Discusses the legal requirements/options for joint venture/licensing in this market.

Commercial companies in Guatemala are governed by the Commerce Code (Congressional Decree No. 2-70) of January 28, 1970.

Article 10 of this Code is specific with respect to the type of corporative organization which is acknowledged under the category of "Commercial Company”, therefore the only collectively considered Merchant as per the Guatemalan Law (Art. 3 of the Commerce Code):

 Corporations (Sociedad Anónima) The most commonly used business vehicle in Guatemala:

  • General Partnerships

  • Limited Partnerships

  • Limited Liability Companies

  • Public Partnership Companies 


Article 12 provides that banks, insurance companies, re-insurance companies, bonding companies, re-bonding companies, financial firms, general warehouses, stock markets, mutual societies, and other similar organizations will be controlled with respect to their form of corporate organization and operation by the provisions of the Commerce Code, specifically to the extent not governed by special Laws and Regulations.

The use of a trade name that includes first names and two-family names of the participating persons shall make those persons legally responsible, just as if they were members of a general partnership, assuming they consented to the use of their name.

Participation Agreements
Participation Agreements (“Negocios en Participación”) are regulated by Articles 861 to 865 of the Commerce Code as contracts, not as companies or collective entities. 

In a participation agreement, the participants enter into a contract (“Contrato de Participación”), by which the person called the “active partner” obligates himself to share with one or more persons called the “participants”, who contribute goods or services, the profits or losses resulting from one or several operations of their enterprise or of the complete turnover thereof.

The main element of a Participation Agreement is the Contribution of the Participants. 

The active partner operates in his own name and assuming the risk of the joint operation.  There is no legal relationship between third parties and the participants.

Participation Agreements are typical contractual forms according to Guatemalan Law and constitute a special case of Tax Payer, obliged to comply with all formal and material Tax Obligations as per Guatemalan Tax Legislation, holding the Active Partner responsible for Tax Liabilities of the Joint Operation.

Joint Ventures
Joint Ventures (distinct from Participation Agreements) are not regulated by Guatemalan Law.

These are flexible contractual forms based expressly on Contracting Freedom Rights acknowledged by Guatemalan Law (Art. 681 of Commerce Code).

Joint Ventures are Associative Business models, which do not constitute a Partnership or a Participation Agreement or any other Merchants Collectively Organized, but are customized for the specific business collaboration tasks to be performed by the parties.

Joint Ventures are not deemed as special cases of Tax Payers, therefore each of the contractual parties is responsible for the compliance of its respective formal and material Tax Obligations.

Foreign Companies 
 Any foreign company that is legally incorporated in its Country of Origin, can conduct business in the Republic of Guatemala.  Foreign companies will still need to open a branch or an agency in the Republic of Guatemala, with the Authorization of the Commerce Register of Guatemala. Locally incorporated corporations can be wholly owned by U.S. individuals or entities. It is thus uncommon for foreign companies to register in Guatemala, instead they tend to establish themselves as wholly owned and managed local corporations. 

To open such branch or agency the Company should have:

1. An Attorney-In-Fact who resides under permanent basis in Guatemala with sufficient faculties to represent the company along with judicial representation powers.  If the Attorney-In-Fact does not have such faculties, by law it will be deemed as vested with the same.
2. Credit that it is dully incorporated in its Country of Origin
3. Certified Copy of its Articles of Incorporation
4.  Insurance policy in favor of any third party for an amount equivalent to USD 50,000.00, which should be in force during all the time the branch or agency operates in Guatemala
5. Expressly waive to the jurisdiction of the Courts of its Country of Origin and to any right of Alien Status
6. Expressly commit to fulfill all legal requirements to withdraw from Guatemala
7. Certified copy of the last General Balance and Income Statement
8. Records of all business operations conducted in Guatemala, held according to Guatemalan Laws and Regulations
There is no need to request any authorization from the Government for a Foreign Company to:
1. Be represented in a Court of Law
2. Open Bank Accounts with Guatemalan Banks
3. Sell or purchase with authorized commerce agents in the Republic of Guatemala
4. Place Purchase Orders with authorized commerce agents in the Republic of Guatemala as long as the products’ final destination is abroad
5. Grant loans or credits or to receive promissory notes or trade with such credit documents
6. Purchase any real property, unless such real property is an element of a commercial enterprise or if the foreign company regularly trades with real property

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