	Social Enterprise Law Surveys
	Nicaragua
	(Latin America/Caribbean) Firm Alvarado Y Asociados
What jurisdiction(s) do you practice in?	Managua, Republic of Nicaragua
What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...	The most common for-profit organizational forms utilized in Nicaragua are: the corporation and the limited liability company, which are well understood and traditional in nature, both regulated in our commercial code Art. 124. a. Enterprises that seek financing from investors and will have multiple owners tend to form corporations. b. In Nicaragua social enterprises are not regulated.
Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...	No, in our Nicaragua only takes into consideration the shareholder value in the decision making.
Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...	No.
Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...	Social enterprises are not regulated in our country. However, not-profit organizations are, but such organizations are not permitted to exercise commercial activities.
Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.	Yes. Cooperatives can carry out all kinds of activity under conditions of equality with private law subjects and other legal entities and with state entities in all activities related to the provision of public services. Cooperatives may associate with persons of another legal nature, provided that said link is convenient for their purposes to the extent that their nature is not distorted or they transfer benefits, privileges and exemptions that are their own. In order to stimulate the cooperative movement, the following benefits and exemptions are granted in favor of cooperatives, in accordance with the law on the matter and other pertinent provisions: Exemption from stamp duty and stamped paper. Exemption from Real Estate Tax (IBI). Free publication of all documents in The Official Gazette. Exemption from Income Tax (IR). Exemption from Value Added Tax, for the importation of inputs, raw materials, intermediate and capital goods used in the production of export goods and domestic consumption. Exemption from the Import Tariff Right, Selective Consumption Tax, VAT and municipal taxes on imports of capital goods, tires, raw materials, machinery, supplies and spare parts used, in favor of cooperatives. Other benefits and exemptions that other laws and provisions establish in favor of cooperatives. As for restrictions, Cooperatives are prohibited: To grant advantages, preferences or other privileges to the founders, promoters, leaders or officials, nor to demand from the new members financial contributions greater than those established in their Statutes. Allow third parties to participate directly or indirectly in the privileges or benefits that the Law grants to cooperatives. Carry out activities other than those established in the Statute and to the detriment of the associates and the community. Integrate into its management or control bodies people who are not members of the cooperative. To become entities of another legal nature. Any decision in this sense is void and those who adopt it will respond personally. Being part of entities whose purposes are incompatible with those of cooperatives.
Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.	No.
In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.	No.
Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.	Social enterprises are not regulated. However, the environmental authorization of the municipality and in case of large-scale projects that may cause environmental impacts, compliance of the environmental assessment system procedures is required.
Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.	No.
Does your jurisdiction have any ESG requirements for investors? If it does, please describe.	The environmental authorization of the municipality, and in case of large-scale projects that may cause environmental impacts, compliance with the environmental assessment system procedures is required.
Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...	Depending on the type of investment and its potential environmental impacts, compliance with the environmental assessment system procedures is required. There are several categories of project investments, for each category there are specific procedures regulated in the Executive Decree No. 20-2017, Approved on November 28, 2017 - Published in Official Gazette No. 228 of November 29, 2017. The Environmental Evaluation of Projects is composed of the following environmental categories: Environmental Category I: Projects that are considered Special of a national or border nature. Environmental Category ll: Projects that, depending on the nature of the process and the potential environmental effects, are considered as having a High Potential Environmental Impact. Environmental Category lll: Projects that, depending on the nature of the process and the potential environmental effects, are considered to have a Moderate Potential Environmental Impact. Environmental Category IV: Projects, which, depending on the nature of the process and the potential environmental effects, are considered as having a low Potential Environmental Impact. Environmental Category V: Experimental or novel projects that are subject to an investigation because the potential impacts on the environment are unknown and will be subject to an environmental assessment. When making investment decisions investors should take into consideration that the environmental authorization of the municipality is always required. Other relevant factors that investors tend to consider are labor, social security and hygiene and security laws.
What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?	Social enterprises are not regulated in our jurisdiction.
How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?	For-profit impact investment is still coming, it has shown a decrease due to the COVID-19 pandemic and the current socio-political situation.
What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...	Social enterprises are not regulated in our jurisdiction. However, the government operates a new model of comprehensive care for rural and urban micro and small production, recognizing the different capacities of Nicaraguan families and different forms of participation in the national economy. Through agriculture, agroindustry, crafts, commerce and services, from cooperatives, savings and credit centers, informal associations, which together, form part of the family and community economy, the Ministry of the Cooperative Community Family and Associative Economy develops different lines of work, granting financial resources through its Entrepreneurship Programs.
Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?	No.
To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.	They are not required to disclose ESG factors, though some choose to do so for marketing reasons.
How prevalent, if at all, are impact bonds in your jurisdiction?	Impact bonds are not prevalent in our jurisdiction.
In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?	No, it is not regulated.
Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...	Crowdfunding is not regulated in our jurisdiction.
Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...	No, because social enterprises are not regulated.
Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?	No.
Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)	No.
Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?	No.
Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.	No.
What government operational support, resources, training or services, are available for small businesses or Social Enterprises?	The Government through its entrepreneurship programs grants financial resources rural and urban micro and small production in different areas such as agriculture, agroindustry, crafts, commerce and services, from cooperatives, savings and credit centers, and informal associations.
Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.	No.
Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.	No.
Is there a different bankruptcy system available for Social Enterprises?	No.
What are the average time and filing fees to form an Enterprise in your jurisdiction?	Average time: Between 6 and 8 weeks Filing fees: The official rates to pay for the registration of the Incorporation public deed in the Second Book of the Public Registry are 1% on the capital stock, without the amount to be paid being less than one thousand cordobas (national currency) (approximately 30 US dollars) nor greater than thirty thousand cordobas (approximately 900.00 dollars) plus C$ 100.00 cordobas (approximately US$ 3.00 dollars) for the registration of the Company in the Book of Persons of the Public Registry. Formalization of the registration with the Mercantile Registry and the subsequent registration as Merchant and of the Company's accounting books. The official fees to pay for these registrations generate an approximate cost of US $ 45.00. General Power of Administration and its registration in the Public Mercantile Registry. The official fees to pay for this registration generate an approximate cost of US$ 30.00. Said General Power of Administration corresponds to the one that will be granted to the Legal Representative of the Company, who must be Nicaraguan or have a Nicaraguan residence card. Once the previous steps have been completed, the company has to be registered with the General Directorate of Income (DGI) obtaining the Unique Taxpayer Registration Number (RUC); and registration procedures are carried out before the Municipal Mayor's Office in order to obtain the municipal registration and environmental authorization. These registrations generate an official rate of 1% on the capital stock before the Municipality, the minimum being C$ 510.00 (approx. 15 US dollars) without there being a maximum, which is why it is important to limit the capital with which the company will operate. Once this process is completed, the Company will be able to start its commercial operations. Please consider that according to the corporate purpose of the Corporation, it may require additional permits. An approximate total of USD 150.00 corresponding to filing fees.
What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...	Not regulated.
Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.	Yes, startups can easily form. However, entrepreneurial enterprises have decreased due to the COVID-19 pandemic and the current socio-political situation.
Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.	Social enterprises are not regulated.
Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...	There aren’t any laws on social enterprises.
In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.	No.
What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?	Social enterprises are not regulated.
What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?	Our jurisdiction has regulated the potential environmental issues which are widely regulated through the environmental legal frame. Regarding social responsibilities, implementing standard social responsibility policies, given that companies usually social responsibility to reduce their tax burden, rather than real concern for social problems.
Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?	No.

Social Enterprise Law Surveys

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What jurisdiction(s) do you practice in?

Managua, Republic of Nicaragua

What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ...

The most common for-profit organizational forms utilized in Nicaragua are: the corporation and the limited liability company, which are well understood and traditional in nature, both regulated in our commercial code Art. 124.

a. Enterprises that seek financing from investors and will have multiple owners tend to form corporations.

b. In Nicaragua social enterprises are not regulated.

Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required...

No, in our Nicaragua only takes into consideration the shareholder value in the decision making.

Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ...

No.

Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat...

Social enterprises are not regulated in our country. However, not-profit organizations are, but such organizations are not permitted to exercise commercial activities.

Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.

Yes. Cooperatives can carry out all kinds of activity under conditions of equality with private law subjects and other legal entities and with state entities in all activities related to the provision of public services.

Cooperatives may associate with persons of another legal nature, provided that said link is convenient for their purposes to the extent that their nature is not distorted or they transfer benefits, privileges and exemptions that are their own.

In order to stimulate the cooperative movement, the following benefits and exemptions are granted in favor of cooperatives, in accordance with the law on the matter and other pertinent provisions:

Exemption from stamp duty and stamped paper.
Exemption from Real Estate Tax (IBI).
Free publication of all documents in The Official Gazette.
Exemption from Income Tax (IR).
Exemption from Value Added Tax, for the importation of inputs, raw materials, intermediate and capital goods used in the production of export goods and domestic consumption.
Exemption from the Import Tariff Right, Selective Consumption Tax, VAT and municipal taxes on imports of capital goods, tires, raw materials, machinery, supplies and spare parts used, in favor of cooperatives.
Other benefits and exemptions that other laws and provisions establish in favor of cooperatives.

As for restrictions, Cooperatives are prohibited:

To grant advantages, preferences or other privileges to the founders, promoters, leaders or officials, nor to demand from the new members financial contributions greater than those established in their Statutes.
Allow third parties to participate directly or indirectly in the privileges or benefits that the Law grants to cooperatives.
Carry out activities other than those established in the Statute and to the detriment of the associates and the community.
Integrate into its management or control bodies people who are not members of the cooperative.
To become entities of another legal nature. Any decision in this sense is void and those who adopt it will respond personally.
Being part of entities whose purposes are incompatible with those of cooperatives.

Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.

No.

In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.

No.

Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.

Social enterprises are not regulated. However, the environmental authorization of the municipality and in case of large-scale projects that may cause environmental impacts, compliance of the environmental assessment system procedures is required.

Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.

No.

Does your jurisdiction have any ESG requirements for investors? If it does, please describe.

The environmental authorization of the municipality, and in case of large-scale projects that may cause environmental impacts, compliance with the environmental assessment system procedures is required.

Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi...

Depending on the type of investment and its potential environmental impacts, compliance with the environmental assessment system procedures is required.

There are several categories of project investments, for each category there are specific procedures regulated in the Executive Decree No. 20-2017, Approved on November 28, 2017 - Published in Official Gazette No. 228 of November 29, 2017.

The Environmental Evaluation of Projects is composed of the following environmental categories:

Environmental Category I: Projects that are considered Special of a national or border nature.
Environmental Category ll: Projects that, depending on the nature of the process and the potential environmental effects, are considered as having a High Potential Environmental Impact.
Environmental Category lll: Projects that, depending on the nature of the process and the potential environmental effects, are considered to have a Moderate Potential Environmental Impact.
Environmental Category IV: Projects, which, depending on the nature of the process and the potential environmental effects, are considered as having a low Potential Environmental Impact.
Environmental Category V: Experimental or novel projects that are subject to an investigation because the potential impacts on the environment are unknown and will be subject to an environmental assessment.

When making investment decisions investors should take into consideration that the environmental authorization of the municipality is always required. Other relevant factors that investors tend to consider are labor, social security and hygiene and security laws.

What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?

Social enterprises are not regulated in our jurisdiction.

How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?

For-profit impact investment is still coming, it has shown a decrease due to the COVID-19 pandemic and the current socio-political situation.

What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government...

Social enterprises are not regulated in our jurisdiction. However, the government operates a new model of comprehensive care for rural and urban micro and small production, recognizing the different capacities of Nicaraguan families and different forms of participation in the national economy.

Through agriculture, agroindustry, crafts, commerce and services, from cooperatives, savings and credit centers, informal associations, which together, form part of the family and community economy, the Ministry of the Cooperative Community Family and Associative Economy develops different lines of work, granting financial resources through its Entrepreneurship Programs.

Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?

No.

To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.

They are not required to disclose ESG factors, though some choose to do so for marketing reasons.

How prevalent, if at all, are impact bonds in your jurisdiction?

Impact bonds are not prevalent in our jurisdiction.

In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?

No, it is not regulated.

Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a...

Crowdfunding is not regulated in our jurisdiction.

Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe...

No, because social enterprises are not regulated.

Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?

No.

Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)

No.

Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?

No.

Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.

No.

What government operational support, resources, training or services, are available for small businesses or Social Enterprises?

The Government through its entrepreneurship programs grants financial resources rural and urban micro and small production in different areas such as agriculture, agroindustry, crafts, commerce and services, from cooperatives, savings and credit centers, and informal associations.

Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.

No.

Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.

No.

Is there a different bankruptcy system available for Social Enterprises?

No.

What are the average time and filing fees to form an Enterprise in your jurisdiction?

Average time: Between 6 and 8 weeks

Filing fees:

The official rates to pay for the registration of the Incorporation public deed in the Second Book of the Public Registry are 1% on the capital stock, without the amount to be paid being less than one thousand cordobas (national currency) (approximately 30 US dollars) nor greater than thirty thousand cordobas (approximately 900.00 dollars) plus C$ 100.00 cordobas (approximately US$ 3.00 dollars) for the registration of the Company in the Book of Persons of the Public Registry.
Formalization of the registration with the Mercantile Registry and the subsequent registration as Merchant and of the Company's accounting books. The official fees to pay for these registrations generate an approximate cost of US $ 45.00.
General Power of Administration and its registration in the Public Mercantile Registry. The official fees to pay for this registration generate an approximate cost of US$ 30.00. Said General Power of Administration corresponds to the one that will be granted to the Legal Representative of the Company, who must be Nicaraguan or have a Nicaraguan residence card.
Once the previous steps have been completed, the company has to be registered with the General Directorate of Income (DGI) obtaining the Unique Taxpayer Registration Number (RUC); and registration procedures are carried out before the Municipal Mayor's Office in order to obtain the municipal registration and environmental authorization. These registrations generate an official rate of 1% on the capital stock before the Municipality, the minimum being C$ 510.00 (approx. 15 US dollars) without there being a maximum, which is why it is important to limit the capital with which the company will operate. Once this process is completed, the Company will be able to start its commercial operations. Please consider that according to the corporate purpose of the Corporation, it may require additional permits.

An approximate total of USD 150.00 corresponding to filing fees.

What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well...

Not regulated.

Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.

Yes, startups can easily form. However, entrepreneurial enterprises have decreased due to the COVID-19 pandemic and the current socio-political situation.

Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.

Social enterprises are not regulated.

Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc...

There aren’t any laws on social enterprises.

In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.

No.

What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?

Social enterprises are not regulated.

What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?

Our jurisdiction has regulated the potential environmental issues which are widely regulated through the environmental legal frame. Regarding social responsibilities, implementing standard social responsibility policies, given that companies usually social responsibility to reduce their tax burden, rather than real concern for social problems.

Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?

No.

Social Enterprise Law Surveys

Nicaragua

Social Enterprise Law Surveys

Nicaragua

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