Country: El Salvador
Duration: 2021-2023
Themes: Strengthening the Business Enabling Environment
Cross Cutting Themes: Gender, Climate, Digital
Anticipated Impact Areas: Quality Jobs, Private Investment and Productivity
The Challenge:
El Salvador is embarking on an ambitious economic reform agenda to overcome decades of low growth and stagnant productivity, combined with the devastating impact of the COVID-19 crisis. The country is facing challenges with its business environment that hinder the development of the private sector and the jobs it can create. Regulations need to be updated and reforms need to be implemented to encourage investment and protect investors while boosting the adoption of digital business models in the public and private sectors. In addition, there has been limited focus on incorporating climate change adaptation and mitigation measures in the economy.
The Mission:
In El Salvador, a C-JET grant provided technical assistance to modernize the country's corporate legal framework. This included updating the Commerce Code to strengthen protections for minority investors, enable digital compliance, and introduce a simplified incorporation form to support entrepreneurship and formalize MSMEs. The grant also supported reforms to the e-commerce law, enhancing transparency, consumer protections, and legal certainty for online transactions. A technical working group—comprising officials from the Ministry of Economy, Ministry of Finance, National Registration Center, and the World Bank—led the reform, with the World Bank providing guidance based on international best practices.
A key outcome was the introduction of the Sociedad por Acciones Simplificada (SAS), a flexible, user-friendly corporate structure ideal for startups, family businesses, and MSMEs. The SAS allows streamlined registration without mandatory intermediaries, offers limited liability, electronic incorporation, optional standard bylaws, and alternative dispute resolution. The Commerce Code amendments also expanded minority shareholder rights.