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Matters of interest related to the capital structure of Peruvian corporations are summarized below:

There is no minimum capital amount required by law, except in the cases of banks, financial

institutions, insurance companies and pension fund administrators, and intermediate labour

service entities.

Shares are nominative, and different classes are allowed (bearer shares are prohibited).

The issuance of shares is permitted with or without voting rights.

Shares can be issued once they have been fully subscribed and at least 25 percent paid for.

By-laws may establish limitations on the transfer of shares, but may not prohibit transfers.

The corporation may not grant loans or guarantees under responsibility of the board of

directors using its own shares as a guarantee, not even for the acquisition of shares.

A corporation is entitled to issue bonds or debentures, thus creating debt in favour of their

holders.

Time & Cost to start business (Approx):-

Procedure 1. Check the uniqueness of the proposed company name

Time to complete: 1 day

Cost to complete: USD 2-6, USD 1.22 per name

Comment: Before electing the company name, a search must be conducted in the PublicRegistry to verify that no other company has the same name. This search takes no more

than 1 day. Moreover, the proposed name may be reserved or blocked for 30 days in thePublic Registry, so that no other company can register the same name during that timeframe.

Procedure 2. An attorney draws up and signs the incorporation papers; have the

documents notarized by a notary

Time to complete: 30 days

Cost to complete: USD 200 (attorney fee) + USD200 (notary fee), both fees depend onmarket conditions

Comment: The Incorporation Documents dully authorized by an attorney and signed by thecompany's shareholders must be presented to the Notary Public who drafts a Public Deed.The Public Deed needs to be filed before the Mercantile Registry within 30 days thereof.Notary fees up to 1% of capital, depending on the size of the company, the length of thepublic deed and the initial capital contribution.

The Incorporation Documents must include at least: the companys name; its specificpurpose and duration; the company's domicile; the initial capital contribution, the sharesnominal value and the total number of shares; the classes of shares, if needed; the name,nationality, marital status, occupation and residence of any individual shareholder; the

names of the first directors, managers and agents; start-up date of operations.

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Procedure 3. Deposit at least 25% of capital in a bank and obtain proof thereof


Cost to complete: 0.08% of transaction value

Comment: Each share must be fully subscribed and paid in at least 25%. Payment may bemade with cash, goods and real estate. It is recommended that the initial contribution bemade in cash by depositing the funds in a bank account and obtaining proof thereof (mostbanks require a marginal deposit to open an account; for e.g. $400). Initial contributions ingoods and real estates need to be appraised and such appraisal be approved by the Boardbefore the shares can be issued.A tax on financial transactions (ITF) was introduced, whereby any debit and credit on abank account is taxed. The ITF rate during 2004 was 0.10%, and has been reduced for 2005to 0.08%.

Procedure 4*. The attorney registers the incorporation Documents with the local LegalEntities Public Registry

Time to complete: included in procedure 2

Cost to complete: 0.3% of capital + USD 10 for performing the registration + USD 9 perappointment of each director, manager or other representative, up to the limit of PEN3,400 or (equivalent to 1 UIT - Peruvian Tax Unit).

Comment: The notary submits the notarized agreement, including the companys name,capital stock and purpose, the address of its head office and branches, the name,

nationality, marital status, occupation and residence of any individual shareholder, namesof directors, capital structure and contributions, proposed bylaws, date of start-up of thecompany, proof of capital deposition in a bank.

By law every corporation (sociedad annima) shall have at least three directors and onemanager, except for the sociedad annima cerrada that may choose not to have a board ofdirectors.

Procedure 5*. The notary stamps the accounting book and the minute book

Time to complete: included in procedure 2

Cost to complete: USD 7 per book of no more than 100 pages. Most companies havebetween 5 and 9 of these books. Thus, the cost will range between USD 35 and USD 72.

Procedure 6. Stamp the payroll books at the Ministry of Labor and Social Promotion


Cost to complete: USD 10 per each 100 pages.

Comment: A copy of the Tax Card shall be attached to the application to stamp the payroll

books.

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Procedure 7. Obtain Tax Card or Registro Unico del Contribuyente (Taxpayer

Identification number, RUC) at the National Superintendency of Tax Administration

(Superintendencia Nacional de Administracion Tributaria, SUNAT)


Cost to complete: no charge

Comment: Registration with the Peruvian Institute of Social Security (this entity has beensubstituted by ESSALUD) is no longer required. ESSALUD and the Oficina de NormalizacionPrevisional (ONP) are the State entities providing health and pension coverage,respectively. However, workers may elect to get said coverage's from private companies.Contributions to the State social security system (ESalud and ONP) are collected by SUNAT.No further action regarding this matter is requiredThis card is used to identify companies for tax purposes, including income tax, value addedtax, and municipal tax returns and procedures, and any other matters with the Peruvian

fiscal administration. Only the Form of the Unified Taxpayer Registry duly filled out shall besubmitted for registration. The following papers must be shown at the time of filing:Incorporation documents of the company, original identification card of legalrepresentative, original voucher of water or electric services of the registered office,corresponding to one of the last two months. The company shall indicate in the form whattaxes will apply to its activities.

Procedure 8. Obtain a Certificate of Compatibility from the City Council


Cost to complete: USD 40 (depends on the City Council, some of them don't charge for thecertificate)

Comment: The procedure must be done before Procedure 10. A certificate of compatibilityshall indicate that the business the company wants to develop is compatible with the areawhere its offices will be located and that said offices meet certain requisites, such asparking lots.

Procedure 9. Obtain Technical Report of Approval given by the National Institute of

Civil Defense (INDECI-Instituto Nacional de Defensa Civil)

Time to complete: 5-15 days

Cost to complete: USD 2 per square meter (with a maximum of USD 1,000)

Comment: According to the law, all companies that are planning to operate a facility thatwill be open to the public need to obtain such a Technical Report. The certificate is givenby INDECI (National Institute of Civil Defense) and is valid for 1 year. The technicalinspection process consists of complying with the minimum security conditions andidentifying the risks offered by the facility or construction, to determine the basicequipment necessary to adequately react in case of emergency.Most district city halls request companies to obtain the report from the National Institute of

Civil Defense as a requisite to grant the municipal license to operate. As a result of someaccidents during 2003, the reports are more difficult to obtain, now adding more time to

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companies which activities will concentrate people in their facilities.

Procedure 10. Obtain Municipal License from the City Council

Time to complete: 7-30 days (depending on the municipality)

Cost to complete: USD 90 (varies depending on the City Council where the company's officeis located.

Comment: The procedure must be done after Procedures 6, 7, 8 and 9 are completed. Amunicipal license is required to operate commercially, and it obtained from theMunicipality of the jurisdiction where the company is located. Some City Councils require aprovisional license while the permanent license is being processed. In most cases the CityCouncil will require a copy of the Incorporation Documents Public Deed, the DistributionPlan, documents supporting title on the property and the Certificate of Compatibilityapproved by the City Council. Ordinance N857 simplified the process to obtain a

municipal license in the metropolitan municipality of Lima (Municipalidad Metropolitana deLima) significantly. The certificate of compatibility, the technical approval and the definitebusiness license can be obtained in one step at the municipality within 7 days. In thatmunicipality, the cost was also reduced and ranges from US$30 to US$ 150 depending onthe company's activities. Lima has 49 municipalities and the new system is currently stillonly operational in one.

Note: Procedures sometimes take place simultaneously. Instances of this are marked withan asterisk (*).

Market Related Character istics

Analysing the market is important.These characteristics relate to areas such as market size and

potential, market growth, product-fit to market demands, buying power of customers, market

seasons and fluctuations, and the level and quality of competition (Hollensen, 1998).

Companies should evaluate these factors when deciding on which foreign markets to enter.

These factors help establish the attractiveness of the market and the extent to which thecompanys products or services are suited to that market.

Entering a new market can take many forms, such as:

Selling existing products in a new geographic market.

Selling existing products into a new industry.

Launching new products in existing geographic markets

Expanding into new distribution channels

Entering business partnerships with distributors, resellers, or other channel partners.

Expanding sales of existing products to a new demographic segment of the market

It turns out that forecasting market share for a new market is just as important as forecasting revenue. This is

because market share is correlated to profitability. The greater your market share, the greater the awareness and

acceptance of your products which translates into lower marketing and sales expenses per dollar of revenue.