The problem of the type of power to declare before the Transparency and Beneficial Ownership Registry and its relation to a democratic political model.

The problem of the type of power to declare before the Transparency and Beneficial Ownership Registry and its relation to a democratic political model.

Published on

22/04/2024
Blog
ics consultants office

On March 11, Decree No. 44390-H was published in La Gaceta, whereby the Regulations of the Transparency and Beneficial Ownership Registry were issued, in order to regulate the process of filing the declaration of beneficial owners with the Registry.

One of the new and most relevant aspects of this current regulation is that it establishes that the person responsible for providing the information, that is, for filing the declaration specifically for companies or legal entities, is the legal representative and only in exceptional cases, which must be duly justified, a general attorney-in-fact may do so.

As lawyer Adriana Herrero of ICS warned:

"The foregoing generates an important change, since, since the obligation of the beneficial owner declarations began to be in force, the same could be filed through a special proxy, which does not seem to be an option now. It is worth mentioning that the exceptional cases that may be filed by means of a general attorney-in-fact are not mentioned or detailed in the Regulation".

This implies a new difficulty, more paperwork, more costs. We love to see how we make everything more complex: the foreign representative must issue a general power of attorney to someone here in Costa Rica (he/she will surely have to go to a Consulate) and then such power of attorney must be registered before the Public Registry. More costs, time and paperwork to comply with a formal obligation imposed on those who act formally (while those who act informally, absolutely nothing happens to them). In addition, the decree clearly contradicts the commercial regulations and the same regulations that establish these compliance obligations. Again, it seems that sometimes we forget that only in Cuesta Moras do we legislate.

In the midst of this uncertainty, the Bar Association filed an appeal before the courts, endorsing the multiple concerns of all in this regard. By virtue of such action, last Friday, the third paragraph of Article 5 of the Decree in question has been ordered to be suspended by means of a provisional injunction:

"IT IS ORDERED TO provisionally SUSPEND the third paragraph of Article 5 of Executive Decree No. 44.390-H Regulation of the Registry of Transparency and Final Beneficiaries. In the event of requiring the declaration of RTBF when this judge suspends the mentioned paragraph, it must be understood that the norms established for such purpose by the legal system become applicable, this while the present measure is in force and until this authority has more elements of judgment to definitively resolve the precautionary request. NOTIFY." Vote of 10:52 hrs of yesterday, dictated by the Contentious Administrative Court of the Second Judicial Circuit of San José.

The underlined was what was suspended:

"Article 5.- Those responsible for the provision of information.

The person responsible for the provision of information is the natural person designated by law to act on behalf of the obliged subject, namely:

a) For legal entities, the legal representative.

b) For trusts, the trustee or person having a similar function.

c) For administrators of third party resources, the legal representative, or whoever exercises the powers of representation with administration faculties.

d) For non-profit organizations, whoever exercises the powers of representation.

For these purposes, the person responsible for providing the information must have a valid digital signature certificate for natural persons.

In exceptional cases, duly justified, the legal representative or similar may grant a general power of attorney for the filing of the declaration before the RTBF. The procedure and conditions for registering an attorney-in-fact shall be established by means of a Joint Resolution of General Scope indicated in Article 15 of these Regulations.."

The exercise of the power of the legal representative of a company to issue a power of attorney cannot be limited by decree. Only if the same law establishes a type of power of attorney required (such as the one required to contract a marriage) can the power to issue powers of attorney other than the general power of attorney be limited.

If the authorities, for reasons that I have no doubt will have to be considered, must modify the type of power to comply with the registry of final beneficiaries, they will have to submit the reforms to the Legislative Assembly. This is the way a democracy works, and it is the price to be paid to avoid the excesses of the concentration of power.

One has to understand that it must surely be easier to govern in a state that is neither republican nor democratic and that does not place the individual at the center. But freedom and legal certainty always come at a price that free men and women must be willing to pay.

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