TerraLex Cross-Border Guide to Cross-Border Merger & Acquisition Guide

There are no foreign investment restrictions. Guatemala grants the foreign investor the same legal treatment as the national investor (Article 3 of the Law of Foreign Investment).

This is governed by the Law of Free Exchange of Currencies Law (Congress Decree 90-2000). The disposal, ownership, contracting, remittance, transfer, buying, selling, collection and payment of and with currencies is allowed. If an entity wishes to engage in the exchange of currencies regularly, it must by authorized by the Monetary Board and will be supervised by the Superintendence of Banks (articles 1 and 3 or the Free Exchange of Currencies Law).

1. Law for the Promotion and Development of Export and Maquila Activities (Decree 29-89) This law aims to promote export and maquila (manufacturing for export) activities by offering significant tax exemptions to companies involved in these sectors. The benefits include exemptions from import duties and Value Added Tax (VAT) on inputs, raw materials, and machinery used in the production of goods intended for export. This regime allows companies to be more competitive in the international market.

In addition to maquila and industrial production activities, the law also includes contact centers and call center services within its scope. These contact centers, which provide services to international markets, can benefit from the same tax incentives as traditional manufacturing activities. This makes Guatemala an attractive destination for outsourcing and BPO (Business Process Outsourcing) companies that offer customer service, technical support, and other remote services for clients abroad.

2. Free Trade Zones Law (Decree 65-89) Free trade zones in Guatemala are designed to encourage investment in specific areas of the country by creating favorable tax conditions. Companies operating within these zones enjoy exemptions from income tax, VAT, and import duties. These benefits are available to companies engaged in the production and commercialization of goods primarily intended for foreign trade. Free trade zones also promote technology transfer and job creation, driving economic development.

3. Law of Incentives for Renewable Energy Projects (Decree 52-2003) This decree promotes investment in renewable energy projects by offering tax benefits to companies developing clean energy initiatives such as hydroelectric, solar, wind, and biomass projects. Incentives include exemptions from income tax and import duties on equipment and technology used for renewable energy generation. Guatemala thus seeks to encourage the use of sustainable energy resources and reduce its dependence on fossil fuels.

4. Law of the Santo Tomás de Castilla Free Trade Zone (ZOLIC) (Decree 22-73) This special regime, located at the port of Santo Tomás de Castilla, provides a favorable foreign trade environment through tax exemptions for companies engaged in industrial and commercial activities. Businesses operating in the Santo Tomás de Castilla Free Trade Zone are exempt from paying income tax, VAT, and import duties, making it an attractive destination for investors interested in commercial and logistics operations.

5. Law of Tax Incentives for Electric Mobility (Decree 40-2022) This legislation aims to promote and facilitate the importation, sale, and use of electric vehicles, hybrid vehicles, hydrogen-powered vehicles, and electric transportation systems in Guatemala, with the goal of diversifying the energy matrix and reducing greenhouse gas emissions.

The law grants exemptions from VAT, the Specific Tax on the First Registration of Land Motor Vehicles and the Circulation Tax.

Guatemala does not have regulation regarding management representation or consultation in relation to corporate transactions. The accuracy of the information represented by the companies must be verified by the parties involved in the transactions. The information can be subject to private agreements such as non-disclosure agreements, audits, due diligence verification, etc.

Consultation is not regulated in Guatemala regarding corporate transactions. Generally, it is allowed for parties involved in the transactions to be assisted by a lawyer, accountant, and other professionals for consultation, as long as it is not against the private agreements between the parties for the transaction.

Termination of employment contracts occurs when one or both parties decide to terminate the labor relationship, either by the will of one or both of the parties, with or without just cause given by the other party. The way the employment contract is terminated can generate responsibility for one of the parties.

• The employment contracts are terminated without responsibility when:

  • For reaching the term the contract was set for or for finalizing the work agreed when hired.
  • By causes established in the contract.
  • By mutual agreement (article 76 Labor Code).

• One of the parties can terminate the contract by dismissal that can be either by direct or indirect dismissal.

  • The direct dismissal is justified when the employee engaged in one of the activities established in article 77 of the Labor Code or any other agreed in the contract or other work regulations.
  • The direct dismissal is unjustified when the employer terminates employment without any legal just cause.
  • The indirect dismissal is when the employee terminates employment without responsibility of his part, with a just caused incurred by the employer according to article 79 of the Labor Code.
  • When the employee decides to terminate the contract and resigns, the employee needs to give written notice to the employer.

• The death or incapacitation of the worker, force majeure, acts of god, insolvency, bankruptcy, or liquidation of the company also constitutes the termination of the employment contract.

Redundancies and layoffs are interpreted by Guatemalan labor law as an unjustified termination by the employer. The employer will have to pay to the employee all of his labor benefits (salary, annual bonus, Christmas bonus, and vacations) and a severance for time worked equal to one salary for every year worked (article 82 Labor Code).

The sale of shares is exempted from VAT and stamp duties (article 7 Value Added Tax Law), however, a 10% tariff of income tax will be applied when the sale generates a capital gain to the owner of the shares (articles 83, 84 y 82 of the Income Tax Law). The issuance of shares is exempted from VAT and stamp duties (article 7 Value Added Tax Law). The issuance and subscription of shares is not a taxable event under the Income Tax Law.

Under Decree 32-2024 (Competition Law), Guatemala will implement merger control provisions in two phases:

• As of January 1, 2025, the law entered into force only for institutional and promotional provisions (including the creation of the Superintendency of Competition).
• The sections related to merger control and anticompetitive practices will become fully effective on December 8, 2026.

Once in force, prior approval from the Superintendency will be required for economic concentrations that meet either of the following thresholds (Article 16):

1. Combined total assets in Guatemala of at least two parties exceed 7 million times the current daily minimum wage for non-agricultural activities.
2. Combined annual revenues in Guatemala of at least two parties exceed 9 million times the same wage.

Authorization must be requested before the legal act is executed, control is acquired, a merger is formalized, or—if the transaction is foreign—before it has legal or material effects in Guatemala.

According to Guatemalan law, the sale of a private company’s shares does not, by itself, require specific formal documentation for signing or closing. Unless otherwise provided in the company's bylaws, shares in a Guatemalan corporation (sociedad anónima) are transferred by endorsing the share certificate, which must then be submitted to the company for the update of its shareholder registry (Libro de Registro de Acciones Nominativas), pursuant to Articles 119 and 128 of the Commercial Code.

However, if the share sale exceeds the financial thresholds established in Article 16 of the Competition Law (Decree 32-2024)—which will become enforceable on December 8, 2026—prior clearance from the Superintendency of Competition will be mandatory before closing. Transactions that qualify as economic concentrations without such clearance, once the law is in force, may be subject to penalties.

Until that date, no antitrust filing is required, but large transactions should still be assessed in light of future compliance.

In Guatemala, there are no general restrictions on foreign or local acquisitions of private companies at signing or closing stages. However, certain regulatory and legal considerations must be observed:

1. Sector-Specific Regulation: Industries such as banking, insurance, telecoms, mining, and energy require prior authorization from the relevant regulatory authorities for share transfers or changes of control.
2. Competition Law (Decree 32-2024): As of December 8, 2026, share acquisitions that result in a change of control and exceed financial thresholds (Article 16) must be pre-cleared by the Superintendency of Competition. Signing can occur before that, but closing is prohibited until clearance is granted.
3. Real Estate or Land Ownership by Foreigners: Although foreign individuals or entities can own property, acquisitions near borders may be subject to restrictions under Article 123 of the Constitution.

Advantages of Guatemalan Jurisdiction

• No general FDI screening or government approval for private M&A.
• Flexible corporate structures under the Commercial Code.
• No notarial formality required for share sale contracts, unless agreed by the parties.

Guatemala doesn’t have any requirements regarding the gap between signing and closing of a deal. The parties can arrange the timing of the transaction as it suits its interest better.

Guatemalan regulation doesn’t require the deposit of money or an intermediary for the closing of M&A transactions.

The personal identification document is sufficient for nationals to establish their identity. In the case of foreigners, they can present proof of their identity with their passport. Regarding the authority to sign, a proxy duly notarized and apostilled is enough to prove the authority to sign for foreign companies. For a national company, the legal representative must have a notarized appointment by the board of directors or shareholders assembly and the appointment must be registered at the Mercantile Registry of the Republic of Guatemala. In both cases, the documents should be reviewed to verify that the legal representative has enough powers execute the transaction.

All contracts that will be executed in Guatemala and subject to Guatemalan law must be written in Spanish. The purchase and sale of shares according to Guatemalan regulation is not subject to execution formalities for its documents. It only requires the endorsement of the share certificate and to notify the company for its shareholder registry to be updated, unless the company’s bylaws state otherwise.

Nevertheless, it’s a usual practice to notarize the signatures of the stock purchase agreement so as to be able to use the stock purchase agreement as an enforceable title in court should either party not fulfill their obligations according to the contract.

If it is a sale of assets, it can be subject to other formalities, such as executing the sale in a public deed. This will depend if assets are subject to registration in a government entity or registry, for example the Real Estate Registry.

Regarding formalities for incorporated companies, the company needs to have the appropriate representation with the authority to sign. For a national company, the legal representative must have a notarized appointment by the board of directors or shareholders assembly, and the appointment must be registered at the Commercial Registry of the Republic of Guatemala. For a foreign company, a proxy duly notarized and apostilled is enough to prove the authority to sign. In both cases, the documents should be reviewed to verify that the legal representative has enough powers execute the transaction.

However, there are no specific formalities for the execution of documents. Except when they are acts that must be registered, for example the sale and purchase of real estate, in which case it is required to be documented in a public deed before a notary.

All contracts that will be executed in Guatemala and subject to Guatemalan law must be written in Spanish. The individuals must show proof of their identity.

All contracts that will be executed in Guatemala and subject to Guatemalan law must be written in Spanish. Both foreign individuals and legal entities can acquire participation as partners or stockholders in Guatemala in any form, even when they don’t have a domicile in the country (Article 19 and 218 Commerce Code).

All contracts that will be executed in Guatemala and subject to Guatemalan law must be written in Spanish. A share purchase agreement is considered a private transaction and does not require any formality regarding the document, therefore, it is the parties’ decision to formalize the agreement in a private document or public deed. However, if the agreement is executed in a private document with certified signatures by a notary or in a public deed, they are considered enforcement titles and, in case of a debt or guarantee, enforcement and the applicable enforcement procedure shall be an executory action. The notary may be required in a share purchase agreement to certify or recognize the signature of the appearing parties.

If an asset purchase agreement involves the purchase of real estate, it is required by law to be executed in a public deed and registered before the Real Estate Registry of Guatemala. If the asset purchase agreement involves different assets (excluding real estate), it does not require any special formality and is only required by the parties to formalize the agreement in a private document or public deed. Please refer to the above mentioned paragraphs in this question.

Regarding the directors’ appointments of mercantile entities, according to article 45 of the Commerce Code of Guatemala (Decree number 2-70), the directors are appointed by its members or shareholders. This must be done through a members’ or shareholders’ resolution to be valid, which may be registered before the Mercantile Registry of the Republic of Guatemala. The director must be given enough powers to proceed with the transaction.

If the deal transaction is executed in a private document, the notary may be required to certify the signatures of the parties, if the parties request it. Considering this, the notary does not have to fulfill any other specific powers.

If the deal transaction requires the agreement to be executed in a public deed, the notary has to authorize the document into which it attests the identification of the parties, the agreement, and documents that were presented to give power to the matters being agreed.

The notary fees are negotiable between the parties. They may be paid equally by the parties or by one party (whether it is the buyer, lessee, etc).

According to article 106 of the Notary Code (Decree number 314), if there is no agreement between the parties regarding the notary´s fees, the legal fees shall be subject to the tariff given by law.

According to article 7 of the Lawyers, Arbitrators, Barrister, Judicial Powers of Attorney, Experts, Interventors, and Depositaries Tarriff Law (Decree number 111-96), the matters that are given under undetermined value (considering that the law establishes the litigious matters as matters with determined value), there will be a charge from Q.500 to Q.15,000 (approximately US$64.00 to US$1,900.00) depending on the importance of the business.

In Guatemala, all lawyers are also notaries, if they pay the annual fee. Therefore, there is a wide range of available notaries. This makes it more efficient in the deliverables of the transaction and should not impact the transaction timetable.

If it is a corporation (sociedad anónima), the share certificate of the stockholder must be signed and endorsed in favor of the transferee and make a written request to the Board of Directors requiring the issuance of a new share and registration into the shareholders registry book. Please refer to answer 9 regarding the taxes applicable to transfer of shares in Guatemala.

The process of changing directors must be authorized through a resolution of members or stockholders of the company. A legal affidavit of the appointment of the new director or officer shall be executed by the notary based on the resolution of members or shareholders. Such appointment affidavit must be registered before the Mercantile Registry. A Stamp Tax of Q.100 once and Q.0.50 per page, and a Notary Stamp Tax of Q.10 (in total, approximately US$14) must be paid for each appointment affidavit.

In a limited liability company, an amendment to the articles of incorporation must be made to include the new shareholder (Articles 81, 119 and 128 of the Commerce Code). Please refer to the prior question regarding the taxes applicable to transfer of shares in Guatemala.

The transfer title to shares may be made by a purchase, assignment, exchange, or donation agreement of the shares.

The legal representative appointed, must have sufficient powers and authorization from the company to execute such documents at the signing/closing meeting. Yes, the company may appoint a different legal representative to execute documents at the signing and/or closing meeting as long as each one is duly empowered and authorized by the company.

Please also refer to the prior response regarding these requirements.

According to the Civil Code of Guatemala, powers of attorney have the following restrictions: - A power of attorney may not be given to donate or to grant a will (Article 1688);

• The powers of attorney of minors, incompetent, or missing persons may not be general and may only be given for determined matters (Article 1691);
• A power of attorney may not be granted for several persons when there is a collision of rights or to represent both parties in the agreement as long as there is authorization from the grantor; and, (Article 1694);
• Spouses may not grant a power of attorney regarding communal assets or for agreements which oblige both persons. (Article 1695).

The evidence of due execution are the original documents or the certified copies given by a notary. The notary certifies the original document as long as the original document was presented before him so its authenticity may be certified.

Regarding the faxed/email documents, article 11 of the Law for the Recognition of Communications and Digital Signatures (Decree number 47-2008), states that all electronic communications are admissible in court, and their efficiency, validity, and obligatory execution of proof shall not be denied in any administrative, judicial, or private matter, even if the original was not presented.

Yes, digital signatures are admitted as evidence of execution as long as the requirements established in article 8 of the Law for the Recognition of Communications and Digital Signatures (Decree number 47-2008) are fulfilled. According to article 8, a digital signature is valid if:

• a. A valid method is used to determine the identity of the party and to determine its acceptance in the agreement;
• b. If the method used is reliable and is appropriate for the purposes of the agreement or it has been proven that the practice by its own fulfills requirement a.

Additionally, article 33 of the same law indicates that the signature must be certified by an entity provider of certification services which has the safety equipment to create or reproduce such signature. According to article 40, these providers must be authorized by the Registry of Entity Providers of Certification Services of the Ministry of Economy in Guatemala. Such registry was created on 2009, however, it is still not yet enforceable and has not registered any entity provider of certification services.

In Guatemala, counterparts are admissible as long as the law does not require a special formality for the validity of a determined agreement (i.e. purchase of real estate). According to articles 1517 and 1518 of the Civil Code of Guatemala, an agreement is valid when there is an agreement between the parties to create, amend, or extinguish an obligation. The form that the parties agree to document this agreement is free as long as there is no any other formal requisite for its validity.

Therefore, counterparts are not admissible in agreements that require special formalities for their validity. Such as the power of attorney, this requires it be taken before public deed or a deposit agreement which requires the delivery of the matter given under deposit.

Considering that agreements that are executed by counterparts are not executed in public deed or with signatures certification, they shall not be considered executive titles.

Guatemalan law does not use the term “undertakings” in the same formal sense as some jurisdictions (e.g., EU competition law). However, under Decree 32-2024 (Competition Law), once it enters fully into force on December 8, 2026, the Superintendencia de Competencia will have authority to impose binding commitments (conditions or remedies) as part of:

1. Merger control clearances – Article 19 allows the authority to authorize a concentration subject to undertakings, such as divestitures, behavioral restrictions, or access obligations. – These conditions must be proportional and directly related to addressing the anticompetitive effects.
2. Resolution of anticompetitive conduct – In practice, parties may also offer voluntary commitments to avoid or terminate a sanctioning procedure, though the law does not yet detail a formal settlement process.
3. Enforceability – Once imposed or accepted, such undertakings are legally binding, and non-compliance may lead to cancellation of clearance (in the case of concentrations) or the imposition of fines and sanctions.

Thus, while Guatemala is still in the early stages of applying competition remedies, the framework for strict enforcement of undertakings exists and will be operative as of late 2026.

Closing of the transaction shall be subject to the prior fulfillment of any outstanding legal, regulatory, or contractual formalities required to produce full legal effects, including, where applicable, approvals from competition or sectoral authorities. Until such formalities are fulfilled, the transaction shall remain valid but not enforceable with respect to ownership transfer or payment obligations.

There is no formality regarding the share sale closing. However, please refer to answer 24 to formalize the share transfer.

No, there are no legal opinions, statutory requirements, or formal rules mandating the issuance of legal opinions for the due execution of agreements or transactions under Guatemalan law, unless specifically required or agreed upon by the parties.

In a private share acquisition, Guatemalan law does not require public registration of the share transfer. However, in private share sales, post-closing steps are generally limited to:

1. Updating the Shareholder Register (Libro de Registro de Acciones Nominativas), required for enforceability under the Commercial Code.
2. Filing board or legal representative changes at the Mercantile Registry, if applicable.
3. Withholding and reporting capital gains tax (ISR) if the seller is a non-resident.
4. Regulatory notifications in case of sector-specific licenses. Starting December 8, 2026, certain share acquisitions that qualify as concentrations must receive prior clearance before closing. If clearance is granted with conditions (undertakings), their monitoring may involve post-closing compliance—but no new filing duties are triggered solely by the law.

In share and asset sales, the timetable or timeframes are determined by the parties.

Under the laws of Guatemala, a non-compete clause or regulation may not be enforceable since according to article 43 of the Political Constitution of the Republic of Guatemala, freedom of industry, commerce, and work is recognized as a constitutional right. This constitutional right is only limited by any limitations given for social motives or national interest that are given by laws. Therefore, a non-compete clause may be considered contrary to such liberties given to all persons as a constitutional right.