Divimark

Corporate and Commercial

TYPES OF CORPORATIONS

STOCK CORPORATION - SOCIEDAD ANÓNIMA (S.A.)

The Stock Corporation is the most widely used form of incorporation in Costa Rica.  Its stockholders can be local or foreign individuals and legal entities, and it is not mandatory that Costa Rican citizens serve as members in the Board of Directors.

1. Establishing the Corporation
   A Stock Corporation must be established between at least two partners who are also its original shareholders.  Once the corporation is chartered, it is no longer mandatory that the founding partners coincide with the shareholders; thus, there can be additional or different shareholders.
2. Joint Stock and Shares
   Joint stock is divided into nominative shares, which are the only type of shares permitted in our country.  It can be expressed either in colones or in foreign currency. The shareholders responsibility ends with their contributions to the Stock Corporation.
3. Shareholders Meeting
   The Shareholders General Meeting is the highest authority in the corporation, since it communicates the collective will on topics of its competency.  It can be convened by a group of shareholders or by the Board of Directors.
4. Board of Directors
   The Board of Directors is composed of at least three members (president, secretary and treasurer) who manage the corporation’s affairs and act as company officials. A controller must also be appointed; the controller will be in charge of supervising the company’s matters and financial affairs.

If the company’s representatives do not reside in Costa Rica, a resident agent must be appointed.  The resident agent must be a Costa Rican attorney and is in charge of receiving any document, court proceedings or notices regarding the corporation.

LIMITED LIABILITY CORPORATION – SOCIEDAD DE RESPONSABILIDAD LIMITADA (S.R.L.)

In a Limited Liability Corporation the shareholders responsibility is limited to the amount of their respective contribution, except when the law expressly allows the extension of said responsibility.
These corporations have the same tax regime as any other type of corporations; they must pay taxes on profits and the shareholders must pay a dividend tax once profits are distributed.

1. Establishing the Corporation
   A Limited Liability Corporation must be established in a public deed before a Notary Public and registered in the Commercial Registry.
2. Joint Stock and Shares
   Joint stock is divided into nominative shares, which are the only type of shares permitted in our country.  Each share conveys the right to one vote.  The assignment of shares cannot be done by endorsement; it must be recorded in the legal books and registered in the Commercial Registry.
3. Shareholders Meetings
   The shareholders must hold at least one meeting per year in order to appoint managers or deputy managers and make any necessary agreements.  The meeting is convened by the manager or deputy manager.
4. Management
   The corporation is managed by one or more managers or deputy managers, who not necessarily have to be shareholders.  The managers respond personally and jointly before third parties when they perform their mandate poorly or infringe the law or charter.

FREE ZONE SYSTEM

The Free Zone System consists in a series of government incentives and benefits granted to companies that fulfill the requirements and obligations provided in the Free Zone System Law and By-Laws. It applies to companies involved in input and raw material imports, manufacturing and assembly or marketing of export goods and provision of export-related services.  As well, beneficiary companies can engage in park management and handling, processing, production, repair, and maintenance of export/re-export goods and services.

These companies must have a minimum fixed assets investment of US $150,000.00.
The companies are usually located within Free Zone Industrial Parks (offshore tax and customs areas), but they can also be installed in other places if they meet the additional requirements provided by law.

LABOR AFFAIRS

Labor relations are regulated in the Constitution and in the Labor Code.  Moreover, companies with a large number of employees should have their own Internal Rules and Regulations (duly approved by the Ministry of Labor).

In some cases professional services contracts can take place with qualified labor force, such as professionals and technicians.  These contracts are regulated by the Commercial Code and the Civil Code.

Foreign employees must have a temporary residence permit granted by the General Immigration Office.

TAXES

In Costa Rica, the same taxation system is applied to local and foreign companies.
Among the different taxes paid are import duties, income taxes, real estate taxes, remittance taxes, and sales taxes.

OPERATION

Companies who wish to operate in Costa Rica must carry out different procedures with entities such as the General Immigration Office, General Tax Office, Ministry of Health, Municipalities, and Social Security.