| CORPORATIONS
IN COSTA RICA:
The Costa Rican
Corporation (Sociedad Anónima) is the most commonly used
type of business organization in Costa Rica and the main
reason for that is that the liability of the shareholders
is limited to their capital contributions. The Law that
rules all matters regarding corporations is the Commerce
Code (law number 3284), specifically between the articles
102 and 225.
To form a Corporation
in Costa Rica, according to the Commercial Code, it is
required that at least two persons execute the articles
of incorporation and subscribe at least one share each.
The incorporator can be either Costa Rican citizen or not.
This procedure has to be done before a Notary Public authorized
by the Notarial Directory of the Costa Rican Supreme Court.
The information
that the articles of incorporation should contain is the
following and can be found in the article 18 of the Commerce
Codes:
a) Date and
place of incorporation,
b) Name, nationality, marital status, occupation, official id number
(passport) and domicile of the incorporators,
c) Name of the corporations involved in the constitution
d) Corporate purposes,
e) Name of the corporation
f) Duration and possible extensions of the term
g) The amount of Capital and the manner in which it shall be subscribed,
h) Share holders contributions
i) Domicile of the corporation it has to be a valid address in the Costa
Rican territory
j) Type of administration and faculties of the Directors
k) Nomination of the directors stating who will represent the corporation
and their acceptance
l) Nomination of a resident agent, when the legal proxy is not a Costa
Rican resident; the resident agent has to be a lawyer with open office
in Costa Rica.
m) Allocation of the balance, profits and losses of the corporations.
n) Establishment of a legal reserve fund of the 10% of the total capital.
o) Cases in which the corporation may dissolve before the term expires
p) Corporate dissolution and liquidation procedures
q) Mode for the election of the liquidators and their faculties
The persons
involved in the functioning of a corporation are: the shareholders,
the board of directors, the legal proxy, the inspector,
the resident agent and other employees it may have for
the developing it purposes.
The shareholders
of the corporation should name a Legal Proxy to act on
behalf the corporation, this individual can a have a limited
or not power of attorney for that purposes and is the one
responsible for signing documents, opening bank accounts,
in general terms exercising all the actions required for
the outgoing of the corporation, this person as well as
the shareholders can be either a Costa Rican citizen, residents
or not. The shareholders meeting and the Board of Directors
could grant all kinds of powers of attorneys.
The corporation
should also have a 3 member Board of Directors to manage
and control its affairs, there are no nationality or residence
requirements for Board members either.
The Board of
Directors may authorize, jointly or separately, the opening
of banking accounts in or out of Costa Rica, in national
currency or in other foreign currencies, and in the same
act may authorize the persons that will sign for the accounts,
authorization that can be jointly or separately.
The control
and supervision of the corporate business and affairs shall
be in charge of an inspector, to be appointed in the shareholders
meeting, according to the 197 article of the Commercial
Code.
Once the articles
of incorporation are executed, they must be filed in the
mercantile section of the Public Registry and a legal notice
must be published in the official newspaper (Gaceta); which
can be done simultaneously with the presentation of the
documents in the National Registry. This Registry provides
the corp. with a proper corporate identity card and the
registration citations indicating the book, page and entry
numbers where the corporation is recorded.
Once the incorporators
receive their original incorporation documents back from
the Public Registry, they can file the request with the
Costa Rican Revenue Department (Tributacion Directa) to
formally legalize the corporate books of the corporation.
By law the Costa Rican corporation must have six corporate
books, three of these books are minutes books to record:
board of directors meetings, shareholders meetings, and
shareholder's logbook. The other three books are for accounting
purposes and include: inventory and balances, general ledger
and account ledger.
The corporation
is required to file a tax return once a year, during the
reporting period, which is October 1 through December 31.
A Costa Rican corporation is only taxed on income earned
in Costa Rica, foreign source income is not liable for
paying any taxes.
The Costa Rican
Corporation is an international business company, that
can be used for a wide range of applications, for example
financial management, investment holdings, property, ships
or any kind of vehicle ownership, you can have share ownership
in other companies, you can lease back assets from your
corporation; it is a perfect vehicle for the housing of
copyright and licensing revenues or to get involved with
international trading of some type.
Regarding the
privacy of the ownership of the assets of the corporation
and the exposure and seizure of the legal books, the Costa
Rican Law, specifically the Commercial Code in its article
265, regulates this issue and it states that No authority
may inquire the books of the corporation nor decree the
exam, communication or delivery or general recognition
of legal books, mail or other papers or documents; except
in cases of bankruptcy or liquidation. The exhibition of
the books may be request only by interest party through
a competent judicial authority. "Interest party" is
referred to any person that have a legal interest in this
opening, for example, one of the shareholders, the inspector
of the corporation, etc. This recognition has to be done
in the domicile of the corporation in presence of the legal
proxy or authorized person. The Costa Rican Revenue Department
(Tributacion Directa), may order the reviewing of the legal
books only for tax purposes, within the domicile of the
corporation and only in cases regarding corporations liable
for paying taxes in Costa Rica (as stated in the tributary
norms and procedures code, codigo de normas y procedimientos
tributarios.) For expert tax consultations and Costa Rican
accounting advice, call Costa
Rica Accounting and Business Center.
Other issue
to take in consideration regarding privacy is that the
ownership of the shares of the corporation is not registered
in the Public Registry, the only information regarding
the people involved in the corporation registered is the
Board of Directors, the inspector, the legal proxy and
the resident agent, in general terms, all the people involved
in the administration and representation of the corporation.
Regarding Banking,
Private Banks in Costa Rica are regulated by the National
Banking System Organic Law (Ley Orgánica del Sistema Bancario
Nacional No. 1644).
Banks in Costa
Rica have to report transactions of more than $ 10.000,
coming in or going out Costa Rica, also those transactions
that in conjunction sum more than $ 10.000 and that were
made by the same person or that are for the same beneficiary;
at last, the Bank may report any transaction they consider
to be suspicious. (as stated in articles 20 to 27 of ley
de estupefacientes y otras actividades conexas.)
Banks may freeze
funds from a Bank Account only if ordered by a competent
judicial authority in processes related with drugs, money
laundering or debts that the corporation have previously
acquired.
The reserve
requirements for Private and State Banking in Costa Rica,
are regulated by the National Banking System Organic Law
(Ley Orgánica del Sistema Bancario Nacional No. 1644).
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