SAS: NEW FORM OF COMPANY INCORPORATION

Since February 2024, the reforms made to the Commercial Code came into effect, introducing the figure of 'Simplified Joint Stock Companies,' better known as 'SAS.

What is an SAS? The SAS are legal entities that can be created by the will of one or more natural or legal persons (art. 305-A, inc. 1). Their creation aims to innovate and facilitate the procedures and other formalities required by law so that micro, small, and medium-sized entrepreneurs can formally conduct commercial activities through the figure of a 'company. Centro Nacional de Registros (cnr.gob.sv)

This new corporate figure will make commerce easier for entrepreneurs who previously were excluded from the Commercial Registry for not meeting the established requirements. It is necessary to clarify that this company must comply with the obligations established for the social merchant, which can be found in Art. 6 of the Commercial Code.

Characteristics:

1. It can have a defined or indefinite duration of existence. (Art. 305-B, Roman II).
2. The registered office must always be established; however, if this information is omitted, it is understood by default to be in the department of San Salvador Centro. (Art. 305-B, Roman III).
3. In the event that the corporate purpose is not specifically established, it will be understood that the company is engaged in any type of legal activity.
4. The signature to be used in transactions between the company and the Commercial Registry (CNR) must be an electronic signature. certified electronic signature. These signatures can be obtained through the Banco Central de Reserva (bcr.gob.sv), this link provides the steps to follow to obtain it.
5. The company's capital is divided into shares. These shares are securities that allow us to certify, exercise, and transfer our status as shareholders. These shares can be represented either by physical certificates, such as registered shares, order shares, bearer shares, and bonds; however, in SAS, these shares can also be electronic. (Art. 305-D, inc. 1). Similarly, financial statements can also be presented electronically (Art. 305-Y).
6. If it is a single-person company, that person performs all the functions within the company (Art. 305-J, inc. 2). Additionally, if they have assets under $12,000, they can handle the accounting themselves (Art. 305-Z, inc. 2).
7. Micro-entrepreneurs are not required to appoint an auditor (Art. 305-P).

Similarities between SAS and other companies::

1. They have independent assets and legal personality, and this personality is obtained upon registration with the Commercial Registry.
2. They issue classes and series of shares, whether privileged or non-voting (Art. 305-F).
3. They have a legal reserve (Art. 305-G).

Advantages::

1. The incorporation, modification, transformation, liquidation, and other corporate acts of this company are carried out through forms (Art. 305-A, inc. 3), meaning that everything is done online and can be done easily without the need for the formalities that are normally used. These forms are only provided by the Commercial Registry (Art. 305-B, inc. 1).  
2. The minimum capital required to establish this company is $1.00 (Art. 305-D, inc. 2 C.com), and the payment of this capital can be made after registration (Art. 305-D, inc. 3 C.com). However, contributions of labor can also be made.

• Single-Person Company: This company can be constituted by a single person (Art. 305-A, inc. 1).

Disadvantages:

1. Being a new law, it can create a lack of awareness in the market, leading to certain doubts and less acceptance among investors. Additionally, there is uncertainty about whether these companies are eligible for loans, since if they can be constituted with just $1.00, investors or creditors might not see viability in granting any type of loan.

• By being committed to the forms provided by the Commercial Registry, certain aspects can be limited, for example, in the drafting of bylaws, since they are pre-filled forms that cannot be customized.
• These companies are limited in certain business activities, such as issuing bonds or debentures, conducting corporate reorganizations like mergers or demergers, and they cannot register in the Public Securities Registry or trade on the stock exchange, according to Art. 305-H C.COM.

In summary, this type of company can simplify the registration and execution of certain business activities. However, it is important to consider that the credibility, trust, and assurance that potential investors, creditors, and even clients have in these companies may be quite low.