Knowing and Understanding the Legal Entity Structure of Costa Rica
Making a business in Costa Rica’s is relatively easier than any other country because of its friendly business policies developed by the government which is attracting foreign investment. These foreign investments made in Costa Rica is projected to increase GDP by 3.6% in the year 2018. Thus, the economy of Costa Rica is increasing in Latin America.
Costa Rica has many schemes for trading across the globe which is thus attracting the investors for business. These trade agreements of Costa Rica make it one of the open countries of Latin America. To begin business in Costa Rica, one must carefully understand the legal entity structure of Costa Rica.
Legal Entity Structure of Costa Rica
The three common legal entity structure in Costa Rica are:
- Sociedad Anonima (SA)- The Corporation/Joint Stock Company
- Sociedad de Responsabilidad Limitada (SRL)- The Limited Liability Structure
- The branches
Corporation/Joint Stock Company – Sociedad Anonima (SA)
SA is the most common form of legal entity structure in Costa Rica. The key features of this legal entity structure are:
- Minimum of Two shareholders are required
- Drafting a public document which must be signed the Public Notary and the company shareholders.
- No need of investment of minimum capital
- Three board members must be appointed along with a controlling agent
The name of the company must be checked before registration with the database of National Registry.
Limited Liability Company – Socidedad de Responsabilidad Limitada (SRL)
This form of legal entity structure is similar like the corporation or joint stock company, exception one being the administration and the shareholders need to appoint General Manager. Shares are named as quotas and this type of legal entity doesn’t require any minimum capital but the amount must be divisible by 100. The company’s name availability must be checked before registration.
The foreign companies can establish their branch offices in Costa Rica by a public deed incorporation and this deed must be signed by the Public Notary and the power of attorney of the foreign company. The legal entity structure is not for SME’s as there are complications involved in the drafting and signing of these agreements. Branch set up is the costliest affair amongst all the legal entity structures.
Costa Rica’s has excellent government policies for the investors which is thus increasing the gross domestic product (GDP) of this country. The details of each of these legal entities must be selected based on the nature of the business and the business requirements.