Legal checklist for a growing company

A company can grow commercially much faster than its legal structure grows. Sales increase, workers are hired, new suppliers and clients appear, more contracts are signed, and partners begin to make decisions that could previously be resolved informally.

The problem is that a legal structure that worked for a small company may fall short when the volume of operations increases.

Therefore, business growth should not be reviewed solely from financial, commercial, and operational perspectives. It is also advisable to evaluate whether the company is legally prepared to handle that growth.

This legal checklist for a growing company can serve as a starting point to identify areas requiring review. It is not a substitute for a legal audit, nor does it mean that all companies have the exact same obligations. The situation will depend, among other factors, on the legal structure, economic activity, number of employees, contracts, assets, and operations of each company.

1. Review the corporate structure

The first point consists of checking that the corporate documentation continues to reflect how the business actually works.

Growth can generate changes in partner participation, management, representation, capital, activities, establishments, or the way decisions are made. If these changes occur in practice but are not properly documented, problems may arise when the company needs to hire, obtain financing, bring in investors, or carry out a major transaction.

The Commercial Code of Guatemala regulates commercial companies and covers, among other aspects, their organization, administration, representation, modifications, dissolution, and professional obligations of merchants.

As a first step, you should check the following:

• That the company's corporate information is up to date.
• That the legal representatives and their powers correspond to the current needs of the company.
• That relevant corporate decisions are duly documented.
• That the corresponding corporate books and records are in order.
• Let the partners' ownership structure reflect reality.
• That the powers of attorney or mandates used by the company remain appropriate.
• That any relevant modification of the company has been formalized and registered when applicable.

A company can be operating correctly from a commercial standpoint and, at the same time, have outdated corporate documentation.

2. Review contracts with clients and suppliers

As a company grows, so does the number and importance of its contractual relationships.

A contract that seemed sufficient when there were few clients may prove insufficient when the company begins handling larger volumes, new territories, critical suppliers, or long-term commitments.

The review should not be limited to asking whether a contract exists. It also matters to know what obligations the company is assuming and what risks each document contains.

It is especially worth reviewing:

• Customer contracts.
• Contracts with strategic suppliers.
• Distribution, service provision, or supply agreements.
• Commercial leases.
• Third-party contracts handling relevant information or assets.
• Contracts with partners or related companies.
• Termination, liability, and breach clauses.
• Dispute resolution mechanisms.
• Confidentiality and ownership of information, documents, or developments.
• Powers of the persons signing on behalf of each party.

It is also advisable to identify contracts that have been used as templates for years without a recent legal review.

The Commercial Code contains provisions on commercial obligations and contracts, so the content and scope of each relationship must be analyzed according to the type of transaction and the specific circumstances.

3. Review the employment status

Growth often brings more workers, new positions, changes in job functions, supervisors, internal policies, and different hiring methods.

This means that labor management is no longer a matter that can be resolved on a case-by-case basis and instead requires greater document organization.

The Labor Code regulates, among other aspects, employment contracts, obligations of employers and employees, internal regulations, termination of labor relations, work shifts, rest periods, wages, and labor procedures.

The checklist should include a review of:

• Employment contracts and documentation.
• Job descriptions and documentation of worker functions.
• Employment records.
• Internal policies and procedures.
• Documentation related to disciplinary measures.
• Processes used for employment terminations.
• Compliance with applicable labor obligations.
• Need for internal work regulations, according to the characteristics of the company.
• Documentation related to working hours, breaks, vacations, and remuneration.

Labor documentation becomes especially important when a company transitions from having a few employees to having a more complex organizational structure.

4. Check the status with the IGSS

Payroll growth should also lead to a review of the company's status regarding the social security system.

Currently, the IGSS states that every employer who employs one or more workers must register with the Social Security regime, in accordance with current institutional regulations. It also provides specific procedures for the registration and updating of employer records.

Therefore, a business review may consider:

• If the company is correctly registered.
• If the employer registration data is up to date.
• Whether the workers are properly registered when applicable.
• If the establishments and other relevant data require updating.
• If the company is fulfilling its obligations regarding payroll and corresponding contributions.

This point deserves special attention because staff growth can modify the operational situation of the company and make it necessary to update previously recorded information.

5. Review accounting and tax obligations

Growth can also modify the administrative and tax complexity of the business.

The Commercial Code establishes obligations related to accounting and essential records for merchants. Article 368, for example, contemplates the obligation to keep accounting in an organized manner and certain accounting books.

In addition to the legal review, the company should coordinate with its accounting and tax managers to verify that the information registered with the Tax Administration corresponds to the reality of the business.

Among the points that can be reviewed are:

• Data and activities registered with SAT.
• Location of the establishment or establishments.
• Applicable tax regime.
• Corresponding billing systems.
• Books and records as applicable.
• Legal representative information.
• Changes in activity or structure that must be communicated.

This review must be carried out in coordination with the company's accountant or tax advisor when the matter exceeds strictly legal analysis.

6. Protect the brand and other intangible assets

When a company grows, its brand can acquire significant value. However, using a trade name for years does not necessarily mean that all relevant legal protection is resolved.

The Industrial Property Law, Decree 57-2000, regulates trademarks and other distinctive signs in Guatemala, in addition to aspects related to trade names, trade secrets, and unfair competition.

Therefore, it is advisable to check:

• What brands does the company currently use?.
• If the main brands have been evaluated for their protection.
• Who appears as the holder of the corresponding rights.
• If there are contracts related to licenses or the use of trademarks.
• If the company uses content, designs, software, or other assets whose ownership should be documented.
• If adequate confidentiality agreements exist for sensitive information.

The protection of intangible assets should be reviewed in accordance with the business model. A technology company, a franchise, a professional services firm, and a manufacturer can have very different legal exposures.

7. Review the powers of decision-makers

Business growth usually distributes more responsibilities among managers, administrators, directors, and other collaborators.

This makes it especially important to know who can sign contracts, assume obligations, or represent the company and under what limits.

Not all business decisions necessarily require the same authorization. Therefore, it is advisable to review the corporate documentation and the powers of attorney used in daily operations.

A good practice is to identify the decisions that generate the greatest financial or legal exposure and verify that the people responsible for executing them have the corresponding authority.

This can be especially relevant when the company begins to enter into higher-value contracts, open new operations, acquire assets, or negotiate with investors.

8. Check if growth is generating new risks

A growing company doesn't necessarily have more legal problems, but it can be more exposed to consequences when something is poorly documented.

Some indicators that justify a deeper review are:

• The company signs many contracts without legal review.
• Partners make important decisions without documenting them.
• There are workers without complete labor documentation.
• Old contract models are used.
• The company has changed its activity, size, or structure.
• New partners or investors have been added.
• The company began operating with international clients or suppliers.
• New establishments or business lines have been opened.
• Legal decisions are consulted only when a conflict arises.

These indicators do not mean in themselves that there is a breach. They are signs that it may be advisable to review the legal structure before growth creates problems that are more costly to fix.

9. What should a company do if it finds several pending items?

Not all legal problems have the same priority.

Finding ten outdated documents does not necessarily mean that all ten must be corrected at the same time. A useful business review should distinguish between urgent matters, obligations that need to be regularized, and preventive improvements.

A practical way to organize the work is to classify the findings into three groups:

High priority: situations that can generate immediate exposure or affect a relevant operation.

Medium priority: documentation, processes, or structures that should be corrected to reduce future risks.

Preventive priority: improvements that can be implemented gradually to keep pace with the company's growth.

This prioritization allows legal counsel to connect with business decisions, rather than becoming merely an extensive document review.

10. When is it advisable to transition from isolated consultations to ongoing legal review?

A company does not necessarily need to hire permanent legal counsel from day one.

However, as the number of employees, contracts, suppliers, corporate decisions, and operations increases, there may come a time when addressing each issue on a case-by-case basis is no longer the most efficient way to manage legal risk.

The Conservis Master Plan specifically identifies this scenario as an opportunity for a Monthly Legal Advice for Businesses, especially in growing companies that do not yet have in-house counsel or whose internal legal capacity is insufficient.

The logic is not to have unlimited access to legal services, but to establish a defined scope, responsible parties, priorities, and monitoring mechanisms. The model provided by Conservis contemplates, depending on the agreed modality and scope, recurring consultations, review and drafting of contracts within defined limits, ordinary corporate maintenance, preventive labor documentation, periodic meetings, and relevant legal alerts.

Extraordinary matters, such as litigation, arbitration, extensive due diligence, reorganizations, or certain specialized projects, must be evaluated and priced according to their scope.

Legal checklist for a growing company

Before closing this review, management can use this list as a starting point:

• The corporate structure and documentation reflect the current situation of the company.
• The representatives and their powers have been reviewed.
• Significant corporate decisions are properly documented.
• The main customer and supplier contracts are identified and reviewed.
• There are suitable contractual models for recurring operations.
• Employment documentation is up to date.
• Sensitive labor processes are documented.
• The company's status with the IGSS has been reviewed.
• Relevant data and obligations with the SAT are updated.
• The corresponding books and records are in order.
• Brands and other relevant intangible assets have been identified.
• The ownership and use of intangible assets are documented when applicable.
• The individuals who sign the contracts have the necessary authority.
• The main legal risks arising from growth have been identified.
• There is an in-house representative responsible for handling legal matters.
• The company has a criterion to distinguish recurring issues from extraordinary projects.

Frequently Asked Questions

Does every growing company need a legal audit?

Not necessarily. The depth of the review should depend on the size, activity, structure, number of workers, contracts, operations, and specific risks of each company.

In some cases, a one-time review may be sufficient. In others, especially when there are multiple recurring issues, it may be advisable to establish an ongoing legal support process.

What should a company that has never had legal counsel review first?

It is advisable to start by identifying the risks that can directly affect the operation: corporate structure, main contracts, labor situation, social security, administrative and tax obligations, representation powers, and relevant assets.

The specific priority must be determined after reviewing the company's documentation and circumstances.

Does the checklist replace a legal review?

No. The checklist is intended to identify areas that may require attention, but it does not, on its own, allow one to determine whether a violation exists or what the appropriate legal remedy is.

A legal conclusion may depend on documents, facts, contracts, records, and circumstances that cannot be evaluated through a general checklist.

When should a company consider monthly legal counsel?

It may be reasonable to consider this option when a company has recurring inquiries and contracts, is growing without an in-house attorney, or needs more consistent legal review of its decisions.

The model must be defined according to the needs and capacity of the company, with clear scope, limits, and responsibilities. The Conservis Master Plan specifically contemplates a continuity modality for growing companies without in-house counsel.

Growth also requires legal structure

Growth is not solely about selling more. It also means taking on more obligations, hiring more people, entering into more significant contracts, and making decisions that can have relevant legal consequences.

Therefore, periodic legal review can help management identify priorities before certain issues turn into conflicts or hinder an important transaction.

If your company is growing and you need to identify which legal matters should be reviewed first, Conservis Abogados can perform a Business legal review and, when there is a recurring need, evaluate a structure of monthly legal advice for businesses.