First Updating 10-26-2001
  A. Legislative Branch
  B. Executive Branch
  C. Judicial Branch
  A. Incorporation of a Company
  B. Establishment of a Branch
  C. Legal Registration and Obligations
  A. Regulatory Entity


The present document is a joint contribution from Price Waterhouse (Honduras) and Honduras International Magazine, aimed at the promotion of direct foreign investment in Honduras. We are aware of the intrinsic limitations of our effort. Doing business is, in any country, related in many ways to almost every law and official regulation, so any attempt to be exhaustive in a single document would not be practical, or even possible. Some sectors of Honduran economy, like airports, energy, forestry and tourism have their specific legal frames that deal with conditions, limitations and incentives to invest. Some of these sectors, as in general the legal structure of the country related to government administration, are undergoing an in-depth process of modernization. New laws are in the process to be issued, some others are being reformed, in order to achieve a healthier economy, a smaller but more efficient government, a more dynamic and profitable business sector, a country open to private investment from anywhere in the world. "Doing Business in Honduras" is, therefore, a synthesis of the basic legislation that matters for the very preliminary interest in investing in this country. From this standpoint, the reader will find here a practical guide to invest in any sector of the economy. To provide specific or more detailed information, the investor can contact many private and official agencies, most of which are listed in this document. Honduras International Magazine will be pleased to help the investor in gathering the additional information that might need and in contacting local investors for possible joint ventures and co-investments. Price Waterhouse Coopers will also provide such assistance when asked to do so.


Location 1,000 miles southwest of Miami, USA. Honduras has both Pacific and Caribbean coasts
Capital Tegucigalpa
Major Cities Tegucigalpa, San Pedro Sula, La Ceiba, El Progreso, Choluteca
Area 112,492 km2
Population 6,385 million (1996)
Official Language Spanish; English is widely spoken as a second language
Currency Lempira (L. 15.27= US$ 1.00,Nov.2000, Auction Central Bank's Reference Price)


The Constitution of the Republic of Honduras establishes the base for the political, administrative and legal systems of the Government. According to Article No. 4 of the Constitution, Honduras is a democratic, representative republic. The Government is comprised of three branches:

A. LEGISLATIVE BRANCH Also known as the National Congress, it is composed of 128 Congressmen and 128 substitutes, who are directly elected in general elections every four years. The Legislative Branch is responsible for the creation, interpretation, reformation and derogation of all honduran laws.

B. EXECUTIVE BRANCH It is comprised by the President of the Republic and three Vice Presidents , any of whom may be called to stand in for the President in case of absence. The President is elected every four years by means of popular vote and can never be re-elected. In addition to leading the general politics and administration of the State, the President is responsible for maintaining and supporting the Honduran Constitution.

C. JUDICIAL BRANCH It is made up of a Supreme Court of Justice, Appeal Courts and Departmental and Sectional Judicial Courts. The Supreme Court is integrated by fifteen magistrates, all of whom are elected by the National Congress for a period of seven years beginning year 2002, the National Congress will elect the magistrates of the Suprema Court from a list of candidates proposed by a committee apointed by a board apointed by the public and private sector. The Judicial Branch is responsible for enforcing the honduran laws and administering justice to the People.


Since the 1990's, Honduras has experienced great economic transformations. Up to the 1980's, government policies were characterized by unsustainable levels of spending, heavy borrowing, protectionism, controls on prices of goods and services, a fixed exchange rate and import substitution oriented industrialization.

Beginning in 1990, trade has been gradually liberalized, tariffs reduced, exchange rate policies modified, government spending brought under control, tax reforms introduced, privatization undertaken, and exports and investment encouraged. As a consequence of these policy reforms, Honduras achieved moderate levels of growth and reduced its rate of unemployment.

The main areas in which Honduras has experienced liberalization and growth are foreign direct investment and trade. Honduras' commitment to attract foreign investors is successful because it offers investors benefits that include: a highly-trainable labor force, low wages, quality infrastructure, tax and tariff incentives, abundant raw materials, and investment-friendly governmental policies.

Beginning in the 1990's, Honduras has followed foreign investment and free trade oriented macroeconomic policies. The establishment of nationally and privately-owned free-trade industrial zones in several regions of the country, the reduction of trade barriers, the incorporation of Honduras into the World Trade Agreement in 1994, and an export-promotion strategy for industrialization have made investment and trade easier and more efficient.

In addition, several laws that benefit and protect investors have been enacted. Among these laws, the Investment Law, the Free Zones Law, the Industrial-Processing Free Zones Law, the Tourism Free Zones Law, the Temporary Importation Regime Law, the Industrial Property Law, the Intellectual Property Rights Law, the Concessions Law, and the reform of the Mining Code are some of the most important.

The Investment Law of 1992 provides transparent legal framework for investment, treats both national and foreign investment equally, reduces excess government controls and intervention, and allows a limitless percentage of foreign owned capital, except for the limitations stated in the Constitution of the Republic, of which land ownership in the rural-border zone is the most important. TheInvestment Law (in Spanish and English ) can be downloaded from Honduras International Magazine (Navigation Bar, Business in Honduras, Investment Legislation)

The Free Zones Law grants foreign exporting companies located in the State-owned Free Zones important benefits like duty-free importation of inputs, permanent exemption of all national and local taxes, permission to repatriate 100% of profits and rapid customs clearance.

The Industrial-Processing Free Zones Law provides the private-sector owned Industrial Processing Free Zones the same privileges given to the State-owned Free Zones.

The Law of Incentives to the Tourism industry grants companies the benefit of duty-free importation of raw materials and equipment and an extensive list of benefits and protective measures.

The Industrial Property Law grants legal protection for trademarks, well-known trademarks not previously registered in the country, commercial names and names of origin.

The Intellectual Property Rights Law provides protection to national and international material in accordance to international conventions and standards.

The Concessions Law, officially enacted as Law for the Promotion and Development of Public Works and National Infrastructure, promotes private investment in public services and infrastructure. It sets up the legal framework for privatizing and concessioning public enterprises in areas like seaports, highways, water distribution systems and similar projects. The Law regulates the provision and indirect management of public services, contracting of professional training and infrastructure - whether implemented by natural persons or legal entities - by national or international tender proceedings, or public auction, and national or international public bid proceedings. In both cases, the award procedure will be based on transparency, objectivity and publicity. Both the Law (in Spanish and English) and its implementing regulations (only in Spanish) can be downloaded from Honduras International Magazine (Navigation bar, Business in Honduras. Legislation).

As a result of these policies and legal reforms, Honduras has achieved a respectable position among the countries that are generally preferred by foreign investors.

During 1998 Hurricane Mitch affected the country and destroyed a wide part of the agriculture and had an impact on the economic situation of the country.

The Honduran economy in the past and current year is characterized by a reactivation of some agro-exports and manufacturing activities. Additionally, the inflationary rate is decreasing (10%) and the Central Bank has announced 5% of GDP growth in year 2000.Transport, communications, electricity and water sectors have shown major progress.

Honduras International Magazine offers detailed data on the country's economy for researchers or investors who need an in-depth overall or sectorial view. The navigation bar provides a list of general topics in both macro and microeconomics and access to extensive statistical information on social matters related to the economic situation. Macroeconomic figures, panorama and trends are found in Economy and Finance. Foreign Commerce details the basic import - expor activities, while Public Finance refers to the Central Government´s fiscal behavior. Financial System provides tha Bank´s balance sheets. Infrastructure reports on Highways, Seaports, Airports, Telecommunications and Energy sectors.

Investors should also take a look on Social Perspective, where information as relevant as education, income and expense behavior of people and consumers can be found, among many other important matters.


The Government continues to encourage foreign investment through tax and tariff incentives; the establishment of Industrial Zones, Free Zones and Industrial-Processing Free Zones, which provide foreign investors a wide array of benefits. Some of the benefits offered by these industrial zones are the following:

1. Unrestricted currency conversion.

2. Duty free importation of capital goods, raw materials and supplies employed in the production of goods.

3. Import and export shipments cleared within one day.

4. Access to the U.S. market under the Caribbean Basin Initiative.

5. 100% foreign ownership.

6. No government income, sales or corporate taxes or fees.

7. Unrestricted repatriation of profits and capital at any time.

8. Low-cost skilled and unskilled labor.

9. An ample range of low-cost raw material.

Foreign firms not located in industrial zones enjoy the same rights as do honduran firms.

To diversify the economy, the Government encourages the production of fruits and vegetables for exportation, petroleum exploration, mining, tourism, fishing activities, wood products, metal works, leather goods, and electronics and apparel assembly. In Honduras, these industries are most productive and efficient.


Buying urban and rural land is fairly safe in Honduras, but, like in any country in the world, it is wise to get proper legal advise from well-known, reliable lawyers before closing any transaction. This is particularly important in the case of beaches, and land close to the country´s international borders. Article 107 of the Constitution forbids very clearly to non-hondurans the property of land within 40 kilometers from the ocean (including islands) and from the borders, at any title. This refers to individuals and companies as well.

Article 107 permits some exceptions when a specific area is declared an urban one, and there is a Presidential Decree from 1990 to rule these cases. But experience proves that it is always wiser to get previous analysis and legal advice.


The Honduran Commerce Code authorizes two ways to organize a business in Honduras: incorporation of a company or establishment of a branch of a foreign company. The local companies may be formed with either fixed or variable capital.


Companies usually incorporate in 2 ways: a stock corporation (Sociedad Anónima) or a limited-liability company (Sociedad de Responsabilidad Limitada).

1. Stock Corporation (Sociedad Anónima)

It is the most common and efficient way of organizing a company in Honduras. The main characteristics are the following:

a. The company must have at least five shareholders. Shares must have a face value of L. 10.00 or a multiple of L. 10.00. Each shareholder must have at least one share.

b. The minimum capital stock required is L.25,000.

c. Twenty five percent (25%) of the value of each subscribed share must be exhibited to the Public Notary, at the moment of incorporation.

d. Shares which are to be paid in kind have to be paid in full.

e. A Board of Directors or a sole administrator is in charge of the administration of the company. Honduran residency of the members of the Board of Directors is not required.

f. Shareholder's meetings will have all the powers not vested upon any other corporate organ, by the articles of incorporation and/or the by-laws.

g. Ordinary Assemblies will be held at least once a year, within the first four months of the year. The ordinary issues discussed at these meetings are: the approval of the financial statements after receiving the controller's report, the appointment or dismissal of members of the board of directors, and the determination of the administrators' and controller's fees.

h. Extraordinary Assemblies will be held for the amendment of the incorporation deed, and any other purposes required by law or by the incorporation deed.

2. Limited-liability Company (Sociedad de Responsabilidad Limitada, S. de R.L.)

Equivalent to a partnership for some foreign legislations, S. de R.L. is subject to fewer controls than the S.A. and requires less financial disclosure. The main characteristics are:

a. Minimum partnership capital of L. 5,000, divided in ownership interests (shares not backed by certified titles).

b. Maximum number of partners is 25. Minimum number of partners is 2.

c. Transfer of the partner's ownership interests requires the consent of all the partners, except when the incorporation deed establishes as sufficient the approval of the majority of partners.

d. The General Assembly has the same duties as in the case of the Sociedad Anónima and must be held at least once a year, at the time established by the by-laws.


In accordance to Commerce Code, foreign corporations that intend to do business directly in Honduras must obtain prior authorization from the Ministry of Finance and fulfill the following requirements:

1. Prove that it is constituted in accordance with the laws of the foreign country of incorporation.

2. Prove that it is legally authorized to establish branches in countries other than the place of incorporation.

3. Appoint and maintain a local legal representative vested with an unlimited general Power of Attorney.

4. Designate a fixed amount of capital to be used for local commercial activities.


In order to be legally established, a new company must:

1. File the articles of incorporation with the Commercial Record Office of the city in which the company will be domiciled.

2. Register at the Fiscal Registry Office (RTN).

3. Register at the municipal authorities of the place(s) where the company will conduct business.

4. Acquire the authorization of its legal accounting and minutes books.

5. Register at the Hand Labor Training Institute (Instituto de Formación Profesional - INFOP), Social Security Institute (Instituto Hondureño de Seguridad Social -IHSS), and Social Fund for Housing (Fondo Social de la Vivienda -FOSOVI) offices.

6. Register at the Value-Added Tax (VAT) offices if the company will sell taxable goods.


A. REGULATORY ENTITY The Secretariat for Natural Resources and the Environment (SERNA) is responsible for environmental regulation.

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