By: Garland M. Baker B.
Exclusive to A.M. Costa Rica
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Anyone with a company in Costa Rica is required to have legal books. The problem with them is they are easy to lose or misplace. It is virtually impossible to do business or maintain a company without the books. If there are assets in a company with no books and no representation, they are locked up and unreachable. Even to legitimate owners.
It can be a big headache to replace them, especially if for some reason no legal representative exist in the company.
Recently, Garro also won a major case against the Dirección Nacional de Notariado, the legal entity that supervises notaries. Attorney Garro has a reputation of going against the status quo when he finds confusion or injustice. Usually, he has to act alone.
He had found the Registro Nacional gave the power to replace books only to legal representatives, and no one else. Not even stockholders. Legal representatives can only be replaced with legal books, so if none exists and no representative is available, it would be impossible to replace company books.
Sociedad anónimas have three books and sociedades de responsabilidad limitada two.
The books common to both company structures are: Actas Asamblea de Socios or Actas Asamblea de Cuotistas (stockholders’ or shareholders’ minutes); Actas Registro de Socios or Registro de Cuotistas (registry of stockholders or shareholders).
The book that is unique to an S.A. is the Actas Junta Directiva or Actas Consejo Administration, the director’s or administrators’ minutes. This minute book records board of director decisions and is unique to this company structure because limited companies do not have directors, only a manager.
Before February 2013, the Diario (general journal), Mayor (general ledger) and Inventario y Balances (inventory and balances) were also required, but no longer.
Here is the current process to replace legal books as clarified by the Registro Nacional. The best place to start is obtaining a certificación literal for the company.
1. Go to the registro’s digital service.
2. Sign up for an account or login.
3. Purchase a Certificación Literal de Personas Jurídicas.
4. Review the document to see who has representación judicial y extrajudicial. This means judicial and extrajudicial representation for the company.
5. If there is a person with such power, he or she can replace company books by going to a public notary. If no person with such power is available, continue to step 6.
6. Find the stockholder(s) of the company.
7. The stockholder(s) need to go in front of a notary with any documentation they might have regarding their stock ownership. With this documentation in hand, they must make a declaración jurada or sworn statement in front of the notary they are the stockholders.
8. If the attorney is satisfied, he or she will proceed to replace the books.
9. Once the books have been replaced, the notary will proceed to change the representation of the company. This requires publishing another edict and filing a testimony from the notary with the new information in it at the registry.
The estimated total cost to replace books when a representative exists is around $1,000. The cost when one does not exist, about $1,500. Cost to start a new company around $750. Prices vary some between notaries.
Why would anyone in their right mind pay upwards to $1,500 to replace the books of an old company when a new one can be started for half that price?
The answer is assets, like property.
Many expats retire to Costa Rica in their golden years. Some of them pass on. When they do, it is not uncommon they are the only representatives in a company they set up to hold a home, property investment, business or other assets.
Legal books are bulky things. Some people throw them in a closet. Others do not know what they are and toss them in the trash. They are forgotten until one day arises when the assets they hold need to be sold or transferred.
Whatever the reason, when they are needed and cannot be found, panic ensues.
There are only two ways to transfer assets when they are in a company. One is by signing over the legal books to someone else. The other is by a legal representative transferring the assets in front of a notary. If no books or representative exists. The assets are stuck and cannot be sold.
In the case of heirs, they are double-stuck. To get to assets they need to start a probate, get awarded the ownership of the company and then start the process to replace books.
When one finds Costa Rican legal books lying around, they should check to see if they hold assets. This is simple to do at the Registro Nacional’s website. If they do not, the correct procedure is to take them to a notary and have it unregistered. If they do, it is a good idea to check to see if they are up-to-date and store them in a safe place.
In the case, where assets are in a company with no books or legal representation, they should be replaced and the company updated. If they are not, heirs might suffer the consequences or an opportunity lost.
Article first published in A.M. Costa Rica on July 20, 2015.
