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1.1.3. Specific Constraints of Available Legal Entities

Below will be found specific constrains of main legal entities used by foreign investors for investing in Guatemala:

Stock Company

The main aspects of a Guatemalan Stock Company include:

  • Equity is divided in shares of equal value
  • From 2013 bearer shares are prohibited
  • Minimum capital required for incorporation is of GTQ 5.000 1
  • Minimum requirement of 2 shareholders, who can be natural persons or legal entities
  • The shareholders of the corporation are limited in liability in proportion to their contribution
  • Management must be in the form of a board of directors, or a sole administrator
  • Must appoint a resident manager in Guatemala who can be a Guatemalan national or foreigner with a valid work permit
  • An annual meeting must be conducted and the minutes notarized

Limited Liability Company

The main aspects of Limited Liability Company (LLC) are the following:

  • Equity is divided in quotas, which cannot be represented with securities.
  • A minimum capital of GTQ 5.000 is required.
  • All capital has to be paid at the time of incorporation.
  • The company must be form by at least 2 quota holders and a maximum 20, of which all hold a limited liability in regard with company´s obligations.

General Partnership

The main aspects of General Partnership are the following:

  • It is considered a legal entity independent and different from its partners.
  • Partners are jointly and severally liable in regard with partnership´s obligations but between the partners can be agreed that of them has a limited liability.
  • Unless otherwise established in the bylaws, all partners can carry on the administration of the partnership.

Limited Partnership

The main aspects of a Limited Partnership are the following:

  • A Limited Partnership is formed by at least one general partner and one limited partner.
  • Limited partner's liability is limited to the amount of their contribution to the partnership.
  • General partner(s) may be involved in management, while the limited partner(s) may not.
  • Limited Partnership divided by shares is the same as same as limited partnership except equity is represented by shares.

Branch

All foreign companies doing business within Guatemala must obtain an authorization. One of the forms through which it can operate is through a branch. The following are the key aspects of Guatemalan Branches of foreign companies:

  • The company must appoint an agent with residence in Guatemala, with the power to represent the company within the country.
  • The agent will be jointly and severally liable of the obligations of the company in case the latter executes its business within the country without fulfilling all the requirements of the Commerce Code.
  • The company will be obliged to presents financial statements of its operations within the country.
  • In order to cease operations within the country, the company must obtain an authorization for which it will have to demonstrate the fulfillment of all contractual and fiscal obligations.

Foreign entities do not require de abovementioned authorization for performing the following activities:

  • Being part of a judicial of a court proceeding before a Guatemalan authority.
  • Open and hold bank accounts with a Guatemalan bank.
  • Buy or sell products to independent agents residents of Guatemala.
  • Coordinate orders through a dependent agent located in the country, provided that the order confirmation is executed abroad.
  • Grant credits or open lines of credits to Guatemalan entrepreneurs  
  • Hold or transfer securities within the country.
  • Acquire movable goods or real estate, provided that these are no part an enterprise nor are negotiated habitually.

Joint Venture

The following are the main aspects of joint ventures:

  • It is a contract between two or more partners by which the parties of the contract participate in the profits, losses and liability of the others, in regard with the businesses and activities stablished in the contract.
  • A joint venture does not form a legal entity.
  • For tax purposes, it is considered a taxpayer with the same obligations of companies.

  

1 USD 1 equals to GTQ 7.6.