For those looking to move into the country, it may not be necessary to incorporate a company in Guatemala. A viable strategy to explore is to register a subsidiary in Guatemala. This is an attractive option, as it offers a quicker entry into the market compared to forming a full-fledged company. Moreover, it offers companies a greater degree of limited liability compared to forming a branch.
Being strategically located between Central America and Mexico, Guatemala enjoys advantages due to its proximity to the north’s large neighbor and easy access to the rest of North America. It spans the isthmus and has high-volume ports serving both the Pacific Ocean and the Caribbean Sea. The location contributes to the country´s attraction as a destination for investors and for those who may be interested in a company partnership. You may find it easier to register a subsidiary in Guatemala to ensure easier market entry into the country.
The country’s large agricultural sector generates almost 9.31% of gross domestic product (GDP), which hit $95 billion in 2022 following two decades of rapid and almost continuous growth (all figures in USD). Guatemala also has a significant manufacturing sector, accounting for almost 14.1% of GDP, while the services sector accounted for close to 62% of GDP in 2022. Guatemala also benefits from significant levels of Foreign Direct Investment, with over $1.6 billion invested in the country in 2023 alone. Register a subsidiary in Guatemala to benefit from the appealing GDP numbers, without the full liability.
Guatemala has made significant strides in improving its security situation over recent years, with the intentional homicide rate almost halving between 2009 and 2021. This period also saw foreign direct investment (FDI) inflows rise significantly.
If you are interested in entering this growing market, read on to better understand what how to register a subsidiary in Guatemala.
What is a subsidiary and how does it differ from a branch?
A subsidiary in Guatemala must be at least 50% under the ownership of a holding company, which will usually be based elsewhere. When you register a subsidiary in Guatemala, it is seen in the eyes of authorities as a separate legal entity to the holding company.
A subsidiary has broad control over its own finances and affairs, which means that the parent company will have limited influence over the entity, but its liabilities will also be limited. So if your subsidiary encounters legal issues of any kind, in many cases you will not be liable for all associated costs.
That stands in contrast to a branch, which is considered an extension of the holding company and passes significantly more liability for legal issues onto its parent.
Forming a branch means operating under the same name and providing similar services as the parent company, while subsidiaries registered in Guatemala can be branded uniquely without infringing on local companies’ intellectual property rights.
How to register a subsidiary in Guatemala: a 6-step guide
The six steps you must follow to register a subsidiary in Guatemala are:
- Step 1 – Draft the subsidiary’s statutes.
- Step 2 – Certify the subsidiary’s registration.
- Step 3 – Register a subsidiary with Guatemala by Accessing the Mercantile Registry Online.
- Step 4 – Post an insurance bond.
- Step 5 – Register the physical office.
- Step 6 – Appoint a legal representative.
Note that you must submit all required documents in Spanish or with a certified Spanish translation.
1. Draft the subsidiary’s statutes
To register a subsidiary in Guatemala, you must first draft its statutes, which will clarify the entity’s structure and provide other key details related to its operations. Your chosen corporate lawyer in Guatemala will be able to assist you in drawing up this document.
2. Certify the subsidiary’s registration
With the statutes drawn up, you or your representative will have to attend the Ministry of Foreign Relations in order to certify the subsidiary’s registration.
3. Register a subsidiary with Guatemala by accessing the mercantile registry online
You can register the subsidiary with Guatemala’s Mercantile Registry online and pay a fee based on the capital that your holding company grants to the subsidiary.
4. Post an insurance bond
Before you can complete the process to register a subsidiary in Guatemala, the holding company must post a $50,000 bond to guarantee the operations of the subsidiary.
5. Register the physical office
Under Guatemalan corporate law, any registered subsidiary in Guatemala must have a physical office, so depending on the nature and scale of your business, you will either need to find adequate facilities to house your operations, or a token office space where you can receive official correspondences.
6. Appoint a legal representative
To register a subsidiary in Guatemala while based elsewhere, you’ll need a local legal representative. This representative will sign documents and have experience in business and investment, acting on your behalf via a power of attorney in front of local authorities.
Common Question About Incorporating an SAS in Guatemala
1. How long does it take to register a subsidiary in Guatemala?
Registering a company in Guatemala takes 4 to 6 weeks.
2. Do I need a local director or shareholder to register a subsidiary in Guatemala?
Although it is not mandatory to have local directors or shareholders, having a local representative can facilitate certain administrative processes.
3. What is a subsidiary in Guatemala?
A subsidiary is alternatively referred to as a Sociedad Anónima in Spanish. In such enterprises, the capital is segmented into smaller units known as shares and owned by shareholders. also, a corporation is a commercial entity that initiates business operations within a particular jurisdiction.
4. Are there any restrictions on foreign ownership of subsidiaries in Guatemala?
In general, Guatemala allows foreign ownership of subsidiaries, but certain sectors may have restrictions or require government approval.
5. Can I register a subsidiary remotely or do I need to be present in Guatemala?
Although it is possible to appoint representatives to handle the registration process, some steps may require presence in the country, require an in-country representative, or require notarized documents.
Biz Latin Hub can help you register a subsidiary in Guatemala
At Biz Latin Hub, we have multilingual teams of corporate support experts present and available to assist you in 18 jurisdictions around Latin America and the Caribbean. Whether you need help with company formation, recruitment, or support with legal or accounting services, we have the personnel and portfolio to be your single point of contact when entering and doing business in the Americas and beyond.
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