The Sociedad Anonima in Costa Rica. (SA)
Starting or operating a business in Costa Rica requires more than a great idea; it demands strict compliance with local legal standards. The standard stock corporation, or Sociedad Anonima, is an excellent corporate choice. The sociedad anónima or “S.A”, is very similar to the standard stock companies in the United States. It´s a solid choice if you wish to have many shareholders in the future.
Can you describe the Costa Rica SA? (Sociedad Anonima)
The Sociedad Anónima (S.A.), or Corporation, is one of the most popular legal structures for businesses in Costa Rica. Known for its flexibility, liability protection, and suitability for both local and international ventures, the S.A. is widely chosen by entrepreneurs seeking to establish a robust and scalable business presence in the country. This essay explores the key features, advantages, and requirements of forming a Sociedad Anónima in Costa Rica.
A Sociedad Anónima is a corporate entity in which the liability of its shareholders is limited to their share participation. This structure makes it an attractive option for entrepreneurs looking to protect personal assets while engaging in business activities. The S.A. is commonly used for medium to large-scale businesses, joint ventures, and companies planning to engage in international trade.
Formation Process of an S.A.
The formation of a Sociedad Anónima (S.A.) in Costa Rica involves several key steps. It must be constituted by a minimum of two founding shareholders, each subscribing to at least one share. The company’s founding act must be formalized through a public deed before a notary public. Additionally, the initial capital contributions must be recorded, under the company’s name information, with the notary certifying this process. This ensures that the S.A. is fully compliant with legal requirements from inception.
Share Structure and Types
In an S.A., the capital is divided into shares, which can be common or preferred. These shares grant voting rights proportional to their value and can include specific privileges, such as preferential access to dividends. The company’s bylaws must detail the characteristics of each share class, ensuring transparency for investors. Importantly, all shares must be nominative, and the issuance of bearer shares is strictly prohibited, aligning with Costa Rica’s financial transparency regulations.
The Shareholders:
At least two founding shareholders. are required. Each receive common stock with voting rights. These votes are cast in every shareholder assembly that must occur at least once a year. The shareholder´s assembly is the most important corporate organ.
Capital Structure:
The capital of the S.A. is divided into shares, which can be freely transferred unless restricted by the company’s bylaws. This flexibility allows for easy investment and ownership changes.
The Board of Directors:
At least three people are necessary to be on the board of directors of the Costa Rica SA. The seats include the company’s president, treasurer, and secretary. Unquestionably, the shareholders can be members of the board of directors. A “Fiscal” must also be appointed.
The president holds judicial and extrajudicial representation of the company unless otherwise specified in the bylaws. The Board is also responsible for delegating authority, creating corporate policies, and ensuring compliance with local and international regulations.
The Corporate Bylaws:
When you form a company in Costa Rica, you need to set the ground rules under which it will operate. These are called “the corporate bylaws.” Usually they are quite generic. However, you can include special dispositions, and innovative concepts, such as priority purchase rights.
These rights prioritize other stockholders before endorsing shares to a third party. With exceptions, most changes in the articles of incorporation may be done with a simple majority vote by the shareholders.
Corporate Governance and Shareholder Rights
Shareholders in an S.A. exercise their decision-making power primarily through general assemblies. These assemblies must be convened annually to approve financial statements, elect directors, and decide on profit distribution. Extraordinary assemblies can be called for significant decisions, such as amending bylaws or dissolving the company. Each shareholder has the right to vote according to their shareholding, with restrictions applicable only to specific share classes as outlined in the bylaws.
Legal Record- Keeping Obligations: The Corporate Legal Books.
An S.A. must maintain legally authenticated corporate books, including the Shareholder Registry, Minutes of Meetings, and Accounting Ledger. These records must be updated regularly and made available for inspection by shareholders and authorized entities. Additionally, companies are required to file annual beneficial ownership declarations with the Transparency and Beneficiary Registry (RTBF) to comply with anti-money laundering laws.
The Shareholders legal book or ledger in the S.A
This book is called the Book of Shareholders, and contains information on who the stockholders are. In addition, there is a commercial principle called “Double Intestation.” This means that a shareholder must have the physical shares to his name and be registered as such in the shareholder ledger.
Shareholder's Book of Acts:
Shareholders must have annual meetings to discuss corporate issues. These meetings are held in “assemblies”. Assemblies are convoked through customary means, and if this is not possible, they must be convoked in the Costa Rican Gazette. Everything that transpires in these assemblies, is recorded in the Book of Shareholders. Shareholder assemblies can be ordinary, or extraordinary.
Ordinary assemblies are convoked once a year, to vote on the subjects that are outlined by article 155 of the Costa Rican Commerce Law. I would say that this legal book, is the second most important one you receive, when you form a company in Costa Rica. Extraordinary assemblies can be held at any time.
The legal Book of Board of Directors Minutes:
This book contains all the minutes from the board of directors’ meetings. The board of directors are comprised by a Presidente, a Treasurer and a Secretary. It´s important to note, that under Costa Rican corporate law, the secretary is legally appointed to keep the books.
Registration of the S.A:
Once registered the Sociedad Anónima obtaines “legal personality.” This means that the S.A becomes a separate legal entity, capable of entering into contracts, owning assets, and being sued independently of its shareholders. One thing to keep in mind: The company’s name must include the term “Sociedad Anónima” or its abbreviation (“S.A.”) to indicate its corporate nature.
Dissolution and Liquidation:
An S.A. can be dissolved for several reasons, including the expiration of its term, unanimous shareholder agreement, or the inability to achieve its corporate purpose. Upon dissolution, the company enters a liquidation phase where liquidators are appointed to settle outstanding debts, distribute remaining assets among shareholders, and finalize the company’s affairs. The liquidation process must be documented and reported to the National Registry.
Conclusions:
As far as corporations in Costa Rica go, the Standard Stock Corporation, known as an “S.A”, or “Sociedad Anónima” is a good option. The Sociedad Anónima is a conerstone of Costa Rica’s corporate landscape, offering entrepreneurs the flexibility, protection, and scalability needed to succeed in a competitive market. The board of directors does need more people than your average LLC, but share endorsement is more straightforward. Each corporate structure has its perks; you must decide which one to choose.
Dr. Christopher Pirie Gil.
CPG LEGAL