In El Salvador, a corporation is known as Sociedad Anónima de Capital Variable (S.A. de C.V.). S.A. de C.V. is the most popular legal entity in El Salvador, partly because it is the simplest to incorporate.
El Salvador corporation characteristics
The S.A. de C.V. has the following characteristics:
• 100% foreign ownership is permitted.
• At least two shareholders are required for the legal entity.
• Stocks are used to represent shareholders and corporate capital.
• The shareholders’ financial liability is limited to their capital contribution.
• Either a Board of Directors or a Unique Administration must represent the company.
• The Board of Directors should have a minimum of two members and one substitute.
• The Unique Administration should consist of one person and one substitute.
• Visa sponsorship for foreign employees is permitted.
• A minimum of USD$2,000 in company share capital is required.
El Salvador corporation corporate requirements
Before forming an S.A. de C.V., you must first meet some corporate compliance requirements. 5% of the share capital must be paid at the time of registration, with the remainder due within the first year of operations. To incorporate the company, the shareholders must sign the Incorporation Deed in front of a public notary. However, another person can be granted Power of Attorney (POA) to appear before a public notary in their place. The Incorporation Deed contains all of the company’s information, such as the shareholders, corporate purpose, and name. All businesses must have a corporate purpose that is directly related to their primary commercial activities. For example, if you are a marketing firm, your corporate purpose must be consistent with your marketing activities.
Procedure for registration
The registration process consists of the following steps:
Check the Mercantile Registry for the availability of the company’s name.
Check the availability of the desired name for your company on the Mercantile Registry’s online platform ‘Mi Empresa’. The company name must meet several criteria. The name cannot be similar to that of another existing company, as confirmed by the Commercial Registry. In addition, companies must include the words ‘Sociedad Anónima de Capital Variable’ in their title. During the company registration process, a minimum of three optional names should be provided.
Obtain a tax identification number (NIT) for each shareholder.
All shareholders or partners must have a tax ID number, or NIT, before registering a company in El Salvador. This step is required because it must be included in the company’s bylaws.
Create the bylaws for your company.
The bylaws are an important document that must be completed as part of the company incorporation process in El Salvador. A public notary must write and legalize the company’s bylaws in El Salvador. The following information must be included in the company’s bylaws:
• Shareholder or partner ID number and NIT
• Company name
• Share capital information
• Registered office address
• Management structure
The payment of incorporation fees
To proceed with the registration process, you must pay the incorporation fees at a bank or through the online platform ‘Pagadito’.
Send the registration form to the Mercantile Registry.
After paying all of the required incorporation fees, you can finally submit the incorporation documents to the Mercantile Registry offices in San Salvador. Once the registration is complete, the company will receive a ‘Testimonio de Escritura de Constitución Inscrita en el Registro de Comercio,’ a ‘Constancia de Matrcula de Empresa Inscrita,’ and a ‘Constancia de Registro de Locales’. All of these documents are proof of the company’s successful registration and are required to complete the following steps.
Obtain the NIT and RNC of the company.
The company must be registered at the Ministry of Finance (Ministerio de Hacienda) within 15 days of its registration at the Mercantile Registry to obtain an NIT (Number de Identificación Tributaria) and RNC (Number de Registro del Contribuyente). To do so, the company must submit shareholder documentation, personal information, personal NIT, and proof of registration at the Mercantile Registry.
Register your business books.
The registration of your company’s statutory books is an important step to take after your company is registered in El Salvador. This step requires the services of a registered accountant and can take up to two business days. The accounting system that the company will use must be legalized and registered with the appropriate local agency.
Establish a corporate bank account.
Once the company’s books are in order, it’s time to open an El Salvador corporate bank account. It is critical to select the appropriate bank based on the needs of the business. Depending on the agreement and goals of the company, each bank offers various types of accounts with numerous benefits. It is advised that the bank provides reasonable pricing structures for international transactions.
Register the business with the municipality.
Register the company with the local municipality to obtain all of the necessary licenses and permits to begin operations. The documents needed vary depending on the nature of the business, but in general, you should provide company information, NIT and RNC numbers, and office and business addresses.
