What is the main source of law authorising this entity form?

Commercial Code, Law N. 3284.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

An SA is a separate legal person.

(Maximum) period of existence

There is no maximum period of existence.

Governing document(s)

The SA's Social Pact is its principal governing document.

Liability of incorporators / shareholders

Responsible only for their contributions to the social or corporate capital.

(Governing) bodies

Board of Directors (President, Secretary, Treasurer, Resident Agent, Comptroller).

Other particularities

Its capital stock can be issued both in local currency and foreign currency (usually in USD).

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Under Costa Rican law it is possible for SAs to enter into legal mergers (whereby the SA ceases to exist by operation of law and its assets are acquired under universal succession of title) and mergers of all or a portion of its assets and liabilities (with universal succession of title to the relevant assets), and conversions (changing into another form of legal entity without ceasing to exist).

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

Yes, they can be listed or publicly held. For listed or publicly held SAs there are specific requirements.

Can this type of entity be used for a non-profit or charitable organization?

No, other legal entities are used for non-profit or charitable objects such as a civil association or a non-governmental organisation

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Identification card of at least two (2) persons who will constitute the entity. Also, the Social Pact must be registered with the National Registry, specifically at the Mercantile Registry.

Involvement of notary, company register, governmental authorities

The Social Pact must be notarised by a Public Notary in a public deed. Thereafter it is submitted to the National Registry for its registration.

Timing (estimate)

If it is submitted online, it may take two (2) days. If it is submitted "by paper" at the National Registry, it may take one (1) week. However, in special cases for both modalities could take up to 15 days.

Main costs, including registration and similar fees (excluding legal fees)

Approximately US$300.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Yes, in the Social Pact the following must be indicated: Name of the persons constituting the entity, object and purpose, capital stock, domicile, specifications regarding legal representation, specifications regarding the General Assembly, etc./

Minimum number of incorporators / shareholders and residency requirements

Two (2) individuals or artificial entities. They can be either a Costa Rica national or a foreigner. However, at the time of establishing the company, the incorporators must sign the Public Deed.

Minimum number of directors (or other applicable officers) and residency requirements

The Board of Directors: President, Secretary, Treasurer, Comptroller. If no legal representative lives in Costa Rica, a Resident Agent must be appointed. The Resident Agent must be a Costa Rican lawyer with an active physical office to receive notices, and his or her main purpose will be to receive notices or notifications on behalf of the company.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

There is no minimum amount, usually it is a very low amount of 10,000 colones (around US$20). Companies that engage in banking or insurance businesses require a large minimum stock capital contribution.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

No. Physical presence is not required when submitting the Public Deed to the National Registry. However, all incorporators must personally sign the Public Deed.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

A tax identification number is given at the Ministry of Treasury. However, when the entity is registered it acquires a legal or corporate identification number which is called cédula jurídica./

What is the title of the applicable company registry?

Mercantile Registry of the National Registry of Costa Rica (Registro de Personas Jurídicas del Registro Nacional).

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The information listed below must be filed at the National Register by means of the SA's Social Pact and is publicly available:

• Articles of association.
• Date of incorporation.
• Name and address details.
• The activities of the SA.
• Share capital (issued and paid-up).
• Legal representatives of the SA and their personal information.
• Constituting shareholders and their personal information (there must be at least two (2) initial shareholders).
• Information regarding insolvency, and liquidation of the SA.
• The annual accounts.
• Information regarding the General Assembly and its meetings.

In Costa Rica, the National Registry does not disclose the shareholders of a SA. A new bill regarding "ultimate beneficial ownership" entered into force, but this information must be submitted to the Central Bank of Costa Rica.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The Board and its members represent the S.A. and must carry out management duties in the interests of the S.A. in accordance with the objects as provided in the articles of incorporation of the SA.

How are the members of the executive body appointed, dismissed and replaced?

They are appointed initially in the Social Pact which forms part of the Public Deed of incorporation and thereafter by the general meeting of shareholders.

The General Assembly of shareholders can appoint and dismiss members of the Board of Directors. These changes must first be registered in the Shareholders' Assembly Book and thereafter, registered with the National Registry.

Is it possible to appoint corporate directors or must all directors be natural persons?

Directors are natural persons. Usually the President and Secretary of the Board of Directors hold the legal representation of a S.A.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

In SA, there must always be a Board of Directors with at least a President, Secretary, Treasurer, Prosecutor and Resident Agent if there are no legal representatives living in the country. In an S.A, this structure cannot be changed, but other directors may be appointed by the shareholders at duly constituted meeting. Also, the legal representatives may grant powers of attorney (special, full, etc.) if that faculty has been allowed in the corporate bylaws.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The General Assembly of Shareholders includes all shareholders without regard to their percentage of ownership of the stock capital. They appoint and dismiss the members of the Board of Directors and can make any decisions with regard to the corporation. They can also grant powers of attorney.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Yes, these can vary depending on the corporation's Social Pact or corporate bylaws. In the Public Deed everything regarding the General Assembly is established, such as the quorum and majority requirements.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

No, there are no special regimes for a SA, except for those companies that will perform financing, banking, and insurance activities, for which particular laws establish several additional requirements.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Within three (3) months after the end of the fiscal/financial year, the SA is required to submit a report to the Ministry of Treasury. Also, there must be an obligatory General Assembly Meeting in order to determine the financial position of the SA.

Is the entity permitted to determine its own financial year?

In principle, all Costa Rican entities have a fiscal year from 1 January to 31 December; if the S.A. is part of a foreign structure and if the headquarters abroad use a different fiscal year, the S.A. may ask the Tax Authorities to change the S.A.'s fiscal year to be the same one as its headquarters.

Is the entity subject to any statutory (external) auditor obligations?

No.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

There are no requirements for these appointments. They are determined by the actual operations of the SA.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares (Acciones).

Are different classes of ownership interests possible? If so, what are some examples of different classes?

In SAs it is only possible to own shares. A S.A. can issue preferred shares that will grant the holders of such shares special rights different than the rights of the common shareholders.

What documentation is required for the transfer of ownership interests?

Usually, the transfer of shares is done through a sale and transfer of share contract between the parties. This transfer of shares must be registered in the SA's Shareholders Registry Book. After this, a new share certificate must be issued.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The transfer must be inscribed in the Shareholders Registry Book which is a private record.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.

How are shares issued? (including information on payment obligations, registration requirements)

All shares are registered in the Shareholders Registry Book and through share certificates which are provided to each shareholder. There are no further payment or registration obligations or requirements.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

There are no special requirements. Usually, the purchase of shares is done via bank transfers.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

It is uncommon for a S.A. to reduce its capital stock.

Any requirements with respect to distributions to shareholders?

The Shareholders' Assembly decides on the distribution of dividends to the shareholders.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, if said agreement does not contravene the Social Pact.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The S.A. has to pay a yearly corporate tax. This will depend on the yearly sales of the S.A. This corporate tax will be for an amount of between US$100 to US$500 per year, depending on the sales of the S.A. Also, there are other types of taxes that SA's must pay if they have any economic activity such as sales and income taxes.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The general corporate tax rate distinction depends on the yearly income of the Company.

Companies pay tax at the rate of:

• Registered in the Legal Entities Registry of the National Registry, but not registered in the Single Tax Registry (RUT) with profit-making activity (Inactive Company), 15% rate on the base salary, tax to be paid: ¢69,330.
• Taxpayers in the Income Tax (Simplified Tax Regime, Traditional Regime and/or Income and Capital Gains), with gross income less than 120 times the base salary*, in the declarations that they were required to submit in the previous period, 25% rate on the base salary, tax to be paid: ¢115,550.
• Taxpayers in the Income Tax (Traditional Regime and/or Income and Capital Gains), with gross income between 120 and less than 280 times the base salary, in the declarations that they were required to submit in the previous period, 30% rate on the base salary, tax to be paid ¢138.660.
• Taxpayers in the Income Tax (Traditional Regime and/or Income and Capital Gains), with gross income exceeding 280 times the base salary, in the declarations that they were required to submit in the previous period, 50% rate on the base salary, tax to be paid ¢231.100.

* Current base salary ¢462,200 (period 2024)*

Summary of any specific matters, e.g. recent or prospective major legal developments

The last major legal development was the pending law regarding the obligation of disclosing the ultimate beneficial owners of all Costa Rican companies to the Costa Rican Central Bank.