Measure to protect minority investors advances

Lawmakers are moving to provide more protection for minority investors in the nation’s business enterprises. The measure is being characterized as a way to improve the investment climate in the country.

The measure is an initiative of the Ministerio de Economía, Industria y Comercio. The minister, Welmer Ramos, outlined the measure before the Comisión Permanente de Asuntos Económicos. The members for the committee then voted to send the bill to the full legislature for possible passage.

The measure defined a minority investor as holding 10 percent or less of the company stock. The bill would give such investors access to company books, financial documents and similar.

The measure, No. 19.530, also requires company managers to notify minority shareholders whenever there is a possible conflict of interest. And minority shareholders have the right to examine and deal that involved 10 percent or more of the company’s assets.

Company managers are required to use diligence and loyalty to act in the best interest of the company keeping in mind the interest of shareholders, employees and the public good, according to a summary of the bill.

If company managers do not provide essential information at the request of minority shareholders, a judge can order that to be done. There also is a provision for minority shareholders to seek an outside audit of the company.

The bill changes civil law, although company managers usually would be liable under criminal law for violating the trust of shareholders.

The summary to the bill notes that the World Bank “Doing Business 2015″ puts Costa Rica in 181st place among 189 nations in relation to protection of investors. Panamá is in 76th place and Colombia is 10th, said the summary. Ramos told lawmakers in his appearance that the measure would encourage growth of the nation’s businesses because it provides transparency and accountability.

The bill also would seem to cover real estate projects where ownership is expressed in shares of stock.

Some of these projects have continuing battles between the management, which maintains control, and individual residents.

The bill is likely to pass because it has moved through the legislature quickly. It was filed in early April.

The measure also would be a boon to expats who want to add investors to their business or real estate projects.

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