KNOWLEDGE BASE

KEY CORPORATE FEATURES

GENERAL INFORMATION

Situated in the geographic centre of the Americas, Costa Rica shares borders with Nicaragua to the Northwest and Panama to the Southeast, and is bordered on the South by the Pacific Ocean and on the North by the Caribbean Sea. It is small in area (51,000 sq km), but nevertheless it is host to an enormous biodiversity. It was visited by Christopher Columbus in 1502, who named the area Costa Rica (the rich coast).

Population

The population of Costa Rica is approximately 4.2 Million, more than one million living in the Central Valley. 94% of the people in Costa Rica are of either European (mostly Spanish) ancestry or are of Mestizo (mixed European and indigenous) ancestry.

Political Structure

Costa Rica 's democracy and social policies have the 1949 constitution as their cornerstone. This document guarantees Costa Ricans freedom of expression and mobility, and upholds the sanctity of human life and private property. Costa Rica 's democratic national government is made up of three separate branches: legislative, executive and judicial.

Executive Branch: Presidential elections take place every four years and the president is elected by popular vote. No president can serve in the presidency for more than four years incumbent presidents and ex-presidents cannot be voted into office. The president appoints 2 vice-presidents and 20 cabinet members. The president must be elected with at least 40 percent of the popular vote or a runoff election is held.

Legislative Branch: Costa Rica has a unicameral legislative assembly with 57 seats. Representatives are elected by popular vote. The legislature has six permanent commissions, which oversee agriculture and natural resources, economic affairs, government and administration, budgeting and taxation, judicial affairs and social affairs. The legislative assembly can override presidential decisions by two-thirds majority vote and is responsible for the declaration of war and selection of Supreme Court Judges. Legislators can be re-elected, but only after spending one term out of office.

Judicial Branch: The judicial branch is responsible for administering justice in Costa Rica, and is made up of the Supreme Court, appellate courts and trial courts. There are 22 magistrates, selected by the legislative assembly every eight years. They can be re elected.

Infrastructure and Economy

The economy has traditionally been based on agricultural commodities such as coffee, cacao, bananas, sugar and beef. In the recent years successful efforts have been made to introduce new exports, services and tourism. Costa Rica is a member of the World Trade Organization. It has developed incentives for companies operating under the Free Trade Zone Regulations and other export programs.

Language

Spanish is the official and spoken language. English is also spoken widely in urban areas and is often used in commerce and international trade.

Currency

Costa Rican Colon (¢)

Exchange Control

None.

Type of Law

Based on French Civil Law.

Principal Corporate Legislation

Commercial Code, Law No. 3284, passed on September 19, 1964, and its subsequent amendments.

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COSTA RICA COMPANY INFORMATION

Type of company for international Trade and Investment

Generally, stock corporations are incorporated as "Sociedades Anónimas" under the Commercial Code, articles 102 ff.

Procedure to Incorporate

By presentation of the proposed corporation's signed Articles of Incorporation before a Notary Public who creates a Public Deed for registration at the Public Registry.

Restrictions on Trading

Private banking, public finance, investment funds, collective investment schemes, and pension funds are allowed, but the Government must authorize operations. Insurance and the distribution of petrol, gasoline, and diesel are prohibited as they are state owned monopolies. There are also restrictions placed on the provision of utility services such as telecoms and power. Trustee services are permitted.

Language of Legislation and Corporate Documents

Spanish.

Registered Office Required

Yes, must be maintained in Costa Rica at the address of the Registered Agent.

Name Approval Required

Yes.

Shelf Companies Available

Yes.

Time to Incorporate

3-4 weeks, subject to name approval.

Name Restrictions

A name that is similar to or identical to an existing company. Names of well-known companies incorporated elsewhere or a name that implies government patronage.

Language of Name

Names may be expressed in any language using the Latin alphabet. The Registrar requires a Spanish translation.

Names Requiring Consent or a Licence

Bank, savings, assurance, reinsurance, fund management, investment fund, or their foreign language equivalents. "Trust" or "Trustee" is permitted.

Suffixes to Denote Limited Liability

"Sociedad Anónima" or the abbreviation "SA."

Disclosure of Beneficial Ownership to Government Authorities

No requirement.

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COSTA RICA COMPLIANCE

Authorised and Issued Share Capital

The standard authorised share capital is Colones 10,000 divided in to 100 common voting shares of Colones 100 each however 25% of the issued capital must be paid up on incorporation. The capital may be expressed in any convertible currency. The minimum issued capital is one share at par value.

Classes of Shares Permitted

Preferred shares and registered (nominal) shares.

Taxation

No corporation tax is levied on non-Costa Rican sourced income.

Tax Return

The Company must file a tax return annually irrespective of whether it is liable for pay tax on in its income.

Double Taxation Agreements

Only Tax Information with the USA. The authorities have begun negotiations with several countries to avoid the double taxation of income. By 2009 Double Taxation Agreements had been signed but not yet ratified with Spain, Germany and Romania. Negotiations are in progress with Israel, South Korea, Switzerland and Canada.

Investment Protection Treaties

Germany, France, Romania, Chile, Great Britain and Switzerland.

Government Fees

Annual Return US$ 51 is payable.

Financial Statements Required

Whilst there is no requirement to file audited accounts with the authorities, a company is required to keep financial records, which reflect the financial position of a company.

Board of Directors

Costa Rican companies are required to appoint a minimum of three officers (president, secretary and treasurer) who may also be the directors, and may or may not have Costa Rican citizenship. Additionally one statutory comptroller (any natural person) is required. Meeting can take place anywhere in the world provided that provision is made for this in the Articles.

Shareholders

The minimum initial number of shareholders (subscribers) at the time of incorporation is two; thereafter a single shareholder is permitted which may be an individual or body corporate.

Meeting of Shareholders

Must take place annually and can be held anywhere in the world provided that provision is made for this in the Articles.

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HOW TO PROCEED

A bespoke 'offshore' solution can be complex and requires careful planning and execution. We therefore encourage our clients to contact us directly, without obligation, for a Free Initial Consultation.

Our experienced consultants will gladly assist with advice on how to approach your particular challenge.

To make contact with a consultant at one of our offices who speaks your language, click here for a full list of our office contact details.


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