When establishing a company in Costa Rica, two of the most commonly used corporate structures are the Sociedad de Responsabilidad Limitada (S.R.L.) and the Sociedad Anónima (S.A.). While both entities offer limited liability to their shareholders or quota holders, they differ in certain aspects related to social capital, transfer of ownership interests, administration, supervision, legal reserves, corporate books, and meetings. Choosing the appropriate vehicle depends on the nature of the business, the profile and country of origin of the investors, and the intended management structure.
One of the primary distinctions lies in ownership. In an S.A., social capital is represented by common and registered shares. The transfer of shares is made through endorsement of the share, an entry in the Shareholders’ Registry Book and a share assignment contract. There is no limitation on the transfer of shares unless otherwise established in the company’s by-laws. In an S.R.L., ownership is represented by quotas, and the transfer of such interests is more restricted. It is made through an assignment agreement, requires prior approval of the partners—unanimously, unless the social pact allows approval by three-fourths of the partners—and must be recorded in the corresponding Quotaholders’ Registry Book.
The management structure also differs. An S.A. is administered by a board of directors composed of at least three members, namely president, secretary, and treasurer. It must also have a comptroller responsible for supervising the correct administration of the company. By contrast, an S.R.L. is managed by at least one manager (gerente), and the comptroller figure is not applicable.
There are also differences in corporate books. An S.A. must keep three legal books: Shareholders’ Meetings Book, Shareholders’ Registry Book, and Board of Directors’ Minutes. An S.R.L. must keep two: Quotaholders’ Meetings Book, Quotaholders’ Registry Book.
Finally, the types of meetings differ between both entities. In an S.A., ordinary meetings are held at least once a year to approve or disapprove reports on the results of the annual exercise, decide on distribution of profits, and make appointments or revocations. Extraordinary meetings are used to modify the articles of incorporation, authorize shares or titles not provided for in the articles of incorporation, and address other matters. In an S.R.L., there are only general shareholders’ meetings.
From a practical standpoint, both structures provide limited liability protection and are widely used by local and international investors. The choice between an S.R.L. and an S.A. should therefore be guided by considerations such as the desired level of control, transfer flexibility, governance preferences, possible impact in taxation on home country of the partners, and long-term business objectives.
At Lang & Asociados, we regularly advise clients on the selection and structuring of corporate entities in Costa Rica, ensuring that each structure aligns with the client’s operational needs and strategic goals. Selecting the right corporate vehicle at the outset is a key step in building a solid foundation for any business in the country.