The importance of choosing the correct power of attorney for your company in Costa Rica

In the business world, making informed decisions is key to ensuring your business runs efficiently and safely. An essential aspect that often goes unnoticed is choosing the right power of attorney for those managing or representing your business. Granting the correct power of attorney will not only allow you to delegate important functions, but will also protect the interests of your company in any eventuality. In Costa Rica, there are different types of legal powers that grant different powers to the attorneys. Knowing the characteristics of each one is essential to make strategic decisions.

Below, we explain the most common types of powers of attorney in Costa Rica and when it is advisable to use them for your business.

Types of powers of attorney for companies

1. General power: For a broad and complete delegation

The Generalissimo Power of Attorney is the broadest legal figure in terms of powers granted. This power allows the agent to act in practically all of the principal's affairs. You can make important decisions such as selling assets, managing bank accounts or accepting inheritances.

When should you consider this power? This type of power is usually granted when complete delegation of business responsibilities is desired. For example, if you are absent for long periods or completely trust a partner or manager, the Generalissimo Power of Attorney is ideal to ensure that all critical decisions can be made without your presence.

Main advantage:

• Total flexibility to manage the client's affairs.

Risk to consider:

• Given its breadth, it should only be granted to people you absolutely trust.

2. General power of attorney: Ideal for the operational management of your company

The General Power of Attorney gives the designated person powers to manage business, contracts and litigation on behalf of your company. However, it does not allow the sale of goods unless expressly specified.

When to use this power? This type of power is recommended when you want the agent to manage the daily operations of the company without having access to important decisions, such as the sale of assets. It is common in companies that need to delegate general administration, but where the owner or partners want to maintain control over certain key issues.

Main advantage:

• It allows you to delegate the administration of the business without losing control over the sale of important assets.

Risk to consider:

• If the limitation of powers is not clearly specified, the agent could act beyond what is desired.

3. Special power: For specific tasks or legal acts

The Special Power of Attorney is granted for specific legal acts, such as signing a contract on behalf of the company or representing the company in a lawsuit. This power is limited to a particular situation or action and does not grant powers beyond what is specified.

When should I use this power? It is useful when you need to delegate a specific task without giving up full control of the company. For example, if you have a lawsuit going on or need someone to sign a specific contract, the Special Power of Attorney ensures that it is only acted upon in that particular circumstance.

Main advantage:

• Provides full control over a specific task without the risks of general delegation.

Risk to consider:

• The power ends once the action for which it was granted has been completed, meaning you would need to grant another power for future actions.

How to choose the right power of attorney for your company?

Choosing the right power of attorney will depend on the specific needs of your business and your level of trust in the person to whom you wish to delegate these powers. When granting power of attorney, it is important to consider the level of control you want to maintain and the extent of decisions you want the agent to be able to make on your behalf.

Key questions to ask yourself before choosing:

1. How much trust do you have in the person you will give power to?

2. What level of control do you want to maintain over your company's assets?

3. What types of decisions should the agent be able to make?

4. Is this power temporary or do you need it indefinitely?

Each type of power has its advantages and risks, and that is why it is essential to have adequate legal advice to make the best decision for your business.

Granting power of attorney is a strategic decision that can make running your business easier, but it must be done carefully. The wrong choice could put the security of your assets or control of your business at risk. If you are considering delegating important functions to an attorney-in-fact, be sure you are aware of the different types of powers of attorney and how each can protect your business interests.

At Legal Chang, we are here to guide you through this process.

Contact us today for a personalized consultation and ensure your business is protected and aligned with your long-term.

Contact us:

✉️ estudio@legalchang.com

📞 +506 6223-2030