The Legal Representative in Costa Rica is someone who acts on behalf of another person or legal entity. Legal representation is established by formally mandating a person to act on behalf of another person or company. If you’re expanding into Costa Rica, it’s important to know when you’ll need a legal representative and what they can do for your business.
You can formally appoint a Legal Representative in Costa Rica through a Power of Attorney (POA) contract. For those entrepreneurs forming a company in Costa Rica, it’s required by law to appoint legal representation for your company.
Why do business in Costa Rica?
Costa Rica is an extraordinary place to do business due to several compelling reasons. Firstly, the country boasts a stable political environment and a long-standing tradition of democracy, providing a secure foundation for business operations. Additionally, Costa Rica enjoys a highly educated and skilled workforce, with a strong emphasis on technological innovation and sustainability. The country’s commitment to education has resulted in a large pool of bilingual professionals, making communication with international partners seamless.
Costa Rica’s strategic geographic location serves as a gateway to both North and South American markets, offering a favorable business environment for regional expansion. The nation has also established an attractive legal framework, encouraging foreign investment through initiatives such as free trade zones and tax incentives.
Moreover, Costa Rica has made remarkable strides in renewable energy, aiming to become carbon neutral by 2021. This commitment to sustainability aligns with global trends and provides ample opportunities for businesses involved in green technologies and sustainable practices.
Lastly, the country’s stunning natural beauty, rich biodiversity, and commitment to environmental preservation make it an enticing destination for both business and leisure, offering a high quality of life for professionals and their families.
So, lets see what a legal representative can do in Costa Rica.
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What can a legal representative in Costa Rica do?
In Costa Rica, your legal entity cannot act on legal matters alone. You need to appoint a natural person to the rank of ‘Director’ in your company, and give them formal Power of Attorney so they can be your Legal Representative in Costa Rica.
This person will be the legal face of the company and have the authority to represent it administratively and judicially in legal matters.
Legal Representatives have as much power of action and decision as the company grants them, so your company can exert some control over the decisions they can make on your behalf. You can choose to grant full powers to the person representing your company.
Your Legal Representative in Costa Rica can undertake the following actions:
- Sign contracts
- Sell and buy goods
- Make legal transactions
- Perform administrative and commercial activities for the company
- Hire employees.
Who can be appointed as Legal Representative of a company?
In Costa Rica, any individual who has reached the legal age of 18 or above can be appointed as a legal representative. They are not required to be a citizen of Costa Rica for this role.
Note that during the company formation process in Costa Rica, your chosen Legal Representative must accept their appointment either through a letter or by being physically present. Ensure that the person you select will be available to fulfil their duties during this time, such as engaging with the Public Notary.
In Costa Rica, any natural person of legal age (18+ years) can be appointed as legal representative. They don’t need to be a Costa Rican national to do this.
Note that in the process for company formation in Costa Rica, your Legal Representative will need to accept their appointment either by letter or by being physically present . Make sure the person you choose will be available to carry out their duties during this time, such as engaging with the Public Notary.
What obligations will the representative of a legal entity have in Costa Rica?
The individual who assumes legal representation of a newly established company as a managing member has a legal obligation known as the “duty of care.” This obligation mandates that they act in the best interests of the company. It requires their decisions, made on behalf of the company, to be well-informed, appropriate, and supportive of the company’s objectives.
Additionally, your Legal Representative in Costa Rica will be responsible for maintaining the company’s legal documents and ensuring compliance with local laws. They must also handle the company’s interactions with relevant government authorities in accordance with legal requirements.
What companies need a legal representative in Costa Rica?
Costa Rican law recognizes four types of legal entities as commercial companies, with the most commonly used and recommended being the Corporation (known as Sociedad Anónima) and the Limited Liability Company (known as Sociedad de Responsabilidad Limitada or SRL) in Costa Rica. Each of these entities requires a Legal Representative in Costa Rica, despite their differing administrative structures in terms of the number of managing members.
In a Corporation, there is typically a board of directors responsible for managing the company’s affairs, and a Legal Representative is appointed to represent the company in legal matters. On the other hand, a Limited Liability Company in Costa Rica usually has one or more managing members who directly manage the company’s operations, and a Legal Representative is also required in this case.
Regardless of the administrative structure, both types of legal entities in Costa Rica necessitate the appointment of a Legal Representative to fulfill legal obligations and represent the company’s interests.
Legal representation for Corporations and LLCs in Costa Rica
Corporations are governed by a board of directors of at least three individuals, comprising at least one President, a Secretary and a Treasurer, who can all together or individually hold the appointment of Legal Representative and act as such individually or as a board.
Limited Liability Companies or LLCs, on the other hand, have a less complex governing body. Legal representation can be held by one or two individuals jointly or separately under the position of Manager and Assistant Manager, according to the needs of the company.
Do the branches of foreign companies need legal representation?
Yes, foreign companies that want to start operations in Costa Rica must also have legal representation. As foreign headquarters are not constituted in the country as a separate local company, those companies must therefore formally register a branch in Costa Rica.
For their legal representation in Costa Rica, they must appoint a proxy that will be the face of the company’s branch, and the person in charge of making legal decisions on behalf of the parent company.
How to choose your legal representative
Choosing the right Legal Representative in Costa Rica for your company is one of the most important decisions to make when starting your expansion process. Although the legal representative is not a partner and may not necessarily own shares in the company, they will have far-reaching power over administration and decision-making processes.
Some details companies need to consider when selecting their Legal Representative in Costa Rica include:
- Having confidence in the credibility and trustworthiness of your prospective Legal Representative
- Partnering with an acquaintance or known associate to the company, or outsourcing your legal representation needs to a proven external legal expert in Costa Rica
- Ensuring your Legal Representative has a clear understanding of what’s required of your company under Costa Rican law
- Confirming that your Legal Representative can accept the appointment.
It’s crucial to choose someone who you know will support the direction of your company and its intended activities, and act in the company’s best interests.
Partner with an expert Legal Representative in Costa Rica
At Biz Latin Hub, we offer a full suite of multilingual market entry and back-office services, that we customize to your specific business needs. Our local team in Costa Rica has the extensive knowledge and experience needed to support your company’s best interests as a Legal Representative in Costa Rica.
Our expertise in company formation, accounting and taxation, due diligence, contracting and visa processing makes us a single point of contact for your business expansion into Costa Rica. For more information and personalized guidance, contact us today here at Biz Latin Hub.
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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.