Company Formation in Guatemala: A Complete Guide

## What is company formation? Forming a commercial company in Guatemala is the legal process through which two or more people (or a single person, in the case of an Individual Enterprise of Limited Liability) create an independent legal entity that allows them to operate a business with limited liability over their personal assets. This process is regulated primarily by the **Commercial Code (Decree 2-70 of the Congress of the Republic)**, available on the Guatemala Congress law portal (www.congreso.gob.gt). --- ## Available company types ### 1. Corporation (Sociedad Anónima, S.A.) The most common form for medium and large businesses. Capital is divided into shares and shareholder liability is limited to their contribution. **Key requirements:** - Minimum 2 shareholders - Minimum capital of Q5,000 - Public deed before a notary ### 2. Limited Liability Company (S.R.L.) Ideal for small and medium businesses. Fewer formalities than the S.A. **Key requirements:** - Minimum 2 partners, maximum 20 - Minimum capital of Q3,000 - Public deed before a notary ### 3. Individual Enterprise of Limited Liability (EIRL) Allows a single person to operate a business, limiting liability to business assets. **Key requirements:** - 1 sole owner - Minimum capital of Q2,000 - Public deed before a notary ### 4. Foreign Branch A foreign company can establish a branch in Guatemala. The parent company is liable for the branch's obligations. **Key requirements:** - Apostilled parent company documents - Capital assigned to the branch - Legal representative residing in Guatemala --- ## Step-by-step process ### Step 1: Drafting the partnership agreement The partners or shareholders agree on the terms of the company and draft the bylaws. This includes: - Trade name (razón social) - Corporate purpose (activities the company will engage in) - Share capital and each partner's contribution - Administration and representation - Duration and registered office ### Step 2: Granting the public deed An **authorized notary** drafts the public deed of incorporation. The notary certifies the identity of the partners and the legality of the act. This document is the legal foundation of the company. ### Step 3: Registration at the Commercial Registry The public deed is filed with the **General Commercial Registry of the Republic (RMG)**, the authority responsible for registering commercial companies. The RMG verifies that the deed meets all requirements of the Commercial Code. ### Step 4: Obtaining tax ID and commercial license With the registered deed, the following are obtained from the **Superintendence of Tax Administration (SAT)**: - Tax Identification Number (NIT) - Commercial license (patente de comercio) for the company and establishment ### Step 5: Publication of registration notice The Commercial Code requires publishing a notice of registration in the Diario de Centro América (the official gazette) or another widely circulated newspaper. --- ## Documents you will need - Copy of the Personal Identification Document (DPI) of all partners or shareholders - Proof of address (utility bill: electricity, water, or phone) - If a partner is foreign: valid passport and identity document from their country, apostilled - If contributing real estate: property deeds - If contributing cash: receipt of the initial capital deposit --- ## Authorities involved | Authority | Role | |---|---| | Authorized notary | Drafts and authorizes the public deed | | General Commercial Registry (RMG) | Registers the company and grants legal personality | | Superintendence of Tax Administration (SAT) | Assigns the tax ID and issues the commercial license | | Diario de Centro América | Publication of the registration notice | | Guatemalan Social Security Institute (IGSS) | Employer and employee registration | --- ## Estimated time and costs - **Time:** 2 to 4 weeks approximately - **Notary fees:** Vary by share capital (generally between Q3,000 and Q15,000) - **Commercial Registry fees:** Approximately Q250 to Q500 - **Commercial license:** Approximately Q100 to Q300 annually - **Publication notice:** Approximately Q150 to Q300 --- ## Practical tips 1. **Choose the right company type:** The S.A. offers more flexibility for transferring shares, while the S.R.L. is simpler to manage. 2. **Define the corporate purpose clearly:** Too broad an object can create ambiguity; too narrow can restrict future activities. 3. **Keep your accounting current:** From day one, the company must maintain formal accounting. 4. **Register your employees with IGSS:** You have 10 days from hiring to register each employee. --- ## Legal basis - **Commercial Code** (Decree 2-70 of the Congress of the Republic), articles 43-90 (company formation), 91-155 (S.A.), 156-205 (S.R.L.) - **Commercial Registry Law** (Decree 14-2014) - Available at: www.congreso.gob.gt *This article is informational and does not constitute legal advice. To form your company, we recommend consulting with a corporate lawyer.*