EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera, Daniel Leiva and Raquel Santos, Torres Legal
Reasons for denying a transaction may vary; however, they tend to be related to the impact that the merger or acquisition may have on the market. 7.6 Labour Law Regulations In El Salvador, labour regulations largely adhere to international standards and are based on employee rights, job stability and contract continuity. Currently, there is no specific legal requirement for the forma- tion of a works council in the context of acquisitions; therefore, there is no binding obligation for boards of directors. 7.7 Currency Control/Central Bank Approval El Salvador does not have currency control regula- tions, as it uses the US dollar as its official currency. This dollarisation means that there are no restrictions on currency exchange or capital flows related to M&A transactions. Also, El Salvador has recently adopted Bitcoin as another official currency. 8. Recent Legal Developments 8.1 Significant Court Decisions or Legal Developments Over the past three years, El Salvador has modern- ised the legal framework affecting technology M&A. In addition to adopting Bitcoin as legal tender and introducing a comprehensive Digital Assets Law, the country enacted new data protection and cybersecu- rity regimes, approved AML reforms and created new capital-formation channels for sophisticated inves- tors. Together, these measures reshape due diligence, compliance and financing pathways for tech-focused transactions. • Digital Assets Law: Regulates the issuance, purchase and trading of cryptocurrencies and tokenised instruments, offering fiscal incentives and establishing market rules intended to provide a safer environment for investors and users. • Law for the Protection of Personal Data (Decree No 144; effective November 2024): Introduces com- prehensive obligations for controllers and proces- sors, data subject rights, cross-border transfer mechanisms and 72-hour breach notification duties, with tiered administrative sanctions.
• Cybersecurity and Information Security Law (Decree No 143; effective November 2024): Creates the Agencia de Ciberseguridad del Estado (ACE) as the supervisory authority and mandates gov- ernance, risk management and incident reporting requirements for public and private entities. • Special AML Law (October 2025): Strengthens cus- tomer due diligence and suspicious activity report- ing, extends obligations to fintechs and digital asset service providers, aligns local practice with Financial Action Task Force (FATF) recommenda- tions and establishes inter-institutional co-ordina- tion mechanisms. • Law on Investment Banks (August 2025) and the PAIF Law (October 2025): Establish channels for sophisticated investors (over USD 250,000) under SSF/BCR oversight, expressly permitting digital- asset operations and broadening local capital-for- mation options relevant to technology M&A. • Technology Investment Promotion Law. Provides tax incentives and streamlined procedures for technology projects, supporting cross-border investment. • Electronic Signature Law and Digital Protocol: Grant qualified e-signatures the same legal validity as handwritten signatures and set integrity/confi- dentiality standards for notarised electronic docu- ments, facilitating remote execution and digital closings. These developments modernise El Salvador’s regula- tory environment around data protection, cybersecu- rity and AML, while expanding the range of financing structures available to buyers and investors in the technology sector.
9. Due Diligence/Data Privacy 9.1 Due Diligence Process
During 2024–25, the scope of due diligence in technol- ogy M&A transactions in El Salvador expanded signifi- cantly following the enactment of new data protection, cybersecurity and AML legislation. Investors are now required to include detailed assessments of compli- ance with the Law for the Protection of Personal Data, the Cybersecurity and Information Security Law and the Special AML Law (October 2025).
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