Frequently Asked Questions – Incorporating a Company in El Salvador

Frequently asked questions about incorporating a company in El Salvador

How to incorporate a company in El Salvador?

A Company, regardless of whether it is people or Capital, is constituted in a public deed before a Salvadoran Notary, through the will of two or more national or foreign natural or legal persons who put their will, that stipulate goods or industries with the purpose of distributing among themselves, benefits that come from the businesses that are going to be dedicated.

What is the procedure to follow for the incorporation of a company in El Salvador?

Once the wills of the grantors have been agreed and the requirements demanded by the Salvadoran Commercial Code have been fulfilled, it is compared before a Salvadoran Notary to grant the Public Deed of Constitution of the Company and then the Commercial Registry must be registered.

What is the number of people required to incorporate a company in El Salvador?

A company can be constituted or formed by two or more natural and/or legal persons (companies), the number of partners is not regulated, that is, there is no maximum limit.

What is the minimum foundation capital for the new company in El Salvador?

The foundation capital must be of a value of $2,000.00, at least, according to reforms to the Commercial Code, in force since July 2008.

How to register Foreign Companies in El Salvador?

The most important thing in this case is that Article 358 of the Commercial Code be read first. In the case of Foreign Companies, two cases can be presented:

1. That the Company wants to open a branch here in the country of a company with the same name in another country. In this case it is understood that the company continues to have foreign nationality, so we are in the presence of a foreign company in the strict sense. What defines this type of company is that they maintain their original nationality and what they do here in the country is establish a branch. a) In such a case, they must first submit a Power of Attorney in favor of a natural person in the Commercial Registry for registration. b) This registered Power of Attorney will also serve to carry out the corresponding procedures at the National Investment Office of the Ministry of Economy (ONI), which is the government entity in charge of registering the investment. c) Once the authorization is obtained, the legal representative or his attorney must submit an application accompanied by the following documents (Art. 358 C Com):

i. The ONI resolution approving the investment. ii. Statutes that prove that the company is legitimately constituted, in accordance with the laws of the country in which it was organized. iii. Documentation proving that the decision to establish domicile in El Salvador or to operate in the country has been validly adopted in accordance with its bylaws. iv. Power with which the representative of the foreign company will act, which will indicate the powers of the latter in a broad, clear and precise manner. The appointed representative must reside permanently in the country. V. Sufficient social capital to carry out its social activities, whose income will be verified with the foreign investment registry, which is kept by the Ministry of Economy for this purpose. vi. Initial balance certified by a Public Accountant authorized in the country, of the foreign company or of the branch that is intended, in which its social capital is reflected. vii. An application addressed to the Registry of Commerce requesting the registration of the company and consigning the documents presented for registration, in addition to the “protest” of submission to the laws of the Republic of El Salvador. viii. The company registration application for the company with its respective annexes. As is logical, documents issued in foreign countries must be duly “apostilled” or that comply with their Authentication requirements, as the case may be.

2. The second case is that of those companies incorporated with foreign capital, in the sense that the shareholders are, in whole or in part, persons with foreign nationality. In this case we would be talking about a foreign company in a restricted sense, since the company as such is a Legal Entity and therefore with personality attributes, within which there is nationality and the shareholders or partners have freely decided, even if they are of foreign nationality, that the company has Salvadoran nationality.

If this were the case, the procedure is therefore normal for a national company.