Choosing The Right Corporation In Costa Rica: SA vs SRL

Deciding on the best corporation in Costa Rica to serve as an investment vehicle is a typical concern among expats.

In Costa Rica, the two most frequently used corporate forms are the “Sociedad Anónima” (SA) and the “Sociedad de Responsabilidad Limitada” (SRL). Each offers stockholders protection from personal liability and operates as a separate legal entity from its owners. Expert guidance from Costa Rica lawyers, particularly those familiar with Costa Rica expat lawyers, can be invaluable in this process. Let’s dive in:

Key Considerations for Choosing Between an SA and an SRL in Costa Rica:

When determining which corporate structure suits your needs, consider the nature of your business, investment, or transaction, and the complexity of the relationships among stockholders.

Both the SA and the SRL have bylaws that can be tailored to the stockholders’ interests, offering the necessary flexibility to manage business operations effectively. However, entrepreneurs often underutilize these bylaws due to a lack of professional guidance from experienced Costa Rica lawyers.

Understanding the SRL Structure:

The SRL is one of the two most common types of corporations used in Costa Rica to conduct business, make investments, buy real estate or secure assets. This type of corporation in Costa Rica features a simpler structure without a board of directors, managed by one or more managers who may also be stockholders.

The SRL’s capital stock is divided into quotas recorded in the corporation’s Quota Holders Register. A key aspect of SRLs is the restricted transferability of quotas, which includes a right of first refusal for existing quota holders, ensuring the preservation of the close-knit stockholder structure.

If a quota holder wishes to transfer his/her quotas to a third party, he/she must first offer them on the same terms and conditions to the remaining quota holders, who have the right to purchase them in the same proportion to the stock they already own. If none of the quota holders accepts the offer to purchase, then sale to a third party is authorized.

These rules are intended to protect the kinship or relationship between the stockholders and, in several types of businesses and transactions, must be carefully studied or supplemented with a stockholder’s agreement so as not to impede the corporation’s operation or decision-making process.

Understanding the SA Structure:

Conversely, the SA is suited for larger operations and is managed by a board of directors comprising at least a president, secretary, and treasurer. These positions have specific functions and powers within the operation of the SA. Additionally, a comptroller must be appointed, which is a mandatory position that cannot be occupied by a member of the board of directors. The SA capital stock is divided into shares, which are registered in the corporation’s Shareholders Register. Shares can be transferred by simple endorsement of the share certificate and share transfer restrictions are only applicable when established in the corporate bylaws or by shareholder’s agreement.

Making the Right Decision for Your Corporation in Costa Rica:

The choice between an SA and an SRL should be based on the size of your business, the desired level of control over operations, and your relationship with other stockholders. Each structure offers unique advantages and may be more suitable depending on your specific business needs and goals in Costa Rica.

If you’re considering establishing a corporation in Costa Rica and need detailed information or assistance in deciding whether an SA or SRL is right for you, please get in touch for a courtesy e-meeting.