The bonus, as well as vacations, are an indisputable and inalienable right for workers in Costa Rica, and this is how the Act of Payment of the End of the Year Bonus to Workers of the Private Sector Companies, Law No. 2412, establishes and regulates everything regarding this “additional salary” that every employer must pay to his collaborators, whatever the activity, within the first twenty days of December of each year.
Said benefit must be calculated based on the average of ordinary and extraordinary salaries (overtime and any other wage payment that has been made in the period) accrued by the same person must be taken into account, during the previous twelve months, calculated from the first of December of each year, and until November thirtieth of the following year, to be subsequently divided by 12 (months of the year).
The foregoing should not include what concerns the periods of disability (only what was paid by the employer during that period), nor the leave without pay, but does include what was received during the four months of maternity leave, if any. The bonus must be paid in full, that is, no deductions should be applied (tax or social charges), except for the amount of child support, if any. In case the employee has not completed a full year of work, the accrued must be added during the time worked and divided by twelve.
In the event that the employer does not pay the bonus, is delayed or paid incompletely, there will be an undue withholding of the salary and a serious fault to the obligations of the contract, empowering the worker to terminate the employment relationship with employer liability; and additionally, the employer may be liable for a fine ranging from a base salary to twenty-three base salaries, as established in the Labor Procedural Reform, and determined by the Judge according to the damages caused to the employee.
In case that, as an employer or an employee, you require legal advice on labor matters, ERP Lawyers offers a professional team with extensive experience in this area. Contact us and it will be our pleasure to offer our services.
NOTE: This article, which is based on regulations in Costa Rica, is issued for informational purposes, not for advice. It is published by: ERP LAWYERS & ASSOCIATES.
On August 30th, 2016, Law number 9379, entitled “Law for the Promotion of Personal Autonomy of People with Disabilities”, was published in the Official newspaper. This law was put into effect to replace the process known as “insanity” and aims to promote and ensure for people with disabilities, the full exercise of the right to personal autonomy. As a result of this, the figure of the guarantor for legal equality of people with disabilities is created, and also the figure of personal assistance to enhance that autonomy.
This law indicates that it is the Government that will ensure that the person with disabilities has access to the figure of the guarantor and personal assistance, as long as that person, due to the disability, requires support for the full exercise of his personal autonomy. All people with disabilities have the right to have their legal personality, legal capacity and ability to act recognized; in addition, the ownership and legitimate exercise of all rights.
The process that must be filed to gain access to this type of legal entity is called “safeguard”, and it must be presented before the corresponding Family Court. The same person with intellectual, mental or psychosocial disability may go to the Family Court to request the safeguard. Exceptionally, when the management of the disability itself becomes complicated, the relatives of the person with a disability may request the safeguard, and in the absence of relatives, any institution or non-governmental organization that provides services or supports to the person with a disability.
About the guarantor.
The person who is designated as the guarantor of the person with disability, has a series of obligations that must be met, so that this figure is useful. The guarantor must not act without considering the rights, will and capacity of the person with disabilities, since it is not a question of the guarantor making his own decisions, but rather of assisting the disabled person and helping him or her to make the best decision. The guarantor must also assist the person with disabilities in making decisions in the legal, financial and patrimonial fields; always considering the position of the person who attends.
The purpose of this law is to be able to contribute with the exercise of the right to personal autonomy of people with disabilities, on equal terms with others. The personal assistant will work and contribute based on an individual support plan. The plan determines the type of support that the person with disability requires when carrying out the basic activities of their daily life.
For determining the type of support, its intensity and number of hours provided, said plan will have to be prepared by the person with disabilities or in conjunction with another person, and must be endorsed by the technical and professional staff of the Program for the Promotion of Personal Autonomy of People with Disabilities of the National Council of People with Disabilities (Conapdis). At ERP Lawyers & Associates you can find a team specialized in family law. Contact us and request personalized assistance in this and any other subject that you require.
This past October 8th, the New Civil Procedural Code (NCPC) came into force, law number 9342, which repeals almost entirely the past code (CPC) and modifies important procedural institutes that adapt to the dynamics of an oral procedural system.
This orality and immediacy characteristic implies one of the pillars of the reform in the civil process, thus promoting compliance with principles such as immediacy, concentration and publicity. The foregoing does not exempt that there will be stages that will be carried out in written or digital form, only those recognized by the same Code and those that, given their nature, must be recorded in such form, must be documented.
Main changes and novelties: The New Civil Procedural Code is divided into two books. Book One regulates everything related to general provisions applicable to all processes< for example: the principles, norms and procedural subjects, the jurisdiction, the parties, the procedural acts, the acts of the parties, the acts of the court, the deadlines, the defective procedural activity and the form of rectification, the suspension of the procedure, the proof, the oral hearings, the extraordinary forms of conclusion of the process, the judicial resolutions, the means of challenge, the economic repercussion of the procedural activity, the precautionary protection and international procedural norms; and in Book Two, all types of processes are established and regulated (Ordinary, Summary, Monitoring, Execution, Third Parties, Inheritance, Non-Contentious Litigation).
Means of challenge: Chapter IV of the New Civil Procedural Code regulates the means to appeal judicial decisions, establishing a list of cases; creating a limited challenge system to avoid the unnecessary lengthening of the judicial processes; other words, actions that are subject to Revocation, Appeal, Cassation or Revision Appeal are limited. The Appeal of Cassation shall be “against judgements rendered in ordinary proceedings of greater or inestimable quantity and in the cases expressly indicated by the law”. (Article 69.1 NCPC)
Additionally, the Knowledge Processes (Ordinary, Summary and Monitoring), the Incidental, the Inheritance process, the Execution process, third parties and Non-contentious processes are regulated, the abbreviated procedure is eliminated.
Both the Law of Judicial Collection and the Eviction Law are repealed with the New Civil Procedural Code (NCPC), as it will be detailed further below.
ORDINARY PROCESS: The Ordinary process is regulated from article 101 of the NCPC, maintaining the same line of the old CPC, where all claims that do not have a procedure expressly indicated by law, must be processed through the Ordinary Process. The response time of the claim and counterclaim remain the same as the old code, which is 30 days.
Once the 30-day period has elapsed, the Judge, at his discretion or by virtue of the nature of the process or because there is no evidence to evacuate, may dispense the convening of a hearing, or go through the process in a single hearing.
If necessary, the Judge must call to a preliminary hearing where he must comply with a series of stages, among which are: report to the parties on the purpose of the process, conciliation, response of the plaintiff or the receiver of the opposing exceptions, fixation of the object of the debate, admission, proof evacuation, among others.
Once the preliminary hearing is over, if possible, due to the nature and circumstances of the process, it will be necessary to call a complimentary hearing and the parties will be given the opportunity to formulate conclusions, and finally, a judgement will be issued.
If necessary, once the preliminary hearing is over, the Judge may call a supplementary hearing within 20 days of the preliminary hearing, unless a longer period is justified.
SUMMARY PROCESS: Unlike the ordinary process, and following the same line as the previous CPC, the NCPC establishes a list of those processes that must be transacted under the provisions of the summary process regulated in article 103.1 of the NCPC, among these processes are Interdicts, demolition, eviction, those derived from a lease (except for non-payment of rent and public services), and others.
For the lawsuit Answer, the same five-day period is maintained as well as the deadline for opposing prior exceptions, which for all the processes regulated by the NCPC must be alleged at the time of answering the lawsuit (article 37.2 NCPC).
Regarding the hearing of the summary process, the Judge, at his discretion and depending on the nature and circumstances of the process, may indicate a single hearing in order to receive and evacuate the respective evidence. Likewise, as in the Ordinary process, the Judge must comply with the stages of the hearing described in article 103.3 of the NCPC.
The above characteristics are some of the general provisions that regulate the Summary process; however, there are specific procedures when the claims are related, for example, to an eviction, injunctions, suspension of new work, demolition, boasting and others.
MONITORING PROCESS: With the entry into force of the NCPC, the current Judicial Collection Law and the Eviction Law were repealed, due to the incorporation of their regulations to the NCPC, so the Monitoring process will be applied for the collection of monetary debts (with executive force or without it), such as the Eviction process, originated form a lease relationship due to the lack of payment of rent, due date, lack of payment of public services and lack of payment of condominium fees, as long as the payment obligation of this last concept corresponds to the tenant as agreed in the lease.
As the main difference with the previous CPC, we can notice that the term conceived in the injunction ordering the party to accept or oppose the claim requested by the plaintiff is now 5 days, and not 15 days as established in the Judicial Collection Law and the Eviction Law, considerably shortening the terms of the process.
PROCESSES OF FORECLOSURE AND MORTGAGE: Foreclosures and pledge foreclosures are regulated in the NCPC from article 166. It practically maintains the basis of the process of foreclosure and pledge that we know with the Law of Judicial Collections. The oppositions, like the Monitoring process for the collection of monetary debts and the eviction for the aforementioned reasons, maintain the limited opposition structure, which are restrictive, for example, for foreclosure, only the lack of enforceability, the proven payment and the prescription of the term shall be admitted and they must be filed within a period of 5 days after being notified.
Regarding the auction of assets in this type of processes, the line of the previous Judicial Collection Law is maintained, only with some changes; for example, article 159 of the NCPC indicates that the auction may be verified after five business days have elapsed from the day following the first publication of the edict and the notification of all parties, unlike the previous law that established a term of 8 business days.
In conclusion, we can affirm that the primary objective of this reform is to achieve a more rapid, timely and transparent justice system.
When we talk about alimony, many people think that it is an amount imposed by a third party (Judge) and that it simply must be paid, without any objection. A few years ago, the corresponding Courts received the request for alimony and the judges established a provisional alimony quota, considering only what the person filing the claim stated and presented. The defendant, at that time, only had the option of filing an appeal; however, while this appeal was being processed, he was obliged to deposit the amount that was established.
The Alimony Law mentions that conciliation can take place at any stage of the process; however, it does not expressly establish a conciliation hearing prior to the beginning of the process, as the Courts carries out actually. When consulting the topic with several judges, they indicated that this hearing is an institutional measure, established three years ago for not setting a provisional alimony amounts that were disproportionate.
What is the early conciliation hearing?
The conciliation hearing occurs immediately after the request for alimony is filed. The defendant is informed, via phone call, that there is a child support process and is invited to participate in the early hearing. If the person says no, the claim is processed, setting a provisional alimony amount, as has been done before these hearings were implemented.
If the defendant agrees to participate, a hearing is scheduled, usually within ten days after the call. In this conciliationhearing, there will be no discussion of the merits of the case, as with any other conciliation hearing. This is an ideal space for the person requesting the alimony to explain their expenses and needs; in addition, the person obliged to pay may also expose his obligations and economic possibilities to try to reach an agreement of an amount that is fair, both for who receives the money, and for who is obligated to pay it.
It is important to indicate that the phone call made by the Court in no way replaces the notification; therefore, if the defendant does not agree to participate in the hearing, he/she must wait to be notified personally, at his/her home.
Are there disadvantages to the early conciliation hearing?
Normally, the early conciliation hearing does not present any disadvantage, rather it is favorable for the defendant, since it is a possibility that he/she has to achieve an amount of alimony that is consistent with its income and obligations. However, in practice, there are aspects that put the defendant at a disadvantage regarding the person requiring the alimony.
When the defendant receives the phone call from the court, they tell him/her that it is not mandatory to bring a lawyer, since it is simply a conciliation hearing, and when he/she arrives at the hearing, commonly finds out that the other party does have a lawyer. This causes that the party that goes without legal representation often ends up accepting an agreement that is not reasonable and impossible to fulfill.
The best option for both parties, is to always hire a lawyer to attend any hearing.
ERP Lawyers & Associates: Experts in alimony processes
If you require legal advice in alimony processes or other family law issues, ERP Lawyers & Associates offers a team of specialized lawyers with extensive experience in family law. Contact us and receive personalized legal advice.
In Costa Rica, there is the possibility that, under certain circumstances, work may be suspended and because of this, the labor contract may be due to the worker’s own situations or the employer’s.
There are situations in companies that prevent the production or provision of services, and that is why Costa Rican legislation provides the temporary suspension of the employment contract in special cases clearly indicated, which lead to stop, for a period of time, the provision of service of one or several worker. Therefore, the employer ceases the payment of salaries, without this implying the termination or extinction of the rights and obligations that come from the contracts (we insist: it only implies that the worker is not obligated to work or to remain in the workplace, and the employer is not obligated to pay the salary).
Causes for suspending an employment contract
In this regard, the grounds for the suspension of the contract by the employer are:
The lack of raw materials, provided that this is not the employer’s fault;
When there is a situation of major force or fortuitous event that seriously affects the activity of the company;
When the employer dies or is incapacitated, demonstrating that this fact does not allow the normal execution of the activity.
Should any of the above causes arise, the procedure may be initiated to receive the approval to suspend the contracts before the National Directorate of Labor Inspection of the Ministry of Labor, for which, in accordance with the provisions of Article 75 of the Labor Code, are fixed three days, since the cause of suspension arose. However, the Manual of Legal Procedures of the Labor Inspection establishes that said term should not be understood as an expiration, since it can be initiated with the process, as long as the situation generating the suspension prevails.
Procedure to temporary suspend a labor contract
The procedure of these cases begins with the review of documents and continues with a visit to the work place. In this act, workers and/or employers’ representatives may be interviewed; that is why it is very important to have the proper documentation and updated information in the workers’ files.
What the National Directorate of Inspection solves has no further appeal; if the request is accepted, the temporary suspension of the employment contracts will be declared. In case of rejection, workers can choose to terminate themselves, and for the same reason, the labor contracts with employer liability.
In those cases where the suspension are authorized, the employer must inform when they can resume the contract, since the Ministry of Labor will have the responsibility to contact the workers to notify them of the resumption of their duties. If the employee does not show up within a period of 15 days after the communication, the employment relationship can be terminated without employer liability.
In general, the most significant effect of the suspension of the employment contract is the employer’s possibility of exempting himself from paying wages to workers during the period of suspension. However, employers should be careful with regard to other obligations, such as the risk insurance and the Social Security, because it is precisely these types of obligations that employer must maintain up to date in order to not harm the worker, and also, to not expose themselves to sanctions or claims before administrative or judicial institutions.
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Article 51 of the Political Constitution of Costa Rica mentions that “family, as a natural and fundamental element of society, is entitled to the special protection of the State.” Additionally, Article 65 of the same law also states, “the State shall promote the construction of popular housing and create the worker’s family assets”. This means that it is the State’s main obligation to protect the family, as well as its assets. In this case, the affectation to the family patrimony refers to the immovable property that is used as the residence of the family, which can be urban or rural.
The owner of the property can only constitute the affectation of family patrimony and the affectation must be made in a public deed, registering it in the Property Registry. The only people who can be beneficiaries of this affectation are the spouse, minor children, ascendants and cohabitating indeed. It is not necessary that these people live with the owner of the property; however, if it is necessary for the beneficiary to live in the property and have a situation of dependence, in relation to the owner of the property.
Legal basis regarding the affectation of a family’s property
The legal basis of the family affectation can be found in article 46 of the Family Law, which mentions that the property of family affectation cannot be more than 1000 square meters in urban areas, and 10,000 square meters in rural areas. The property cannot be alienated or encumbered (sold, donated, mortgaged, among others) without the consent of either spouses or cohabitants, and after demonstration in a process of diligences of utility and necessity.
The property that is under the affectation cannot be pursued by personal creditors of the person who owns the property, unless the debts have been contracted by both spouses or by the owner prior to the registration of the affectation to family patrimony.
This affectation is not perpetual, since it can be extinguished or terminated at any time, according to article 47 of the Family Law, for the following reasons:a) Mutual agreement of the spouses or cohabitants.b) Due to death or majority of the beneficiaries.c) By judicially declared separation or by divorce. In this case, the continuation of the affectation can be arranged, as long as there are beneficiaries with right.d) By judicial order, at the request of the owner, once the process has been filed and the utility and necessity of the affectation have been proven,e) When, in fact, the property ceases to be used for family inhabitancy or for small exploitation, after verification by the Court.
This affectation has as primary objective the protection of the family patrimony, so that the family always can always have a place to live, without having to worry about disposals by a negligent owner, or any type of lien for debt.
ERP Lawyers & Associates: Family Law experts.
If you need assistance and legal advice in the matter of affectation to family patrimony or any other Family Law topic, at ERP Lawyers & Associates we are at your disposal to assist you, since we have professionals specialized in Family Law, with extensive experience in the branch. You can make an appointment through our website or by phone.
The disciplinary suspension without salary is contained in article 68 clause e) of the Labor Code, in which it establishes the following: “Article 68.- The work regulations may include the technical and administrative rules necessary for the correct operation of the company; those related to hygiene and safety of work, as indications to prevent professional risks and instructions for providing first aid in case of accidents and in general, all others that are deemed convenient. In addition, it will contain: (…) e) The disciplinary provisions and the ways to apply them. It is understood that it is prohibited to deduct any amount from the salary of workers as a fine and that the suspension of work without pay, cannot be decreed for more than eight days or before having heard the interested party and the co-workers indicated by the affected worker; (…) “.
From the analysis of the previous article, along with the provisions of articles 66 and 67 of the same law, which regulate what refers to the Internal Labor Regulations, it is clear that, in Costa Rica, even though the disciplinary power that the employer has is recognized, It is limited in this matter, by restricting its action to the existence of an internal regulation, which must be previously approved by the Ministry of Labor and Social Security (MTSS in Spanish); however, Costa Rican jurisprudence has established that suspension of work without pay as substitute for dismissal without employer responsibility, implying that the sanctioned offense must be of equal gravity to a fault committed for dismissal without employer liability. The law defines a maximum of 8 days, in which, although the employment contract is suspended by the sanction, the worker accumulates seniority, maintaining the existence of the employment link, despite the suspensive condition of the contract.
The suspension as a disciplinary measure
It is important to stress that the suspension as a disciplinary measure should not be used lightly, because you can only resort to such a measure to sanction a fault that merits dismissal without employer responsibility, and provided that the corresponding procedure is carried out as we have already indicated.
Also, it is important to take into consideration that the sanction as a disciplinary measure is a “clean slate”; that is, imposing the suspension without pay, as a temporary measure, erases all the disciplinary history that the worker has accumulated during the employment relationship.
In addition, unless the company has internal work regulations, the employer cannot assign the suspension to specific offenses, other than those stipulated in Article 81 of the Labor Code, which details the serious offenses that justify dismissal without employer’s liability.
Referring to the sanction for suspension without pay as an alternative measure to dismissal without employer responsibility, it must be reserved for the most serious cases, and should not be seen as an intermediate sanction between a warning and dismissal; this is due to the implications of using this sanction for the employer and its employees, given the negative pecuniary impact it has on the worker, so it must be substantiated and executed in written form, safeguarding the right to defend both – employer and worker – before an eventual process or claim.
The Labor Procedural Reform that came into force recently, introduced important changes to the Labor Code, among them, the prohibition to discriminate against workers in any of the stages of the employee-employer relationship (pre-contractual, contractual or post-contractual).
Previously, only four discrimination causes were considered: for reasons of age, ethnicity, gender or religion; causes that had been expanded by different guidelines of the Ministry of Labor; however, the Labor Procedural Reform, in addition to these prohibitions, includes the prohibition to discriminate based on race, sexual orientation, marital status, political opinion, national extraction, social origin, filiation, disability, union affiliation and economic situation of the worker, or for similar conditions that may be considered grounds for discrimination; this means that any other cause that the applicant or worker considers a discriminatory act and that is not established in the previous list, the worker can submit the complaint to the Labor Authorities (Ministry of Labor), or before the Labor Courts, a possibility already established by our legislation.
The new regulation responds to the changes experienced by society, which is increasingly diverse and plural. These are criteria that, in some cases, have already been considered by the Courts as situations in which a person should not be discriminated against for an employment opportunity, for an improvement of their working conditions, let alone be considered as causes for the termination of the employment relationship.
Considerations for hiring personnel
The considerations made by the employer should focus on the formal criteria of the position that is intended to hire, or which is already occupied by the person who was hired.
The workers who consider themselves injured should detail the facts for what they consider that they were discriminated, in addition to presenting the comparison criteria that must accompany their claim.
If it is proven that the person was discriminated for any reason, the judge is entitled to order reinstatement in their work, in addition to receive the established compensation. Likewise, the new regulations indicate that, in the case of public employment, any administrative act such as dismissal, suspension, transfer, exchange, or promotion that takes place and involves an act of discrimination may be voidable if the interested party so requests.
As a summary, we can highlight three important aspects that come with the new law, in terms of discrimination in labor matters:
1.The burden of proof of an employer discriminatory act by the worker. The worker’s allegation of discrimination does not imply a presumption of truth, since Article 409 says that “whoever alleges discrimination must specifically indicate the factual support on which he bases his argument and the terms of comparison that substantiate his claim.” If the worker complies with this procedural obligation, then the burden of proof is shifted to the employer, as provided in article 478 paragraph 10): “In any case, the employer will have to prove his statement, when there is no agreement on: … 10) The justification of the objectivity, rationality and proportion of the measures or behaviors identified as discriminatory in all claims related to discrimination.”
2.The limitation period for alleging an employer discriminatory act. There are three terms that could apply: a six-month term, in accordance to article 416, counted from the moment when the employer gave reason for the separation without having terminated the employment relationship; the same semiannual term, since the discriminatory dismissal was given, to challenge said termination and seek reinstatement, according to also article 416; or, the one year term from the termination of the employment contract, in accordance with article 413 of the Labor Code.
3.The establishment of grounds for dismissal for serious misconduct in article 410, in accordance to article 81, subsection l), for “all workers who, in exercise of their daily labors related to recruitment, selection, appointment, movement of personnel or any other another form, incur in discrimination.”, so that the people who oversee the recruitment and selection process, and in general the administration of labor relations in a workplace, can commit a serious fault that justifies the termination without liability of their contract, if they in any way incur in any form of discrimination in their work.
A special mention must be made to the procedural mechanism against discrimination that included the Labor Procedural Reform. From article 540 of the Labor Code, a process of guardianship was established, which, at first, is given in cases of violation of special privileges, but the same article allows to be used in cases of labor discrimination, so in urgency or simplicity of the case, or the seriousness of the act, the law indicates a very short procedure.
Based on the foregoing, it is clear that the reform is sensitive, so the organizations and individuals, who hire personnel, should review their recruitment processes, as well as the disciplinary procedures used in the work centers to avoid presenting situations that may be considered discriminatory acts.
NOTE: This article, which is based on regulations in Costa Rica, is issued for informational purposes, not for advice. It is distributed to help you know your rights and obligations according to the law, and is published by: ERP Lawyers & Associates.
This past January 31st, the deadline for the payment of the tax on corporations expired, amount that is updated every year according to the base salary established by decree annually, which for this year is four hundred thirty one thousand colones (₡431,000.00).
It is important to remember that companies that are inactive, must pay a total of fifteen percent (15%) of the base salary; active companies that generate an income no higher than one hundred twenty (120) base salaries, must pay a tribute of twenty five percent (25%) of the base salary; those companies that have an income between one hundred and twenty (120) and two hundred and eighty (280) base salaries, must pay thirty percent (30%) of the base salary; and finally, companies with a gross income greater than 280 base salaries must pay a tax of fifty percent (50%) of the base salary.
Those said payment percentages were established by law, so they apply every year, the only thing that will change is the corresponding amount, depending on the base salary established each year.
The consequences of not paying these taxes are quite serious for the companies, since, first, they generate late interest rates, which are fixed by the Tax Authorities, but never may exceed twenty percent (20%) of the amount owed; and, if the corporations are in default, the National Registry does not issue certifications of any kind, nor register documents in favor of the delinquent company. Besides, the default payment constitutes a legal mortgage and/or preferential pledge on the assets of the delinquent company.
In addition, the delinquent corporations cannot participate in administrative contracting processes. It should also be remembered that those companies that have more than three periods as delinquent, risk a dissolution ex officio. The only companies that are exempt from paying this tax are those that are registered as small and medium enterprises (PYMEs in spanish).
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On August 4, 2016, the Costa Rican Congress approved the Minority Investor Protection Act, Law No. 9392 that came into force on October of that same year, filling an important legal vacuum within corporations in Costa Rica and that also places our country at the levels of best practice and standards of the Organization for Economic Cooperation and Development.
Regulatory authorities, worldwide, have made enormous efforts to improve the rules that govern the capital markets, this to make its operation efficient, credible and reliable. These efforts sought to increase the transparency of the markets as well as to safeguard the interests of investors, especially small investors, because of their disadvantaged position in the power relationship.
Responsibility to protect the rights of the small investors
It is up to each country to protect the rights of the investors through regulations that encourage the implementation of good practices of corporate transparency, which provide better access to information and ensure protection for minority investors against possible conflicts of interest. The World Bank, in its publication “Doing Business 2015: Beyond efficiency”, placed Costa Rica that year in the 181st position, almost at the bottom of the ranking in terms of investor protection. By 2017, our country jumped to position 119, which shows a great advance, effort and work by the authorities to protect these investors.
The Doing Business Index is a decision-making instrument for investors, mainly foreigners, when assessing the feasibility of conducting a business, based on ten indicators that cover the life cycle of a business. The Doing Business method defines the minority shareholder as one who has a percentage equal to or less than 10% of the share capital.
Under this scenario, in order to increase protection for investors, especially minority shareholders, it was necessary to carry out punctual reforms to the Code of Commerce, in its articles 26 and 189, as well as the Civil Procedure Code in its article 426; which allowed the country to be at the level of the best international practices in this matter
Achievements of the Minority Investor Protection Law
The Minority Investor Protection Law has helped to strengthen the small and medium-sized associated companies under the guise of consortiums for the benefit of better conditions that meet their needs, since there was not an adequate legal framework to protect them as minority investors.
The article 26 of the Commercial Code, in its first paragraph, is amended to incorporate a right of minority shareholders to examine those transactions that involve the disposal of assets of the company – or the constitution of guarantees through them – provided that such operations represent a value equal to or greater than 10% of the total assets of the respective company. In this regard, it is also important to notice that the Law also requires, through paragraph 32 ter of the same Law, that these transactions must always be approved by the Board of Directors.
It is important to point out that the Law decreases the percentage of corporate capital necessary to request a Court order to conduct an audit of the company, of 20% – as it was established – to 10%. In addition, the Law adds a new second paragraph to Article 189 of the Commercial Code to establish, explicitly, the duty of diligence and loyalty of corporate directors and other administrators, as well as their duty to act in the best interest of the company, taking into account that it counts the interests of shareholders, employees and the public.
Finally, the Law reforms article 426 of the Civil Procedure Code regarding the abbreviated process; a process through which the challenge of corporate resolutions taken at a meeting of shareholders, or at a board of directors is known. In this sense, the Law extends the power of the parties to request the Judge to present documents from the defendant company.
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Mi experiencia con ERP Lawyers ha sido de gran satisfacción. Son muy profesionales y extremamente dedicados en cada uno de sus servicios. Su capacidad de resolución de problemas es realmente admirable. Definitivamente recomiendo a ERP Lawyers a cualquier persona en busca de asesoría legal.
Eva Brenes Branch Manager Ground Cargo Transportation
Adrian Gutierrez CEO JOGO MERCADEO
Realmente nos ha impresionado la eficiencia y profesionalismo de ERP Lawyers a la hora de brindar los servicios que se les solicita. Han sido de gran apoyo para nuestra empresa. Hemos quedado muy satisfechos y no dudaríamos en recomendarlos a otras personas y empresas.
Adrian Gutierrez CEO JOGO MERCADEO
Attorney Eduardo Rojas and his highly competent team are the reason that my son has his father in his life.ERP Lawyers is a group of experts in international family law, and they are also compassionate through their practice of law.My son was abducted from the United States and taken to Costa Rica.If it weren’t for ERP Lawyers and their thorough efforts within international family law I do not think I would have been reunited with my son.
The sad fact is that family law in Costa Rica is wrongly biased towards mothers and can often violate human rights of a child to know their father.While this is a widely known issue in Costa Rica it is immensely difficult for fathers to overcome the negative position that a father begins with in the family courts of Costa Rica.Thanks to Eduardo Rojas and his team we were able to navigate numerous processes in order to allow my son the human right to be reunited with his father after many years.
Eduardo Rojas, Jose Azofeifa, and ERP Lawyers displayed great teamwork, integrity, responsiveness, and flexibility to work with me internationally.Moreover they were diligent and persistent in pursuing the truth through law practices that allowed my son to finally be reunited with his father.I have Eduardo Rojas and his team to thank for future years where my son and I will justly be allowed to grow our relationship as father and son.I give my highest recommendation to anyone needing expert and compassionate support in international family law.