internal agreements on how to allocate debts cannot be enforced against creditors (article 138).

Conversion

A conversion requires a special balance sheet and the formalities of an amendment to the articles; shareholders who would become personally and unlimitedly liable must expressly consent (article 106). A summary is published for three days (article 107), and dissenting and absent shareholders may withdraw within thirty days (article 108); in corporations, absent shareholders who neither join nor withdraw are excluded (article 109). If the conversion is approved unanimously, it is enough to register the resolution while meeting the requirements of the new form (article 112). A conversion does not release those who had unlimited liability for prior debts, unless the creditors consent (article 105).

Corporations: majorities and AIN oversight

• Extraordinary shareholders’ meeting: mergers, conversions and spin-offs fall within its exclusive powers (article 343).
• Majority: an absolute majority of the voting shares, on first or second call, unless the articles require more, and a one-time publication of a summary in the Official Gazette and another newspaper (article 362).
• Withdrawal: dissenting shareholders, those who abstained or cast blank votes and those absent may withdraw by giving notice within thirty days of the last publication (article 363).
• State oversight: every corporation is subject to AIN oversight in its conversion, merger and spin-off (article 409).

For a merger of corporations, the AIN requires, among other documents, the meeting minutes, the merger agreement and the final contract with certified signatures, the publications, board minutes on withdrawals and objections, the special balance sheets, BPS and BSE certificates, and the sworn statement under Laws 18,930 and 19,484. According to the official procedure page, the filing is made within thirty calendar days after the final merger contract. See also beneficial ownership in Uruguay.

Key deadlines

Stage	Statutory period	Provision
Publication of the merger agreement or spin-off	10 days	Arts. 126 and 137, Law 16,060
Creditor claims and objections	20 days from the last publication	Art. 126
Withdrawal (merger and conversion)	30 days from the last publication	Arts. 108 and 129
Publication of a conversion	3 days	Art. 107
Separation of estates if the resulting company goes bankrupt	60 days from registration	Art. 135
Keeping owners and business activity (goodwill relief)	At least 2 years	Art. 29(F), Title 4

On top of these come the time needed to prepare the balance sheets, resolve any objections and complete the AIN and Registry procedures, which vary from case to case. It is advisable to fix the balance sheet reference date and the full timetable before calling the shareholders’ meetings.

Corporate income tax (IRAE) treatment

In conversions, mergers, spin-offs and similar transactions, the successor keeps the tax basis of the predecessor’s assets, its valuation and depreciation methods and the running of periods for bad debts (article 72 of Decree 150/007), a treatment later extended to conversions of sole proprietorships into SAS.

The sensitive point is goodwill (valor llave). Under article 29(F) of Title 4 of the 2023 Consolidated Tax Code, it is not gross income if:

• the ultimate owners are entirely the same and keep at least 95% of their ownership proportions for at least two years;
• the transaction is carried out at the book value of the transferred net assets;
• the full ownership chain is reported to the AIN register; and
• the predecessors’ business activity is maintained for that period.

If any condition is breached, the general regime applies: the taxes are paid without fines or surcharges, indexed by the UI, with a ten-year statute of limitations, and the successors are jointly liable up to the value of what they received. The AIN requires a first sworn statement when the transaction is registered and a second one no earlier than two years later. Letter G provides a similar regime, with a four-year period, for transfers of shareholdings between resident legal entities with the same ultimate owners. Other taxes and the position of non-resident shareholders must be reviewed case by case; see tax structuring of investments in Uruguay.

SAS specifics

Law 19,820 refers to Law 16,060, with its own rules:

• Narrower withdrawal right: without unanimity, dissenting shareholders may withdraw only if there is a material impairment of their economic rights: a significant reduction of their percentage or of the value of their stake, lower transferability of the shares or greater liability (article 36).
• Prior information: the essential documents may be inspected during the ten business days before the meeting (article 25).
• Conversion: any commercial company may convert into an SAS except a corporation, and an SAS may adopt any form under Law 16,060 with a majority of the paid-in voting capital (article 37). A company left with a single partner can avoid dissolution by converting into an SAS (article 39).
• State oversight: an SAS falls under state oversight on terms similar to a closed corporation only if its annual revenue exceeds UI 37,500,000 (article 10).

See simplified joint stock companies (SAS) in Uruguay.

Contracts, employees and creditors

The merger contract or spin-off deed transfers the assets, rights and obligations and serves as a valid instrument to record the changes in property, vehicle or trademark registries (article 122). In practice:

• Contracts: mergers and spin-offs do not alter the companies’ rights, unless otherwise agreed in each contract (article 123). Change-of-control, assignment and termination clauses in loans, leases and licences should be reviewed in advance.
• Employees: employment contracts are part of the transferred business and the successor becomes the employer; seniority and terms should be preserved and BPS records updated. See labour regime in Uruguay.
• Creditors: the resulting company is liable for debts notified or shown in the special balance sheets (article 127), and if it goes bankrupt within sixty days of the merger’s registration, prior creditors may request the separation of estates (article 135).

Frequently asked questions

Corporate reorganisations with GlobalTax

At GlobalTax we plan and carry out mergers, spin-offs and conversions: special balance sheets, merger agreements, publications, AIN and Registry filings, and the prior tax analysis. Learn more on our corporate and cross-border page.