Protecting Investors to Ensure Compliance
At Lawgical, we take legal matters seriously. We provide clear information to help your business navigate potential changes in Costa Rican corporate law. So, let’s dive right in:
Over the past several months, the Costa Rican Congress has engaged in discussions that could significantly impact corporate governance and compliance. As legal advisors, we aim to keep you informed about these developments and their potential implications. Here, we’ll explore the proposed changes and their relevance towards operating a legal entity in Costa Rica.
The Current Landscape
Representatives vs. Shareholders
In Costa Rica, the role you play in a company, whether as a representative or a shareholder, is significant. Take the owners of Walmart Costa Rica as an example—they don’t personally sign every document. Instead, they appoint someone to manage the legal affairs. This distinction is crucial—it’s like choosing between being the driver or a passenger.
Types of Legal Entities
Sociedad Anónima (S.A.): This is the go-to structure for large enterprises, akin to a large cargo ship. Shareholders and representatives navigate through corporate decisions via a board of directors.
Sociedad de Responsabilidad Limitada (S.R.L): In this smaller entity, similar to a nimble fishing boat, quotaholders and representatives also operate separately, but there’s no need for a board of directors.
Final Beneficiaries Annual Declaration
In 2019, the government mandated an informative declaration through the “Registro de Transparencia y Beneficiarios Finales” via the Costa Rican Central Bank’s digital portal. This declaration aims to provide the central administration with information about the ultimate beneficiaries of corporations or limited liability companies. While some may view this requirement as intrusive, it is, nonetheless, a legal obligation.
The challenge arises in designating a representative who has access to this portal. Costa Rican law permits foreigners to be representatives, shareholders, and quotaholders simultaneously. However, it does not account for representatives who may not reside in Costa Rica permanently, nor does it facilitate their access to obtain a digital signature device—essential for filing the declaration. To address this, attorneys have devised granting a special purpose power of attorney (annually) to a resident or national with a digital signature device to fulfill this obligation.
New Requirement on the Horizon
Appointment of a national legal representative (Apoderado Generalísimo)
Envision an all-powerful legal representative—an “apoderado generalísimo.” Should this requirement become law, it’s imperative to choose this individual carefully. They will have the authority to navigate all legal pathways on your behalf, including corporate compliance, and will possess full decision-making power over your legal entity without needing your prior consent.
Thankfully, the Costa Rican Bar Association (“Colegio de Abogados”) has secured a precautionary measure to prevent the implementation of this new requirement for the current year.
2024: What to Do Now?
As we prepare for the 2024 filing, we can continue our usual practices. Our gratitude goes to the Colegio de Abogados de Costa Rica!
2025: What Lies Ahead?
Prepare for potential changes. The proposed requirements may resurface. But don’t worry—we’ll keep our eyes on legislative developments and provide you with timely updates.
Staying informed is part of your essence. At Lawgical, we are closely monitoring legislative developments and will provide you with the necessary information to stay ahead.
-Javier Montejo, Managing & Founding Partner
