corporation may be thing of the past A service of A.M. Costa Rica
corporation may be thing of the past
For Costa Rica Business
Overlooked by many in the crush of local news is the fact that Costa
Rica is about to eliminate the anonymous from the corporate structure
called a sociedad anónima or S.A.
The S.A. is a popular form of a corporation. Until now the shareholders
of most corporations were not known unless they chose to divulge that
Many foreigners own corporations here that do not have their name as
the responsible party. A common practice has been to name a lawyer or
someone with similar business background to be the president or holder
of a power of attorney to handle day-to-day affairs.
Such a person representing a company does not have to own any shares in
the entity. All the shares and the benefits derived from them can be
held by one or many other parties.
Until now the only listing of shareholders has been on the private
books of the corporation. Sometimes they would be disclosed. For
example, for a firm to do business with the government, the names of
major shareholders must be disclosed to avoid officials bidding on
In addition, when a firm seeks to become listed as a small or medium
enterprise, a designation that has some economic benefits, the names of
shareholders must be disclosed.
Media companies in Costa Rica also must disclose the names of
shareholders each year.
Not so the average firm. For that reason the S.A. could be used as a
tax evading device. A U.S. citizen could send money to a Costa Rican
S.A. without informing the tax authorities. Investigators would not be
able to pierce the veil of the corporation.
A proposed law, No. 18.041, awaiting the signature of President Laura
Chinchilla Miranda requires corporations to disclose the names of their
shareholders to the Registro Nacional. This is the same bill that
authorizes officials to assess a tax when the shares of corporations
are transferred. Until now such a transfer was tax-free. The bill would
assess a sales tax on what is being called an indirect transfer. There
are a few exceptions for certain types of transfers.
A.M. Costa Rica, a sister publicaiton, may be the only English-language
news source to have reported this information. The bill gained final
legislative approval Aug. 27, and this newspaper reported that fact
in the edition the next day.
Some readers have expressed surprise at the scope of the measure and
the fact that there has been no obvious objection to it by the business
Even though an anonymous corporation could be a good money laundering
or tax evading device, there also are legitimate reasons for having
such a corporate structure. Privacy and not alerting criminals to
wealth are among the legitimate reason.
The Chinchilla administration has characterized the bill as one to
tighten up tax collection and to attack fraud, so the president is
likely to sign it.