Startup Structuring in Guatemala: A Legal Guide for Entrepreneurs

## Structuring a startup in Guatemala Legal structuring of a startup is fundamental to protect founders, attract investment, and scale the business. In Guatemala, the legal framework includes the **Commercial Code (Decree 2-70)** for incorporation, the **Law for the Recognition of Entrepreneurship Communities (Decree 14-2022)** for startup benefits, and the **Securities Market Law (Decree 19-2023)** for investment rounds. --- ## Step 1: Choose the company type ### Corporation (S.A.) (recommended for startups) The S.A. is the preferred vehicle for startups because: - Shares are easily transferable - Allows a clear cap table for investors - It is the form VCs are familiar with **Requirements:** Minimum 2 shareholders, minimum capital Q5,000, public deed. ### Limited Liability Company (S.R.L.) Suitable for startups with few founding partners not seeking external investment in the short term. --- ## Step 2: Founders agreement Before incorporating, founders should sign an agreement covering: - **Equity:** What percentage each founder holds - **Roles and responsibilities:** What each one does - **Vesting:** Equity is earned over time (generally 4 years with 1-year cliff) - **Intellectual property:** Assignment of created IP to the company - **Exit:** What happens if a founder leaves (exit clauses, drag-along, tag-along) - **Non-compete:** Founders cannot compete with the startup --- ## Step 3: Intellectual property protection ### Trademark Register the startup's name and logo with the **Industrial Property Registry (RPI)** under the **Industrial Property Law (Decree 57-2000)**. ### Software If the startup develops software, protection is automatic under **copyright (Decree 33-98)**, but registration with the **Copyright Registry** provides evidentiary value. ### Patents If the startup has a technical invention, consider patenting with the RPI. --- ## Step 4: Register as a startup (Law 14-2022) The **Law for the Recognition of Entrepreneurship Communities (Decree 14-2022)**, known as the Startup Law, allows: - Registration in the **Startup Registry** of the Ministry of Economy - Access to training and networking programs - Potential tax benefits and simplified procedures - Access to the Single Window for Investments **Requirements:** - Be an early-stage company - Have a scalable business model - Focus on innovation/technology - Meet revenue/funding thresholds --- ## Step 5: Prepare for investment ### Documents an investor will require: - **Pitch deck:** Business presentation - **Cap table:** Updated capitalization table - **Financial statements:** Audited or reviewed - **Legal due diligence:** Deeds, contracts, IP, labor, tax - **Founders agreement:** Signed and current - **Data policies:** If handling user data (Data Protection Law, Decree 15-2016) ### Common investment instruments: - **Convertible note:** Loan convertible to shares at the next round - **SAFE:** Simple agreement for future equity - **Equity round:** Direct share issuance --- ## Documents you will need - Company incorporation deed - Signed founders agreement - Trademark registration (if applicable) - Business plan - Financial statements - Updated cap table - Key employee and supplier contracts --- ## Authorities involved | Authority | Role | |---|---| | General Commercial Registry | Company incorporation | | Ministry of Economy | Startup registration; single window | | Industrial Property Registry (RPI) | Trademark and patent registration | | Superintendence of Tax Administration (SAT) | Tax ID and compliance | | Superintendence of the Securities Market (SMV) | If issuing public securities | --- ## Legal basis - **Commercial Code** (Decree 2-70), articles 71-155 (S.A.) - **Law for the Recognition of Entrepreneurship Communities** (Decree 14-2022) - **Securities Market Law** (Decree 19-2023) - **Industrial Property Law** (Decree 57-2000) - **Copyright Law** (Decree 33-98) - Available at: www.congreso.gob.gt *This article is informational and does not constitute legal advice.*