Legal Corporations - ERP LAWYERS Law Firm
10 October, 2013

Legal Corporations

There are various types of corporations In Costa Rica but the two most common are the “Sociedad Anónima” (S.A.), which is very similar to a “corporation”, and the “Sociedad de Responsabilidad Limitada” (S.R.L.), which is comparable to a limited liability company, “LLC”. In order to incorporate and register them, a minimum of two partners must appear before a Notary Public, and then the articles of incorporation must be registered before the Mercantile Registry, a section of the National Registry. Once it is recorded, there are no restrictions regarding the number of shareholders of the company (for example, a single shareholder.).

All companies must have duly authorized corporate books. The corporate books consist of a Shareholders Registry Book, Shareholders Meetings Book, Sociedades Anónimas (S.A.) are also required to have a Board of Directors Meeting Book. Please be informed that these Books are needed in order to amend the articles of incorporation or to transfer the shares.

Costa Rican companies shall have a determined Management Structure composed of one or several officers, which will vary depending on the type of corporation, whether a “Sociedad Anónima” or a “Sociedad de Responsabilidad Limitada”, as indicated below.

If the company’s representatives do not have a permanent domicile in Costa Rica, a Resident Agent must be appointed. Said Agent shall have sufficient faculties to receive judicial and administrative notices on behalf of the company, and must be a duly incorporated lawyer in Costa Rica. Its appointment and revocation shall be agreed upon during a Shareholders Meeting.

The following aspects are useful in order to differentiate between a S.A. and a S.R.L.:

I. Sociedades Anónimas (S.A.)

A. Corporate Stock::

  • The corporate stock shall be composed of a determined amount of common stock shares, with voting rights. Preferred shares may be also issued; with limited or additional rights.
  • Shares in a S.A. shall be transferred by endorsement. Said transfer shall also be registered in the Shareholders Registry Book

B. Administration:

  • The Stockholders Meeting is the highest corporate authority.
  • The Board of Directors acts on behalf of the company and also performs the duties of a corporate Executive Committee as it would in U.S corporations.
  • Said Board must be comprised of at least three members, which are the President, Secretary and Treasurer; their faculties shall be established in the articles of incorporation
  • Also, a controller must be appointed to oversee the adequate management of the company

II. Sociedades de Responsabilidad Limitada (S.R.L.)

Corporate Stock::

  • The corporate stock shall be comprised of a determined amount of nominative shares, commonly known and legally denominated as “quotas”.•
  • Shares or Quotas in a S.R.L. shall not be transferred by endorsement. The transfer is performed by means of a Share Transfer Agreement, which is subject to the approval of the remaining shareholders. Such transfer shall also be registered in the Shareholders Registry Book. Please take note that the remaining shareholders have the right of first refusal over an eventual share transfer.

Administration::

  • The Shareholders Meeting is the highest corporate authority.
  • One or more managers or vice-managers manage an S.R.L. Contrary to a S.A., this type of company does not require a Board of Directors nor a Controller, since only one or more managers can direct the company’s activities.
  • Said representative(s) shall be empowered with the faculties granted through the articles of incorporation.

III. Responsibility:

In both types of companies, Corporation and the Limited Liability Company, the shareholders’ responsibility is limited to the proportion of their contributions in the corporate stock at the time of the incorporation, excluding from the foregoing their personal assets, which remain outside of the scope of action of creditors and obligations that the company acquires regarding the execution of their activities.

ERP COSTA RICA LAWYERS