Costa Rica has business-friendly policies, making all processes involved with ‘doing business’ relatively easy. Governmental policies encouraging foreign investment and a 3.6% GDP growth projected for 2018 have allowed Costa Rica to position itself as one of the great commercial jurisdictions in both Central and Latin America.
With a raft of regional trade agreements across the globe and policies that welcome foreign participation, investors find Costa Rica one of the most open countries in Latin America for business. Before beginning operations in Costa Rica, knowing what kind of legal structure works best for your business needs is vital.
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3 Types Legal Entity in Costa Rica
The (3) most common legal entities in Costa Rica are:
- The Corporation/Joint Stock Company (Sociedad Anónima – S.A)
- The Limited Liability Company (Sociedad de Responsabilidad Limitada – S.R.L)
- The Branches
1. Corporation/Joint Stock Company (Sociedad Anónima – S.A):
The S.A. is the most common legal entity structure in Costa Rica. See below some of its key characteristics:
- A Public Document must be drafted with the bylaws and signed by the Public Notary and company shareholders.
- A minimum of (2) shareholders are required.
- There is no established minimum capital.
- A board needs to be appointed, consisting of three board members and a controlling agent.
The availability for the company name needs to be checked with the National Registry Database.
2. Limited Liability Company (Sociedad de Responsabilidad Limitada – S.R.L):
The Limited Liability Company has the same requirements as the S.A., with the only exception being the administration; shareholders are required to appoint at least one General Manager. Shares are called ¨quotas¨ and there is no minimum required capital, however, the amount subscribed must be divisible by 100. The company name availability must also be checked on the National Registry database.
3. Branches of Foreign Companies:
Branches of foreign companies are incorporated with a public deed signed by the Public Notary and the power of attorney of the foreign company. Due to the complexities of drafting and signing all agreements, this legal structure is not recommended for SMEs. Apart from the requisites asked by the National Registry, it is also considered more expensive than other legal entities in Costa Rica.
Our Recommendation: Keep in mind the Limited Liability Company (Sociedad de Responsabilidad Limitada – S.R.L) structure because it provides a balance of limited liability protection for its members and flexibility in management and ownership. Additionally, the S.R.L structure is well-suited for small to medium-sized enterprises seeking to establish a presence in Costa Rica.
FAQs on Types of Legal Structures in Costa Rica
1. Can a foreigner register a company in Costa Rica?
Absolutely, foreign can register a company in Costa Rica. However, certain restrictions or requirements may apply depending on the chosen legal entity structure.
2. What type of legal entity is SAS (Sociedad por Acciones Simplificada) in Costa Rica?
SAS, known as Simplified Shares Company, is a legal entity structure in Costa Rica designed to provide simplicity and flexibility to businesses. It offers streamlined incorporation procedures and limited liability for shareholders.
3. How do I create a company in Costa Rica?
To establish a company in Costa Rica, you need to follow specific legal procedures and fulfill regulatory requirements. It’s advisable to seek assistance from legal professionals to ensure compliance.
4. What is an LLC in Costa Rica?
An LLC, or Limited Liability Company, in Costa Rica is a hybrid legal structure that combines the flexibility of partnerships with the limited liability protection of corporations. It offers advantages such as pass-through taxation and simplified management structures.
5. What is the business structure of a Simplified Shares Company (S.A.S) in Costa Rica?
The Simplified Shares Company (S.A.S) in Costa Rica offers a blend of efficiency, adaptability, and investor-friendly features, making it an attractive option for both domestic and foreign businesses. This structure streamlines administrative processes and provides limited liability protection to shareholders.
Interested in Beginning Commercial Operations in Costa Rica?
Choosing the type of company depends on which structure is best suited to your business needs. Much consideration needs to be taken before launching your operations in Costa Rica.
Given the favorable conditions in the country and the region as well as the economic growth, Biz Latin Hub through its company offers the experience and support necessary for investors to have a successful market entry in Costa Rica. Feel free to contact us now.
For more information on doing business in Latin America, check out the short video below: