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Company Liquidation in Costa Rica

Company Liquidation in Costa Rica

Company liquidation in Costa Rica is divided into two proceedings, which resemble in some aspects, but are different in others. According to the Company Law, the owners need specific reasons to close a company in Costa Rica.

Below, our company formation agents explain the mechanism behind winding up a company in Costa Rica. Our local agents can assist during this process.

Reasons to terminate a Costa Rican business

Here are the main grounds under which a Costa Rican company can undergo liquidation:

  • it has reached its expiration, according to the Articles of Association;
  • it is no longer able to complete its activities due to valid reasons;
  • it can no longer honor its contracts with clients;
  • it can no longer pay its debts to creditors;
  • it has lost at least 50% of its share capital and can no longer gather it;
  • it is the decision of the shareholders to terminate the business.

Our lawyers in Costa Rica can explain the exact provision of the Company Law in terms of closing a company.

Types of procedures for winding up a company in Costa Rica

A Costa Rican business can be terminated:

  • voluntarily;
  • through a court decision.

Except for two steps, the liquidation procedure is the same no matter the way the company will be closed. Our company formation agents in Costa can offer more information about them.

Company liquidation steps in Costa Rica

In order to close a company in Costa Rica, the shareholders need to follow a specific procedure that begins with a general meeting. Then:

  • an inventory of the assets and debts of the company will be completed;
  • all relevant authorities, starting with the Companies Register, must be notified about the liquidation;
  • the decision will be published in the Official Gazette hosted by the National Bank of Costa Rica;
  • liquidation of the movable and immovable assets of the company;
  • dissolution of the company.

The shareholders must also appoint the liquidator who will be in charge of the inventory and payment of the creditors.

These steps apply when winding up a company in Costa Rica voluntarily. When the creditors are the ones to request for the recovery of unpaid bills, the liquidation decision will be imposed by a court of law. The same court will appoint the liquidator.

Feel free to address our local specialists for assistance in understanding the steps to complete in case of company liquidation.

Authorities to notify when closing a company in Costa Rica

One of the important stages in Costa Rican company liquidation is notifying the tax authorities, apart from the Companies House. This stage also implies for the business to pay any outstanding taxes, as well as to file the last income statements. Also, in case the company has employees, it must also de-register for social security with the Social Security Administration.

For the formalities to be completed with the tax authorities, you can rely on our Costa Rican accountants who can handle de-registration for taxes and employment.

Company liquidation procedures in numbers

Costa Rica is an appealing country to open a company in, which is why the number of businesses filing for liquidation annually is quite low. However, in case you find yourself in the position of closing your enterprise, you should know that:

  • the procedure can take between 6 and 12 months if the entity does not have any debts;
  • in case of judicial proceedings, the procedure will often exceed 12 months;
  • a special case is that of companies failing to pay their corporate taxes for 3 years, as they will be automatically dissolved by the Companies Register.

Our lawyers are also at the service of foreign citizens who want to immigrate to Costa Rica. We can assist in applying for Costa Rican residency and/or citizenship, depending on the duration of their stay in the country.

If you need assistance in company winding up in Costa Rica, please contact our local agents.