Usufruct of shares in Costa Rica

By: Nikole Sánchez

The usufruct is a right that gives a third party the possibility to use and enjoy a property that does not belong to him and grants him the possibility to take possession of the fruits it produces, in this case, the civil fruits that are those that come from businesses where money is involved. This third party must always keep the property without making any alterations to it and does not have the power to dispose of it, since it corresponds exclusively to the owner.

The full ownership of the property is divided in two:

  • Nuda property: It is the right of a person (called nudo owner) to be the owner of a property with the limitation of not being able to use, enjoy or enjoy it.
  • Usufruct: It is the right of use, enjoyment, and enjoyment of a person (called usufructuary) on the property that belongs to the bare owner.

These are different rights over the same property, but they cannot be held by the same person, since when the usufruct is extinguished, the ownership is consolidated again.

The Civil Code allows the acquisition of the usufruct of movable property through testamentary dispositions, thus prohibiting the constitution inter vivos, thus limiting the owner’s freedom of disposition since it restricts the constitution of usufruct of shares inter vivos. On the contrary, the Code of Commerce has no express rule regulating the subject and is limited to establish, in supplementary rules, who will keep the voting rights when the ownership is divided.

When the shares are usufructuated, this right must be reflected in the Shareholders’ Registry Book and in the share certificate to assume the character of partner. If the company generates profits, the dividends will belong to the usufructuary, since he/she has the right to enjoy all the ordinary fruits (whether natural, industrial, or civil) produced by the property whose usufruct belongs to him/her. The civil fruits will belong to the usufructuary, day by day, and for the duration of the usufruct.

Also, in accordance with the Code of Commerce, the usufructuary shall have the right to vote in ordinary meetings and the bare owner in extraordinary meetings, unless otherwise agreed. In addition, if the shares are seized, both may retain their voting rights.

If the company repurchases the shares from the bare owner, the inherent rights of both the bare owner and the usufructuary will be suspended.

On the other hand, if the company owns real estate in its name and the shareholder transfers the bare ownership of the shares, reserving 100% and exclusively the right to vote, it is possible to affirm that there is an obligation to pay the tax on the indirect transfer of real estate, since it is considered that whoever owns the bare ownership continues to be the owner of the shares, and the usufructuary only reserves the use, enjoyment and enjoyment that comes from the possession of the shares. Since the usufruct is renounceable, any transfer of 100% of the bare ownership of the shares constitutes the taxable event.