Starting business in Costa Rica Vocabulary

Patente Comercial: Business Operational License

Certificado de Uso de Suelo: Zoning Request Certification

Solicitud de Patente Comercial: Business Licence Application Form

Plano Catastrado: Property Survey Map

Permiso Sanitario de Funcionamiento: Health Permit

Tributacion Directa: Tax Department

SUGEF: General SuperIntendence of Financial Entities

Codigo de Comercio: Commercial Code

Accionistas: Shareholders

Junta Directiva: Board of Directors

Cedula Juridica: Corporate Identity Card

Ganancias: Profits

Perdidas: Losses

Registro Nacional: National Registry

Poder Especial: Powers of Attorney

Libros de Actas: Corporate Books

Sociedad de Responsabilidad Limitada: Limited Liability Company

The Costa Rican Corporation (S.A.)

Basics of the Costa Rican Corporation - The Sociedad Anonima
I. INCORPORATION
To form a Costa Rican corporation the Commercial Code requires that at least two
individuals sign the articles of incorporation and subscribe at least one share each.

There are no requirement that the incorporators be Costa Rican citizens. The articles of
incorporation must contain as a minimum the following information:
(1) the date and place of incorporation; (2) the name, nationality, occupation, marital
status, and domicile of the incorporators; (3) type of corporation being formed; (4)
corporate purposes; (5) its duration and possible extensions; (6) the amount of
authorized capital and the manner in which it shall be subscribed; (7) the cash, property,
or other capital contribution of the shareholders; (8) the domicile of the corporation; (9)
enumeration of powers; (10) names of the officers of the corporation; (11) allocation of
profit and losses; (12) corporate dissolution or liquidation procedures.
Once the articles of incorporation are executed, they must be filed in the Costa Rican
National Registry for recording. Notice of the incorporation must be published in the
official newspaper, La Gaceta, for a period of eight days. Once approved, the
corporation is recorded in the Corporate Section (Personas Juridicas) of the National
Registry and issued a corporate identity card (cedula juridica).

II. MANAGING THE CORPORATION - THE BOARD OF DIRECTORS

The corporation must have a three (3) member Board of Directors to manage
and control its affairs subject to whatever restrictions may be imposed by the
Shareholders. There are no nationality or residence requirements for Board Members.
The most common practice is to have a President, Treasurer and Secretary. The Board
of Directors selects the corporate officers and has the power to remove them. Generally,
the directors, officers and managers are the same
individuals unless the shareholders elect to appoint different officers.

III. CAPITAL STRUCTURE

Costa Rican law requires that the articles of incorporation also set forth the (1) amount
of paid in capital; (2) the number, par value, and classes of shares; and (3) the terms
and method of payment for the shares.
The capital of a Costa Rican corporation is represented by nominative shares, which is
an artificial value set forth in the articles of incorporation and appearing on the face of
the certificates for shares. As such, a corporation can issue common shares which can
either be denominated in Colones, the Costa Rican currency or in Dollars. The law
prohibits issuing common shares without any value or issuing bearer shares. In addition
to common shares, the corporation may issue preferred shares so long as the class,
preferences, rights, and limitations are set forth in the articles of incorporation. All
shares are indivisible; this means that one share confers only one right. If there are
several persons who own one share then they will have to elect one representative to
act on behalf of that share.
IV. THE SHAREHOLDERS
The corporation only recognizes as Shareholders those that have been registered as
such in the Shareholders Log Book. Shares can be transferred by simple endorsement
and the relevant entry in the Shareholders Log Book. Generally, the identity of
subsequent Shareholders does not have to be recorded in the National Registry thus
ensuring confidentiality.
Each common share has the right of one vote. Thus, the Costa Rican corporation uses
the concept of "straight voting" whereby each shareholder may cast the number of votes
equal to the number of shares they hold. Shareholder meetings are divided into two
categories, General and Special. The General meetings can be made up of all the
shareholders while the special meetings are limited to those shareholders who have
specific rights.

Furthermore, the General meetings are divided into Ordinary and Extraordinary.
Extraordinary meetings are those which modify the corporate existence or which
authorize the issuance of a class of shares or bonds which have not been set forth in
the articles of incorporation. All other corporate matters are dealt with in the Ordinary
meetings. The law requires that an Ordinary meeting be held once a year. In order to
constitute a quorum, it is required that at least fifty percent (50%) of the voting shares
be represented at the meeting. In order to adopt a corporate resolution it must be
passed by a majority of the votes.
V. POWERS OF ATTORNEY
The Shareholders and members of the Board of Directors, if so permitted, may grant
Powers of Attorney to third parties. The Powers of Attorney may be Special (Poder
Especial) of General (Poder Generalisimo). The Special Power of Attorney is generally
executed to accomplish a specific purpose such as purchasing a specific parcel of
property, opening a bank account, orsigning specific documents. The Special Power of
Attorney is not registered in the Public Registry. The General Power of Attorney must be
recorded in the Public Registry and it provides broad powers including the power of the
attorney-in-fact to substitute their powers, all or in part, to another person.
VI. ADMINISTRATIVE
The Corporate Books: The Costa Rican corporation must log all corporate matters in the
Corporate Books referred to locally as Libro de Actas. There must be three (3)
Corporate Minute Books to record (1) Board of Director's meetings, (2) Shareholder's
meetings, and (3) a Stock registry (log) book.
To record the financial operations of the corporation the law requires that the
corporation have and maintain the following: (1) Inventory and Balances, (2) General
Ledger, (3) Account Ledger.
Internal Auditor: The Commercial Code requires that each corporation appoint an
internal auditor known as a Fiscal. The auditor may or may not be a member of the
Board of Directors and he has a duty to safeguard the interests of the
Shareholders.
The Registered Agent: The Articles of Incorporation must name a Registered Agent who
is located in Costa Rica and will receive service of process. This is only required if the
Corporate representative is domiciled outside of Costa Rica.

Income Tax Reporting: The corporation is required to file a tax return once a year during
the reporting period which is September 30 through November 30. A Costa Rican
corporation is only taxed on income earned in Costa Rica, foreign
source income is not taxed.
Sociedad de Responsabilidad Limitada
(Limited Liability Company)
The Sociedad de Responsabilidad Limitada
(L.T.D.A. or L.L.C.) was created as an
alternative to the Sociedad Annima (S.A.)
(described below). It is simpler to operate
than a S.A. since it does not require many
formal acts to function. This makes it
suitable for small business enterprises. The
main characteristics of the limited liability Download Our Incorporation Application
company are, that the liability of the
shareholders is limited to the amount of
their capital contribution, the capital is
divided into individual registered quotes
which cannot be sold to the public unless
previously offered to other partners (first
right of refusal), the company is made up of
In these applications forms you will find the information and data
a minimum of two quote holders with no we require to start the incorporation process. Any doubt contact us
limit as to the maximum number of to:info@companiescr.com

shareholders allowed.
This kind of corporation is managed by one
or several MANAGERS who may or may not
be shareholders. While the simplicity of the
operation is a benefit of this form of
incorporation the draw back is the limitation
on the ability to transfer ownership of the
LTDA to third parties.
The LTDA can be handled by a manager with
broad powers of attorney. There can also be
more managers or vice-managers, as
deemed appropriate by the owners.
Sociedad Anonima
In Costa Rica the Sociedad Annima is the most
common used corporation form of business
organization. The main features are that the liability
of the shareholders is limited to their capital
contribution and stock ownership in the corporation
is easily transferred to third parties (endorsement of
shares).
The Board of Directors is the supreme organ of the
corporation and it expresses the collective
disposition of the partners. The following positions
should be assigned in the Board of Directors of the
company:
1. President
2. Secretary
3. Treasurer
Additionally, a Controller (which cannot be family
related with any other Board Member) and a
Resident Attorney or Agent has to be designated.
The Resident Attorney or Agent must be an Attorney
at Law in Costa Rica. In general, the positions
outlined above are the minimum necessary for
incorporation purposes and do not exclude the
possibility of appointing vice-presidents, managers
and others. Moreover, your disposition concerning
which member(s) of the Board of Directors will have
Powers of Attorney in the company and if those
powers will be exercised jointly or separately (at
least the President has to have powers to represent
the company, both in court and out of court) is
necessary.

Incorporation Requisites:

In order to incorporate either of these types of

companies, we will require the following information
of at least two founding partners:
1. Full name
2. Marital Status
3. Occupation
4. Street address
5. Passport number (copy of the passport of each
person involved in the corporation)

Powers of Attorney:
In Costa Rica, there are various types of Powers of
Attorney, among them and the most commonly used
are Full, General and Special, all of which can be
limited in kind, in time and in amount; and are
summarized as follows:
1. Full Power of Attorney: allows purchase, sale,
mortgage, etc. of any goods that the corporation
may have. It also empowers to sign checks, pay
invoices, contract with suppliers, etc. It can be
limited, both in the type of acts that are permitted
and prohibited, as well as in total amount of each of
the acts or contracts.
2. General Power of Attorney: is solely intended to
be used for administrative purposes, such as
contracting of personnel for business purposes,
signing invoices and, in general, any other document
which is strictly related to the company's scope of
activity.
3. Special Power of Attorney: entitles the
representative to execute one or more specific acts,
whether of administration or disposition. One special
characteristic of this power of attorney is that, as
opposed to the two previously explained powers of
attorney, it does not need to be recorded in the
Mercantile Section of the Public Registry.
Using the above mentioned guidelines, powers of
attorney may be drafted to fit special corporate
needs. For instance, you may have the following
scenarios:
a. President holds full powers of attorney.
b. President and Secretary hold full powers of
attorney so long as they act jointly.
c. President and Secretary hold full powers of
attorney acting individually for transactions up to $
50,000.00 and jointly thereafter.
d. All Board Members hold full powers of attorney.
e. Any other combination established by the
Shareholders.