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Mergers in Costa Rica have become increasingly popular in the past few years. This is primarily due to the low tax environment offered by the jurisdiction. The special status of this zone is due to the absence of division of companies into residents and non-residents. The decisive role is played by the nature and territory of the firm.

If it is registered in Costa Rica and is active in this region, then it is subject to income tax at the rate of 25%. In all other cases, firms get rid of the need to pay annual fiscal fees. It is also important that when a number of conditions are met, companies completely get rid of government interference in entrepreneurial activity. This review will provide a brief analysis of the regulation of mergers in Costa Rica.

Filing a merger application in Costa Rica

The filing of a merger application is a mutual responsibility of the parties. When it comes to reorganizing a company through a merger in Costa Rica, there is no filing fee. Initially, stakeholders indicate their intention to conclude a merger in Costa Rica. Then they form an application, submit it and wait for permission from the regulatory authorities.

Sanctions for illegal transactions

To carry out an M&A deal in Costa Rica, you need to be patient, as the procedures can take a lot of time. If you rush and close the company before a decision is made to approve the deal, then the local regulator has the power to impose fines. Moreover, you put the entire trade at risk. The regulator can order its cancellation. The sanctions are determined based on the severity of the violation of the law and range from 0.1% to 10% of the company's profits for the previous financial year.

If the application is incomplete, the regulator may request additional information. However, if the application contains incorrect or knowingly false information, you again run the risk of being fined.
 

Stages of a merger in Costa Rica

In order to reorganize a company through a merger in Costa Rica, it is necessary to progressively go through all the stages. They are as follows:

  • 15 business days after the application is submitted, the initial review will begin and additional information may be requested;
  • Next, the regulator determines whether the transaction poses any risk to competition. If there are no risks, it is approved;
  • If a risk is identified, the applicant is given 10 working days to present arguments and evidence to challenge the concerns identified by the supervisory authority. This stage can take up to 3 months. As a result, the regulator either gives permission for the transaction, or the parties to the transaction must revise the terms to eliminate competitive risks;
  • The exact timing of a Costa Rica merger depends on the complexity of the deal and its potential market impact.

Conclusion

The beginning of the process of a business reorganization in the jurisdiction occurs after your application is submitted to the regulating authority that is responsible for such transactions. If there is no objection, then  the parties can conclude a merger transaction in Costa Rica within 30 days. If there are errors in filing or false information is provided, the regulator has the right to impose fines. For a more detailed explanation of how this process works, you may need advice on the regulation of mergers in Costa Rica. Our experts are ready to answer all your questions and provide the necessary range of services to support such a transaction.