The Department of Revenue and Institute for the Control of Drugs published the new regulations that will govern the filing of the shareholder disclosure forms
As we have been indicating for sometime now the Costa Rican government passed a law that requires the mandatory disclosure of the shareholders and or beneficial owners of any corporate entities registered in Costa Rica. The filing obligation was originally set for March of 2019 but the tax department extended that deadline to September of 2019 so that they could publish the corresponding regulations and procedures for compliance.
The Costa Rica Department of Revenue and the Institute for Drug Control have published those regulations (DGT-ICD-R-14-2019) in the official government newspaper La Gaceta on April 3, 2018 (Alance # 78 Gaceta N. 66). In this article I will summarize the requirements of the regulations and the process required to comply. The full text of the regulations are attached below as well in Spanish.
What is the objective of the is law and regulations
The objective of this law is to identify all the shares of each legal entity registered in Costa Rican and then disclose the direct shareholders or the beneficial owners of those shares. Why are they doing this ? Costa Rica has applied to admission to the OECD (Organization for Economic Cooperation and Development). The organization promotes Global tax transparency and exchange of information. In order to comply Costa Rica passed the Law to Combat Tax Fraud (Ley para mejorar la lucha contra el fraude fiscal Ley N° 9416 del 14 de diciembre de 2016) which mandated the creation of this shareholder registry.
2. Who is obligated to comply with the disclosure requirements. The following entities must comply with the law:
- Costa Rican S.A. corporations (Sociedades Anónimas). The President of the company.
- Limited Liability Companies (Limitadas or Sociedad de Responsabilidad Limitada) The Manager or Assistant Manager.
- General Partnerships (Sociedad en nombre colectivo). The Administrator
- Limited Partnerships (Sociedad en comandita) The Manager
- Branches of Foreign Corporations in Costa Rica (The legal representative with power of attorney)
- Individual company with limited liability (Empresas Individuales de Responsabilidad Limitada) The Manager
- Civil law corporations (Sociedades civiles) Administrators
3. What is the legal representative supposed to do ?
The legal representative of these listed companies has the legal obligation to file the declaration disclosing shareholders and beneficial owners in the database created and managed by the Central Bank called the must Transparency and Final Beneficiaries Registry. The filing can only be done online at the web portal of the Central Bank know as Central Directo. That website is https://www.centraldirecto.fi.cr.
4. How do you file ?
In order to file the form the legal representatives must fist have obtained a digital signature card known as Firma Digital. The digital signature card is issued by the Costa Rican Central Bank either directly or through the following authorized Costa Rican banks.
- Banco Central de Costa Rica
- Banco Nacional de Costa Rica
- Banco de Costa Rica
- Banco Popular y Desarrollo Comunal
- Banco Bac San José
- Banco BCT
- Banco Lafise
- Banco Davivienda
- Banco Promérica
- Banco Scotiabank
- Coopealianza
- Coopenae
- Instituto Nacional de Seguros – INS
- Grupo Mutual Alajuela La Vivienda
- Vida Plena
As such the first step is to have a valid digital signature card. However, the digital card is only available for Costa Rican citizens with their cédula or foreigners that have residency and a valid DIMEX card.
5. What if you won’t be in the country or don’t have residency in Costa Rica how can you file ?
I have been getting a lot of questions from individuals that do not reside in Costa Rica on a permanent basis or that don’t have a residency status in Costa Rica but have a corporation.
Article 3 of the regulations indicates that in addition to the legal representative indicated above they will allow one sole Power of Attorney holder to do the registration. The Power of Attorney must be to a physical person with sufficient authorization to to do the filing. The law requires the Power of Attorney to be granted in the presence of a Notary Public in a public deed (escritura publica). Under this scenario it would be the obligation of the Notary Public to upload to the computer database the Power of Attorney with the Notaries digital signature card. Once uploaded to the system then the power of attorney holder can complete the declaration.
Generally there are two ways to grant a Special Power of Attorney (Poder Especial) for these purposes. The first one is when the legal representative if duly authorized to grant powers of attorney in the bylaws, personally appears before a Costa Rica Notary Public and grants on behalf of the corporation a Power of Attorney to a third party. The other alternative is when the shareholders convene a special meeting of the corporation and they grant the Power of Attorney by way of a shareholder resolution. This then requires the resolution to be extracted and certified in a process called a protocolization (Protocolización de Acta) by a Costa Rican Notary Public. This second alternative allows more flexibility for those individuals that do not reside in Costa Rica. They could confer a shareholder Proxy (Carta Poder) to somebody in Costa Rica to represent them at the shareholder meeting and then grant the Power of Attorney that way. I am monitoring the filing requirements and if any new information develops on the filing with Powers of Attorney I will keep you posted.
6. When do I have to file ?
The order of filing is determined by the last digit number of your corporate entity as follows:
Ending in 0 and 1 September 2019
Ending in 2 and 3 October 2019
Ending in 4 and 5 November 2019
Ending in 6 and 7 December 2019
Ending in 8 and 9 January of 2020
7. What information do they want ?
The following is the information that must be provided to comply with the law.
- Identification Information
- 1.1.1 Identification number
- 1.1.2 Name of the corporation
- 1.1.3 Commercial Name of the entity
- 1.1.4 Date of incorporation
- 1.1.5. Country of Incorporation
- 1.1.6 Main economic activity
- 1.1.7 Telephone Number
- 1.1.8 E-mail address to receive notices
- 1.1.9 Physical address to locate you.
- B. Summary of the Capital Stock of the Corporation
- 1.2.1 Type of stock
- 1.2.2 Currency of the capital stock
- 1.2.3 Total amount of shares
- 1.2.4 Shares distributed / issued
- 1.2.5 Shares held in treasury
- 1.2.6 Nominal unit value of the share
- 1.2.7 Total nominal value
- C. Details for each shareholder or beneficial owners of the shares
- 1.3.1 For individual owners
- 1.3.1.1 Identification information
- 1.3.1.1.1 Type of identification
- 1.3.1.1.2 Identification number
- 1.3.1.1.3 Name
- 1.3.1.1.4 Date of Birth
- 1.3.1.1.5 Place of Birth
- 1.3.1.1.6 Nationality
- 1.3.1.1.7 Telephone
- 1.3.1.1.8 Correo Electrónico
- 1.3.1.1.9 Country of Residence
- 1.3.1.1.10 Physical address where you are located
- 1.3.1.2 Details of Share Ownership
- 1.3.1.2.1 Date you first acquired the shares which must match the first share registration in the shareholder log book
- 1.3.1.2.2 Type of identification
- 1.3.1.2.3 How many shares do you own
- 1.3.1.2.4 How many voting right shares do you own
- 1.3.1.2.5 Disclose co-ownership rights if any
- 1.3.2.3 Indicate if there are any special conditions affecting the shares
- 1.3.2.3.1 Usufruct
- 1.3.2.3.2 Lien
- 1.3.2.3.3 Trustee
- 1.3.2.3.4 Tutor
- 1.3.2.3.5 Probate
- 1.3.2.3.6 Others
- If your shares are owned by a TRUST then you must disclose on the form all the information about the Trust and the Trustee.
- 1.3..3 Trusts
- 1.3.3.1 Identification Information
- 1.3.3.1.1 Identification number
- 1.3.3.1.2 Name
- 1.3.3.1.3 Country of Formation
- 1.3.3.1.4 Identification of Trustee
- 1.3.3.1.5 Name of the Trustee
- 1.3.3.1.6 Identification of the beneficiary of the trust
- 1.3.3.1.7 Name of the beneficiary
- 1.3.3.1.8 Identification of the Trustor
- 1.3.3.1.9 Name of the Trustor
- 1.3.3.1.10 Object of the Trust
- 1.3.3.1.11 Date the Trust initiated
- 1.3.3.1.12 Date the Trust ended
- If the shares are controlled by a Beneficiary or by another corporation or entity then you must also disclose that information.
- 1.4 Final Beneficiary by way of other forms of control
- 1.4.1.1 Type of identification
- 1.4.1.2 Identification Number
- 1.4.1.3 Name
- 1.4.1.4 Date of Birth
- 1.4.1.5 Place of Birth
- 1.4.1.6 Nationality
- 1.4.1.7 Telephone number
- 1.4.1.8 E-mail address
- 1.4.1.9 Country of residency
- 1.4.1.10 Physical address
- 1.4.2 Information about the control you have over the shares
- 1.4.2.1 Date on which you acquired the condition of final beneficiary
- 1.4.2.2 Any bylaws
- 1.4.2.3 Do you have the right to designate or remove the majority of the administrators, directors or supervisors of the corporation.
- 1.4.2.4 Do you have the control over any principal director or manager
- 1.4.2.5 Any other means of control
8. Do you have to file this declaration every year ?
Yes. After the initial filing Article 13 (a) indicates that an ordinary declaration must be filed in April of each year between April 1- 30th. Also, if shares are transferred at any time during the year it is the obligation of the legal representative of the company to report the transfer of shares within 15 days of the date the entry is made in the shareholder log book.
