Social Enterprise Law Surveys |
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Venezuela |
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| (Latin America/Caribbean) Firm LEGA | |
| What jurisdiction(s) do you practice in? | Venezuela |
| What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ... | The most common types of for-profit corporate organizational forms are:
a.The most common for-profit organizational form used by Enterprises seeking financing from investors and will have multiple owners is the Corporation (C.A. or S.A.). b. Either Corporations, Cooperatives or Civil Societies. |
| Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required... | The board or managers can considerer, balance, and prioritize interests other than that of the shareholders; nevertheless, it´s not a legal obligation. They are not required to consider the interest of employees, customers, the environment, etc. |
| Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ... | No, there aren´t organizational forms specifically designed for Social Enterprises. |
| Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat... | In Venezuela, social enterprises are not regulated nor mentioned in our current legislation. However, nonprofits organizations could very well pursue the same goals as Social Enterprises do. But since Social enterprise is not a regulated or legally recognized figure in Venezuela, there are no practical differences upon the treatments that Nonprofits receive regarding their Social Enterprises purposes or not |
| Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms. | Yes, worker-owned enterprises such as cooperatives are allowed. The law grants these organizations several benefits, such as the exemption of paying incorporation fees and being subject to promotion policies from the government. |
| Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to. | Yes. Cooperatives require special reporting before the Superintendence of Cooperatives. |
| In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples. | No. |
| Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe. | No. |
| Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe. | No. |
| Does your jurisdiction have any ESG requirements for investors? If it does, please describe. | No. |
| Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi... | No, under Venezuelan there are no requirements to look at ESG issues. Given that the law does not forbid any matter related to making investments regarding ESG issues, we believe they are allowed to consider such factors. We are not particularly aware of any other relevant factors that investors tend to consider, aside from profit. |
| What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)? | Social Enterprises receive mostly donations from private corporations and sometimes grants from government agencies. |
| How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)? | For-profit impact investments are still very unknown in Venezuela. Although recently there has been some local entrepreneurs trying to bring this kind of investment in our country. |
| What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government... | There is no special government funding specifically available to Social Enterprises as such. Depending on the Enterprise form and industry, government grants, loans, bonds, and guarantees may be available. Given that Venezuela is suffering an economic crisis, such funding has become very difficult for any applicant or possible beneficiary whatsoever. |
| Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)? | No, we are not aware of such companies in our jurisdiction. |
| To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction. | N/A |
| How prevalent, if at all, are impact bonds in your jurisdiction? | There are no Impact Bonds in our jurisdiction that we are aware of. |
| In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)? | There are not any restrictions. But nonprofit entities are subject to surveillance and compliance under some of the provisions of the organic law against organized crime and funding to terrorism. Recently the government has deployed a strict surveillance activity regarding the incorporation of nonprofit entities that are composed or funded by foreign entities. |
| Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a... | Crowdfunding is legal, as it is not forbidden nor specially regulated by any Venezuelan legislation. |
| Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe... | No, tax exemptions, in general, are specifically aimed at Public Entities, inheritance fees when the value of these does not exceed 75 Tax Units (Tax Unit Value = VES 1.500. 1 USD= 1.987.184,75 VES), and public or private non-territorial entities that carry out charitable and social assistance or protection activities, as long as they use the assets they receive for these purposes. Exemptions are total, only to the subjects indicated in the previous paragraph when they demonstrate the quality of charity and social assistance or protection as long as they use the assets they receive for these purposes, that is, they must comply with a nonprofit organization structure. For the exemption to be approved, companies must include in their organizational form an article of their bylaws where it is expressly stated that the company does NOT distribute dividends to its partners or shareholders and an article where it is expressly stated that the purpose of the organization is charitable and assistance. |
| Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations? | No. |
| Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.) | No. |
| Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions? | Yes, as long as there is a Treaty to avoid double taxation between both jurisdictions. |
| Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe. | No. |
| What government operational support, resources, training or services, are available for small businesses or Social Enterprises? | Due to the COVID-19 pandemic, the government has simplified the procedures for the incorporation and registration of small and medium businesses. It also established that the process will be free for up to 3 months after the end of the pandemic. |
| Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are. | No. However, non-profit foundations, civil associations, and organizations must comply with certain obligations provided by the Organic Law against Organized Crime and Terrorist Financing. These organizations must report all cash transactions, establish the true identity of the third parties involved and the final beneficiary, and keep the records or documents that prove the operations and business relationships with their clients or users for five years, as well as their identification documents. |
| Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness. | No. However, the Non-Governmental Organization not domiciled in Venezuela that perform non-for-profit activities in the country through a representative or a headquarter must be registered in the Special Automated Registry of Non-Domiciled Non-Governmental Organizations (RECONG by its Spanish acronym). |
| Is there a different bankruptcy system available for Social Enterprises? | No. |
| What are the average time and filing fees to form an Enterprise in your jurisdiction? | The average filing time and fees may depend on the purpose of the Enterprise. Filing a Non-For-Profit Enterprise may require the previous authorization of the Autonomous Service of Registers and Notaries (SAREN, as its acronym in Spanish); the granting of this authorization may vary in time from Register to Register, but it may take a minimum of two (2) months. Once the SAREN authorization is acquired, the filing process may take up to 10 business days. This authorization will not be required if the Enterprise will be filed as a For-Profit Enterprise. The process to fill a For-Profit Enterprise may take a minimum of two (2) months. The filing of the tax exemptions before the National Integrated Service on Customs and Tax (SENIAT, as its acronym in Spanish) may take up to three (3) months. Tax exemptions will only be granted to Non-For-Profit Enterprise/Organizations based on local tax regulations. Startups may be given some flexibility on their requisites to be filed before the Mercantile Registers in Venezuela – it may only be granted if the Startup would be a for-profit enterprise. This flexibility will be active meanwhile the pandemic related to COVID-19 affects Venezuela. |
| What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well... | A nonprofit enterprise or organization may request a tax exemption on the Value Added Tax (VAT), Income Tax and Donations’ Tax. These exemptions may take up to three (3) months to be granted by the SENIAT. A for-profit enterprise will not be able to request the tax exemption that may be given by the SENIAT. |
| Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction. | In Venezuela, there is no difference in the filing activities between the Startups or Entrepreneur’s Enterprises and the usually filed For-Profit Enterprises. Since the beginning of the COVID-19's Pandemic, the National government has requested major flexibility on Startups to be filed, although this flexibility has not been formalized through a decree nor a law. |
| Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction. | Nowadays, Social Enterprises are not easily formed in Venezuela. The National government is issuing non-formal orders on this matter; also, the National government is instructing the SAREN to further request documentation and authorizations to delay the filing process of Non-For-Profit Enterprises and Associations in Venezuela. |
| Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc... | There is no formal obstacle nor obstruction in local laws. Social Enterprises are not regulated by local laws. The obstacles may come from the Register practice, the documentation that the Registers may require, and the delays that may be caused by it. |
| In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects. | There is a major concern on the utilization of Non-For-Profit Enterprises as a vessel on money laundering and terrorism financing. This has caused further audit actions and follow-ups on the activities of Non-For-Profit Enterprises. Additionally, this has led to a further practical local monitoring of Non-For-Profit Enterprises and Organizations This has not happened to For-Profit Enterprises. |
| What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction? | The first thing that shall be tackled in Venezuela would be the issuance of a law regulating the functionality, corporate governance, filing, and other related matters on Social Enterprises. The Registers structures may be reviewed to further expedite the filing processes Additionally, the requisites related to the granting of the tax exemptions may be reviewed, as well as the granting lapses. |
| What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)? | As previously stated, the first step that must be taken in Venezuela would be to regulate the existence, governance, and functionality of Social Enterprises. Current local laws may cover its existence in a general way, but a specific law is required to establish, in a precise manner, its existence. |
| Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not? | We have no further comment, we only would like to emphasize that Social Enterprises are not explicitly regulated in Venezuela; they can be located through For-Profit Enterprises and Non-For-Profit Enterprises. |
Social Enterprise Law Surveys
Venezuela
The most common types of for-profit corporate organizational forms are:
- Corporation (Compañías o Sociedades anónimas in Spanish) (“C.A. or S.A.”): Social obligations are guaranteed by a determined capital, in which the shareholders are only obliged up to the amount of their capital contribution.
- Limit Partnership Sociedad en Comandita Simple y en Comandita por Acciones in Spanish) (S.C.S y S.C.A) Social obligations are guaranteed by the unlimited and joint liability of one or more partners, called joint and several partners or “comanditantes”, and by the liability limited to a certain amount of one or more limited partners, called “comanditarios”. The capital of the limited partners can be divided into shares.
- Limited Liability Company (Sociedad de Responsabilidad Limitada in Spanish) (“S.R.L:”): the social obligations are guaranteed by a determined capital, divided in participation quotas, which cannot be represented in any case by shares or negotiable securities. It is currently the least used type in this jurisdiction due to limitations regarding its maximum capital stock..
- Civil Societies (Sociedad Civil in Spanish) (S.C.) It refers to any legal entity formed by partners that are not necessarily obligated by capital, but instead by any other kind of contributions.
- Cooperatives (Cooperativas in Spanish) It refers to the worker-owned Enterprises. These can be for-profit and non-profit.
a.The most common for-profit organizational form used by Enterprises seeking financing from investors and will have multiple owners is the Corporation (C.A. or S.A.).
b. Either Corporations, Cooperatives or Civil Societies.
The board or managers can considerer, balance, and prioritize interests other than that of the shareholders; nevertheless, it´s not a legal obligation. They are not required to consider the interest of employees, customers, the environment, etc.
No, there aren´t organizational forms specifically designed for Social Enterprises.
In Venezuela, social enterprises are not regulated nor mentioned in our current legislation. However, nonprofits organizations could very well pursue the same goals as Social Enterprises do.
But since Social enterprise is not a regulated or legally recognized figure in Venezuela, there are no practical differences upon the treatments that Nonprofits receive regarding their Social Enterprises purposes or not
Yes, worker-owned enterprises such as cooperatives are allowed. The law grants these organizations several benefits, such as the exemption of paying incorporation fees and being subject to promotion policies from the government.
Yes. Cooperatives require special reporting before the Superintendence of Cooperatives.
No.
No.
No.
No.
No, under Venezuelan there are no requirements to look at ESG issues.
Given that the law does not forbid any matter related to making investments regarding ESG issues, we believe they are allowed to consider such factors.
We are not particularly aware of any other relevant factors that investors tend to consider, aside from profit.
Social Enterprises receive mostly donations from private corporations and sometimes grants from government agencies.
For-profit impact investments are still very unknown in Venezuela. Although recently there has been some local entrepreneurs trying to bring this kind of investment in our country.
There is no special government funding specifically available to Social Enterprises as such. Depending on the Enterprise form and industry, government grants, loans, bonds, and guarantees may be available.
Given that Venezuela is suffering an economic crisis, such funding has become very difficult for any applicant or possible beneficiary whatsoever.
No, we are not aware of such companies in our jurisdiction.
N/A
There are no Impact Bonds in our jurisdiction that we are aware of.
There are not any restrictions. But nonprofit entities are subject to surveillance and compliance under some of the provisions of the organic law against organized crime and funding to terrorism. Recently the government has deployed a strict surveillance activity regarding the incorporation of nonprofit entities that are composed or funded by foreign entities.
Crowdfunding is legal, as it is not forbidden nor specially regulated by any Venezuelan legislation.
No, tax exemptions, in general, are specifically aimed at Public Entities, inheritance fees when the value of these does not exceed 75 Tax Units (Tax Unit Value = VES 1.500. 1 USD= 1.987.184,75 VES), and public or private non-territorial entities that carry out charitable and social assistance or protection activities, as long as they use the assets they receive for these purposes.
Exemptions are total, only to the subjects indicated in the previous paragraph when they demonstrate the quality of charity and social assistance or protection as long as they use the assets they receive for these purposes, that is, they must comply with a nonprofit organization structure.
For the exemption to be approved, companies must include in their organizational form an article of their bylaws where it is expressly stated that the company does NOT distribute dividends to its partners or shareholders and an article where it is expressly stated that the purpose of the organization is charitable and assistance.
No.
No.
Yes, as long as there is a Treaty to avoid double taxation between both jurisdictions.
No.
Due to the COVID-19 pandemic, the government has simplified the procedures for the incorporation and registration of small and medium businesses. It also established that the process will be free for up to 3 months after the end of the pandemic.
No. However, non-profit foundations, civil associations, and organizations must comply with certain obligations provided by the Organic Law against Organized Crime and Terrorist Financing.
These organizations must report all cash transactions, establish the true identity of the third parties involved and the final beneficiary, and keep the records or documents that prove the operations and business relationships with their clients or users for five years, as well as their identification documents.
No. However, the Non-Governmental Organization not domiciled in Venezuela that perform non-for-profit activities in the country through a representative or a headquarter must be registered in the Special Automated Registry of Non-Domiciled Non-Governmental Organizations (RECONG by its Spanish acronym).
No.
The average filing time and fees may depend on the purpose of the Enterprise.
Filing a Non-For-Profit Enterprise may require the previous authorization of the Autonomous Service of Registers and Notaries (SAREN, as its acronym in Spanish); the granting of this authorization may vary in time from Register to Register, but it may take a minimum of two (2) months.
Once the SAREN authorization is acquired, the filing process may take up to 10 business days.
This authorization will not be required if the Enterprise will be filed as a For-Profit Enterprise. The process to fill a For-Profit Enterprise may take a minimum of two (2) months.
The filing of the tax exemptions before the National Integrated Service on Customs and Tax (SENIAT, as its acronym in Spanish) may take up to three (3) months. Tax exemptions will only be granted to Non-For-Profit Enterprise/Organizations based on local tax regulations.
Startups may be given some flexibility on their requisites to be filed before the Mercantile Registers in Venezuela – it may only be granted if the Startup would be a for-profit enterprise. This flexibility will be active meanwhile the pandemic related to COVID-19 affects Venezuela.
A nonprofit enterprise or organization may request a tax exemption on the Value Added Tax (VAT), Income Tax and Donations’ Tax. These exemptions may take up to three (3) months to be granted by the SENIAT.
A for-profit enterprise will not be able to request the tax exemption that may be given by the SENIAT.
In Venezuela, there is no difference in the filing activities between the Startups or Entrepreneur’s Enterprises and the usually filed For-Profit Enterprises.
Since the beginning of the COVID-19's Pandemic, the National government has requested major flexibility on Startups to be filed, although this flexibility has not been formalized through a decree nor a law.
Nowadays, Social Enterprises are not easily formed in Venezuela. The National government is issuing non-formal orders on this matter; also, the National government is instructing the SAREN to further request documentation and authorizations to delay the filing process of Non-For-Profit Enterprises and Associations in Venezuela.
There is no formal obstacle nor obstruction in local laws. Social Enterprises are not regulated by local laws.
The obstacles may come from the Register practice, the documentation that the Registers may require, and the delays that may be caused by it.
There is a major concern on the utilization of Non-For-Profit Enterprises as a vessel on money laundering and terrorism financing. This has caused further audit actions and follow-ups on the activities of Non-For-Profit Enterprises. Additionally, this has led to a further practical local monitoring of Non-For-Profit Enterprises and Organizations
This has not happened to For-Profit Enterprises.
The first thing that shall be tackled in Venezuela would be the issuance of a law regulating the functionality, corporate governance, filing, and other related matters on Social Enterprises.
The Registers structures may be reviewed to further expedite the filing processes
Additionally, the requisites related to the granting of the tax exemptions may be reviewed, as well as the granting lapses.
As previously stated, the first step that must be taken in Venezuela would be to regulate the existence, governance, and functionality of Social Enterprises. Current local laws may cover its existence in a general way, but a specific law is required to establish, in a precise manner, its existence.
We have no further comment, we only would like to emphasize that Social Enterprises are not explicitly regulated in Venezuela; they can be located through For-Profit Enterprises and Non-For-Profit Enterprises.