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These stories were published Monday, Oct. 17, 2005, in Vol. 5, No. 205
Jo Stuart
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Purchase of a business has its own challenges
By Garland M. Baker
Special to A.M. Costa Rica

Most people believe selling a business in Costa Rica is like selling a piece of real estate.  This is not true.  There are other factors to consider and special rules that apply to the sale of a business.

Two different situations may arise:  The business may or may not be part of a real estate transaction.  However, the business sale part of the deal does not differ much between the two cases.

Normally, a business operates from a company structure like a sociedad anónima (S.A.), similar to what is called a corporation in the United States or as a sociedad de responsabilidad limitada (S.R.L.), comparable to a limited liability corporation.

When the business is in one of these company types, transferring the entity is as simple as transferring its stock shares to a purchasing party.  The new owners change the board of directors in the case of a S.A. and the managers in the case of a S.R.L. Then they restructure any clauses of the original constitution to suit their special needs.

This custom of transferring shares to change ownership is very commonplace but dangerous.  It is great for the seller but not safe for the buyers.  Credit instruments like prendas, referred to in English as chattel mortgages, letras, known as letters of exchanges, and pagarés or promissory notes live on for four years even after a closing.  These documents are usually undeclared or forgotten skeletons for which the purchaser is responsible.

Other obligations like bills to creditors, payroll withholding responsibilities, employee social benefit liabilities, and taxes all live on past a transfer of a corporation to a new owner.  Each of these items has a different statute of limitation.

It is much better to setup a new organizational structure, fresh and clean to hold the business that will be purchased.  A must is an agreement with the current owners to legally liquidated all employee liabilities and close the old company with the Dirección General de Tributación. Tributación is Costa Rica’s tax authority similar to the Internal Revenue Service or  Revenue Canada.

In addition, a buyer must remember that an operating business is composed of many different physical elements, such as furniture, telephones, merchandise, documents and computers, as well as non-physical things like patents, commercial licenses, brands, intellectual property, clients and goodwill.  Hacienda in Spanish is the word used to describe the totality of physical and intangible components that make up a business, and the word aviamiento to describes goodwill.

Sometimes it is just impractical to transfer all that makes up a running business to a new company structure, especially when the business is large. The new owners want to keep the good credit history, the operating bank accounts and the contracts with customers and suppliers. These assets many times outweighs the downside or the skeletons potentially lingering in the closet.

The secret is to use Chapter III, Articles 478 to 489 of Costa Rica’s Code of Commerce. These articles cover the Compra-Venta de Establecimientos Mercantiles e Industriales or the purchase-sale of mercantile and industrial establishments and offers specific rules and regulations to manage the transactions.

The most important and interesting of Chapter III and its articles, is the surety bond or performance bond required by law to protect both parties.  The bond, deposited with a notary for 15 business days after the publication of a business transfer to another party guarantees the correct transfer of licenses and other assets involved in this kind of deal.

Buying and selling a business in Costa Rica holds its own set of challenges apart from the challenges of real estate transactions.  The same rule applies.  Tread cautiously.  It is better to work with individuals who have a track record in overseeing the sale of businesses. These do not necessarily have to be lawyers.  Most lawyers in Costa Rica do not know much about business transfers.

Garland M. Baker is a 35-year resident and naturalized citizen of Costa Rica who provides multidisciplinary professional services to the international community.  Reach him at info@crexpertise.com.  Allan Garro provides the legal review.  Reach him at crlaw@licgarro.com. Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica.  Find the collection at http://crexpertise.info.  Copyright 2005, use without permission prohibited.

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San José, Costa Rica, Monday, Oct. 17, 2005, Vol. 5, No. 205

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Guanacaste continuing
to get hit with rain

By the A.M. Costa Rica staff

Thursday the Instituto Meteorológico Nacional predicted that rain would continue in Guanacaste until Saturday.  Sunday night it was still raining. 

Though the road between Liberia and the popular tourist destinations of Tamarindo and Flamingo was still serviceable Sunday, it certainly wasn't pretty.  The rain has done enough damage to slow buses to a crawling pace as they splash down the road.  Axel-snapping potholes infest the road, although it remains above water.  However, according to the national emergency commission, much of the rest of the province is not.

By Sunday the number of persons forced from their homes had exceeded 2,000, according to the commission more formally known as the Comisión Nacional de Prevención de Riesgos y Atención de Emergencias.

Flooding isolated several more communities over the weekend as rising waters washed away bridges and roads.  The emergency commission's most recent statistics listed the communities of Playitas, Llano Cortés, Bebedero, Las Tinajas, San Ramón, Tamarindo de Bagaces; Cantarrana, Corralillos, La Guinea y la Esperanza del cantón de Carrillo and Tabaco and El Socorro de Santa Cruz all as isolated.  However, workers were able to reach many of the communities with water filters and potable water. 

Sunday afternoon the emergency commission met at the Centro de Operaciones de Emergencia with the country's front-line response organizations to plan preventative actions in Guanacaste should the rain continue to fall this week and cause further damage, the commission said.

As warnings, the comission posted the cantones of Bagaces, Carrillo, Santa Cruz, Hojancha, Nandayure, Nicoya and Aguirre under red alert.  Residents in many of the towns in those cantones have been evacuated.  Abangares, La Cruz, Liberia Tilarán and Upala are all yellow, and the rest of the Pacific slope is green, meaning authorities are keeping an eye on it, the commission said.

Of the 2,182 evacuated persons, 1,299 are in 18 shelters, the commission said.  The rest have taken refuge with family and friends.

The commission's latest statistics say that 204 homes, 12 roads, and 10 bridges all have sustained damage in this round of floods.

Two tropical depressions/storms are responsible for the recent rains.  A depression 200 miles southeast of Grand Cayman Island is expected to turn into Tropical Storm Wilma today.  If it does, that will make 21 tropical storms for the Atlantic hurricane season, tying a record set in 1933, according to the United States National Hurricane Center.  That storm is expected to pelt the Cayman islands and Jamaica with four to six inches of rain.  Long term forecasts show it moving into the Gulf of Mexico, possibly towards the United States Gulf Coast.  

Another weaker depression due east of Guatemala is moving north along the Pacific coast of the Americas as well and is probably primarily responsible for the crummy conditions in Guanacaste. 

Beekeepers meet Thursday
with stress on production

By the A.M. Costa Rica staff

Since 2002, the amount of honey that Costa Rica imports has diminished.  Authorities at the Ministerio de Agricultura y Ganadería and other institutions hope that the country will one day have enough of its own bees to produce a sufficient amount of honey and pollinate other agricultural products such as watermelon and coffee.

Such is the topic of the VIII Congreso Nacional de Apicultura, scheduled for Thursday and Friday at the Auditorio Danilo Jiménez Veiga, at the Instituto Nacional de Aprendizaje in La Uruca.

Among other themes, organizers of the conference hope to analyze methods in which to attract more bees and good honey-manufacturing practices. 

Entrance to the conference costs 5,000 colons.  For more information, contact Ana Cubero Murillo at 262-0219 or abeja@protecnet.go.cr.

Police continue to grab
sex offense suspects

By the A.M. Costa Rica staff

Fuerza Pública officers captured the 15th of a list of the 20 most wanted sexual predator suspects in the country, officers said Friday.  All 20 are suspected of raping minors, the officers said. 

The 55-year-old suspect, identified by the last names Cedeño González, is a farm worker near Cartago, officers said.  Cedeño is suspected of raping a minor. 

The officers said they surprised Cedeño at work and he cooperated.  However, they said he acted surprised when the officers informed him that he could serve up to 20 years in prison, they said. 

Poker expo will be in December

By the A.M. Costa Rica staff

Poker executives, marketers, payment processers and players among others will converge on San José Dec. 3 and 4 at the Hotel Barcelo San José Palacio for the Poker Industry Expo.

The conference will focus on the business of poker, covering management, marketing and technology. 
Also planned is a tournament for those in attendance.  The tournament will be at the Herradura Casino west of San José.

Today is a holiday

By the A.M. Costa Rica staff

Today is the informal celebration of the Día de las Culturas. Many institutions will be closed, as is the U.S. Embassy. The closings are done by consensus because the law establishing a three-day weekend does not take effect until 2006.

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This expression has little regard for excuses
Obras son amores y no buenas razones

Today’s dicho is a little difficult to translate, but it sort of has to do with the notion expressed by the English saying “actions speak louder than words.”

For some reason the government comes immediately to my mind. For example, we’ve been hearing for years that to help relieve horrific traffic congestion and because of the burgeoning fuel crisis, passenger train service across parts of the San José metropolitan area should be reinstated. Well, a week ago last Friday it finally happened! Passenger trains actually began rolling through the capital for the first time in a decade! This event, of course, far exceeded in significance any of the millions of words on the matter that preceded it.

Now, one can only hope that rail service will continue not just in the San José metro area, but be extended to other parts of Costa Rica as well. It clearly makes such good sense on so many practical and economic levels.

When I was a boy, my father often traveled to Puntarenas on business. He usually would take the 3 a.m. train. I always loved to go with him. Riding the train was such an adventure.

But my dad’s rule was that I had to get myself out of bed by 2 a.m. and be ready to leave for the station by 2:30. He refused to wake me. Getting up and getting myself ready to go on time were strictly my responsibilities.

I would frequently go to bed early, but could almost never fall asleep. Then I finally would go to sleep only to wake up around 7, by which time my father would be reaching his destination on the Pacific coast. Once I even tried staying up until time to leave. But by 1:30 in the morning I couldn’t take it any more, and surrendered — albeit reluctantly — to the arms of Morpheus.

But on those occasions when I actually did wake up in time to accompany my father to the port, I delighted in the trip. I would sit next to the window and eagerly watch as the rising sun gradually released the gently passing bucolic landscape from the murky darkness.

I loved seeing all the places we passed through in route, such as Belén, Palmares, Atenas, and Orotina.  These towns always seemed to me new, no matter how many times I’d visited them before. Somehow,
way we say it

By Daniel Soto

viewing familiar settings from the window of a train maintained their novelty. The journey’s entire experience was pure enchantment.

Our stop at Orotina was my favorite because that was where we always had our breakfast. Vendors would enter the train selling all manner of delicious things to eat with strong, rich coffee and hot chocolate to drink.

With a large family to support, my father had to be a serious businessman, but not to the extent that he couldn’t take a moment to chat with the food vendors on the train. He always spoke to them like old friends. He was generous in his purchases and always praised the quality of their wares.

I admired my father very much. It was unimaginable that he could ever be less than kind to anyone. My mother used to say my father was so gregarious he could have a conversation with a stone. Today friends say of me that I never met a stranger. I like to think it’s a trait I inherited from father.

My dad was never big on promises as such. He laid down rules, and we knew if those rules were followed our obedience would be rewarded. But we also knew well the consequences of breaking my father’s rules. This is not to say that he was mean or a harsh taskmaster, but it did pay to subscribe to his gentle but firm brand of discipline. You might say that the buenas palabras (good words) of those rules were what motivated our obras (actions or deeds).

My father was the unchallenged head of our household. It was his prerogative to set the rules. And I obeyed those rules because I loved my father and never doubted that he loved me too. That trust was never disappointed.

Nesting activities of a mother leatherback turtle thrill environmentalists
By the A.M. Costa Rica staff

Tuesday a leatherback turtle crept up the beach at Playa Caletas, dug a nest in the sand and laid 42 eggs, said the Programa Restauración de Tortugas Marinas.

Two reasons make the event noteworthy.  First, the mother turtle, with a shell measuring 4.5 feet in length, was the first of the season to lay eggs.  Second, she chose Playa Caletas, a proposed National Refuge on the Guanacaste coast. 

Scientists with the program immediately dug up the eggs and transported them to their nursery so they can be carefully guarded until the baby turtles hatch, the program said. 
“We are very excited with this success, especially since each nest is so important,” said Ingrid Yañez, the program's coordinator of beach projects.  “This
 compensates for the bad news that eggs were stolen from a leatherback nest in Playa Avellanas.”  That beach is a little more than 12 miles north of Paya Caletas. 

The leatherback turtles along the coast of the Pacific Coast of the Americas is the most threatened species of turtle in the world, the program said.  According to their statistics, the turtle's population has diminished 99 percent in the last 25 years.

The program said also that Costa Rica is the most important country in the Americas for the nesting of leatherback turtles.  The program considers Playa Caletas, where six nests were found last season, the second most important beach for the leatherback. 

Playa Grande, just north of Tamarindo, is the most important, the program said.  Last nesting season, 52 turtles laid eggs there, the program said. 

Rumsfeld says he's confident that Nicaragua has missiles secure
Special to A.M. Costa Rica

KEY BISCAYNE, Fla. — U.S. Defense Secretary Donald Rumsfeld says he is confident the government of Nicaragua is securing its stockpile of missiles from terrorists who might try to use the weapons to shoot down commercial aircraft.

Speaking  in Key Biscayne, Florida following his two-day meeting with Central American defense and security ministers, Rumsfeld said obstacles have been "put in the way of completing the program for the destruction of those missiles, and at the present time the obstacles have slowed that process, but I've been assured that the existing missiles are being maintained in a secure manner, which is reassuring."
The defense secretary added that the cooperation of the Nicaraguan government and its armed forces has been "excellent" in securing the shoulder-fired missiles that easily can be transported and concealed from law enforcement authorities.

During a November 2004 visit to Nicaragua, Rumsfeld received assurances from Nicaraguan President Enrique Bolaños Geyer that Nicaragua would destroy its stockpile of the roughly 1,000 Soviet-era hand-held missiles. 

However, ongoing internal political tensions in Nicaragua led the country's National Assembly to strip Bolaños of authority regarding the stockpile, and destruction of the weapons has been stalled.

Prosecutor has until Tuesday to appeal release of former president
By the A.M. Costa Rica staff

Prosecutors have until Tuesday to appeal a judicial decision made last week that frees a former president from house arrest.

The decision involves Miguel Angel Rodríguez Echeverría, who served as president from 1998 until 2002. He is a suspect in the investigation of kickbacks in a telecommunications contract between the Instituto Costarricense de Electricidad and the French firm Alcatel.

A judge in the Juzgado Penal of the II Circuito ordered
Thursday that Rodríguez be freed from house arrest as of midnight Friday. However, a spokesperson for the Poder Judicial noted that prosecutors have three working days to appeal this decision. Since today is a holiday, the appeal deadline is Tuesday.

Although he is free to leave his home, Rodríguez still may not leave the country and may not recover the 250 million colons (about $500,000) that he posted as bail a year ago. The judge's order also said that the former president may not communicate with others involved in the case and that he must sign in every month on the 14th with the  Fiscalía de Delitos Económicos.

Domestic violence complaint prompts melee with police in Puntarenas
By the A.M. Costa Rica staff

A confrontation Friday between Fuerza Pública officers and three brothers in Puntarenas escalated to violence when the officers attempted to arrest one of them to face an allegation of beating his female companion, the officers said.

Police in El Progreso de Barranca, Puntarenas, said they were alerted that one of the brothers, identified by the last names Zapata, had hit his 19-year-old girlfriend, Claris Chamorra.  When police arrived, the girl refused to sign a complaint and asked the officers to forget about the incident, they said. 

However, one of the Zapatas grew aggressive and refused to cooperate with the officers, they said.  The incident escalated and police were forced to take cover
in their cars as the three brothers threw rocks and fired air pistols at them, the officers said. 

The projectiles hit one of the officers in the head, wounding her enough that she was taken to the Hospital Monseñor Sanabria, officers said.  Other rocks and bullets broke windows and dented the patrol cars, the officers said. 

Two elderly neighbors overheard the commotion and began scolding the Zapatas for fighting with the officers.  The Zapatas then turned their wrath on the bystanders, Paulino Alvarado Solera, 69, and Oscar Fernández Pérez, 67, police said.  Alvarado was wounded in the right arm, and Fernández was wounded in the forehead, officers said.   The officers eventually took control of the situation and arrested the three brothers, the officers said.   

WTO chief says Hong Kong negotiations must end agricultural tariffs
By the A.M. Costa Rica wire services

HONG KONG — The World Trade Organization's Hong Kong gathering here in December is supposed to approve the outlines of an agreement cutting subsidies, tariffs and other trade barriers, the goal set four years ago in the city of Doha.

During a visit to Hong Kong Sunday, WTO Director General Pascal Lamy emphasized the importance of the conference. In a speech at the Hong Kong Foreign Correspondents Club, he called the December meeting the WTO's best opportunity to conclude the Doha round of trade talks by the end of next year. Lamy stressed that the Hong Kong ministerial conference must succeed.

"Now, what does success mean? In my view, and for what it is worth, it means we must use this occasion to resolve two-thirds of the issues on our agenda," he said. "We must complete the work, the core work, in agriculture, industrial tariffs and services."

One of the most crucial conditions for the success of the meeting is an accord on ending agricultural subsidies.

During the past week there has been a sudden flurry of efforts to end a deadlock in the negotiations.
The United States and the European Union have proposed plans to cut agricultural subsidies and tariffs. Both are in the spotlight because critics say U.S. and E.U. subsidies help farmers offload goods at artificially low prices, undercutting producers in poor countries.

Despite this new momentum, the 148 governments that are members of the WTO are still far from a breakthrough. Lamy says the WTO is struggling to finalize its preparations for the December meeting.

"And although I am not downcast on the prospects [of reaching an agreement], I really remain concerned at the size of the task at hand. With so little time remaining, we cannot afford to waste a single day, and everybody can be sure that I and the secretariat will spare no effort to bring about a success in December," added Lamy.

Among other things, WTO negotiators also must reach accords on issues such as tariffs on industrial goods, and rules on opening service industries for foreign competition.

Lamy stressed Sunday that no agreement will be possible in Hong Kong, if the concerns of developing nations are not addressed. Three-quarters of the WTO's members are developing economies.

32 inmates reported killed in fires during takeover of Argentine prison
By the A.M. Costa Rica wire services

MAGDALENA, Argentina — Police in Argentina say at least 32 prisoners have been killed in fires set by rioting inmates at a jail here in Magdalena, south of Buenos Aires.

Authorities say most of the victims suffocated in smoke from mattresses and other items set ablaze after a fight broke out late Saturday.

Initial reports said the prisoners had been demanding
longer visiting hours for relatives.  But the justice minister of Buenos Aires province, Eduardo Di Rocco, said the disturbances were a result of prisoner infighting. Authorities re-took control of the prison Sunday morning.

Hundreds of relatives came to visit inmates Sunday, Argentina's Mother's Day, and instead waited outside the prison to learn the fate of their loved ones. 

This was the worst of several violent outbreaks in Argentina's prisons this year.
Jo Stuart
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