The Corporation (Sociedad Anónima or S.A.) and the Limited Liability Company (Sociedad de Responsabilidad Limitada or S.R.L. or LTDA.) are the most commonly used business entities in Costa Rica for investment or engaging in commercial activities.
The Corporation (S.A.) and the Limited Liability Company (S.R.L. or LTDA.) are suitable for conducting activities without putting the personal capital of its members at risk: in case of lawsuits or liens, for example, only the capital contributed by the members of the company will be affected. However, the Corporation is better suited for launching larger-scale businesses.
Characteristics of the Corporation S.A. and S.R.L.
Who are the people involved in a Corporation?
Members: The Corporation has a President, Secretary, Treasurer, and Controller; whereas the Limited Liability Company only requires a Manager who also serves as the legal representative.
Share Capital: In the Corporation, shares are managed and transferred by endorsement; whereas in the Limited Liability Company, the share capital consists of nominative quotas that can be transferred upon approval by the Members (members of the company).
Management: In the Corporation, the highest authority is the Shareholders’ Assembly; in the Limited Liability Company, it is the General Assembly of Members.
Records: The Corporation maintains three legal books: Minutes of Shareholders’ Meetings, Minutes of the Board of Directors, and Shareholders’ Register. The Limited Liability Company keeps only the Minutes of the Members’ Assembly and the Members’ Register.
What are the requirements to form a company?
Requirements to form a company
- Partners: At least 2 partners are required to establish a business entity. Once formed, there is no maximum limit of members, and if necessary, it can be left with only one.
- Members: The Corporation must have a President, Secretary, Treasurer, and a Controller without any legal power. For a Limited Liability Company, only a Manager is required, who will also serve as the company’s legal representative.
- Registration: Companies are registered in the Registry of Legal Entities of the National Registry. It will be necessary to specify the activity or activities the company will carry out; provide details such as: full names of the members, copy of ID or passport, marital status, profession or occupation, and exact residential address; also specify the total capital of the company, the number and value of shares or quotas, and how they will be distributed among the members.
- Enrollment: When registering the company, the corporate tax, other taxes, and stamps are paid in advance.
- Domicile: To establish a company, a fixed domicile and an office to receive legal notifications within Costa Rica are required. If those representing the company do not have a fixed domicile in Costa Rica and reside abroad, it will be necessary to appoint a Resident Agent: a lawyer to represent the company when required.
