Amendments to Guatemala’s Commercial Code

Amendments to Guatemala’s Commercial Code

On October 3rd, 2017, the Congress of Guatemala approved Decree number 18-2017, which contains important amendments to Guatemala’s Commercial Code, Decree N° 2-70.

These amendments will come into force 90 days after their publication in the Official Newspaper.  Below, we present you with a brief summary of the most significant amendments:

  • In reference to the General Shareholders’ Meetings, Partner Meetings, and Board of Directors Meetings of commercial companies, the summoning and any related communication can now be made using remote, modern technology, such as e-mail, video conference, telephone calls, etc.
  • Legislation provides that the legal reserve cannot be distributed in any way between partners/shareholders until the company is liquidated. However, 5% thereof can now be capitalized when the annual legal reserve exceeds 15% of the paid-in share capital, at the immediately previous closing.
  • In relation to the meetings held in the presence of a Notary Public, there is now an obligation to adhere the Minutes thereof to the book of Shareholders’ Meetings, General Partner Meetings, and Board of Directors Meetings, within 15 days following the issuance of the Notarial Certificate.
  • In regard to the initial paid-in share capital of corporations (or Sociedades Anónimas in Spanish)their capital is reduced from Q5,000.00 (approximately US$ 685 ) to Q200.00 (approximately US$30).
  • As we know very well, in compliance with anti-money laundering regulations, the company is obligated to have a Shareholders’ Registry; it is now mandatory to include the exact physical address and email address of the Shareholders in this Registry.
  • Publications in the Official Newspaper for the incorporation of companies and their modification are eliminated from the legal framework; as soon as the amendments come into force, publications in the Official Newspaper will be publicly notified by means of an electronic communication by the General Mercantile  Registry of Guatemala.
  • Registering foreign company branches in Guatemala is also simplified. Once the Branch complies with legal requirements, allocate operating capital in the country, and establish the corresponding bond in Guatemala, the General Mercantile Registry of Guatemala will complete the registration and issue the respective business licenses, thereby reducing overall registration times. Finally, it should be noted that the Branch will have one year to begin operations from the registration date, otherwise, the registration will be canceled.