 | 2007 | 2006 |
Overall Score: | 56 | 40 |
Regional Ranking: | 5th | 10th |
Uruguay makes a strong showing in 2007 Scorecard, with an overall score improved by 16 points. An open economy and attractive tax structure have spurred new industry activity in this small nation. Uruguay’s pioneering VC/PE practitioners have found sufficient flexibility to operate, despite issues of transparency, capital markets development, bankruptcy procedures and protection of minority shareholder rights.
Strengths: With tax-exempt dividends for local shareholders, a relatively low corporate tax rate and other favorable terms, Uruguay’s tax treatment of VC/PE funds and investments is reasonable. Uruguay’s legal trust form (fideicomiso) is far from ideal, but local firms have flexibility to participate in off shore vehicles. Uruguay has also made recent steps forward in minority shareholder rights, restrictions on institutional investors, and corporate governance, though room for improvement exists.
Challenges: Uruguay received a lowered score for quality of local accounting/ use of international standards, perceived as “intermediate” by EIU’s Risk Briefing. And though a pending bankruptcy law would facilitate the merger or sale of insolvent companies, lengthy bankruptcy proceedings are currently a concern, and partner liability remains considerable. And as a small economy, Uruguay’s capital markets are under developed, perhaps offset by open capital in- and out-flows.
| Score | Change |
| Overall score | 56 | ▲ 16 |
| Laws on VC/PE fund formation and operation | 2 | ▲ 1 |
| Tax treatment of VC/PE funds & investments | 3 | ▲ 1 |
| Protection of minority shareholder rights | 2 | ▲ 1 |
| Restrictions on institutional investors investing in VC/PE | 2 | ▲ 1 |
| Protection of intellectual property rights | 2 | |
| Bankruptcy procedures/creditors' rights/partner liability | 2 | ▲ 1 |
| Capital markets development and feasibility of exits | 2 | ▲ 1 |
| Registration/reserve requirements on inward investments | 3 | |
| Corporate governance requirements | 2 | ▲ 1 |
| Strength of the judicial system | 2 | |
| Perceived corruption | 2 | |
| Quality of local accounting/use of international standards | 3 | ▼ 1 |
Indicators are scored from 0-4 where 4=best score.
Overall score ranges from 0-100 where 100=best score. |
