Planning To Invest In Costa Rica?
Below you will find the legal ABC’s of buying property in Costa Rica. Many of our foreign clients share similar concerns when we first discuss their investment plans in Costa Rica. Almost everyone we meet wants to know about the legal requirements and possible legal pitfalls of making an investment in Costa Rica. By following just a few basic steps you can make sure your Costa Rican venture is a very successful one.
Incorporating In Costa Rica
The most efficient way to buy property in Costa Rica is to purchase in a corporation’s name. The typical limited liability company (“Sociedad Anónima” or “S.A”.) must be incorporated by at least two people before a Costa Rican Notary Public. After incorporation, the shares may be transferred, making it legally possible to have a corporation in which one person is the owner of all the shares.
The incorporators must choose an original name that cannot be similar to any existing corporate name. They must then appoint a Board of Directors, with a minimum of three members: President, Treasurer and Secretary, and also appoint a Comptroller. A different person must occupy each of these positions. It is possible for the initial incorporators to occupy the positions.
Other crucial issues to be decided are the capital of the corporation (the higher the capital, the more registration taxes that must be paid), the number of shares composing such capital (Shares cannot be divided according to Costa Rican law, thus it is advisable to have a number of shares that would permit future distributions of the company), and the representation of the newly formed company (there must be at least one representative of the company with powers of attorney to act on its behalf. However, at the time of incorporation, or later on, the powers of the company’s representatives may be limited. For example, to specific actions or amounts).
Costa Rica has what we call a “hybrid” corporate system. The incorporation deed as well as all changes to the company’s by-laws, must be recorded in the Public Registry, where they are accessible to the public. All transfers of the company’s shares, however, are recorded in the Shareholders Registry Book, which is kept by the corporation and is only available to company shareholders and officials; other parties can only review it with a court order.
When you are buying real estate, it is advisable to do it in a corporation’s name. Doing so simplifies the transfer process. The corporate structure may also be more flexible for other transactions and organizational matters.
