Expanding companies must appoint a Legal Representative in El Salvador when incorporating their company. Business owners in this new market must be clear about the government requirements and their obligations they must comply with. Foreign companies should engage with a knowledgeable local expert to guide them through the company incorporation process.
Regardless of the type of legal entity, a Legal Representative will be required. 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 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.
In the first case, when incorporating either 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.
The statutes are recorded in a public deed authorized by a Public Notary. Then, together with the presentation of the documents before the Registry of Commerce for the incorporation of the company, the appointed legal representative of the company is registered. This type of appointment only occurs at the time of company incorporation in El Salvador.
After this step, companies can subsequently appoint their Legal Representative through the General Meeting of Shareholders of the company. Once the new Legal Representative has been appointed, the company must certify the minutes of the General Shareholders’ Meeting and present it to the Commercial Registry for registration.
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 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 legal representation for a local company 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 maximum of 7 people. Their roles are as Directors and with their respective Alternate Directors. The appointed Legal Representatives 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 representative of the company.
The way in which the functions of legal representation will be managed depends entirely on how the shareholders have established it in the company deed of incorporation.
Sole Proprietary Administrator
When the company’s administration regime is by Sole Administration, only one Director is appointed as Legal Representative with the 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. It is understood that all attorneys are principal Directors and legal representatives, unless one is given specific or limited functions for their appointment.
Contact Biz Latin Hub to find a trusted Legal Representative in El Salvador
If you are planning to expand your business to El Salvador, it is mandatory to have a Legal Representative to take charge of managing the company’s legal activities the country.
Biz Latin Hub provides a full range of bilingual market enty and basck-office services focused on the correct and proper functioning of your company, from legal, accounting, tax, corporate administrative services, to market entry. Find all the essential services for your company with us in El Salvador.
Contact us through our email [email protected] 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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