How Much Annual Revenue Can a Simplified Stock Company (SAS) Receive by 2024?

What is the annual income limit for a Simplified Limited Company (SAS) for 2024?

On December 28, 2023, the Ministry of Economy issued an Agreement aimed at defining the annual total income limit for Simplified Limited Companies, as established in article 260 of the General Law on Mercantile Companies.

This Agreement reveals the update factor for the year 2024, set at 1,0432. This factor is the result of precise calculations based on the National Consumer Price Index, which is decisive for establishing the economic limits applicable to Simplified Stock Companies.

Practically speaking, this update factor determines that, as of January 1, 2024, the total annual revenues of a Simplified Limited Company may not exceed the amount of $7,076,469.38 (seven million seventy-six thousand four hundred sixty-nine pesos 38/100 M.N.).

What are the consequences of exceeding this limit?

If a Simplified Stock Company (SAS) exceeds the established annual income limit, it will lose the benefit of being considered as an SAS and will have to be subject to the regulations and requirements of a traditional company, and must modify its structure and become another type of business entity, such as a Public Limited Company (S.A.) or a Limited Liability Company (S. de R.L.), among others. If the amendment is not made, the corporate veil that protects the shareholders will be lifted and each of them will be responsible to third parties for the payment and compliance with any of the Company's obligations.

Remember that, when setting up an SAS, we will be subject to various obligations, such as:

-Disseminate the following in the Electronic System of Publications of Mercantile Companies:

• The Notice when all of the share capital has been subscribed and paid.
• The Call for a Shareholder Meeting.
• The Annual Report on the Company's financial situation.
• The Notice about the entries made in the stock register of the increase or decrease in variable share capital.
• The contracts concluded between the sole shareholder and the company.

- All shares must be paid within the deadline set by the shareholders, in less than one year.

- Keep the record book of the Company's shares.

- Transform to another traditional commercial company once the amount of annual income allowed is exceeded.

While Simplified Stock Companies have their advantages, meeting their obligations will be crucial to avoid negative consequences.

If you are looking for more information, send us an email to d.rodriguez@rmgsc.com