Incorporate a Simplified Joint Stock Company (SAS) in El Salvador
In El Salvador on December 6, 2023, the Legislative Assembly approved reforms to the Commercial Code of El Salvador established that allow the incorporation of Simplified Joint Stock Companies (SAS) in El Salvador, which is determined as a new mechanism that will facilitate the registration and registration process for a single natural or legal person to establish the operation of a business in El Salvador.
The important thing about this reform is that it includes informal commerce, micro, small and medium-sized enterprises (MSMEs) that have not yet been registered, and reduces the registration processes so that they can be formalized, thereby promoting financial and banking inclusion in El Salvador, generating new business opportunities for the sole trader who registers as a Simplified Joint Stock Company (SAS) in El Salvador.
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The reform to the Salvadoran Commercial Code includes 11 articles and introduces 28 additional sections, specifically detailing the regulations governing SAS in El Salvador. This aims to expand the options for incorporating new businesses in the country. As a result, SAS will be classified as capital-based commercial companies, as established in Article 18, Section II, of the Salvadoran Commercial Code.
Habiendo establecido un contexto general de los motivos para incorporar al ordenamiento jurídico las Sociedades por Acciones Simplificadas (SAS) en El Salvador, es importante desarrollar los siguientes elementos:
What is a Simplified Joint Stock Company (SAS) in El Salvador?
A Simplified Joint Stock Company is a legal entity created by the agreement of one or more individuals or legal entities. Shareholders have limited liability, meaning their responsibility is restricted to their capital contributions. This company type is always commercial in nature, regardless of its intended business activities.
- Single-owner structure: An SAS can be formed by a single individual or legal entity, unlike traditional corporations that require at least two shareholders.
- Separation of personal and business assets: This structure protects personal assets from business liabilities.
- Opportunities for Salvadorans abroad: Those living overseas can establish an SAS using a certified electronic signature.
- Flexible capital requirements: The minimum required capital is just US$1, and contributions can include labor or services.
- Foreign company incorporation: International companies can establish an SAS by providing their original incorporation documents, translated into Spanish and properly apostilled.
- Transformation of existing companies: Businesses already operating in El Salvador can convert into an SAS through a merger or restructuring.
- Dissolution criteria: An SAS can be dissolved upon expiration of its designated term, inability to carry out its intended business activities, or other reasons defined in its incorporation documents.
- One-year exemption from registration fees: During the first year after the reform takes effect, new SAS registrations and their business licenses will be exempt from registration fees at the National Center of Registries (CNR) in El Salvador.
- Virtual incorporation: The SAS registration process can be completed online without in-person assistance.
- Financial inclusion: This structure encourages formal business registration and access to financial services.
Request your consultation about SAS through the following form.
Comparative analysis
SAS vs. Traditional Corporations (SA)
| Feature | Simplified Joint Stock Company (SAS) | Traditional Corporation (SA) |
| Minimum Shareholders | 1 (individual or legal entity) | 2 (individuals or legal entities) |
| Incorporation Process | Via official forms from the Commercial Registry | Requires notarized public deed |
| Capital Requirements | At least US$1 | Minimum US$2,000, with an initial contribution of US$100 (5%) |
| Variable Capital Regime | Allowed | Allowed |
| Electronic Transactions | Permitted, including e-signatures and virtual meetings | Requires physical documentation |
| Bookkeeping Requirements | Digital records allowed | Physical books required, certified by an accountant or auditor |
| Auditor Requirement | Only mandatory if revenue exceeds 482 minimum wages | Mandatory external auditor appointment every year |
| Administration Duration | Indefinite if not specified | Maximum 7 years unless renewed |
| Legal Personality | Independent from shareholders, limited liability to contributions | Same as SAS |
| Company Name | Must include “Sociedad por Acciones Simplificada” (S.A.S.) | Must include “Sociedad Anónima” (S.A.) |
| Legal Representative | Can be based abroad, allowing remote incorporation | Must reside in El Salvador and sign documents in person |
