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Company Law
El Salvador has a very formalistic legal system. The legal processes regarding company law are no exception. Incorporation is used for both constructive and destructive purposes: to develop a legitimate entrepreneurial idea and to dodge the application of the law. Public companies do not exist and protection for minority shareholders is weak. In addition, the judicial system is unreliable.
However, the Commercial Registry is very efficient and the entrepreneurial culture of Salvadorans is reflected in a strong private sector that has succeeded in international markets. TACA, perhaps the second-largest privately owned Latin American airline was formed in El Salvador and the largest Central American bank, Banco Agrícola, originated in that country.
Both formal and informal SMEs are a driving force of the economy, although they lack access to customized financing mechanisms.
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