Costa Rica

The legal framework analysis aims to provide general knowledge of the national cooperative legislation and of its main characteristics and contents, with particular regard to those aspects of regulation regarding the identity of cooperatives and its distinction from other types of business organisations, notably the for-profit shareholder corporation.

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for Costa Rica.

The first Costa Rican cooperative regulation dates back to 1943, when the first Labour Code was enacted, a regulation was included (Art. 262) which declared cooperatives "as one of the most effective means of contributing to the sustainability and development of popular culture and Costa Rican democracy". This legal definition would later be replicated in the Political Constitution enacted in 1949 with the following regulation: "Political Constitution of the Republic of Costa Rica Article 64.-. The State will encourage the creation of cooperatives as a means to improve the living conditions of workers...".

These first cooperative precepts in Costa Rica would be part of the Labour Code until 1968 when, by Law 4179, the "Law on Cooperative Associations and creation of the National Cooperative Development Institute -INFOCOOP-" was enacted. Through this law, the Costa Rican cooperative movement would autonomously become established and thus modify the legal nature of these organizations, going from being cooperative societies, to being from then on, voluntary associations of people of an indefinite duration and limited liability. 

Cooperative friendliness

In Costa Rica there are no specific legal barriers or obstacles for the development of cooperatives, on the contrary, public policies and legislation in general are inclined toward the development of these associations. However, the Cooperative Associations Law requires comprehensive reform in order to adjust it to the reality currently brought forward by the cooperative movement. The current law was encouraged by the development of cooperatives, especially agricultural ones, with emphasis in coffee activity and the production for the consumption of basic grains. The current reality shows a movement that without abandoning agriculture, is inserting itself into other sectors of the economy, which requires a regulatory update.

Key recommendations for improvement

It is important to ensure that in the cooperative legislation and in the rest of the positive order of the country, the Cooperative Act is recognized, with its fundamental characteristics and that the actualization of the Law on Cooperative Associations should be derived from it.
New regulation that allows novel schemes is required for the capitalization of organizations, and it is necessary to regulate the procedures within cooperatives to modernize and facilitate the summons and execution of assemblies and meetings of administrative entities. Special regulation should be established for cooperatives that manage or distribute public services such as electricity, infocommunication services, health services, education services, etc.  It is also important to standardize in a particular way the existence of housing and consumer cooperatives, which have seen a reduction in the country.

Conclusions

In addition to the input from the responses of ICA member entities, the expert has consulted with well-known cooperative leaders and base associates, so the report drafted has a particular adherence with the latest views on cooperative legislation in Costa Rica.
Like in several Latin American countries, there has been discussion in Costa Rica about the relevance of taxing cooperatives, the issue should not be considered as resolved, legislators from new political generations do not have the same vision about the cooperative movement as their predecessors.

_{The legal frameworks analysis is a tool developed under the ICA-EU Partnership #coops4dev. It is an overview of the national legal frameworks at the time of writing. The views expressed within are not necessarily those of the ICA, nor does a reference to any specific content constitute an explicit endorsement or recommendation by the ICA.}