Incorporating in Nicaragua

The most common and usual form of corporation in Nicaragua is a Sociedad Anonima, in which ownership is divided by shares of stock. Nicaraguan Commercial Law also provides for Limited Liability Partnerships (Compañía Limitada), but because of their inflexible structure are not used much in practice.

A Sociedad Anonima can be set up in a few days. In order to be ready to do business it must be registered at the municipality where the company will do business, and the Nicaraguan Tax Authority (DGI).

Some important aspects to consider when incorporating in Nicaragua are:

* Number of shareholders *

In Nicaragua a corporation can be established with a minimum of two shareholders; however, we recommend adding at least a third shareholder within six months of incorporation.

* Who can be a shareholder in a Nicaraguan corporation? *

Natural and legal persons (Nicaraguan or foreigner) can be shareholders in a corporation.

Composition of the Board of Directors in a Nicaraguan corporation

Only shareholders can be part of the Board of Directors, which usually is composed of the President, Vice-President, Treasurer, Secretary and other Board members. If a legal entity is a stock holder in a Nicaraguan Corporation, such entity is free to designate a representative to be part of the Board of Directors.

Scope of activities

The articles of incorporation must state the activities that the new company will carry out. We carefully draft a general scope of activities that will enable the company to carry out day to day business, such as importing or exporting goods and opening bank accounts. This is a very important aspect when setting up a new company in Nicaragua, as missing activities that may be seen as trivial to a foreign investor may result in problems down the line, that may even require having to amend the articles of incorporation at great expense and delays, resulting in lost business opportunities. To the general scope of activities required for a smooth operation in Nicaragua, any particular activities of interest to the client are added.

Legal representative

Every company in Nicaragua must appoint a legal representative, which must be a Nicaraguan citizen or a Nicaraguan legal resident.

Bank accounts

Nicaraguan banks are very conservative, and are very careful when opening bank accounts belonging to recently incorporated companies, particularly those in which foreign persons or foreign entities are shareholders. At Bendaña & Bendaña we assist our clients in the fulfillment of bank requirements for opening new accounts.

Corporate Taxes

Once incorporated, even if not yet conducting business, a Nicaraguan company must file monthly tax returns. We assist our clients in filing the necessary tax forms. Once the company is conducting business it must appoint an accountant, who will be responsible for preparing tax returns and the payment of taxes.

Please contact us for additional information.

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