Andrey Dorado and José Miguel Zamora of Arias & Muñoz in San José provide an introduction to capital markets in Costa Rica

Public offerings and activity in the Costa Rican Stock Exchange are rare because of both the country’s largely consolidated banking industry and the relative ease with which companies can obtain a loan. The Costa Rican Stock Exchange is aware of this situation and hopes to invigorate the highly unattractive stock market and very complicated alternative stock market. It has proposed new regulations for public offerings and new rules for the Costa Rican Alternative Stock Market. However, this article will outline the current rules for public offerings - as the proposed new rules have not yet been made public - as well as the current and proposed regulations for the Costa Rican Alternative Stock Market.

Under Costa Rican law, a public offering is any offer, express or implied, for issuing, placing, negotiating, and trading securities and is transmitted either to the general public or to specific groups through any medium. Public offering includes both the general public offering and the restricted public offering. The general public offering is addressed to the general public; the restricted public offering is addressed to only institutional and sophisticated investors. (In the latter case, a sophisticated investor is any investor with a net wealth equal to or greater than $1 million.)

Additionally, an offer only constitutes a public offering if it complies with either of the following conditions: (1) It is performed on Costa Rican territory to persons not necessarily domiciled in Costa Rica or (2) it is addressed to persons domiciled in Costa Rica, but the offer originates from another country. Even if the offeror does not participate directly in the negotiation or if the negotiation is performed in a foreign market, the offer would still be considered public. Also, an offering is presumed public when the offer or placement of securities is: (1) presented through mass media: such as the press, radio, television, and internet or disseminated by any other means; (2) undertaken by an issuer of securities of the same issuance, or with similar characteristics to those of other public offer securities of the same issuer; (3) issued in a standardised manner, irrespective of the method used to offer them; (4) an issuance between more than fifty investors who are not part of the issuer’s economic interest group: not considering the percentage that these securities represent in the issuance. All Public Offerings are regulated and the General Superintendence for Securities Exchange must authorise them.

Given the tight regulations regarding Public Offerings, in 2007 the Costa Rican Stock Exchange created and supervised the Costa Rican Alternative Stock Market (Spanish acronym: MAPA) to provide certain companies access to funding through equity. MAPA is a venture capital market whose main purpose is: 1) to operate a platform for small to medium sized businesses, that have a medium to high level of risk, from which these businesses can attract “sophisticated investors” (under MAPA rules, ‘sophisticated investors’ are individuals able to invest a minimum amount of $50,000) to invest in these businesses, in exchange for stock options; and 2) to create a platform from which sophisticated, and preferably expert, investors can purchase stock options in developing companies that, because of the risk involved, have the potential for high returns while also providing additional investor’s rights’ protection; especially, for those with a minority interest. MAPA operates on a private offer basis so any company can negotiate privately with its investors, and these investors can purchase company shares without requiring the General Superintendence for Securities Exchange’s authorization.

To join MAPA, a company must fulfill the following requirements:

  • Type of entity: MAPA is open only to Corporations (Sociedad Anónima).
  • Operation term: The entity must have a consolidated business model and be able to attract private investors; therefore, the entity must have operated on its own, in Costa Rica, for at least two years.
  • Sponsor: A registered MAPA Sponsor must “adopt” the company. Sponsors play a key role as bonding agents between the investors, the company, and the Stock Exchange. Sponsors are also responsible for conducting the Eligibility Evaluation that determines the managerial team’s expertise level, the company’s financial health, and its ability to attract company investment.
  • Company Value: Minimum company value is between $250,000 and $300,000.
  • Amendment of Bylaws and the Shareholder’s Agreement: these amendments are necessary if the Bylaws and/or Shareholder’s Agreement did not incorporate, amongst other provisions, protection for minority shareholder’s rights. Furthermore, any entity admitted into MAPA must have a maximum of 50 shareholders.

MAPA operated under the previously mentioned rules until October 2015 when the Stock Exchange decided to halt operations and draft the new rules. Additionally, to ease regulations, the Stock Exchange has proposed: (i) working jointly with exchange posts so that they may buy and sell MAPA companies’ issued stock; (ii) replacing “sophisticated investors” with “professional investors” and focusing on both their expertise and their advisors and no longer on the amount each individual investor can invest;
(iii) lifting the maximum 50-shareholders limit; although, it is not yet clear if the amount is to be increased or unlimited; (iv) easing regulations regarding the required amendments; and (v) focusing MAPA mainly on medium-sized companies who can export internationally.

If and when these changes are introduced is still unknown. Nevertheless, introducing new rules to invigorate both the Costa Rican Stock Market and MAPA is necessary and a good sign that Costa Rica wishes to both create new ways for its companies to grow - without taking on extra debt - and provide current and future investors with new and attractive opportunities.


Andrey Dorado
Arias & Muñoz
San José

José Miguel Zamora
Arias & Muñoz
San José