Costa Rica Company
Incorporating in Costa Rica would mean accessing a wide variety of corporate forms because of the fact that Costa Rica does not distinguish between onshore and offshore companies. Whilst in the typical offshore jurisdiction the main company forms that are available for use as offshore companies are international business companies (IBC's) and limited liability companies (LLC's), in Costa Rica, partnerships, sole proprietorships, stock corporations and limited liability corporations and branches can be incorporated for use either as onshore or offshore companies. An offshore jurisdiction would normally require that offshore companies have limited liability, which usually restricts the types of offshore companies that can be created to mostly LLCs and IBCs.
The removal of the distinction ‘onshore / offshore company’ in Costa Rica is a move in the new direction towards creating a domestic environment that is investor friendly, asserting a degree of competitively on a global scale and avoiding the stigmas that have been associated with the term ‘offshore’. Under this setting, Costa Rica companies are governed accordingly with regard to their distinct structures but trade rules are generally the same with respect to tax rates and incentives, trading conditions, requirements and standards.
In light of increasing pressure from international bodies to regulate international financial services and investment which are proven to impact countries based on capital inflow and outflow trends, countries such as Costa Rica have resorted to providing companies and investors internationally with corporate structures and business climates which promote safe, successful, globally scaled but regulated business ventures.
The following paragraphs are brief summaries on most of the Costa Rica company structures that can be utilized for effectively conducting offshore business:
The Sociedad Limitada (SRL) or Limited Liability Corporation is the corporate structure in Costa Rica which can be compared to a regular limited (Ltd.) in the sense that the liability of the owners is separate from their personal wealth and limited to the funds or capital that was invested in the company. In the Costa Rican context, however, the limited liability corporation enjoys an additional edge given that liability is measured as and only tied to a member’s unpaid capital. A Costa Rica limited liability corporation is required to have at least two members in order to be duly incorporated. However, once registration is complete, the company is allowed to function with only one member who can be the sole Manager. A board of directors is not mandatory.
Sociedades Anónimas (S.A.) or Stock Corporations are the closest examples of the offshore IBC. They enjoy a level of privacy that other corporate forms do not receive because of their nature as ‘sociedades anónimas’, meaning, ‘anonymous societies’. The Costa Rica S.A. is considered the most commonly used corporate vehicle due to its simple structure and ability to provide its owners with privacy. Similarly to the IBC, the meetings of a Costa Rica S.A. can be held anywhere in the world and a registered agent and registered office are mandatory. Given that the Costa Rica S.A. can operate as an onshore or offshore company, it is required to have a fiscal agent such as an accountant to whom fiscal and other financial responsibilities are delegated. A Costa Rica S.A. must have no less than three directors and for incorporation purposes require a minimum of two shareholders, which can be reduced to one once operations commence. A Costa Rica S.A. like an SRL is a company with limited liability.
Costa Rica LLCs operate more or less like US LLCs in the sense that they do not have a board of directors and are managed by a member who exercises extensive powers of attorney. Additionally, the LLC combines the structure of a partnership and limited liability company.
The main distinguishing factor between the Empresa Individual de Responsabilidad Limitada or Sole Proprietorship in Costa Rica and that established in most Common Law jurisdictions is the fact the liability of a Costa Rica sole proprietorship’s owner is limited to the member’s capital investment in the business.
The use of Costa Rica Shelf Corporations is relatively common. Shelf corporations are what would be typically referred to a shelf company in other offshore jurisdictions. The shelf corporation is a company which was incorporated and registered but never utilized to conduct any business. Proof of this is provided by issuing a Certificate of Good Standing to the new owners of the Costa Rica Shelf Corporation as well as a letter signed by the former / first directors of the company, stating that the company has never traded and has no debt or other obligations.
The Razón Social or General Partnership can be considered an arrangement by individuals to pursue common business interests. In this corporate structure, the liability to partners is unlimited and profits are allocated in proportion to equity.
Parallel to the General Partnership is the Sociedad Comandita or Limited Partnership. Costa Rica limited partnerships are required to have at least one general partner who assumes unlimited liability, as well as a limited partner whose liability is measured according to the value of any capital which remains unpaid. A limited partner who functions as a general is becomes subject to assuming unlimited liability.