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To start a corporation in Costa Rica you will need to issue articles
of incorporation, register your company with the Public Registry
(Registro Público), obtain your company's tax identification number
(Cédula Jurídica), obtain operational permits, and import / export
permits if required.
Costa Rica corporations have the
abbreviation S.A. (Sociedad Anónima) at the end of their names, is
equivalent to Inc. (Incorporated) found at the end of U.S.
corporations.
Issuance of Articles of Incorporation:
You may add new provisions at your own discretion as long as everything is abided by and legal under the Costa Rican law.
The following information must be included in your articles of incorporation:
Life of your Corporation
The
duration of the corporation can be between 99 years and 100 years,
starting from the date that it is formed. You can change the duration
of the corporation for the same period of time prior to the expiration
date of the duration of the corporation.
Nature of Your Corporation
The vision and mission of your company. Its industry and main goals.
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Required Capital:
The
minimum capital stock of a company is 10,000 colones (CR currency;
approximately $20.00 (rate exchange 515 Costa Rican colones per dollar
on March 15, 2007), represented by the desired number of common stock.
They must be subscribed and paid hereby you and third parties that form
the company.
If you want to have access to credit for businesses
from State- owned banks and file for temporary or permanent residency
at Immigration in Costa Rica, the minimum capital stock of a
corporation must be 50,000,000 colons (CR currency; approximately
$97,087.00 - rate exchange 515 Costa Rican colones per dollar on March
15, 2007). There are different ways to register your company without
paying cash for it. Consult your lawyer for further assistance.
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Tax Deadlines:
The
fiscal year for all companies in Costa Rica varies upon your request to
the Internal Revenue Service of Costa Rica (Direccion General de
Tributacion Directa). Some start on January 1 and end on December 31.
Others start on October 1 and end on September 30. According to the
law, all balances and inventory are due the day before the end of the
period. And on that day, dividends must be paid and losses observed in
proportion to each partner's share(s).
Sales tax, consumer taxes
and other taxes can be made on a monthly basis or every three months
based on your arrangements with the Internal Revenue Services of Costa
Rica (Direccion General de Tributacion Directa).
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Required Savings Fund:
According
to provisions of the Commercial Code of Costa Rica, each fiscal year
five percent (5%) of a corporation's profits will be retained and used
to create a legal reserve fund (Fondo de Reserva Legal). This practice
will end when the total amount of the legal reserve fund equals 20
percent of the original value of the stock stated on your articles of
incorporation, and not on the real market value of your stock.
For
example, if your company's initial capital was $100,000 U.S. and the
profit of your company for a year was $50,000.00 U.S. You will be
required to save 5% of that profit ($2,500.00 U.S.) and save it as the
legal reserve fund (Fondo de Reserva Legal). You will continue doing
that until your legal reserve fund reaches $20,000.00 U.S. After that
you are not required to allocate money for that fund. You will not be
able to spend that money during the life of the corporation. However,
you may be able to invest that money in another company. Consult a
lawyer for further assistance.
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Board of Directors:
The
Board of Directors, which must have at least three members, must manage
a Costa Rican corporation: President, Secretary, and Treasurer
(Additional members of the board may be Vice president, and trustees.)
The
president is authorized to act in the name of the corporation, with an
unlimited power of attorney to access the bank accounts - this power
can also be shared by all the board members upon request- and the
powers contained in Article 1253 of the Civil Code of Costa Rica.
A
Trustee, appointed for the same term as the Board of Directors, is in
charge of the supervision of the corporation and the actions of the
board of directors, with the same powers contained in Article 197 of
the Commerce Code of Costa Rica. The Trustee cannot be a relative of
either of the partners or the board of directors.
Although the
Board of Directors and the Trustee are nominated for the whole duration
of the corporation, the members of the board can be re-elected upon the
board of directors' request, and can be nominated for another term
determined by the Board of Directors. The partners of the corporations
may be members of the corporation.
Personal information such as
full name, nationality, occupation, civil status, residence, passport
number or identification number must be submitted and included in this
section for each Board Member.
The Board of Directors can
appoint managers and provide power of attorney of any type, with the
definitions and characteristics necessary to manage the business of the
corporation. The corporation must have five books of records: Stock
Holder Meetings (Asamblea de Accionistas), Stock Holder Registrations
(Registro de Accionistas), Inventory and Balances (Inventario y
Balances), Daily and Monthly Transaction Books (Libro Mayor - it keeps
records of transactions per account) and Daily Transaction Book (Libro
de Diario - it keeps records of daily transactions).
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Board of Directors and Stockholder's Meetings:
The
Board of Directors must meet every three months or any other period of
time that is agreed to by the business partners. The Board may also
meet when the President requests via telex, and with three days advance
notice that members attend a meeting. Board meetings must be held at
the head offices of the corporation. Decisions will be taken upon
majority. In the case of a tie, the President decides. A quorum is two
members.
The stockholder meeting will take place within three
months after the end of each fiscal year (December 30 or September 29).
The bank statements, the balances and performance of the corporation
will be discussed. The Secretary must record the meeting on the stock
holder meeting book.
The stockholder meeting may be convened by
the President of the Board, a business partner who owns at least 25% of
the stock or in specific cases, by a business partner who owns at
least 1% of the stock of the company with an eight day advance notice
stating the date after its publication, via telex to each partner.
The
quorum for the first stockholder meeting is the total number of
stockholders. The quorum for the second stock holder meeting - one hour
after the specific time - may be the total number of stock holders that
show up to the meeting. If all the stockholders are present there is no
need to call for a meeting.
It will not be necessary for the president to convene the meeting if the majority of shareholders are present.
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Termination:
The
Corporation can be dissolved due to the causes stated in Article 201
points B, C and D of the Commerce Code of Costa Rica. In this case, the
Stockholder Meeting, with the Quorum of law, will proceed to authorize
and delegate power to a liquidator.
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Registration:
Once
you have a draft of your company's articles of incorporation, you need
to hire a notary public, an attorney specialized in Notarization and
Registration law in Costa Rica, the only professional authorized by law
to register a company.
Your company must be registered in the
Costa Rican Mercantile Registry, to be a legal, authorized entity. Upon
registration, all information related to your company and the people
who will manage it must be submitted including: full name, nationality,
occupation, civil status, domicile, legal form of business, company
purpose, amount of capital, manner in which this capital is to be paid,
time limits for payments, company domicile and other agreements made by
the founders.
A registration summary must be published in "La
Gaceta," the official legal journal. The initial equity payment
(usually nominal) may be expressed in local currency or U.S. dollars
and deposited in a private or state owned bank in Costa Rica until
registration is completed. Initial equity payment is usually from
$100.00 to $1,000.00 U.S. dollars; or may be done through goods such as
a car or a house. Those goods will be appraised and their value would
be considered as an equity payment to the company; and/or mutual funds,
stock from other corporations, letters of credit that you give to the
corporation you are creating.
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Operation Permits:
Depending
on the business type, a company may have to obtain a company operation
permit (Patente de Funcionamiento), issued by the municipality (local
government) of the location where your company will be operating, and a
company health permit issued by the Health Department of Costa Rica
(Ministerio de Salud) at the Health Center (Centro de Salud) of the
location where your company will operate.
In order to issue your
company's operation permit, a municipality officer must visit your
facility to ensure that your restrooms and facility meet the basic
requirements to be open to the public (restroom access, state of the
building, etc.) Then, the municipality will issue a permit that will
allow you to do business at your facility. You will need to renew this
permit every year. The fee of this permit depends on your type of
business. A foreign company that plans to open branches in Costa Rica
must appoint and retain a legal representative with full Power of
Attorney for the business or branch.
In order to issue your
company health permit, a health officer must visit your facility to
ensure that your restrooms and facility meet the basic health
requirements. Then, the Health Center of the Health Department of Costa
Rica will issue a permit that will allow you to do business at your
facility. The fee for this permit is due every three months and the
amount of the fee depends on the type of business you have.
Other Permits
If
your company's main activity will be to trade products of foreign
companies in Costa Rica, your company must obtain a License of
Representation of Foreign Companies (Licencia de Representación de
Casas Extranjeras) issued by the Costa Rican Department of Commerce
(Ministerio de Economía, Industria y Commercio). Please see
requirements to be a local representative of a foreign company.
Read More About Employer Responsibilities, Franchises in Costa Rica
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