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Doing Business in El Salvador
 
 
 

General

As the economy has grown and investor confidence has increased, inquiries about franchises are more common. With a continued rise in consumer spending, opportunities in this sector are expected to increase.

Limited communications and mail delivery capacity in El Salvador are obstacles to direct marketing. However, with privatisation, telecommunications are improving and the government is making efforts to upgrade its mail system. Door to door sales and direct-from-television sales are increasing.

There are six types of business corporations according to the Code of Commerce: SA, Limited Liability Company, General Partnership, Joint Liability Company, Cooperatives and Joint Stock Company.

To register a legal entity takes about 10 working days and the cost depends on the foundation capital (registration fees) and legal fees. To dissolve a legal entity it needs to comply with different requirements established in the commerce code and it could take about six months.

There is no cash movement restriction only to comply on what is established in the money laundry law.

Companies are able to do payroll through an agreement with a local entity or constitute a corporation in El Salvador which takes less time than constituting a branch and also is less expensive and requires less paperwork.

The Monetary Integration Law dollarised El Salvador in 2001, and the US dollar now freely circulates and can be used in all transactions. One objective of dollarisation was to make El Salvador more attractive to foreign investors.

Forms of Business Organisation

SA

In general, local companies and foreign companies choose to operate as SA.

The main features of this corporate vehicle are as follows:

• a stock company is the one that has the capital divided and represented by shares;
• the responsibility of each shareholder is limited to the total amount of shares subscribed by them;
• the company must be identified by a name;
• each shareholder is free to transfer the capacity of shareholder to another party by share transference.


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