SIMPLIFIED JOINT STOCK COMPANIES VERSUS ANONYMOUS COMPANIES

In El Salvador, the corporation (Sociedad Anónima) has traditionally been the preferred structure for the corporate sphere; however, in 2023, with the reforms to the Commercial Code through Legislative Decree No. 905, the figure of Simplified Joint Stock Companies (SAS) was created, very similar to corporations. This was done with the aim of facilitating the formalization of micro and small businesses that generally could not comply with the obligations required of corporations. Therefore, in this article, a brief comparison between both structures will be made.

The main difference between the two structures is the simplified incorporation process of the SAS, since they can be incorporated by one or more persons, whether natural or legal, through a form provided by the National Registry Center and are not required to have a minimum capital; whereas corporations must be incorporated by public deed, with two or more shareholders present, and require a minimum capital of $2,000.

In terms of corporate governance, corporations are composed of a General Shareholders' Meeting as the highest body, which also appoints a Manager or Board of Directors, as they prefer, providing greater control over the company's actions. SAS, on the other hand, offer more flexibility since, if the company has a single shareholder, that person may perform all roles within it, commonly known as a sole administrator. In these cases, decision-making becomes easier; however, since all responsibility falls on one person, it can make the structure somewhat more informal and create difficulties in accessing the benefits offered, as entities will impose much stricter controls than on a corporation.

Regarding accounting obligations, SAS have the same obligations as corporations; however, some exceptions have been established. For example, SAS with assets of less than $12,000 may handle accounting themselves or appoint someone to do it, while corporations must have their accounting carried out by a duly authorized accountant. Similarly, an external auditor is mandatory for corporations, but not for SAS when, due to their size, they are classified as microenterprises—that is, when their annual gross sales do not exceed 482 minimum wages.

Another aspect to consider is the simplified dissolution and liquidation process of SAS, since once the shareholders make the dissolution agreement and 15 days have passed since registration in the Commercial Registry, the liquidators will distribute the company’s assets within a period not exceeding thirty business days, and the company will be considered dissolved. This shortens the time compared to corporations, which must follow a dissolution and liquidation process that can take up to two years.

In conclusion, corporations entail more responsibilities but will continue to be the most widely used by large companies or businesses seeking to obtain all the commercial benefits granted in our country. However, the SAS structure can be a solution for small companies that do not yet have the capacity to assume all the responsibilities of corporations, and as more regulations are established, SAS could become the most widely used structure in our country.