How to Appoint a Director of an SA in Uruguay: Requirements and Process
The director is the central figure in the corporate governance of a corporation (SA) in Uruguay. The director legally represents the company, takes executive decisions and answers to the shareholders for the management carried out. Properly appointing a director of an SA in Uruguay is no minor formality: it means meeting specific legal requirements, recording the appointment in the corresponding minutes, registering it in the public registries and being fully aware of the responsibilities the position involves.
In this guide we explain everything you need to know about appointing directors in a Uruguayan corporation: who can be one, how they are appointed, how long the term lasts, how it is documented and how a director is removed.
The Director in a Uruguayan SA: Role and Governance Structure
The Commercial Companies Law No. 16,060 provides that SAs must be managed by a board of directors (directorio), the company’s collective management body. The board may have one or more directors, as set out in the bylaws.
In practice, many smaller Uruguayan SAs operate with a single director, while more complex structures, with several shareholders or stricter governance requirements, opt for boards with a chair, vice-chair and members.
The board manages the company’s ordinary business and represents it before third parties. Its decisions are adopted by majority vote and recorded in the board minutes book. The shareholders’ meeting, for its part, is the sovereign body that appoints and removes directors, approves the financial statements and takes the company’s most important decisions.
Requirements to Be a Director of an SA in Uruguay
The requirements to be a director of an SA in Uruguay arise from Law No. 16,060 and are as follows:
- Full legal capacity: the director must be an adult individual with full legal capacity to hold the position.
- Not disqualified: people declared bankrupt or insolvent without discharge, those convicted of crimes against property or public trust, and those barred by judicial or administrative decision from holding commercial positions cannot be directors.
- Individual: in Uruguay, SA directors must be individuals; a legal entity cannot be appointed as director.
- Not the company’s statutory auditor: anyone acting as statutory auditor (síndico, the supervisory body) cannot hold that role and the director’s role at the same time.
Beyond these limitations, the law is broad: Uruguayan nationality, residence in the country or a specific professional qualification are not required to be a director of an SA.
Can a Foreigner Be a Director of an SA in Uruguay?
Yes, entirely legally. A foreigner can be a director of an SA in Uruguay without any restriction based on nationality. Uruguayan law makes no distinction between nationals and foreigners for holding the position, which makes Uruguay especially attractive for international corporate structures.
A foreign director does not need to be resident in Uruguay or hold a Uruguayan identity card. To register their appointment with the General Registry Office (DGR) and for other formal procedures, proving their identity with a passport or other valid foreign identity document is enough.
In practice, when the board is made up exclusively of non-residents, many companies also appoint a local attorney or representative domiciled in the country to handle day-to-day dealings with public bodies and to receive judicial or administrative notices.
How to Appoint a Director in a Uruguayan SA: The Process
The appointment of a director in a Uruguayan SA can take place at two different times:
- At incorporation: when the SA is incorporated, the bylaws or the founding document appoint the first directors. This appointment is registered together with the incorporation.
- During the life of the company: when the directors’ term expires, following a resignation or removal, or when the shareholders decide to add new directors, a shareholders’ meeting called for that purpose appoints the new board members.
Appointing a director during the life of the company follows these steps:
- Calling the shareholders’ meeting: the meeting is called with an agenda that includes the appointment of officers, respecting the notice periods and formalities in the bylaws.
- Holding the meeting: the shareholders deliberate and vote on the appointment of the new director(s) with the majorities required by the bylaws or the law.
- Drafting and signing the minutes: the decision is recorded in the shareholders’ meeting minutes book.
- Acceptance of the position: the appointee must expressly accept the position, which may be recorded in the same minutes or in a separate document.
- Board minutes: the new board meets and records the corresponding minutes, allocating the internal positions (chair, vice-chair, etc.) if the board has several members.
- Registration with the DGR: the appointment must be registered in the Legal Entities Registry of the General Registry Office to take effect against third parties.
Board Minutes in a Uruguayan SA
The board minutes of a Uruguayan SA are the document that records the meetings and decisions of the management body. They must be kept in the board minutes book, which forms part of the company’s mandatory corporate books.
The minutes of the meeting at which the new board is constituted are especially important: they prove who sits on the board, what positions they hold and what powers of representation each has. Banks, notaries, public bodies and business counterparties often ask for this document to check who has signing authority on behalf of the company.
Well-drafted board minutes should include: the date, place and time of the meeting, the list of attendees, confirmation of the quorum, the agenda, the deliberations, the resolutions adopted with an indication of the votes, and the participants’ signatures.
Term of Office of SA Directors in Uruguay
The term of office of directors of a Uruguayan SA is one of the points the bylaws must regulate expressly, within the framework of Law 16,060.
In practice, the most common terms are:
- One financial year: directors are appointed by the annual ordinary meeting that approves the financial statements and must be confirmed or replaced each time.
- Two or three financial years: bylaws seeking more stability in management appoint directors for longer periods, reducing how often renewal meetings are needed.
When the term expires, directors can be re-elected by the meeting. If the term expires without the meeting appointing new directors, the outgoing directors remain in office until they are replaced, so that the management body is not left vacant.
Registering the Director’s Appointment with the DGR in Uruguay
Registering the SA director’s appointment with the DGR is the step that makes the new board composition effective against third parties. Without registration, the director’s actions may be challenged by those who were unaware of the appointment.
For registration, the following are filed with the DGR’s Legal Entities Registry:
- A notarially certified copy of the minutes of the meeting that appointed the new directors.
- The board minutes allocating positions, if applicable.
- The identity details of the appointed directors.
- Registry forms and payment of fees.
Once the appointment is registered, the company can request an updated certificate of good standing showing the new board composition, a document often required for banking, contracts with the State and other important procedures.
Remuneration of SA Directors in Uruguay
The remuneration of directors of a Uruguayan SA is a matter for the shareholders’ meeting. The law does not require directors to be paid, but it does regulate some relevant aspects:
- The annual ordinary meeting that approves the financial statements can also approve directors’ remuneration for the year just ended.
- The bylaws may set a mechanism for fixing remuneration or leave the decision to the meeting itself.
- Directors’ remuneration has a specific tax treatment: for the SA, fees paid to directors are deductible for IRAE, within certain limits, and for the individual director they are income subject to IRPF if resident, or IRNR if not.
- If the director also works for the company as an employee in another role, remuneration for the board position and a salary for the employment relationship can coexist, each with its own tax and social security treatment.
Legal Responsibilities of an SA Director in Uruguay
The position of director carries significant legal responsibilities that every appointee should know before accepting. Law No. 16,060 sets out a liability regime that can, in certain circumstances, reach the director’s personal assets:
- Liability for damage to the company: directors are jointly liable for damage caused to the company by wilful or negligent conduct or by breaches of the law or the bylaws.
- Liability to shareholders and third parties: if the director’s conduct caused damage to individual shareholders or third parties, they may also be personally liable.
- Joint tax liability: in certain circumstances, directors may be jointly liable for the company’s tax obligations to DGI, especially where there was wilful misconduct or gross negligence.
- Employment liability: in some cases of breach of the company’s employment obligations, directors may be subject to claims by employees.
- Criminal liability: wilful misconduct in office (fraud, asset stripping, document forgery, etc.) can lead to personal criminal liability for the director.
Accepting a directorship should not be taken lightly. Whoever accepts is responsible for management from the day of appointment until they effectively leave office and the change is registered.
Removing a Director of an SA in Uruguay
The removal of a director of a Uruguayan SA is a prerogative of the shareholders’ meeting and can be exercised at any time, with or without cause, unless the bylaws set special conditions.
The removal process follows these steps:
- Calling a meeting with the removal of the director on the agenda.
- Holding the meeting with the quorum and majorities required by the bylaws for this type of decision.
- Adopting the removal resolution and recording it in the minutes.
- Appointing the replacement at the same meeting, if applicable.
- Registering the removal and the new appointment with the DGR, so that the departure and replacement take effect against third parties.
A removed director may claim compensation if the removal was without just cause and the bylaws or a management agreement provided for it. Without such provisions, removal at will (ad nutum, without stating a cause) is valid and does not in itself give rise to compensation.
A director may also leave by voluntary resignation, in which case it must be notified to the company, recorded in the board or shareholders’ minutes, and the departure must likewise be registered with the DGR.
Conclusion
Appointing, managing and, where necessary, removing a director of an SA in Uruguay requires formal rigour and knowledge of the applicable legal framework. From calling the meeting to registering with the DGR, every step matters to ensure the appointment is valid, enforceable against third parties and free of contingencies.
Understanding the responsibilities the position carries — tax, civil and criminal — is as important as knowing the appointment procedure. A properly constituted and documented board is the basis of good corporate governance and a source of confidence for shareholders, banks, business counterparties and regulators.
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