Founding a Corporation in Costa Rica

Costa Rica law recognizes certain forms of business organizations and companies or individuals desirous of doing business in the country have to comply with the requirements for one of the business organizations.

There are four forms of business organizations recognized by the Costa Rican law and these are Corporations (Sociedad Anonima), Limited Liability Companies (Sociedad de Responsabilidad Limitada), Limited Partnerships (Sociedad en Comandita Simple) and General Partnerships (Sociedad en Nombre Colectivo). Each of these has certain requirements guiding them and are an absolute necessity for anyone who wishes to do business in Costa Rica.

The corporation of the Sociedad Anonima like it is called in Costa Rica, is the most common form of organization and is known for its structural flexibility. The law states though, that a corporation is a bilateral agreement therefore two people are needed before a corporation can be formed. This should not be a problem though because after the legalities have been met, Costa Rican law allows a single party to own 100% of the capital stock.

In order to successfully form a corporation in Costa Rica, the law states that you need a company name. Any name is acceptable as long as it has not been used by an already registered company. Secondly, it is imperative that all corporations registered in Costa Rica be domiciled there. It does not matter if the company is a branch of a huge international chain, to do business in Costa Rica as a corporation, it must have a local address within the country. Another requirement is a specific legal term. A corporation cannot be registered to do business indefinitely, even if that is the aim. A fixed term must be stated although that term can always be reduced or extended when necessary.

Other necessary requirements include a formal statement of the business purpose, which does not particularly have to be lengthy or too detailed; the share capital of the company and a Board of Directors who do not have to be shareholders. The president of the Board of Directors must have full powers of attorney according to law, although that can be restricted.

One thing to note when forming a corporation in Costa Rica is that where none of the legal representatives of the business is resident in Costa Rica, there must be a registered agent who will be served with administrative and court notices on behalf of the corporation. The registered agent must be a licensed lawyer.

Costa Rica is more or less a stable economy and has been so for several years. It depends mostly on Agriculture, Tourism and electronics exports. There are several tax rebates available for foreign businesses and as such, it is a prime location for people looking for investment opportunities in that part of the world.