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Types of
Corporations
While the variety of corporate entities recognized by the Costa Rican government are generally the same as those found in most North American and European countries, there are significant differences to note. Here is a breakdown of the various types of corporations available, and a special reference on the most popular and advantageous of structures available, the “Sociedad Anónima,” or S.A, plus information on the advantages on “Shelf Corporations.”
Limited Liability Corporation: Known as a “Sociedad Limitada,” this structure limits the liability of its members to the value of unpaid capital. At least two members must incorporate the company, but thereafter, one member is permitted.
LLC: Although not very popular in Costa Rica, the LLC differs mainly from the S.A. in that it may be run by a single manager with broad powers of attorney, much as in a partnership under Common Law, instead of a board of directors.
Limited Partnership: Known as a “Sociedad Comandita,” may be comprised of at least one general partner, with unlimited liability for all debts, and at least one limited partner, whose liability runs to the amount of his unpaid capital. However, if a limited partner acts as a general partner, his liability becomes unlimited.
General Partnership: Known as a “Razón Social,” consists of partners who all share unlimited liability, and profits are distributed according to each partner’s equity.
Sole Proprietorship: Unlike under its Common Law counterpart, an “empressa individual de responsibilidad limitada” the owner of a sole proprietorship is only liable up to the amount of his capital interest in the business, except in certain cases of fraud, where his personal assets become liable as well. The owner may choose a manager with broad powers of attorney to run the business. Profits can only be distributed by way of a dividend when profits have been made.
Foundation or Trust: A foundation or trust allows you to name beneficiaries to help you ensure the future of your loved ones by making your money immune to governmental confiscation for whatever reason, even bankruptcy. Trusts can also be used to establish an undetectable cash reserve.
Stock Corporation: By far the most popular and protective of all corporate structures is the “Sociedad Anónima” or S.A. Upon incorporation, there must be at least two shareholders, after which time one shareholder is allowed. The shareholders must hold at least one annual meeting anywhere in the world. The corporation also must have a registered office, a fiscal agent (basically an accountant), a resident agent (a local lawyer), and at least three directors. The powers of the President are broad, and he may choose to delegate these powers to others who may act on the company’s behalf in matters financial and otherwise.
By far the most attractive feature of the S.A. lies in its name. All members are anonymous for all legal and financial purposes. The Costa Rican government’s protection of this privacy, especially from foreign governments, is commensurately strong.
Shelf Corporations: Shelf Corporations are Stock Corporations that have been previously formed. Their age can vary from months to years. Generally a small bank account and taxes have been filed for this company for the term of its life, which therefore makes it easier to obtain credit. If you choose to buy a Shelf Corporation, you will receive a confirmation of non-trading signed by either the first incorporator or director stating that the company has not engaged in trading and has no liabilities. Furthermore, you will receive a “Certificate of Good Standing.” Also, if you decide not to keep the original directors, you will need a resolution from the former directors appointing you as the new director, plus their letters of resignation, all of which should be notarized and filled in the company records. The same holds true if there were shareholders in the past.
Please see Forming Your Corporations for information on establishing your own Costa Rican corporation.
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