Series: Investing in El Salvador — A legal guide for foreign investors
An investor who incorporates in El Salvador from abroad reaches an awkward question early: who signs here when I am not there? Banks ask for the legal representative in person, the registry requires a recorded appointment, and official notices are served on that person. The answer differs depending on whether you have a Salvadoran company or a foreign company registered in the country.
Who represents a Salvadoran company
Article 260 of the Commercial Code provides that judicial and extrajudicial representation of a corporation belongs to the sole director or the chairman of the board, as applicable. The same article allows the articles of incorporation to assign those powers to any director it designates, or to a manager appointed by the board.
Judicial representation has an additional route: it may be held by a person appointed by the sole director or the board, but it must be granted to someone qualified to act as attorney at law and for the same term as the appointing body. The article closes with a point that is often missed: the appointment must be recorded with the Commercial Registry to be effective against third parties.
On nationality, Article 260 does not condition the office on being Salvadoran. A foreigner may in principle hold the representation of an ordinary Salvadoran company. Two caveats matter: regulated sectors — banking, insurance, securitization and others — have their own statutes with specific requirements and disqualifications for directors and officers; and being able to hold the office is not the same as being able to exercise it comfortably from abroad.
The foreign company: here the law does require residence
If what you register in the country is a foreign company establishing a domicile or a branch, the rule is explicit. Article 358 of the Commercial Code, subsection (c), requires filing the power of attorney under which the foreign company’s representative will act, stating their powers broadly, clearly and precisely, and adds that the appointed representative must reside permanently in the country.
To this, Article 63 of the Civil and Commercial Procedure Code adds that foreign companies carrying on activities in El Salvador are subject to the same representation requirements as domestic law imposes, save for an international treaty or a legal provision to the contrary.
The real problem is friction, not prohibition
Even where the law lets a foreign owner serve as representative of their Salvadoran company, day-to-day operations run into things the Code does not mention:
- Banks. Account opening and much of the follow-up require the legal representative to appear in person with valid identification.
- Notices. A requirement served while the representative is eight time zones away consumes the deadline all the same.
- Signatures. Tax filings, minutes, contracts and registry filings need timely signature; coordinating that remotely adds weeks.
- Immigration and tax. Holding office and drawing income in the country can carry immigration and tax consequences that must be reviewed case by case.
Two arrangements that work
The first is a local legal representative: a professional domiciled in El Salvador takes the representation with powers delimited in writing, which satisfies Article 358 and solves the banking and registry presence problem.
The second reverses the roles: the client keeps the legal representation and the firm acts as attorney-in-fact for specific actions, billed individually and only after the client approves each one. This is what investors choose when they do not want to hand over signing authority but still need hands on the ground.
In both cases the scope of powers is what protects everyone: a vaguely drafted power of attorney is as risky for the investor as for whoever accepts it.
Frequently asked questions
Can the appointment be revoked?
Yes. It is revocable under the rules of the body that approved it, and the revocation must be registered to be effective against third parties, on the same logic as Article 260.
Is the legal representative liable for the company’s debts?
As a general rule the company answers with its own assets. That does not rule out personal liability of an officer for their own acts, for specific breaches the law attributes to them, or for acting beyond their powers. Which is why the drafting of the power matters.
Do I need Salvadoran residency to represent my own company?
For a Salvadoran company, Article 260 does not require it. For a foreign company registered in the country, Article 358(c) does require its representative to reside permanently in El Salvador. These are two different situations and should not be conflated.
Can I appoint a trusted employee instead of a lawyer?
For extrajudicial representation, yes, within what the articles of incorporation allow. For judicial representation conferred by appointment, Article 260 requires a person qualified to act as attorney at law.
Decide who signs before you incorporate
Legal Boutique acts as local legal representative for foreign-owned Salvadoran companies and handles company formation and powers of attorney granted from abroad. See our English-speaking legal services in El Salvador. Virtual or in-person consultations from $30. Contact us or message us on WhatsApp at +503 7987-1398.
This article is for informational purposes only and does not constitute legal, tax or investment advice for any specific situation.