Corporate Law at Honduras
Here’s a detailed overview of Corporate Law in Honduras:
Corporate Law in Honduras
1. Legal Framework
Honduras follows a civil law system, with corporate law governed primarily by the Commercial Code of Honduras.
The Commercial Code regulates the formation, management, and dissolution of companies.
Additional laws related to foreign investment, taxation, and labor also impact corporate operations.
Honduras is a member of the Central American Integration System (SICA), which promotes some harmonization of business laws regionally.
2. Types of Companies
The most common company forms in Honduras include:
Sociedad de Responsabilidad Limitada (S. de R.L.) – Limited Liability Company
Popular among small and medium-sized businesses. Liability is limited to contributions.
Sociedad Anónima (S.A.) – Corporation or Public Limited Company
Suitable for larger companies; can issue shares to the public.
Sociedad en Comandita – Limited Partnership
Sociedad Colectiva – General Partnership
Branch of Foreign Companies – Foreign entities can register branches to operate locally.
3. Company Formation and Registration
Companies must register with the Mercantile Registry (Registro Mercantil) under the Ministry of Industry and Commerce.
The registration process involves:
Drafting and notarizing the articles of incorporation or company bylaws.
Providing identification of founders, directors, and shareholders.
Proof of company address.
Depositing the initial capital.
The registration leads to obtaining a Tax Identification Number (RTN) and business licenses.
4. Corporate Governance
S. de R.L.: Managed by one or more managers (gerentes), who may or may not be shareholders.
S.A.: Managed by a Board of Directors and General Shareholders’ Meetings.
Companies must hold annual meetings to approve financial statements and make key decisions.
Financial statements must comply with the International Financial Reporting Standards (IFRS).
5. Capital Requirements
S. de R.L.: No minimum capital specified by law, but bylaws usually set a capital amount.
S.A.: Minimum capital typically around Lempiras 20,000 (~USD 800–1,000), but varies by company.
6. Foreign Investment
Foreigners can own 100% of companies in Honduras.
The Foreign Investment Law protects foreign investors and provides guarantees like no expropriation without compensation.
Certain sectors may require special permits or licenses.
7. Taxation
Corporate tax rate is approximately 25% on net profits.
Other taxes include Value Added Tax (VAT) at 15%, withholding taxes, and payroll taxes.
Honduras has tax treaties with some countries to avoid double taxation.
8. Dispute Resolution
Business disputes are handled by the commercial courts.
Arbitration is an accepted and encouraged alternative dispute resolution mechanism.
The judiciary is generally competent but can be slow due to backlogs.
9. Challenges
Bureaucracy and delays in administrative processes.
Corruption and legal enforcement can pose challenges.
Infrastructure and regulatory environment are improving but still developing.
Summary
| Aspect | Details |
|---|---|
| Governing Law | Commercial Code of Honduras |
| Common Company Types | S. de R.L., S.A., partnerships |
| Capital Requirements | S.A.: Minimum approx. L 20,000 |
| Foreign Ownership | 100% allowed |
| Corporate Tax Rate | Approx. 25% |
| Registration Body | Mercantile Registry |
| Legal System | Civil Law |
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