Any foreigner legally residing in the country can engage in business activities as sole proprietorship under the provisions of the Salvadoran Commercial Code. Under this business structure personal liability is unlimited. Both can be of variable capital, i.e. capital can be increased by decision taken in a shareholders general assembly. Under this form, all partners are liable jointly for all obligations contracted under the commercial firm. Limited partners are liable only up to the amount of capital invested, where as general partners have unlimited liability for the firm s debts.
Individual shareholders are only liable up to the amount of equity held.
A corporation can be organized as a company of fixed capital, abbreviated S. A., where capital can only be increased reforming the company s statutes, or variable capital, S. A. de C.V., where the capital can be increased by a shareholders general assembly decision. Variable capital corporations are the most popular form of company structure in El Salvador. The approval must be granted by the Ministry of Economy, which will issue the company an operating authorization. Twenty five percent of each share issued must be paid in cash. A board of directors must be elected by the shareholders.