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Costa Rica Company formation: a background overview, efficiency, and tax related regulatory compliances. A jurisdictional article by JJ Sanchez LL.M. International Law - web: www.crlaw.info November 2022 version

1. Background: Incorporation of mercantile entities in Costa Rica is regulated by the CR Code of Commerce of 1964, Section I, Title I, chapters 2 to 11th, and some sections of the Civil Code of 1888 apply as ancillary provisions. The most used entities are Corporations or SAs and LLCs or LIMITADAS: Corporations being conceived as open partnerships with a four member board of directors and its shares constitute securities designed to circulate by endorsement or assignment, which makes them more cumbersome and subject to shares ´ certificate loss or theft. The LLCs are simpler with one or more managers instead, personalist entities meaning the existing quota (share) holder identity is relevant to the other partners, who have first right

of refusal before a third party acquisition of quotas or units, and their liability is also limited, except in case of criminal fraud by a company director - shareholder. Both entities are constituted by two constitutional shareholders, who can be nominee directors from the Law office, who later convey the shares to the Beneficiary owners (final shareholders). Beneficiary owners can remain anonymous within the company shareholders registry record or be also designated company directors – managers which is public record of the Mercantile Registry. Company directors are to receive a specific power of attorney to administer the assets and relations of the company, this power of attorney can be either full unlimited, exclude acts of asset disposition and exerci

se jointly or independently amongst the company directors. The entity is to have a legal domicile which is a street address in Costa Rica, where it will receive legal notices and service of process of any nature either contractual, administrative, or judicial action claims. In lieu of a CR physical address of the company directors they may appoint a CR Lawyer as Resident Agent with an office authorized to receive notifications or service of process. The life span of the entity is one hundred years, their articles of incorporation which is the equivalent of the birth charter gets executed before a CR Notary Public protocol book of indentures and filed and recorded in the National Registry Mercantile Registry, once recorded the articles are public record and an electronic

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