Published on Mar 24, 2024

Our lawyers in El Salvador, experts in Corporate Law, share this article related to the operation of Simplified Shares Companies in El Salvador, just over 1 month after the entry into force of the amendments to the Commercial Code that create this type of company within the country.

Last March 13 marked one month since the amendments to the Commercial Code came into force where, among other things, the Simplified Shares Company (hereinafter “SAS” for its acronym in Spanish) was created in El Salvador. With these amendments, El Salvador is preparing to give a boost to entrepreneurs that allows them to develop their businesses through the implementation of the SAS, a corporate structure equipped with agility in its operations and that encourages entrepreneur’s formality when entering into business negotiations with their suppliers, clients and the financial system among others.

Among other functions, SAS are intended to serve as a method of estate planning, where shareholders decide what portion of their assets they wish to risk when carrying out a certain business, limiting their liability to the amount of their participation within the created legal entity.

The main developments following the incorporation of the SAS into the Salvadoran legal regime are:

  • The possibility of companies with a single shareholder is enabled; The shares of this type of company may not be registered in the public stock registry, traded on the stock exchange and, consequently, may not adopt the nature of electronic book entries of securities.
  • The minimum capital of the SAS is $1.00. Shareholders have up to 2 years after the company is registered to pay the amount of unpaid capital. The SAS may adapt from the variable capital regime.
  • Its creation is done exclusively through forms provided by the Commercial Registry for such purposes, notary intervention is not required for these purposes.
  • In companies with a single shareholder, which do not contemplate a different administrative body, it will not be necessary for the bodies to meet; the shareholder's decisions will be recorded in the corresponding book.
  • If the entity is considered as a microenterprise in accordance with current legislation, it will not be required to appoint auditors or a supervisory board. Likewise, SAS with assets of less than $12,000.00 may carry out their accounting independently. SAS with assets greater than this amount are required to carry out their accounting through authorized public accountants.
  • Corporate books may be kept in physical format or by electronic means that allow their safeguarding, integrity and conservation of the information recorded.
  • A simplified process is established for the dissolution of this type of company as long as the company has no accounts payable or obligations to cancel, which must be expressed by the company's public accountant or auditor.
  • During the first year of validity of the reforms to the Commercial Code that approved the SAS in El Salvador, that is, until February 13, 2025, the registration of the incorporation of SAS, as well as its company registration, will not cause any type of rights or tariffs before the Commercial Registry.

One month after its implementation, the acceptance of this investment vehicle within Salvadoran market has been broad, with multiple SAS having been established before the Registry of Commerce and being operational even with bank accounts opened in the most renowned financial institutions in the country.

In this way, the SAS are functioning as a tool for the development of entrepreneurial projects with rapid growth projections through capital/debt raising, with the SAS having flexible structures for the development of investment and credit agreements that guarantee the rights of all parties involved.

If you would like additional information or advice on how to implement a SAS as a mechanism for managing your investments, do not hesitate to contact us.

Rafael Burgos. - Senior Associate, El Salvador

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.