Provisional Registration of a Company - International Law Office

Name, Representation and Articles of Incorporation
Registration and Licensing
Shares
Social Security

This update sets out the processes involved in registering a company.

Name, Representation and Articles of Incorporation

Company name
Applicants must check that the chosen company name is available in order to avoid the application being rejected by the Commercial Registry or challenged by third parties. The registry does not issue certificates to confirm the results of its searches. The registry has branches in the principal regions of the country, and the conditions and requirements are the same in all branches. An interested party may also wish to consult the legal department to ensure that the name will not be subject to future challenges.

This procedure takes approximately 10 minutes.

Opening a bank account for a local company
This step is necessary only if the company is totally or partially incorporated by monetary contributions. The applicant is free to choose a notary; the Guatemalan Bar Association can provide a list of practising professionals. The notary issues a letter requesting that an account be opened with the specified bank in the name of the company to be formed. The applicant must:

• go to the bank and present the notary's letter;

• make a minimum capital deposit of Q5,000 ($625); and

• retain the deposit slip to give to the notary.

This procedure takes approximately one hour and 15 minutes.

Articles of incorporation for a local company
All types of commercial company use the same registration procedure; they differ only in the content of their articles of incorporation. Guatemalan regulations recognize general partnerships, limited partnerships, partnerships limited by shares and corporations, of which the last is the most common (for further details please see the Overview (February 2007)). Applicants must choose a public notary and send at least two representatives to appear before him or her. Individuals must present an identity card (or passport in the case of foreign nationals); in the case of legal entities, the legal representative must additionally submit proof of his or her duly registered appointment - the original document or a legally certified copy will be accepted. Individuals and legal entities may also act through a third party with power of attorney, in which case the third party must provide proof of his or her identity and power.

The applicant must choose the type of company to be formed and confirm its contribution as follows:

• Where capital is provided wholly or partly in monetary contributions, the applicant must present the bank deposit slip.

• In the case of real estate contributions, the applicant must confirm its ownership of the property with a certificate from the Property Registry(1) and/or the affidavit of the title deed. The notary may also examine the information held by the registry. Partners must assign a value to the contribution.

• Other non-monetary contributions(2) must be given a pre-approved value by the partners in the articles of incorporation or inventory, which must be certified by the notary.

The notary authorizes the articles of incorporation and issues the affidavits for registration at the Commercial Registry.

Usually, it takes one day for the notary to prepare the note and one or two days to issue the affidavits.

Appointment of a legal representative
The company may begin activity from the moment provisional registration is obtained and a legal representative is appointed. The Commercial Registry approves the provisional registration and orders a notice to be published in the Official Gazette. The appointment of the legal representative may be registered immediately after obtaining provisional registration. The company must submit:

• the company's articles of incorporation and a certified copy;

• proof of payment; and

• a form entitled "Request to Register a Trading Company", which must be completed in typescript.

This procedure takes between eight and 24 hours.

Publication in the Official Gazette
Once the notice has been published, interested parties have eight working days to oppose the registration of the company - this period is known as the 'opposition term'. Once the publication fee has been received, the registry sends the notice electronically to the Official Gazette and publication is scheduled by the Official Gazette.

This procedure takes approximately 15 minutes.

Appointment of the company's legal representative
The legal representative must show the notary his or her identity card or passport and the document confirming his or her appointment as the legal representative. The notary then draws up a deed confirming the appointment.

This procedure takes approximately two hours.

Registration and Licensing

Provisional registration
The company must submit the following to the Commercial Registry:

• a form entitled "Commercial Representatives", which must be completed in typescript and bear a legally certified signature;

• the original and a photocopy of the legal document confirming the appointment; and

• proof of payment.

There is no legally prescribed timeframe, but in practice this procedure takes between eight and 24 hours.

Conveyance of property titles
This step is necessary only if the company's capital contributions consist partly or wholly of real estate. The company must present:

• a legally certified copy of the registered articles of incorporation of the provisionally registered company;

• a duplicate of the copy (ie, a photocopy with the word 'duplicado' stamped or written on it);

• a certificate of provisional registration issued by the registry; and

• photocopies of the identity cards of the individuals who appear in the company's articles of incorporation (or passports in the case of foreign nationals).

The company must also pay a registration fee in cash or by cashier's cheque when presenting the documents. The registry issues a receipt of payment which is used as a docket to collect the registered document.

The law sets a period of between eight and 14 working days for this procedure, but this may vary in practice.

Permanent registration and obtaining a company licence
Definitive registration may be requested if the opposition term has elapsed and no objection has been received or all objections have been resolved. Opposition by a third party must be resolved (i) by the registry's administrative procedures within 30 to 60 days if the objection relates to the commercial name or trade name of the company, or (ii) by the courts within 60 to 180 days in the event of an objection based on other grounds.

The company must submit:

• a formal request for the definitive registration of the company;

• a copy of the full notice of provisional registration from the Official Gazette;

• the original legally certified copy of the company's articles of incorporation - in the case of real estate contributions, the copy must also include annotations certifying the registration of the property; and

• a photocopy of the document confirming the appointment of the legal representative.

The Commercial Registry then annotates the legal copy of the articles of incorporation, adds the date of the company's definitive registration and issues a company licence, to which the applicant must affix tax stamps to the value of Q200 (around US$25).

The opposition term means that the minimum period for obtaining definitive registration and the company licence is eight days plus one additional day, provided that there is no opposition and the applicant carries out the necessary procedures immediately after the opposition period has ended.

Obtaining a business licence for a local company
In Guatemala, a business is considered personal and transferable property. A company may comprise one or more businesses, each of which must have its own licence. The company must provide the registry with:

• a form entitled "Request from an Individual Merchant and Business", which must be completed in typescript and bear a legally certified signature;

• a photocopy of the document appointing the legal representative; and

• a photocopy of the company's licence.

Once the interested party has obtained a licence, it must affix revenue stamps to a value of Q50 (US$6.25), which should be obtained in advance.

Shares

Notification of share issuance
Shares may be made out to an individual or to the bearer, unless the articles of incorporation state otherwise. Only registered shares will be recognized by the registry. The company should submit:

• a form entitled "Notice of Share Issuance", which must be completed in typescript and bear a legally certified signature;

• a photocopy of the company's patents;

• a photocopy of the document confirming the appointment of the company's legal representative; and

• proof of payment.

The registry then processes the share issue request form and annotates it to confirm registration.

This procedure takes between eight and 24 hours.

Printing share certificates
Once the share issue has been registered, the applicant may print certificates; they may be printed by the applicant or by a printer of its choice.

The share certificates must bear:

• the company's name, address and date of foundation;

• the date of the articles of incorporation, the place where they were granted, the name of the issuing notary and details of registration;

• the shareholder's name (in the case of nominative shares);

• the amount of authorized share capital and how it will be distributed;

• the face value, class and registry number of the shares;

• the rights and obligations of the relevant class and a summary of the rights and obligations of other classes of shares, if applicable; and

• the signatures of the administrators, who must sign pursuant to the incorporation papers.

Printing usually takes between two and five days. The notary's preparation of the certificates usually takes one or two days.

Tax and Accounting

Tax registration
Once registration has been completed at the Tax Superintendency, the entity or its legal representative is automatically registered and obtains a tax identification number. This procedure must be completed within 30 days of the company's provisional registration; otherwise, the superintendency levies a fine. The procedure can be completed at the superintendency's main office or one of its branch offices; there is a branch office at the Commercial Registry. The company must submit a form entitled "Registration and Updating of Taxpayer Information (RTU SAT-0014)" and original and legally certified copies and an additional copy of:

• the articles of incorporation or, in the case of a foreign company, the record in the notary's registry of the company's registered documents;

• the document appointing the legal representative to be registered or testimony of the registered deed, including power of attorney; and

• the legal representative's identity card (or passport in the case of a foreign national).

The superintendency issues a registration certificate and assigns a tax identification number.

This procedure usually takes about 15 minutes.

Superintendency approval of accounting and corporate books
Company records may be handwritten or computerized, but must include:

• inventories;

• a general journal;

• a ledger;

• financial statements; and

• details of services purchased and supplied.

Small contributors need only maintain a book of services purchased and supplied.

Companies may also authorize:

• minutes of shareholders' meetings;

• a register of shareholders (if nominative shares have been issued); and

• minutes of the administrative board and/or other documents.

This procedure may be carried out at the superintendency's central office (at the Central Tax Registry) or in any branch office. There is a branch at the Commercial Registry. The superintendency issues a sticker for each authorized record. Applicants must supply:

• Form SAT-0052, entitled "Request for Authorization Books";

• the original or a legalized photocopy (plus an additional copy) of the legal representative's or individual merchant's identity card (or passport in the case of a foreign national);

• handwritten accounts, if they are kept in this form; and

• receipt of payment.

This procedure takes approximately 15 minutes.

Authorization of accounting and corporate books at the Commercial Registry
The books can be handwritten or computerized, but must include:

• inventories;

• a general journal;

• a central ledger;

• financial statements;

• details of services purchased and received; and

• details of sales and services rendered.

Smaller companies need keep only details relating to services. However, companies may also choose to keep and authorize:

• minutes of shareholders' meetings;

• a register of shareholders (in the case of nominative shares);

• minutes of the administrative board; and

• other draft records.

Once the authorization procedure is completed, the stickers are issued to be affixed to the authorized records. Applicants must submit a written request for authorization and a photocopy of proof of payment. Handwritten books must be submitted with the affixed stickers issued by the superintendency; in the case of computerized records, only the stickers need be submitted.

This procedure takes approximately 15 minutes.

Printing of invoices and other accounting documents
This procedure can be carried out at the main office of the superintendency (at windows 6 to 12 of the Central Tax Registry) or at any other branch. The superintendency issues a voucher with the number of the resolution, which is used to print invoices or accounting documents.

Applicants must submit a completed copy of Form SAT-0042, entitled "Request for Authorization to Print and Use Documents and Forms", and the original or a legalized copy of the identity card (or passport in the case of a foreign national) of the legal representative, attorney or individual merchant who is making the request.

This procedure takes approximately 15 minutes.

Social Security

Social security registration form
Before starting the registration process, applicants must obtain Form DRTP-001, which is available:

• printed and in quadruplicate on request (in person) from the main office of the Institute of Social Security, its branch in the General Registry, its sub-offices (of which there are 13 in Guatemala) or any departmental cashier's desks under its jurisdiction (of which there are eight);

• to download and print from the institute's website at www.igssgt.org; and

• on compact disc on submission of a blank disk to the Employers and Employees Registry Division.

This procedure takes approximately 10 minutes.

Registration
An employer must be registered in the social security regime if it employs three or more workers (or one or more workers in the case of inland transportation companies). Employers can register at the institute's main office, at the Commercial Registry, at a sub-office or at a departmental cashier's desk. The institute will issue a social security registration number.

The applicant has 30 days from the date on which the obligation takes effect to submit:

• Form DRPT-001;

• a photocopy of a legally certified copy of the public deed of the registered articles of incorporation (showing any modifications);

• a photocopy of a legally certified copy of the appointment of the legal representative or photocopy of the registered public deed of the power of attorney, as appropriate;

• a photocopy of the full identity card of the individual merchant (or passport in the case of a foreign national);

• a photocopy of the confirmation of the tax identification number; and

• an attestation from a qualified accountant.

Further documentation may also be required, such as:

• a public deed of property and a certificate of registration of the real estate at the Property Registry in the case of an agricultural company;

• a photocopy of the leasing contract in the case of a leased business;

• a photocopy of the completed construction contract and related municipal licence in the case of a company engaged in construction, and a photocopy of the contract signed with the state, its entities or municipalities if the company is engaged in a public works contract;

• a legally certified photocopy of the registration licence of vehicles belonging to the employer in the case of a company engaged in inland transportation, or a photocopy of the document confirming the sale of the vehicles if the transfer of ownership has not yet taken place;

• a photocopy of the commercial licence and an authorizing resolution from the Ministry of Education in the case of a school;

• a photocopy of the contract in the case of companies engaged in the provision of personnel services; or

• a photocopy of the document which confirms the entity's name in the case of companies providing professional services.

This procedure takes approximately 20 minutes.

For further information on this topic please contact Juan Jegerlehner at Saravia y Muñoz by telephone (+502 2337 0057) or by fax (+502 2333 4925) or by email (jajegerlehner@saraviamunoz.com).

Endnotes

(1) The registry has district branches in the departments of Guatemala and Quetzltenango. There are also regional offices in Alta Verapaz, El Petén and Zacapa. Conditions and requirements are the same in all branches. The transfer is carried out in the Property Sub-registry in Quetzaltenango if the properties in question are located in Mazatenango, Huehuetenango, Sololá, Totonicapán, Quiché, Retalhuleu, San Marcos or Quetzaltenango. The transfer of properties located in all the remaining departments is carried out at the General Registry.

(2) These include personal property, patents, pre-feasibility and feasibility studies, expenses incurred in the creation of the company, publicity estimates for the company, credits and shares.