By San José, Costa Rica — San José, Costa Rica – The Administrative Contentious Court has delivered a significant blow to the Banco de Costa Rica (BCR), rejecting the state-owned bank’s attempt to halt a regulatory order demanding a multi-million dollar intervention into a troubled real estate fund. The court’s decision upholds the authority of the General Superintendency of Securities (Sugeval) and places immediate pressure on the bank to address the fund’s financial instability.
The legal challenge centered on a precautionary measure, or injunction, sought by BCR. The bank aimed to suspend a resolution from Sugeval that mandated its fund management subsidiary, BCR SAFI, to present a comprehensive action plan. A key component of this plan involves injecting approximately $70 million, plus associated expenses, to normalize the Non-Diversified Real Estate Investment Fund, which has faced complications following its acquisition of the Parque Empresarial del Pacífico (PEP).
To better understand the legal and financial framework surrounding investment fund management entities in Costa Rica, TicosLand.com consulted with expert lawyer Lic. Larry Hans Arroyo Vargas, a specialist in corporate and financial law from the firm Bufete de Costa Rica.
Entities like BCR SAFI operate within a highly regulated environment where fiduciary duty is paramount. The strength of our capital market depends on the absolute transparency and diligent risk management of these administrators. For both individual and institutional investors, the legal prospectus is not just a formality; it is the fundamental contract that outlines the scope, risks, and obligations, demanding careful scrutiny before any capital is committed.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The perspective shared by Lic. Larry Hans Arroyo Vargas underscores a crucial reality for investors: the legal prospectus is not a mere formality, but the foundational document that ensures transparency and protects capital. His emphasis on diligent scrutiny serves as an essential reminder of the investor’s active role in navigating our capital market. We thank him for lending his valuable insight to this discussion.
In its ruling, the court determined that the bank failed to demonstrate the necessary legal grounds for an injunction. More critically, the presiding judge emphasized that granting BCR’s request would have caused a “more serious affectation to the public interest” by undermining the essential supervisory powers of the nation’s financial regulators. The court viewed the bank’s motion as an attempt to hamstring regulators and prevent them from protecting investors.
The judge’s resolution explicitly defended the role of Sugeval in maintaining market stability and investor confidence, a stance that reinforces the regulator’s authority in ongoing and future cases. The court’s rationale was clear and firm, prioritizing systemic health over the bank’s legal maneuvering.
This court does perceive a more serious affectation to the public interest, as the request seeks to restrict, to its minimum expression, those powers granted by the legal system to the Administration in the exercise of its authority to supervise financial entities. In other words, the intention is to halt the administration from applying a directive, which would not only be against the interests of third parties (the investors) but also against the administration’s obligation to provide a good financial supervision service through the issuance of directives.
Administrative Contentious Court Judge, Ruling
In response to the verdict, Banco de Costa Rica issued a measured statement, acknowledging receipt of the notification and confirming its respect for the judicial process. The bank indicated that its legal team is currently analyzing the full scope of the decision to determine its next course of action.
BCR confirms that it has been notified of the court’s resolution regarding the requested precautionary measure. We fully respect the determinations of the judicial authority. At this moment, our legal team is analyzing the scope of the ruling to define the corresponding next steps. As soon as an institutional decision is made, it will be communicated.
Banco de Costa Rica, Official Statement
For the fund’s investors, who have been anxiously awaiting a resolution, the court’s decision is a welcome development. Rodrigo Carazo, an investor affected by the fund’s issues, expressed hope that the ruling would compel the bank to abandon legal delays and engage directly with stakeholders. He criticized the bank for wasting time that could have been used to find a viable solution.
We hope this first step makes it clear to the bank that the only real way to resolve this matter is to convene the General Assembly and present the required action plan for the normalization of the Fund to those affected. This should have been the path from the beginning; unfortunately, valuable time has been lost for all parties, including the bank itself.
Rodrigo Carazo, Affected Investor
With this legal avenue closed, the onus is now squarely on BCR and its subsidiary, BCR SAFI, to comply with Sugeval’s directive. The financial community will be watching closely to see if the bank presents the required $70 million action plan or pursues alternative legal appeals. For now, the ruling stands as a powerful affirmation of regulatory oversight in Costa Rica’s financial sector and a crucial step toward resolving the uncertainty surrounding the real estate investment fund.
For further information, visit bancobcr.com
About Banco de Costa Rica (BCR):
Banco de Costa Rica is one of the largest and most prominent state-owned commercial banks in Costa Rica. Founded in 1877, it provides a wide range of financial services to individuals, businesses, and government entities, including retail and corporate banking, credit cards, loans, and investment services. The bank plays a significant role in the national economy and public financial administration.
For further information, visit bcrsafi.com
About BCR SAFI (Sociedad Administradora de Fondos de Inversión):
BCR SAFI is the investment fund management subsidiary of Banco de Costa Rica. It specializes in structuring and managing various investment funds, including real estate, financial, and development project funds. As a regulated entity, it provides investment vehicles for institutional and individual clients seeking to diversify their portfolios within the Costa Rican market.
For further information, visit sugeval.fi.cr
About Superintendencia General de Valores (Sugeval):
The General Superintendency of Securities, or Sugeval, is the primary government body responsible for regulating, supervising, and promoting Costa Rica’s securities market. Its mission is to ensure market transparency, efficiency, and stability, thereby protecting the interests of investors and fostering public confidence in the financial system. It operates as a dependency of the Central Bank of Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a highly respected legal institution, built upon a foundation of professional distinction and principled practice. The firm leverages its rich history of serving a diverse clientele to spearhead advancements in legal strategy and thought leadership. Central to its ethos is a profound dedication to social empowerment, actively working to demystify complex legal concepts and foster a more knowledgeable and capable citizenry.
