The Costa Rican Government has issued a new law that requires that all shareholders must be registered at the Central Bank through a series of formalities.
The companies on default will be considered “Defaulter” and will not be able to obtain corporate certifications, file modifications to its bylaws and risks to be charged with a sanction of one base salary (about US$745) if they do not file the information in 3 days after each notification. Take into consideration that Corporate certifications are required for must diligences before the government institutions.
By the end of the 1980´s, an inter-governmental body that would develop and promote policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction was established. This body is called the Financial Action Task Force (FATF).
FATF has developed a series of Recommendations throughout the years that have become an international standard for anti-money laundering and counter-terrorist financing. These Recommendations have been revised several times to ensure they remain up to date.
Another organization that has unfolded recommendations and guidelines for countries all over the world is the Organization for European Economic Cooperation (OEEC).
Recommendations from both organizations require countries to ensure that information on the beneficial ownership of legal entities and legal arrangements can be accessed by the authorities in order to be able to perform investigations related to suspect accounts and/or assets and also allowing some financial institutions and professions to implement a proper “know your client” diligence.
Shortly after the implementation of FATF Recommendations identified as 24 & 25, Costa Rica implemented a new law named “Law to Improve the Fight Against Tax Fraud” (Law #9416). Among the new rules imposed by this new law, the obligation for legal entities and other legal arrangements to disclose the identity of the legal and final beneficiary or beneficial owner becomes a drastic change in the way this information has been handled until now. Some even say this defines the end of the anonymity provided by Corporations and similar entities and legal arrangements.
The definition of “final” or “effective beneficiary” in the law, follows the definitions established by the international organizations: the purpose of the registry is to have records of the natural persons who actually own and take advantage of capital or assets of the legal entity or legal arrangement, as well as on those who really control them, even if they do not occupy a formal position within the legal entity or arrangement. The authorities are after the natural persons that exercise effective control.
In April 2018, some of the rules and regulations that will apply to the new Registry were adopted in Executive Decree #41040-H. The first, and perhaps the most controversial rule is that, to interact with the Registry, the legal representative of the legal entities or arrangements must have a digital signature certificate. This rule creates a problem for all foreigners that do not have Costa Rican residency because they cannot obtain the digital signature certificate. Even though our legal system confers full legal value and effectiveness to digital signature certificates issued abroad (as long as those certificates fulfill all the requirements set out in the Law of Digital Signatures, Certificates and Electronic Documents and if there is a reciprocal agreement in place between our country and the country of origin providing the certification), the truth of the matter is that our authorities did not contemplate this issue at all. In an effort to provide a solution, the Tax Administration along with the Costa Rican Drug Institute, have drafted a resolution that pretends to outline the specific requirements for the registration process and timelines. This resolution is under revision right now and it could be amended or changed. This preliminary version of the resolution includes the possibility for the legal representative of the legal entity to authorize, via power of attorney executed in front of a Costa Rican Notary, a natural person with access to the digital signature certificate. However, it is still uncertain if the power of attorney can be granted through a shareholders´ assembly which will facilitate the process.
The legal representative or the authorized person will have to register during the first quarter of 2019. Then, starting in the month of March, the 2019* declaration must be filed following the same criteria used for RUT registration: last digit of the corporate I.D. number.
Once a year, every year, during the month of April, all legal entities and other legal arrangement such as but not limited to: trusts, non-profit organizations, etc, must provide the required information. Also, 15 business days after a natural person has acquired 15% or more of the legal entity or legal arrangement, an extraordinary declaration must be filed.
*Note: This dates were modified. Please review the new dates at: https://corderoabogados.com/new-dates-transparency-and-beneficial-ownership-registry/
Rolando González Calderón