AGM Requirements in Costa Rica: A Compliance Guide

Holding an Annual General Meeting (AGM) in Costa Rica is a fundamental compliance requirement for corporations operating in the country. This article walks legal, tax, and compliance professionals through the key requirements, timelines, and procedures for conducting AGMs under Costa Rican law, from convening shareholders to approving financial statements and documenting decisions. Whether you’re managing entities across Latin America or overseeing Costa Rican subsidiaries, understanding these obligations helps ensure smooth governance and regulatory compliance.

When must companies hold their AGM?

Costa Rican law requires corporations to convene an ordinary general meeting at least once a year. The meeting must take place within three months following the close of the company’s financial year. This annual gathering serves as the primary forum for shareholders to review company performance, approve financial results, and make key governance decisions.

Missing this three-month window doesn’t trigger statutory penalties, but failing to hold AGMs creates governance gaps and potential liability concerns for directors and administrators. Regular meetings demonstrate sound corporate housekeeping and protect management from future disputes.

Who can call the AGM and how?

Every shareholder has the right to request that the general meeting convene to approve the annual balance sheet and deliberate on profit distribution. The specific procedures for calling meetings are typically outlined in the Articles of Association. In the absence of such provisions, notice must be published in Costa Rica’s official gazette, La Gaceta.

Notice requirements demand careful attention to timing. Unless the Articles specify otherwise, at least 15 days’ advance notice is required before the scheduled meeting date. This period excludes both the day of publication and the meeting date itself. During this notice period, companies must make all relevant books and documents available to shareholders at the registered office.

Interestingly, companies can bypass formal notice requirements entirely if all shareholders are present and unanimously agree to hold the meeting and waive the notice procedure. This flexibility must be documented in the meeting minutes and signed by all attendees.

Can the AGM be postponed or rescheduled?

Costa Rican corporate law provides limited postponement rights. Shareholders representing at least 25% of shares present at a meeting can request postponement of voting on any matter where they feel insufficiently informed. However, this postponement cannot exceed three days and doesn’t require a new formal notice.

This right serves as a protective mechanism for minority shareholders but comes with restrictions—it can only be exercised once for the same matter. Therefore, companies should ensure adequate information disclosure before meetings to minimise disruption.

What quorum and voting thresholds apply?

The requirements differ based on whether the meeting is ordinary or extraordinary, and whether it’s the first or second call.

For ordinary meetings on first call, at least half of all voting shares must be represented. Resolutions pass when approved by more than half of votes present. Extraordinary meetings require higher thresholds—at least three-quarters of voting shares must be represented on first call, and resolutions need approval from more than half of all shares (not just those present).

On second call, both ordinary and extraordinary meetings are validly constituted regardless of attendance levels. Resolutions still require approval from more than half of votes present. Companies can streamline this process by issuing both first and second call notices simultaneously, provided the meetings are separated by at least one hour.

How can shareholders participate?

Shareholders can attend meetings personally or through representation. Costa Rican law permits shareholders to appoint proxies using either a general power of attorney or specific authorisation for the meeting. The proxy holder need not be a shareholder themselves, providing flexibility in representation arrangements.

Meetings must be attended by at least one director or administrator and one company prosecutor. Without this presence, the meeting may only be adjourned once. Unless the Articles specify otherwise, the Chairman of the Board of Directors presides, with the Board Secretary serving as meeting secretary. If either is absent, shareholders present can elect replacements.

What matters are typically addressed?

The standard AGM agenda covers several core items that form the backbone of annual corporate governance:

• Reviewing and approving (or disapproving) the annual report presented by administrators on company results
• Deciding on profit distribution according to the corporate deed provisions
• Appointing or revoking appointments of administrators and oversight officials
• Addressing other ordinary matters specified in the corporate deed

The person or body calling the meeting prepares the agenda, listing all business items for discussion and approval. Shareholders or directors can propose additional items, though procedures vary based on company bylaws.

Companies can address both ordinary and extraordinary business at the same meeting, provided the notice explicitly states this. This efficiency measure helps consolidate governance activities while maintaining proper procedural transparency.

What financial reporting obligations apply?

Annual financial statements form a critical component of the AGM. These documents must include comprehensive information for each fiscal year:

• Balance sheets must detail current and non-current assets and liabilities, specifying whether rights and obligations are documented or collateralised. Foreign currency items require separate disclosure in their respective categories.
• Profit and loss statements must separately show results from ordinary operations and extraordinary activities. Additional required statements cover cash flow variations and changes in equity throughout the year.
• Notes to financial statements provide essential context—explaining preparation bases, measurement and recognition methods, and accounting policies applied. This supplementary information helps shareholders understand the numbers behind the company’s financial position.

Companies must keep copies of financial statements and related documentation on file, available for shareholder review. Management reports and statutory controller reports (where applicable) should likewise be accessible to shareholders before the meeting.

Financial statements and the management report require formal approval at the annual ordinary shareholders’ meeting. This approval represents the shareholders’ acceptance of how management has conducted the company’s affairs during the reporting period.

Are financial statements required to be audited?

Costa Rica doesn’t mandate universal audit requirements for all companies. However, specific categories face compulsory auditing:

• Regulated companies operating in supervised sectors must have their financial statements audited according to their regulatory framework.
• National Large Taxpayers declaring losses or zero profits must now submit audited financial statements automatically to the Tax Authority, without waiting for a formal request. This represents a recent regulatory change—previously, these taxpayers only submitted audited statements upon specific Tax Authority request. The submission deadline is three months following the close of the Corporate Income Tax fiscal year, with possible extension for an additional three months in cases of unforeseeable circumstances or force majeure.

Other taxpayers remain subject to the previous rules—they’re not required to submit audited financial statements unless the Tax Authority formally requests them.

How are dividend distributions decided?

Profit distribution decisions must follow strict legal requirements to protect company capital and creditor interests. Companies cannot distribute dividends except from realised and liquid profits confirmed by an assembly-approved balance sheet.

If the company has experienced capital losses, these must be legally reinstated or reduced before any profit distribution. Administrators bear personal responsibility for distributions made in violation of these provisions—a powerful deterrent against improper dividend payments.

Before distributing profits, companies must allocate 5% of net annual profits to a legal reserve fund. This obligation continues until the fund reaches 20% of share capital. Only after making this reservation, plus any other reserves required by the corporate deed, can the assembly approve dividend distributions.

Once the assembly agrees to distribute profits, shareholders acquire an enforceable right to collect their corresponding dividends. If payment is agreed in cash, it becomes collectable through executive legal means when due. The certification of the assembly’s agreement serves as an executive title for collection purposes.

Companies must pay approved dividends within three months following the close of the meeting. This deadline ensures shareholders receive their distributions within a reasonable timeframe after approval.

Costa Rican law also prohibits companies from making loans or advances to shareholders on their own shares or social participations—a safeguard against capital manipulation and related-party transaction abuse.

When do AGM decisions take effect?

Corporate changes decided at the Annual General Meeting become effective on the date of registration with the relevant authorities. For director appointments, the corporate deed typically specifies fixed terms. Directors whose terms have expired continue performing their duties until successors can legally exercise their positions—preventing governance vacuums during transition periods.

The Articles of Association may provide for substitute directors, offering continuity mechanisms when primary directors cannot serve. This flexibility helps companies maintain stable leadership through planned or unexpected changes.

What documentation and record-keeping requirements exist?

Proper documentation ensures legal compliance and creates a reliable corporate record. Meeting minutes must be recorded in the company’s official book and signed by both the president and secretary of the meeting. These signatures authenticate the proceedings and confirm accuracy.

Companies must create a file for each assembly containing a copy of the minutes, documents proving the legality of meeting notices, and records of accredited representations (proxies). This comprehensive filing system provides evidence of proper procedure and protects against future disputes about meeting validity.

Costa Rican law recognises multiple signature methods for documentation—traditional handwritten signatures remain valid, alongside electronic signatures facilitated through platforms like DocuSign. The appropriate signing method depends on document type and circumstances, so consulting document flow procedures ensures compliance with specific requirements.

What are the consequences of non-compliance?

While Costa Rican law doesn’t establish specific penalties or fines for failing to hold the Annual General Meeting, compliance remains highly advisable for multiple reasons. Regular AGMs demonstrate orderly corporate housekeeping and help companies maintain good standing with stakeholders.

More importantly, failing to hold meetings creates liability concerns related to management oversight. Without formal shareholder review and approval of financial statements and management decisions, directors and administrators face increased exposure to potential claims. The AGM provides a documented forum where management accounts for its stewardship—protecting both shareholders and management through transparent governance.

Companies should view AGM compliance not merely as a legal formality but as an essential governance practice that strengthens corporate structure and accountability.

What’s next?

Managing an Annual General Meeting in Costa Rica requires detailed planning and full legal awareness. For more insights into processes in other jurisdictions, explore our article AGM Requirements in Uruguay: Essential Compliance Guide.

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