Author

Valeria Gutiérrez
Associate
Costa Rica
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Commercial Code Reform and Corporate Representation in Costa Rica

Recently, the Legislative Assembly approved Law No. 10840, “Law for the Harmonization of the Commercial Code and the Strengthening of the Special Power of Attorney,” which amends Articles 98 and 146 of the Commercial Code. Through this reform, the legislation aims to modernize the mechanisms through which companies are represented in their respective corporate meetings, particularly for micro, small, and medium-sized enterprises (SMEs) as well as small and medium-sized agricultural producers (PYMPAs).

The reform introduces changes to the manner in which shareholders may exercise their voting rights, which will impact corporate governance dynamics and corporate practice in the country. As a result, companies may need to review their corporate structures and internal practices to ensure that shareholder voting delegations are carried out properly and in accordance with the law.

As previously noted, the main changes introduced by the law relate to the ways in which shareholders’ capital may be represented in Quotaholders’ Meetings (for Limited Liability Companies) and Shareholders’ Meetings (for Corporations). Specifically, the reform now limits the use of proxy letters (“cartas poder”) for these corporate acts.

Although Law No. 10840 seeks to simplify certain mechanisms, its implementation could generate adverse effects on the corporate management of many companies, particularly those with shareholders residing outside Costa Rica. This is due to the restriction on the use of proxy letters, which historically have served as a practical tool to facilitate shareholder representation in corporate meetings.

While the regulation still allows shareholders to be represented through special, general, or broad powers of attorney to exercise their voting rights, SMEs and PYMPAs may now authorize a third party (whether a shareholder or not) to represent them through a special power of attorney granted for each specific act.

This mandate must meet specific requirements to be considered valid. Among these are the shareholder’s original signature, authentication by an attorney, and apostille certification when the document is executed abroad.

In practice—particularly for companies with foreign shareholders or individuals residing outside the country—this requirement could prove challenging in situations where meetings must be held with urgency or frequency. The process for granting a special power of attorney may require additional logistical steps, including:

  • Obtaining signatures abroad and coordinating formalities
  • Increased administrative and legal costs
  • The need to organize meetings further in advance
  • Potential delays in corporate decision-making
  • Greater scrutiny in validating each special power of attorney

Although the reform seeks to simplify processes and support certain sectors, from a corporate governance perspective it may introduce additional rigidity for a significant number of shareholders or quotaholders. This could result in delays in decision-making processes, greater dependence on formal power structures, and challenges for effective participation by shareholders who do not reside in Costa Rica.

Consequently, the Law for the Harmonization of the Commercial Code and the Strengthening of Special Powers of Attorney will require companies to review their representation mechanisms and adjust their internal procedures to comply with the new requirements established by law.

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