Incorporation in Costa Rica


If you want to do business in Costa Rica, the first decision to take is what kind of corporation structure is best for you. There are two commonly used structures, Anonymous Society and Limited Liability.

Anonymous Society or S.A: is the most common structure used in Costa Rica, and its most important characteristics are:

A.       It has a Board of Directors, with at least three members: President, Treasurer and Secretary.

B.      It has a Comptroller (known as Fiscal) which can’t be a Board of Director member or shareholder.

C.       Its capital is represented by shares. It’s possible to create different kinds of shares, with different rights (access to profits but not to vote for example). For example, if the company needed funds, it’s possible to sell the shares in the primary stock market.

This structure is intended for large companies, where the Board takes decisions according to the Shareholder instructions. 

 

Costa Rican Limited Liability Company:

  

Social Patrimony: represented by quotas instead of shares. They cannot be endorsed and could only be transferred following a formal and pre-established procedure. These transfers are registered in the company’s Book of Partners.

Transfer of quotas are done with an express, previous and unanimous authorization from the partners, unless there is a clause in the Corporations bylaws authorizing the requirement of only three fourths (3/4) of the social patrimony. If there is no consent, partners will have the right to offer for acquiring those quotas (preferential right). If none of them offer to acquire those quotas, they can be transferred to a third party.

 

The main differences between the shares from the S.A. and the quotas or equity participation in the LLC are the following:

 

1. LLC`s: The partner condition requires the approval by the rest of partners, because it is oriented towards the personal characteristics of the partner.

2. LLC`s: the participation certificate cannot be transferred by endorsement, it isn’t created for general circulation.

 

Quotas: cannot be expressed in foreign currency, but this is not a limitation for business.

 

Capital Calls: The Corporation could be able to increase the capital or patrimony. The procedure for the capital call shall be described and explained in the Corporation bylaws. The partners shall have preferred rights for increasing the patrimony and within a period of 15 days shall cancel that amount, if not then the rest of the partners could subscribe the correspondent capital percentage.

 

Administration: They are administered by one or two managers (that can be partners or third parties). Those positions can be revoked by a relative majority of votes. The bylaws define the faculties of the Managers.

 

The LLC was created for small and midsize business, where usually the (a sole) shareholder is the same as the person who manages the company. 

So, depending on your business idea or the purposes to create the corporation, you first should consider which one is better. In both cases the expenses and legal fees are the same.