Specific constrains of the main legal entities used by foreign investors for investing in Costa Rica include:

Corporations

The following are the main constrains and features of the corporations:

Shareholders: Minimum two shareholders are required for constituting the corporation, but once incorporated, the number of shareholders can decrease or increase with no restriction. Shareholders can be individuals or legal entities, as well as nationals or aliens.
Capital: capital of the corporation is formed of the contributions of shareholders. These contributions can be made in cash, in kind or through personal work, and, when incorporated, at least 25% of this capital has to be paid. For doing so, shareholders must deposit contributions in cash in a corporation´s bank account. This transaction has to be certified by a public notary. Shareholders will receive shares of the company pro rata to their participation in the capital of the latter. These shares can by ordinary or confer preferential treatments and other privileges as established in bylaws. Bearer shares as well as shares with no economic value are prohibited.
Corporate bodies: a corporation is formed by three corporate bodies: the shareholders´ assembly, the board of directors and the statutory auditor. The shareholders´ assembly must meet at least once a year within the three months following the end of the fiscal year. At ordinary meetings, shareholders approve financial statements, distribute profits, appoint and dismiss members of the board and approve the statutory auditor´s reports. The board of director must have at least three members. These can be shareholders and no nationality restrictions exist. Nonetheless, if all members are non-residents, the board has to appoint a resident agent with sufficient powers to represent the company. Finally, all corporations are obliged to appoint a statutory auditor in charge of controlling management activities of the board of directors.
Head office: national corporations are free to transfer their head office to a foreign country, as there are no restrictions for doing so.

Limited Liability Companies

The following are the main constrains and features of LLCs:

Quota holders: Minimum two quota holders are required for constituting the company, but once incorporated, the number of shareholders can decrease or increase with no restriction. Shareholders can be individuals or legal entities, as well as nationals or aliens.
Capital: capital of LLCs is formed of the contributions of quota holders. These contributions can be made in cash, in kind or through personal work, and, when incorporated, at least 25% of this capital has to be paid. For doing so, quota holders must deposit contributions in cash in the company´s bank account. This transaction has to be certified by a public notary. Quota holders will receive quotas of the company pro rata to their participation in the capital of the latter. In order to transfer them, unanimous approval of all quota holders is required, unless a different majority, minimum of 75% of the quotas, is stablished in bylaws. If no approval is obtained, other quota holders and the company will have a preferential right to buy the quotas. If the preferential right is exhausted and the quotas are not acquired by the company or other quota holders, they may be transferred to third parties.
Corporate bodies: LLCs are formed by two bodies: quota holders assembly and the manager. Quota holders´ assembly must meet at least once a year within the three months following the end of the fiscal year. At ordinary meetings, quota holders approve financial statements, distribute profits, and appoint managers among others. Administration of the LLC will be done by one or more managers appointed by Quota Holders´ Assembly in accordance with company´s bylaws. These managers will be jointly and severally liable for the company´s obligations.

Investment Funds

The following are the main constrains and features of Investment Funds:

Management: an investment fund must be created and managed by an Investment Funds Management Company (“SFI”, by its acronym in Spanish) as explained in Section 2.1. SFCs have to be corporations or foreign entities that fulfill requisites established in Law No. 7732, and are required to hold a license issued by the Securities Superintendence. In order to obtain the license, the SFC must have a capital of at least CRC 30.000.000¹ , among other requisites. Additionally, SFCs must appoint a Commission of Investments in charge of realizing and executing the investments of the fund. When the Investment Fund is an open-ended one, it is required to have an Investors Assembly representing the fund´s investors and largely subject to the same rules as those for Shareholders´ Assemblies in corporations.
Investment: After the Securities Superintendence approves the fund, as referred in Section 2.1., the SFC is required to issue a Prospectus of Information that has also to be approved by the Superintendence, and which has to contain the investment policy of the fund. This prospectus has to be furnished to all investors. Any modification of it must be approved by the Superintendence. All investments executed through the fund must be in accordance with the investment policy specified in the prospectus.
Restrictions: SFC and/or its personnel cannot become investors of the fund, acquire stocks owned by the fund, nor sell to the fund shares and other stocks issued by it. Additionally, financial funds cannot obtain control of a company.
Special tax rules: profits originating from the investment in stocks already subject to interests tax, are not subject to other taxes different from income tax.

Foreign entities

The following are the main constrains and features of foreign entities:

Branches: foreign entities are able to do business within Costa Rica by establishing a branch in the country. Requirements specified in section 1.1 have to be fulfilled.
Head office: additionally, as referred in section 1.1, foreign companies can transfer their head office to Costa Rica. For doing so, the company must register in the Mercantile Registry. Under Costa Rican law, head office is the place where the board of directors´ meetings are held. Foreign companies with their head office within Costa Rica are subject to tax only on income sourced in Costa Rica, being exempted in regard with foreign income. Additionally, foreign entities can freely relocate their head office abroad, subject only to the requirement of registering the certificate the relocation decision is contained.

¹USD 1,00 is equivalent to CRC 531,33 (Costa Rican currency) approximately.

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