Business Structures

Details about the different types of business structure available when starting a business in Costa Rica...

An individual may establish a business in Costa Rica under their own name, but in order to limit business liabilities it is necessary to set up a formal corporate entity. There are several types of business organizations and they are distinguished primarily by the financial liability of the owners and the registration requirements.

Types of Businesses

The two most common types of businesses are both stock-held corporations, and limit the liability of the owners:

  • Limit Liability Company (Sociedad de Responsabilidad Limitada or SRL)
  • Stock-held Corporation (Sociedad Anónima or S.A.)

An SRL may be governed by a group of managing directors, while an SA must have a minimum of three members on the board of directors and a fiscal examiner. Current shareholders of an SRL have the first right of refusal if stock is sold, while this requirement does not exist for an SA unless written into its Articles of Incorporation. Originally the SRL was created for use by a small number of owners and the SA for a large number; however, there is no size limit on the number of stockholders for an SRL.

Costa Rica also has legal entities that are the equivalent of a limited partnership, called the Sociedad en Comandita. Here the company has a least one general partner who has unlimited responsibility for the obligations and debts of the company. Partners’ liability is limited to their capital contribution; they cannot actively manage the company.

Trusts

Although not a form of corporation, expatriates should explore the trust concept to manage commercial or personal interests when large amounts of property are involved (for example, the sale of a house, business, or other asset). Trusts, or fideicomisos, are becoming more common in Costa Rica because they can be created quickly and help prevent future lawsuits.

In general a trust is established to administer real estate or personal property. The property is put into the trust so that a trustee can administer the assets for the beneficiaries according to the terms of the trust contract. To set up a trust a lawyer should be consulted. Look for a specialist in trusts, as this is a recently popular area of the law and not all lawyers have the necessary experience.

 

Disclaimer

Any statements concerning starting a business are based upon our understanding of current laws and practices in Costa Rica which are subject to change. While every effort has been made to offer information that is current, correct and clearly expressed the publisher is not responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. Readers are encouraged to seek professional advice concerning specific matters before making any decision.