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[null,"Prepared By:","Contributors:"]
[null,"Mayora & Mayora, S.C."]
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["Social Enterprise Law Surveys"]
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["Report Generated: 5/2/2025"]
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["View your report results on next tab"]

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["Question","Guatemala"]
["I. Enterprise Form"]
["What jurisdiction(s) do you practice in?","Guatemala \n"]
["What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade or business (rather than for investment or holding company purposes)? Please briefly describe these forms. a. Of these, which are the most common for-profit organizational forms used by Enterprises seeking financing from investors and that will have multiple owners? b. Other than organizational forms specifically designed for Social Enterprises (and discussed below under Question 4), which, if any, are the most common for-profit organizational forms used by Social Enterprises?"," The most commonly used types of corporate organizational forms for such purposes are the Sociedad Anónima (a Stock Corporation) and the Sociedad de Responsabilidad Limitada (a Limited Liability Company). Both are legal entities separate from their constituents. There are also partnership types available under law, but they are rarely used in practice. Foreign companies can operate through local branches or subsidiaries. \n\n Stock Corporation : \n\n \n\t The Stock Corporation is the most common corporate structure in Guatemala. According to the Guatemalan Commerce Code, the equity capital of this entity is divided into shares. Shareholders may transfer their interests freely, unless there is an express agreement otherwise. Unlike an LLC, the Deed of Incorporation does not have to be updated for each share transfer. The shareholders’ liability is limited to the shares owned. Each share provides a right to vote to a shareholder. The corporate capital can be categorized into authorized, subscribed and paid-in capital. The authorized capital is the sum up to which the corporation can issue shares of stock without modifying its Deed of Incorporation. Different from an LLC, a Stock Corporation does not have to pay the full amount of authorized capital upfront. The shareholders may choose to subscribe, totally or partially, to the amount of authorized capital. Subscription means that the shares are issued, but only 25% of their value is required to be paid. The paid-in capital is the actual value of contributions made by the shareholders. The minimum amount of paid-in capital necessary to start a Stock Corporation is Q.200.00 (approximately US$27.00). It is possible to not have a Board of Directors and appoint only a Sole Administrator, who will hold the same powers and obligations as the board members. \n \n\n Limited Liability Company : \n\n \n\t According to the Guatemalan Commerce Code, the equity capital of a Limited Liability Company is divided into ownership interests, not represented by shares. Members may transfer their interests, but there is a right of first refusal in favor of the other members. Additionally, all members have to unanimously agree to the transfer, unless there is an express agreement otherwise in the Deed of Incorporation. The Deed of Incorporation has to o be amended if the members of the Limited Liability Company change. \n\t The members have limited liability up to the amount of their capital contributions, unless they expressly elect to be liable for more. The minimum amount of capital necessary to start an LLC is the same as for a Stock Corporation. This capital must be paid in full before the Deed of Incorporation is issued. For an LLC, there is a maximum of twenty (20) members. Votes are by person and not by percentage ownership interest, unless expressly agreed otherwise. In accordance with Guatemalan tax law, the LLC may enable foreign investors to avoid international double taxation in the United States through the “check-the-box regime.” Consequently, the members may be able to set-off any United States tax liability against any Guatemalan taxes paid. \n \n\n a. Enterprises that seek financing from investors and will have multiple owners tend to form Stock Corporations. \n\n b. Some Social Enterprises may use the Sociedad Civil (Civil Corporation) form, which is similar to a Stock Corporation but governed by principles of Civil Law instead of Commercial Law. Among these, the most important is the fact that the liability of the constituents or members is not limited to the amount of their contributions and there are no shares issued. \n"]
["Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required to or allowed to consider (e.g., interests of employees, customers, the environment, etc.)?","The statutory legal framework (Commercial Code) dates from 1970, has suffered few amendments, and does not explicitly contemplate these more recent developments of Commercial Law.\nHowever, the interests of employees must be considered inasmuch as the Constitution and Labor Code, among others, grant special minimum legal protections to employees, which may in no case be diminished. This is even more relevant if the company has a Collective Bargaining Agreement and a Workers Union.\nThere is also a Consumer Protection Act that, although not requiring direct consideration, balance or prioritization of customer interests at the managerial level, does establish mandatory protections which companies must abide by in their daily operations and may give rise to liabilities.\nEnvironmental and other social interests are also not directly developed in business law frameworks, but have been increasingly enforced through judicial rulings, including and especially those of the country’s Constitutional Court.\nFurthermore, judicial rulings have also required specific companies to implement compliance and anti-corruption mechanisms and control, as a result of various criminal cases involving private actors linked to State corruption.   \n"]
["Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so: a. What type(s) of organizational forms are they? b. How do they materially differ from the most closely analogous traditional organizational form? c. What are the main benefits for founders and funders of such organizational forms? d. Are there any restrictions on the use of these organizational forms (such as profit-caps, stakeholder involvement and impact reporting)? If there are, what are they? e. Are there any material differences in timing or costs for forming a Social Enterprise versus a traditional Enterprise? f. How prevalent and well known are Social Enterprise forms?","Yes.\na. There are specific legal frameworks for NGOs and Cooperatives, as well as the general civil law rules for Associations and Foundations.\nb. Both are legally required to be non-profit. However, Cooperatives do have an enterprise and distribute profits among their associates, although the law states that it is not for profit but for service to their associates. NGOs may in no case do any such or similar distribution.\nc. The main benefits of Cooperatives are their tax exemptions and access to government aid programs. NGOs have been a vehicle widely used for social promotion activities and foreign cooperation.\nd. Restrictions on profits and distribution are those mentioned above. When they receive and administer public funds, they are subject to special reporting obligations applicable to all public expenses.\ne. Yes. A traditional enterprise (Stock Corporation or LLC) is usually registered by the Commercial Registry and the Tax Authority rather fast, and there have even been recent legal amendments to make registration even easier. NGOs, on the other hand, must be registered at the Legal Entities Registry (REPEJU), which is widely known for its much more lengthy and difficult processes.\nf. NGOs and Cooperatives are widely known. Cooperatives have increased their activities in financial and social entrepreneurship sectors, and NGOs have a longstanding tradition in promoting social and environmental causes.\n"]
["Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporate, tax or other perspective? b. Are there any material benefits of, and/or restrictions on, using a Nonprofit form for Social Enterprises that does not apply to Nonprofits that are not Social Enterprises? c. Is there any type of “hybrid” Nonprofit form that requires less reporting and/or allows for faster formation? If so, please describe the drawbacks of utilizing this form (i.e. fewer tax benefits). d. How prevalent is the use of Nonprofits for Social Enterprises?","Yes.\na. No. There are other possible types of Nonprofit organizations in Guatemala, but they fall outside the category of Cooperatives and “NGOs as such” (though also mentioned in the NGO Act) and may cover issues such as neighborhood committees, foundations, associations, etc.\nb. No.\nc. No.\nd. Social Enterprise is usually carried out through Cooperatives and NGOs. Other forms, such as Foundations and Associations are usually more oriented toward philanthropy, sports and recreation, etc.\n"]
["Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.","Yes. Cooperatives have access to tax exemptions and government aid, but are also subject to special government oversight through the National Cooperatives Institute (INACOP). \n"]
["Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.","Reporting requirements are not so much unique, but analogous to those of other organizations. The main difference is the government bodies to whom they report and register: Cooperatives are subject to INACOP, NGOs to the General Comptroller’s Office (Contraloría General de Cuentas).\n"]
["In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.","The Constitutional Court replied negatively to a consultation on whether Cooperatives were part of the commercial, industrial and agricultural associations which the Constitution allows to vote for a Member of the Monetary Board (Docket 4476-2008, opinion of January 12th 2009).\nThe Constitutional Court suspended the entry into force of a legal amendment to the NGO Act which would have, according to critics and petitioners, placed undue and discriminatory burdens on NGOs and made them more susceptible to government interference and cancellation. The suspension is currently in place pending the final ruling. (Accumulated Dockets 859, 860, 879, 895, 896, 904, 905 and 1029-2020, rulings of March 2nd and 5th 2020).\n"]
["Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.","Not generally, beyond what was answered on Question 3. There are, however, some specific governance requirements on certain activities under legislation seeking to prevent money laundering and financing of terrorism.\n"]
["Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.","No specifically. \n"]
["Does your jurisdiction have any ESG requirements for investors? If it does, please describe.","No.\n"]
["II. Funding"]
["Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements. b. If they are not, are they permitted to consider such factors? c. What other relevant factors do investors tend to consider (aside from profit motive).","No. They are permitted to consider them. \n"]
["What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?","Grants and charitable investment. Some NGOs receive funding from foreign governments and international agencies and development programs. This has made them politically suspect under some administrations and, according to some observers, led to the attempted legal amendments mentioned in answer to Question 4(j).\n"]
["How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?","Not too prevalent, to our knowledge.\n"]
["What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government funding? b. Is any government funding limited to Enterprises incorporated using Social Enterprise forms?","There is a program run by the Ministry of the Economy to support Cooperatives and small businesses through various efforts, including technical assistance and training.\nThe government contributes funds to INACOP and its General Inspection. There is no specific funding limited to such Enterprises.\nSome NGOs obtain government funding directly from the national budget.\n"]
["Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?","No.\n"]
["To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.","None.\n"]
["How prevalent, if at all, are impact bonds in your jurisdiction?","Not prevelant. \n"]
["In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?","No.\n"]
["Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under applicable statutes?","Crowdfunding is not specifically regulated in Guatemala, though it is also not prohibited. It is in fact practiced through a few local websites, specifically for Social Enterprise.\n"]
["III. Tax"]
["Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full. b. Are they dependent on the Social Enterprise utilized using a specific organizational form (e.g., for profit vs. Nonprofit form)? c. Please describe any other key requirements of the available tax exemptions (e.g., restrictions on sources or uses of funds, restrictions on commercial activities, etc.)."," Cooperatives have specific exemptions in the specific legislation but, in general, they are the same as those included in general tax legislation for all Nonprofits. \n\n \n\t Cooperatives are exempt from stamp tax, VAT, inheritance tax, import duties. They are exempt from income tax on transactions with their associates and with other cooperatives, federations and confederations, not on income from operations with third parties. Nonprofits, such as Associations and Foundations, are exempt from income tax only on income destined solely to the nonprofit purposes. They are taxed for income tax on any commercial activity they may carry out. Donations to Nonprofits are exempt from VAT. \n\t Yes, they must be either Cooperatives or Nonprofits. \n\t See restrictions mentioned in (a). \n \n"]
["Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?","Yes. The donations must be made to Nonprofits duly registered and with a tax solvency certificate. The maximum deduction is 5% of gross income and Q.500,000.00 per year. Deductions for in-kind donations may not exceed those limits nor the acquisition, production or construction cost, without depreciation. Donations must be registered in the accounting books of both the donating and receiving parties.  \n"]
["Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)","No.\n"]
["Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?","No, but it does provide for foreign Nonprofits to register operations in Guatemala.\n"]
["IV. Governmental Infrastructure"]
["Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.","No.\n"]
["What government operational support, resources, training or services, are available for small businesses or Social Enterprises?","There is a program run by the Ministry of the Economy to support Cooperatives and small businesses through various efforts, including technical assistance and training. Some programs are mediated through the Ministry but financed by international cooperation. Similar programs, more specifically of training and operational support, are carried out by INACOP and some federations or confederations of Cooperatives.\n"]
["Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.","Yes, but due to their different nature as legal entities. For example, as explained above, traditional Stock Corporations or LLCs have different registration, reporting and tax regimes from NGOs and Cooperatives.\n"]
["Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.","Only for Cooperatives. INACOP is in charge of supervising compliance with all legal and regulatory matters related to Cooperatives, promoting their organization and providing technical and administrative assistance. It also runs the official registry of cooperatives and General Inspection.\n"]
["Is there a different bankruptcy system available for Social Enterprises?","No.\n"]
["VI. Miscellaneous"]
["What are the average time and filing fees to form an Enterprise in your jurisdiction?","Formation of commercial entities (Stock Corporation, LLC or others) may range between around US$600.00 to US$5,500.00, depending on the amount of authorized capital. Their registration takes approximately two weeks.\nCooperatives and NGOs take longer to register.\n"]
["What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well as the standards there are to maintain them.","There are some incentives and programs specifically related to environmental protection.\nThere is a project headed by the National Protected Areas Council (CONAP) known as \"Guatecarbon\", which seeks to reduce emissions in the Mayan Biosphere Reserve (Reserva de la Biósfera Maya) through activities aimed at reducing deforestation. This project has generated carbon credits to be traded in the international market. AGEXPORT (a collective of Guatemalan exporters) has promoted actions to reduce greenhouse gas emissions, setting up investment agreements through carbon bonds between entities such as Global Carbon Group, Rainforest Alliance and Guatemalan municipalities.\nCongress issued Decree 52-2003, the Incentives for the Development of Renewable Energy Projects Act, which establishes tax, economic and administrative incentives to the effect. These include exemption from import tariffs during pre-investment and construction for up to ten years and from income tax for ten years and issuing of emission reduction certificates.\n"]
["Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.","The formation of commercial entities has become less costly and more expedited in recent years, following legal amendments and modernization of Commercial Registry services since 2018. However, flourishment is still a challenge due to the country’s lack of political stability and legal certainty, which have, on the contrary, become more acute in recent years.\n"]
["Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.","There is currently a “wave” of Social Enterprises and Cooperatives in Guatemala, though their formation is slower than for commercial entities. Their flourishment faces the same challenges.\n"]
["Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Social Enterprises subject to legislation prohibiting inclusion of Social Enterprises in government contract procurement)?","The current obstacles to Social Enterprises are more of an administrative nature (for example, the widely regarded inefficacy of REPEJU). Specific to NGOs, the legal amendments blocked by the Constitutional Court would indeed have added obstacles and made it easier for NGOs to be targeted by the government for political reasons. Since the case is still pending final decision and a new Constitutional Court is set to be installed this year, it could influence the final outcome of that legislation.\n"]
["In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.","Yes. NGOs have been controversial for various reasons. On the one hand, some have been seen by government and other political actors as vehicles for political agendas and economic interests (especially those tied to environmental causes and to international cooperation on socially progressive issues), leading to tensions with authorities and a general bad reputation with certain sectors of the population. On the other hand, some have been accused of serving as vehicles for public officials to direct public funds to personal projects, or as payment for political favors to allies.\n"]
["What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?","See Question 5.\n"]
["What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?","We believe this is more of a corporate cultural issue than legislative, given various national circumstances, including limited government ability to enforce the law. We have seen a trend toward more social and environmental responsibility, especially from multinational companies.\n"]
["Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?","No.\n"]