Regulation of M&A Deals in Costa Rica

Normally, concluding an M&A deal in Costa Rica begins with executing an LOI or MOU. Also, it involves discussing terms under which DD of an M&A deal in Costa Rica will be taking place. Usually, NDAs are concluded before or after concluding preliminary agreements.

Regulatory Framework

Those seeking to conclude an M&A deal in Costa Rica should keep in mind that transactions like these are regulated by Costa Rica’s Commercial Code. It also governs liquidation &  termination of enterprises & lays the regulatory basis for M&A deals & corporate transformations. Another piece of legislation governing M&A deals in Costa Rica is the Consumer Protection Act.

Agreements for purchase of companies’ stakes aren’t regulated by Costa Rican legislation. That said, Costa Rican regulations do apply when it comes to properly registering & transferring stakes of Costa Rican companies.

Obtaining Ownership of Companies’ Shares in Costa Rica

When it comes to transferring title in Costa Rica, parties may be required to fulfil various formalities. For instance, to transfer ownership of a share certificate in Costa Rica, they must have a physical share certificate. In addition, they will have to make a corresponding entry in their shareholder book. Transfering quotas in LLCs requires making a corresponding entry in a company’s accounting records. Physical approval isn’t required.

To transfer IP & real estate of Costa Rican companies, parties must fulfil certain regulatory formalities. In particular, they’ll have to notarize documents necessary for a transfer to take place. Also, they may have to register some of the aforementioned assets or obtain an ownership certificate in Costa Rica.

Multiple Sellers

Buying shares of Costa Rican companies requires getting approval of their shareholders. Shareholders may request compensation if they disagree with their shares being sold. When it comes to selling assets accounting for ten or more percent of the entire company’s assets, approval of a BoD will be required.

Exclusion of Assets/Liabilities

Excluding labor, tax, environmental & social obligations from M&A agreements isn’t allowed. Alternatively, after selling assets, liabilities may be included in M&A agreements by purchasers.

Costa Rica: Transferring Companies’ Shares/Assets

Foreign ownership is allowed; however, to conduct international M&A transactions in Costa Rica, parties have to observe certain restrictions. For instance, they aren't allowed to own immovable property in coastal areas. 

3rd Parties

Conducting mergers with other legal entities requires getting approval of a company's stakeholders. Selling assets representing ten or more percent of a company’s assets, requires getting approval of a BoD. Selling other assets/shares doesn’t require getting shareholders’ consent.