● The Board of Directors must approve before the sale, acquisition, mortgage, or pledge of a company’s assets that represent a percentage equal to or greater than 10% of its total assets. Likewise, the obligation is regulated that any transaction of the company that involves the acquisition, sale, mortgage, or pledge of assets of this company with the general manager, with some of the members of the Board of Directors, or with related parties must be previously reported to the Board by whoever is involved in the transaction, providing all the relevant information about the interest is of the parties to the transaction. ● Right to Recess consists of a technical resource that protects minority shareholders, without requiring any minimum percentage to exercise it. This entails that every member may withdraw from the company before any substantial modification or resolution that generates an increase in their liability and may obtain reimbursement of the actual value of their shares. Per article 32 bis, there are five cases in which the Right to Recess could be applied, namely: (i) Extension of the Social Term; (ii) Transfer of the Social Domicile to the Foreigner; (iii) Transformation or Fusion; (iv) non- distribution of profits in two consecutive periods in which there have been profits; and/or (v) Change of turn or object. Although this is a little-known and applied right in practice, it is an essential tool for minority shareholders should they request it.

3. Limited Liability Company (Sociedad de Responsabilidad Limitada) 3.1 Constitution This type of business organization is a hybrid between a Partnership and a Corporation known as “Sociedades de Responsabilidad Limitada” or “S.R.L.s,” or limited liability companies. 3.2 Ownership The capital in a Limited Liability Company, unlike Corporations, is not represented by shares but by what is known as “quotas.” ● Minimum Capital: The quotes on a Limited Liability Company are required to have a value each of at least 100 Colones, Costa Rican legal currency. ● Currency: The capital in a Limited Liability Company cannot be established in a foreign monetary unit. ● Transfer: Unlike the shares of a corporation that can typically be easily transferred, the transfer of ownership of a quota holder is limited by the following rules: o Quotas may only be assigned

with the unanimous consent of the remaining quota holders. This limitation can be lowered to a maximum consent of seventy- five percent of the quota holders. o Quota holders may oppose a transfer, and thus, a right of first refusal would be constituted for the other quota holders to acquire the quotas under the same conditions as they were offered to third parties. If the quota holders do not exercise this option during the

ILN Corporate Group – Establishing a Business Entity Series

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