Foreign companies expanding into the country must appoint a legal representative in El Salvador during the company incorporation process and be aware of the government requirements and obligations they must comply with. To ensure a successful and efficient incorporation, it is recommended that business owners engage with a knowledgeable local expert who can guide them through the process and provide the legal representation in El Salvador needed to guarantee their success.
There are many exciting opportunities to be explored in the small Central American nation of El Salvador. The country is showing an exceptional year-on-year annual GDP growth of 10%, and has a GDP valued at $28.74 billion (USD). It has a track record as an excellent place to outsource business processes due to lower operating costs, its dollarized economy (USD) and cultural ties with the USA. This is backed up by excellent Foreign Direct Investment (FDI) figures, receiving nearly $850 million in 2021. A legal representative in El Salvador will help your company remain compliant when conducting economic activities.
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All legal entity structures need a legal representative in El Salvador. The appointed person will act as the legal face of the company before public and private entities. In addition, the Legal Representative has administrative, legal, financial and managerial responsibilities to support the performance and proper functioning of the company.
We explain the essential considerations to have a Legal Representative in El Salvador.
Who can be an Appointed Legal Representative in El Salvador?
The Legal Representative in El Salvador can be anyone that meets certain basic requirements:
- They must be at least 18 years old
- The person must have a Unique Identity Document (DUI) and Tax Identification Number (NIT)
- The person must be domiciled in the country.
In the event that the Legal Representative is a foreign person, they will need to reside in El Salvador to be able to exercise their functions as a representative. Also, depending on the category of your company’s economic activity, your Legal Representative may need a certain academic degree.
How to Appoint a Legal Representative in El Salvador
The way to appoint a Legal Representative in El Salvador varies depending on the type of company you have in the country.
When incorporating a Public Limited Company (S.A.) or a Limited Liability Company (S.R.L.), shareholders agree on the appointment of a Legal Representative within the company’s statutes.
A Public Notary records the statutes in a public deed. The appointed legal representative is registered with the incorporation documents at the Commerce Registry. This appointment is only made during company incorporation in El Salvador.
After this step, companies can subsequently appoint their Legal Representative through the General Meeting of Shareholders of the company. After the appointment of the new Legal Representative, the company needs to certify the minutes of the General Shareholders’ Meeting. Following this step, you must register it with the Commercial Registry.
The General Shareholders’ Meeting to appoint a Legal Representative may occur at any time in the year.
Branches of foreign companies
The appointment of a legal representative in El Salvador at a branch is different from that of local companies in El Salvador. The process must go through the branch’s headquarters, in which the company must appoint an attorney or attorneys in the country through a General Administrative Power. This document is then presented to the Commercial Registry for registration.
For Branches, the duration of the legal representative appointment is indefinite. However, the parent company, through the Board of Directors, can also establish the period that they will last in functions.
Be aware that the attorneys appointed in El Salvador have the same responsibilities and must meet the same criteria as Legal Representatives.
Types of legal representation in El Salvador
The necessary type of legal representative in El Salvador depends on the type of governance of the company.
Board of Directors
A company’s Board of Directors will take responsibility for the legal representation of the company. These Boards can be made up of a minimum of 2 and a maximum of 7 people. Their roles are as Directors and with their respective Alternate Directors. The appointed legal representative in El Salvador can be one or more of the Directors.
Many companies, when they have this type of administration regime, usually choose the Chief Executive Officer of the Board of Directors to be the Legal Representative and take on the full legal responsibilities. Or, they may choose that the legal representation rests with the Chief Executive Officer and the Chief Secretary, with the latter having more limited functions as legal representatives of the company.
The management of legal representation functions depends entirely on how the shareholders have established it in the company deed of incorporation.
Sole Proprietary Administrator
If the company’s administration regime is by Sole Administration, it appoints only one Director as legal representative in El Salvador, along with an Alternate Director.
Regardless of the type of administration that the company has through the Board of Directors or Sole Administration for legal representation, the period of its function cannot be more than 7 years. After this term, the shareholders must appoint a new administration, and there is also no impediment for the Directors to be re-elected.
It is not necessary to appoint Alternate Directors. All attorneys are considered principal Directors and a legal representative in El Salvador unless their appointment specifies or limits their functions.
Contact Biz Latin Hub to find a trusted Legal Representative in El Salvador
If you are planning to expand your business to the country, it is mandatory to have a Legal Representative El Salvador to take charge of managing the company’s legal activities the country.
Biz Latin Hub provides a full range of bilingual market entry and back-office services focused on the correct and proper functioning of your company, from legal, accounting, tax, and corporate administrative services, to market entry. Find all the essential services for your company with us in El Salvador.
Get in contact with our team to see how we can support your business in El Salvador and the Latin American region. Our team of local and foreign professionals is ready to help you.
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