Foreword
This review of Corporate Governance in Costa Rica was prepared in the context of Costa Rica’s accession process to the OECD, which was launched in April 2015 by decision of the OECD Council, and which led to an OECD Council decision on 15 May 2020 inviting Costa Rica to become the OECD’s 38th Member country.
As part of its OECD accession process, Costa Rica underwent an assessment against the OECD’s corporate governance standards for listed companies and state-owned enterprises (SOEs), namely the G20/OECD Corporate Governance Principles and the OECD Guidelines on Corporate Governance of State-Owned Enterprises. It also reflects an assessment against the recently adopted OECD Guidelines on Integrity and Anti-Corruption in State-Owned Enterprises. These assessments were undertaken by the two OECD bodies responsible for these standards, the Corporate Governance Committee and its Working Party on State Ownership and Privatisation Practices. This review presents the results of that assessment and highlights the significant reforms undertaken by Costa Rica to further align its practices with these corporate governance standards.
Over the course of the accession review process, Costa Rica took significant measures to align its corporate governance framework and practices with OECD standards. For listed companies, these included, amongst others, the passage of a new corporate governance regulation, a regulation requiring regulated financial entities to transition to International Financial Reporting Standards (IFRS), and the enactment of a law to allow the securities market regulator to access and exchange information on beneficial ownership for the purposes of enforcement. These measures have helped strengthen Costa Rica’s framework for the corporate governance of listed companies.
Costa Rica has also demonstrated a significant commitment to implementing better governance in its SOEs, including through the establishment of a Presidential Advisory Unit for the oversight of SOEs, requiring SOEs to comply with IFRS, a decree on the roles and responsibilities of SOE boards, a decree on SOE disclosure and transparency, legislation on creating a deposit insurance scheme to advance towards a more level playing field between SOE and private sector banks, the reform of SOE procurement procedures and the establishment of aggregate reporting on SOEs. These measures attest to Costa Rica’s commitment to promoting more efficient SOEs, greater transparency and fair and open competition.
This review also includes a number of recommendations for continued improvement, with a view to ensuring that companies and markets create optimum value for the Costa Rican economy and society. In the future, as an OECD Member, Costa Rica will have the opportunity to further benefit from the reform experiences and expertise of its peers as it pursues its corporate governance reforms.
Successive versions of the review informed seven separate accession review discussions on Costa Rica held by the OECD Corporate Governance Committee and its Working Party on State Ownership and Privatisation Practices between October 2016 and October 2019, and its conclusions and recommendations reflect both bodies’ assessments. However, reference to more recent developments through March 2020 have also been incorporated into this report.
The principal author of the review is W. Richard Frederick, under the oversight of Daniel Blume, and with project co-ordination and support of Katrina Baker of the OECD Directorate for Financial and Enterprise Affairs, building on an initial self-assessment of Costa Rica against the G20/OECD Principles of Corporate Governance and a detailed questionnaire response on Costa Rican SOEs prepared by the government and regulatory authorities of Costa Rica. It has benefited from substantial input from the Costa Rican government authorities throughout the accession process.
In accordance with paragraph 14 of the Roadmap for the Accession of Costa Rica to the OECD Convention, setting out the terms, conditions and process for accession, the Corporate Governance Committee agreed to declassify this review and publish it under the authority of the Secretary-General in order to allow a wider audience to become acquainted with its content.
