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Corporation - Sociedad Anónima (S.A.)


What is the main source of law authorising this entity form?

Commercial Code, Congressional Decree 2-70


Give a brief summary of the entity form:

Does the entity possess separate legal personality?

An SA has separate legal personality.

(Maximum) period of existence

No maximum period.

Governing document(s)

The SA’s minutes of incorporation (“escritura constitutiva”).

Liability of incorporators / shareholders

Responsible only for their contributions to the social or corporate capital.

(Governing) bodies

Shareholders Meeting (the ultimate governing body), Board of Administrators (”Consejo de Administración”) or Single Administrator (“Administrador Único”).

Other particularities

The Shareholders Meetings may be ordinary and/or extra-ordinary, depending on the business of the meeting. There can be as many managers as the company needs, but there has to be one General Manager.


Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

There are no legal limitations on foreign ownership of a Guatemalan company. All shareholders have to be registered. Bearer shares are not permitted. Any company in Guatemala may be merged, acquired, sold out, dissolved or its type of company be transformed.


Can this type of entity be publicly listed or held?

Yes, they can be listed or publicly held.


Can this type of entity be used for a non-profit or charitable organization?

No, the main purpose of this type of company is commercial. For non-profit or charitable uses, there are other types of legal entities such as civil associations, which are incorporated under Civil Law.



Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

An S.A. must be incorporated by a Notary Public in a special type of document (“Escritura Pública”), by at least two persons. The minimum initial capital (approximately US$30.00) must be deposited in a bank prior to signing the document. This is then registered at the Registro Mercantil de Guatemala where it undergoes a registration process, in-cluding the publication of the main information on the SA, so that anyone with an objection can oppose the registration.

Involvement of notary, company register, governmental authorities

The social pact must be notarized by a Public Notary in a public deed. Thereafter it is submitted to the National Registry for its registration.

Timing (estimate)

If it is submitted by the digital platform, it may take 2 days. If it submitted “by paper” at the National Registry it may take one week.

Main costs, including registration and similar fees (excluding legal fees)

Approximately US $150.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Yes, in the social pact the following must be indicated: name of the persons constituting the entity, object and purpose, capital stock, domicile, specifications regarding legal representation, as well as regarding the General Assembly, etc.


Minimum number of incorporators / shareholders and residency requirements

Two individuals or artificial entities. They can be either a Costa Rica national or a foreigner.


Minimum number of directors (or other applicable officers) and residency requirements

The Board of Directors: President, Secretary, Treasurer, Prosecutor. If no legal representative lives in Costa Rica, a Resident Agent must be appointed. The Resident Agent must be a Costa Rican lawyer with an active office with a physical office to receive notices and his or her main purpose will be to receive eventual notices or notifications on behalf of the company.


Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

There is no minimum amount, usually it is a very low amount, of 10,000 colones (around US $20). Companies that engage in banking or insurance businesses will require a large minimum stock capital contribution.


Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

No when submitting the Public Deed before the National Registry. However, all incorporators must personally sign the Public Deed.


Is a tax identification number, or equivalent, required? If so, how is it obtained?

A tax identification number is given at the Ministry of Treasury, however, when the entity is registered it acquires a legal or corporate identification number which is called in Spanish “cédula jurídica”.



What is the title of the applicable company registry?

Mercantile Registry of the National Registry of Costa Rica. (In Spanish, Registro de Personas Jurídicas del Registro Nacional)


What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The information listed below must be filed at the National Register by means of the SA’s Social Pact and is publicly available:

  • Articles of association
  • Date of incorporation
  • Name and address details
  • The activities of the SA
  • Share capital (issued and paid up)
  • Legal representatives of the SA and their personal information
  • Constituting shareholders and their personal information (there must be at least 2 initial shareholders)
  • Information regarding insolvency, and liquidation of the SA
  • The annual accounts
  • Information regarding General Assembly and its meetings

     

In Costa Rica the National Registry does not disclose the shareholders of a SA. A new bill regarding “ultimate beneficial ownership” entered into force, but this information must be submitted to the Central Bank of Costa Rica.


 


What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Board of Administrators or Sole Administrator. Its main responsibilities are to oversee the operations of the company and appoint its managers (when they are not appointed by the Shareholders Meeting).


How are the members of the executive body appointed, dismissed and replaced?

The type of body e.g. Board of Administrators and/or Sole Administrator is determined in the Articles of Incorporation, and are appointed, dismissed and replaced by the Shareholders Meeting


Is it possible to appoint corporate directors or must all directors be natural persons?

The directors/administrators can act as a body, although the legal representation is held by one single person.


Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

The term “director” is not specifically used in Guatemala. There are either Members of the Board of Administrators, which functions as directors, a Sole Administrator, and as many Managers as the company requires. Additionally, there can be several legal representatives appointed to act on the SA’s behalf, either generally or for specific matters.


What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The Shareholders Meeting (“Junta General de Accionistas”). Its main responsibilities are to oversee the stewardship of the Administrators, oversee the results of the company’s business, determine investments and revenues, and appoint the Administrators.


What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

The normal majority and quorum requirements are simple: A “relative” majority which means more than 50% of shares represented in the meeting.

However this may vary according to the type of decision they are taking: usually an “absolute” is required which means more than 50% of the total shares for decisions such as increasing or decreasing of company capital, amending the Articles of Incorporation, or the cancellation of the company.

Other instances may be provided in the Articles of Incorporation and other majorities may be required, but this will vary in each individual case.


Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

There are a few instances where a special regime is required, such as a financial institution.


What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Within 3 months after the end of the fiscal / financial year, the SA is required to submit a report to the Tax Administration Superintendency. Also, there must be an obligatory General Shareholders Meeting in order to determine the financial position of the SA.


Is the entity permitted to determine its own financial year?

The financial year of a company must correspond to its fiscal year which is from January 1st to December 31st.


Is the entity subject to any statutory (external) auditor obligations?

No, it is not.


Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

No legal requirements. They will depend on the Articles of Incor-poration. In any case, there are no residency requirements.



What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares ("acciones").


Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes they are. For example, different classes may have a priority when the company is paying dividends, or may have different buy-out options.


What documentation is required for the transfer of ownership interests?

The transfer of the shares must be registered in the company’s Shareholders Registry and the Commercial Registry must be notified of the transfer. SAs may have other requirements to accept the transfer of a share, which must be stated in the Articles of Incorporation, or in a Shareholders Agreement. This last document is not a legal requirement.


Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

No other formal requirements are necessary. However, some shares have “legalized signatures” in order to assure the authenticity of the person’s signature when transferring them.


Are there any applicable stamp duties imposed when transferring ownership interests?

No.


How are shares issued? (including information on payment obligations, registration requirements)

All shares are registered in the Shareholders Registry Book and through share certificates which are provided to each shareholder. There are no further payment or registration obligations or requirements.


Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

There are no special requirements.


Any requirements with respect to share cancellation, share repurchase and other capital reductions

There are no special requirements for share cancellations. In the case of capital reductions, as long as it does not involve reducing the approved total capital of the company, there are no special requirements. All these corporate actions fall within the issues that a Shareholders Meeting can resolve, specifically by an Extraordinary majority, with special attendance and voting percentages.


Any requirements with respect to distributions to shareholders?

The Shareholders Meeting decides on these matters, in an Ordinary Meeting with no special percentages required.


Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, pursuant to a Shareholders Agreement, which is not public information.



Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

There are no legal maintenance costs due, other than corporate, and income taxes.


What are the general corporate tax rates? (Specify if there is a national versus local distinction).

A corporation is subject to the following taxes, which are all national:

  • ISO (“Impuesto de Solidaridad”)
  • Income Tax
  • Sales Tax



 


Summary of any specific matters, e.g. recent or prospective major legal developments

N/A.


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Julio Aparicio
Lexincorp Central American Law Firm
Guatemala City, Guatemala