Corporate Law at Nicaragua
Corporate law in Nicaragua is governed primarily by the Commercial Code (Código de Comercio) and other relevant national laws and regulations. Here's a brief overview of key aspects of corporate law in Nicaragua:
1. Types of Business Entities
The most common corporate structures in Nicaragua include:
Sociedad Anónima (S.A.) – Similar to a corporation or limited liability company (LLC). It requires at least two shareholders.
Sociedad de Responsabilidad Limitada (SRL) – A limited liability company with more flexibility and fewer formal requirements than an S.A.
Branch Office (Sucursal) – A foreign company can operate in Nicaragua by registering a branch.
2. Incorporation Process
To incorporate a company in Nicaragua, the steps include:
Name Reservation – Register the company name with the Public Registry.
Draft and Notarize the Articles of Incorporation – Must include company name, object, capital, shareholders, and governance structure.
Registration – Submit to the Mercantile Registry.
Obtain Tax ID (RUC) – From the Nicaraguan tax authority (DGI).
Municipal License – Obtain a license from the local municipality.
Social Security Registration – For companies with employees.
3. Governance and Compliance
Corporations must appoint a Board of Directors and hold at least one shareholders’ meeting annually.
Companies must maintain accounting records and submit financial statements.
There is no minimum capital required by law, but it should be adequate for business purposes.
4. Foreign Investment
Nicaragua allows 100% foreign ownership in most sectors.
Foreign investors have the same rights as local investors.
The Foreign Investment Law (Ley de Inversiones Extranjeras) protects foreign capital and allows for repatriation of profits.
5. Corporate Taxes
Corporate Income Tax (IR) is typically 30% on net income.
Value Added Tax (VAT/IVA) is 15% on most goods and services.
Companies must file monthly and annual tax returns.
6. Labor and Employment Law
Governed by the Nicaraguan Labor Code.
Includes mandatory benefits such as severance pay, vacation, and 13th-month salary.
Employment contracts must be registered with the Ministry of Labor.
7. Recent Developments
Political and regulatory risks should be considered, especially in light of recent U.S. sanctions and increased scrutiny on business operations.
Legal reforms and investment incentives may evolve depending on political climate.
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