Law No. 19.820 (LFE) of 2019 created a new corporate type called “Simplified Joint Stock Companies” (S.A.S.), which today is the most widely used corporate form in our country.
This corporate type introduces innovations in several areas, one of the most relevant being shareholder liability. According to Article 8 of Law No. 19.820, shareholders are not liable for the company’s obligations beyond their respective contributions. Shareholders are not personally responsible for labor, tax, or any other type of debt incurred by the company.
It is important to clarify that this holds true as long as the company’s legal personality is not disregarded, a doctrine established in Articles 189 to 191 of Law 16.060. Disregard may occur when the company is used to defraud the law, violate public policy, or harm the rights of shareholders or third parties. This applies to all corporate forms.
In the case of the S.R.L. (Limited Liability Company), members are not liable for civil or commercial debts. However, unlike in the S.A.S., they can be personally liable for corporate income tax debts (IRAE) and, in certain cases, for wage-related labor debts.
Regarding the liability of directors and legal representatives, the regime is practically the same across the S.A.S., S.R.L., and S.A. (Corporation). They are not liable for civil, commercial, or labor debts, but may be held liable for tax debts.
Article 95 of Title 4 of the 1996 Consolidated Text (IRAE) states:
“Joint liability.— Partners of partnerships or directors of corporate taxpayers shall be liable for payment of the tax.”
The second part of this article also includes administrators, granting them objective liability—that is, liability without the need to prove negligence—limited to specific IRAE tax debts. Moreover, their liability is not capped by the value of the assets they manage.
Another rule imposing liability for tax debts, but of a general nature, is Article 21 of the Uruguayan Tax Code. Unlike the previous one, this establishes subjective liability. It refers to representatives, but the majority of legal scholars agree that the distinction between “representative” and “administrator” is largely artificial, since in practice decisions are taken jointly, and administrators are usually also legal representatives. Under this article, representatives and administrators may be subjectively liable for other tax debts (e.g., Social Security Contributions), but not for IRAE, which falls under Article 95 of Title 4 of the 1996 Consolidated Text. In this case, liability is capped at the value of the assets managed, provided negligence is involved. This cap is removed in cases of fraud (dolo).
Furthermore, Article 31 of Law 19.820 establishes in its first paragraph the “Corporate Action of Liability”, intended to restore the company’s assets if they are harmed by the administrator’s conduct.
In its second paragraph, the same article introduces the “Individual Action of Liability”, applicable when the administrator directly harms the personal assets of a shareholder or a third party.
For these cases to apply, the following elements must be present:
Unlawful conduct, i.e., violation of legal or statutory norms or duties of diligence or loyalty.
Fault (Article 21 of the Tax Code) or fraud/gross negligence (Article 31 of the LFE) as a subjective element.
Existence of patrimonial damage.
Causal link between the conduct and the damage.
