Accountancy in Costa Rica

>> Choice of Legal Form in Costa Rica

Limited liability company

In Costa Rica, with this company, shareholders respond only up to the extent of their contributions in the company. They can be named as shareholders wish, and the words “Sociedad de Responsabilidad Limitada” (Limited Liability Company) or only “Limitada” (Limited) should appear at the end of the name, abbreviated as follows: S.R.L., “Ltda.”.

Share capital shall be represented by nominative shares that cannot be transferred through endorsement. According to the Costa Rican Code of Commerce, share capital is divided in shares of one hundred colonies or multiples of a hundred.

The articles of incorporation should state the complete share capital amount and the amount paid by each shareholder, at least one-fourth of it so that in order to increase capital, the same rules used for its constitution are applicable.

Shareholders are entitled to the same number of votes than the shares they own. From liquid profits, 10% should be destined to the creation of a legal reserve, until reaching 20% of share capital.

The company should be managed by one or more managers or sub-managers, and they can be the company´s shareholders or not related to it.

No dividends can be paid or allocations made to shareholders, but only on realized and liquid profits.

General partnership

This type of partnership is practically not used in Costa Rica; however, it is established in the Code of Commerce. Its main characteristics are: shareholders are secondarily but jointly and severally liable on capital obligations.

Trade name will be formed with the name or last name of one or more shareholders, adding the word “compañía” (company). If a person not related to the company agrees on having his/her name and last name included in the trade name, this person shall be subject to the joint and several liability that corresponds to a shareholder. A shareholder cannot assign his/her right in the company without the express consent of the others.

Limited partnership

It refers to the company formed by general partners to whom representation and management corresponds and by limited partners

The manager and sub-manager are appointed among the limited partners, and the former should manage the partnership. The articles of incorporation should state who are the general and limited partners, as well as the contribution of each partner to share capital.

Liability of general partners is similar to that of limited partners; however, in case of limited partners, liability does not go beyond the capital contributed.

This company can be dissolved due to the general partner´s death, bankruptcy, impossibility to manage, in case the company is constituted by more than one partner. However, when there is more than one partner, this situation can be prevented in the articles of incorporation, so the company can continue to operate. The use of this corporation is inexistent in our country.

Representative office/branch

The companies´ branches are obligated to have an unlimited power of attorney in the country. The articles of incorporation shall state: a) purpose of the branch and capital assigned to it b) parent company´s purpose, capital, complete name of representatives or administrators and term; c) express declaration acknowledging that the representative, or the branch, are subjected to the Laws and courts of Costa Rica regarding all acts or contracts entered into or which take place in the country, and they expressly waive to the laws of their domicile, and d) proof that the grantor has sufficient legal representation to do so. Branches should register with the Commercial Section of the Public Registry in Costa Rica.

Independent business

In our country, Costa Rican citizens can have a business under their name and perform commercial activities.

Offshore entities

This type of entity is generally used by financial groups and is established abroad, at a site previously authorized by the General Superintendence of Financial Entities (SUGEF). These institutions cannot perform operations in colones for they should only act as correspondent banks of a local bank. They are subject to the legislation and supervision of the country where their juridical headquarters are located.

Subsidiary

According to the regulations established in the Code of Commerce, a subsidiary should have an unlimited attorney-in-fact in the country and register with the Commercial Section of the Public Registry in Costa Rica. As in the case of the branch, articles of incorporation articles of incorporation must state: a) purpose of the subsidiary and capital assigned to it b) parent company´s purpose, capital, complete name of representatives or administrators and term; c) express declaration acknowledging that the representative, or the subsidiary, are subjected to the Laws and courts of Costa Rica regarding all acts or contracts entered into or which take place in the country, and they expressly waive to the laws of their domicile, and d) proof that the grantor has sufficient legal representation to do so.

Corporation

This type of company is the one used the most in Costa Rica. In this kind of entity, share capital is divided in shares, and shareholders are obligated to pay their contributions. The name is chosen freely, but it should be different from any other existing company and must be followed by the words “Sociedad Anónima” or “S.A.”.

To create a corporation, there should be, in the first place, at least two shareholders, and each of them shall subscribe at least one share. Each of the subscribed shares must be paid in cash, and at least 25% should be paid at the moment the company´s articles of incorporation are entered into. Liability is limited, which means that shareholders assume no liability before third parties beyond the capital contributed. From net profits of each tax year, five percent should be used to create a legal reserve fund, and obligation that shall cease when the fund reaches twenty percent of capital stock.

Foundation

The trust entity is regulated by the Costa Rican Code of Commerce in articles 633 to 662.

According to article 637 of such Code, the trustee can be any individual or corporation who is capable of acquiring rights and assuming obligations. In the case of companies, articles of incorporation should clearly state that they are empowered to receive the trusted property by agreement or will.


Latest version updated 10th April 2019

Country Breakdown

4.9

Million

Population

?

Costa Rican colón

Currency

$ 57.06

Billion

GDP

51,100

km2