, Legal Aspects to Consider When Undertaking in Nicaragua

Legal Aspects to Consider When Undertaking in Nicaragua

I want to address an issue that many young entrepreneurs are often unaware, and this is the legal aspect when you start an adventure. The legal requirements that must be met for a company to be able to operate are not often aware by the people. Other details often being unaware are the legal incentives that our legislation provides us, which are mean to lower the costs of operation and, therefore, facilitate market entry. Having a great idea is not everything, but we need to know how to maximize the legal tools available.

Incorporating a Company

Our law recognizes four types of commercial companies, but on this occasion, we are going to address the company that is easier to incorporate and manage, which in turn is most widely used, (known as “Sociedad Anónima”). Under this scheme, shareholders will respond only to the extent of their participation. This is constituted by the appearance of two or more partners before a notary public (recommend a minimum of three) to incorporate a company, having to set certain aspects of the operation thereof, such as: its social reason (referring to its name ), the object to be allocated, the capital, the number of shares which will be divided and the nominal value of each, minimum percentages to adopt resolutions and quorums, composition of the Board of Directors and their duration, among others. Besides having to incorporate and register into the competent Commercial Register, we also must register in the Municipality of its domicile, in the Local Revenues Office (known as “DGI”) and the Nicaraguan Institute of Social Security. Subsequently, depending on the activities of the company, it will require registration into other government entities.

Intellectual Property Rights

When an entrepreneurship is taking place, it is partly because they have conceived an idea about a product or a service, which we tend to believe, is innovative compared to what is offered on the market. This developing idea must receive a face, which represents all the gear of the effort that has taken place by undertaking. And that face, must be protected.

To protect an idea or creation, we must properly advise about what is registrable and how to register it. First, let us highlight that the registration is given in recognition of the idea or creation, for the sake of which is operated exclusively by the holder thereof for a period of time. That record may come in different ways, it be either as a trademark or trade name or as a patent, among many others. All intellectual property right are set up to be registered in the Registry of Intellectual Property.

Usually, the greatest asset any company has is its trademark, because this is the face presented to the public, being of vital importance to register the same, even before starting to operate the company. If an adequate protection and an effective branding is given, we could think about a future in innovative tools, such as a Franchising, allowing having an expansion with business sense. In CENTRAL LAW Nicaragua, we are promoting the expansion of Nicaraguan businesses through the generation of franchise systems.

Licenses and Permits

Certain administrative titles might be required prior to going into operation, in order to be able to offer a product or service, due to the nature of the same. For that, we have to follow certain rules designed to ensure product safety and health service or local. If, for example, I would like to craft beer for its commercialization, I must meet certain specifications and regulations set forth by the Ministry of Health. Therefore, it is important to learn about each of the permits and licenses required to act within the law.


Financial Planning and Tax Strategies are key matters, however, equally relevant is knowing the legal incentives that could benefit us, according to the nature of our economic activity.

Our legislation is recognized internationally as an extremely generous, which promotes domestic and foreign investment. Whether at the field of tourism, renewable energy generation or in free zones, among many others, in which we have a series of incentives that do nothing more than provide tools to anyone who wants to develop an idea. These incentives usually are related to taxes (tax exemptions on income or real estate for example) or customs (Free Imports load).

These were some of the elements that we must consider, however there are other relevant factors, such as labor issues, tax, immigration, among others.

We have no doubt that it is in entrepreneurship and innovation where there is true development, so that Nicaraguans from an early age must foster entrepreneurship culture. The new generations have to go out with the mentality of being entrepreneurs and not employees, but it is require further work in our country.

Our law firm in Nicaragua offers legal advice in various areas of law. CENTRAL LAW is a law firm based in seven countries in Central America, Panama and Dominican Republic.

Avil Ramírez Mayorga