Country Overview
The official language in Nicaragua is Spanish, being also the most spoken language throughout the country; however, there are some other dialects spoken by the natives of the Nicaraguan Caribbean Coast like Miskito, Rama, and Sumo; as well as English (ethnic minorities), which also have official use in certain circumstances according to law.

Nicaraguan currency is the “Córdoba”, and the official exchange rate for US dollars currently (July 2024) is C$36.62.

In Nicaragua, there are neither cultural nor religious influences for running businesses, though most of the Nicaraguan people are religious and traditionalist. Running a business in Nicaragua demands full compliance with all applicable laws and regulations and requires the business not to be in contradiction with public order.

Territory
Nicaragua has a land of 130,373 square kilometers bordered by the Caribbean Sea (to the east) the Pacific Ocean (to the west), Costa Rica (to the south) and Honduras (to the north), making it the largest country in the Central American region, including about 800km of coastline in the Pacific Ocean and Caribbean Sea, 28 volcanic formations, 22,000 km2 of natural reserves, more than 10,000km2 of lakes, lagoons and rivers and 7 percent of the world´s biodiversity.

The country's physical geography divides it into three major zones: the Pacific plains, northern and central regions, and the Caribbean lowlands. Administratively, Nicaragua is divided into 15 departments and 2 autonomous regions with 153 municipalities.

Government
Nicaragua is a democratic-presidential republic made up of four branches of government (Executive Power, Legislative Power, Electoral Power and Judiciary Power), and the government system is ruled by the 1987 Political Constitution and amendments. The current President of the Republic is Mr. Daniel Ortega Saavedra, who was reelected in November 2021.

The Nicaraguan legislative system is a single-chamber parliament composed of ninety-two representatives elected in the same election process to elect the President of the Republic. The parliament is called the “National Assembly”, and its primary function is to create, approve, amend and derogate laws and parliamentary decrees. Representatives must run with a political party in order to be elected.

The country’s judicial system, is well-organized, with specific divisions to solve disputes according to the subject matter of the case (civil, labor, criminal, etc.); being this a unitary legal system for all the country. It is also a system that allows alternative methods for dispute resolution (arbitration, mediation), which helps the system to reduce the number of judicial cases. Of course, some matters cannot be solved by means of alternative methods (criminal matters, labor, etc.) and must mandatorily be resolved in court.
Depending on the case’s subject matter, lawsuits may take a considerable time (civil cases, mainly), while others may find a faster resolution. It is a judicial system generally perceived as impartial, though there is a trend for some people to criticize the system as “not impartial” when served with resolutions against their interests, which is a common situation in all judicial systems.

Additionally, the country’s judicial system allows enforcement of foreign judicial decisions, as long as the enforcement request complies with the Nicaraguan legislation requirements and previous proceedings. The enforcement of foreign judicial decisions also depends on the reciprocity of the country where the decision is issued; that is, such a country allows the enforcement of Nicaraguan judicial decisions as well.

Enforcement of foreign arbitration awards is also allowed by the Nicaraguan system, so long as conditions and procedures required by Nicaraguan law are met and completed.

Population
According to the National Institute of Information Development ("INIDE", for its acronym in Spanish), the estimated national population for July 2022 is 6,733,763 million people, 50.65 percent being female and 49.34 percent male. Life expectancy in Nicaragua, according to data from the World Health Organization, is currently around 75 years.

Gross Domestic Product
According to the World Bank, the Nicaraguan Gross Domestic Product expanded by “4.3 percent in 2023, driven by sectors such as electricity, mining, trade, construction, finance, transport, and communications.”. It is also established that Nicaragua's economic growth is projected to moderate to 3.7 percent in 2024 due to the global economic slowdown and a tight monetary policy environment. However, according to the Nicaraguan Central Bank, In the first quarter of 2024, gross domestic product recorded year-on-year growth of 3.7 percent (5.2% in the previous quarter).

Infrastructure
The country’s infrastructure is mainly composed of highways, some ports and airports. The most important ports, among others, are Corinto (Department of Chinandega), San Juan del Sur (Department of Rivas) and, Sandino (Department of León); which have lots of commercial and tourism activities (vessels, merchandise freight and cruise ships). The main airport is the International Airport “Augusto C. Sandino”, located in Managua, the capital of Nicaragua; there are other airports located in the main cities of the Caribbean Coast (Puerto Cabezas, Bluefields and Corn Island), for internal transportation only. Two additional airports that will receive both domestic and international flights are under development: one in Ometepe Island and another in Punta Huete. In Nicaragua, there are no railroad systems.

In Nicaragua, commerce can be carried out both individually and collectively, generally, investors decide to establish a company to operate their businesses in the country and in this regard, the most common business vehicles in Nicaragua are:

• Corporations (Sociedades Anónimas)
  Comprise capital is divided and incorporated into shares.
• Limited Liability Companies (LLC) (Sociedades Colectivas de Responsabilidad Limitada)
  Are formed by partners whose capital in the company is in the form of participation or contribution (as opposed to shares in corporations).
• Branches of foreign entities (branch) (Sucursales de Entidades Extranjeras)
  Are established as branches of foreign parent companies.
  Foreign investors most frequently use one of the three vehicles above. When it comes to choosing a specific vehicle, most foreign investors consider their pre-existing corporate or organizational structure and try to keep it or to follow it (to the extent that that is possible), for their business in Nicaragua. The most flexible corporate structure can be found in corporations, as a result of their share structure and the corporate governance requirements.

Whether a corporation, LLC or a branch is being used, they must all be incorporated by a public deed before a Nicaraguan public notary and should be recorded with the Mercantile Registry, the Final Beneficiary Registry, the Nicaraguan Tax Authority and the municipal authority where the company is doing business.
LLCs must contain at least one of the names of their partners in their legal name, followed by the words "y Compañía Limitada" to limit the responsibility of the partners. Corporations should include the words "Sociedad Anónima"; and branches must include the words "Sucursal Nicaragua". These vehicles can be incorporated and registered in about 35 days. Some additional permits and registrations may apply, depending on the business sector, and the timescales for obtaining permits and registrations can vary, depending on the permit to be obtained and the governmental agency involved.

The following websites can provide further information:

• Mercantile Registry (www.registropublico.gob.ni)
• Municipal Authority of Managua -Capital- (www.managua.gob.ni)
• Tax Authority (www.dgi.gob.ni)

The highest authority for corporations is the shareholders' meeting and the board of directors administers the corporation (Directors must be shareholders.) LLCs can appoint administrators with the authority to legally represent and act on behalf of the company, and these administrators may or may be not partners in the company. If administrators are not appointed, then any partner is lawfully entitled to act on behalf of the company. Branches are managed by their parent company's board of directors and/or shareholders, as applicable, though the branch in Nicaragua should also have an individual granted full power of attorney to represent the branch in the country.

Income Tax
Law No. 822 “Tax Concertation Law”, classifies income tax into the following categories:

• Labor income/Personal Taxes
• Income from economic activities, and
• Capital income, capital gains and capital losses.

Labor Income/Personal Taxes
The taxable base of work labor income is the net income, which is the result of deducting from gross non-exempt or taxable income, the deductions allowed by the Tax Concertation Law. The taxable base of allowances is the gross amount received. The taxable base of nonresidents' work income is the gross income. Income perceived in kind will be valued at the standard market price of the good or service received in kind.

Law No. 822 establishes a new method to calculate the amount of income tax to pay for work income based on a progressive rate.

Income from Economic Activities
The taxable base is the net income. Taxpayers have to pay an aliquot equivalent to 30% of the net income from economic activities. From 2016, this aliquot will be reduced by one percent per year for the next five years.

It is important to highlight that the Tax Concertation law establishes a parallel system with differentiated aliquots for taxpayers with annual gross income less than or equal to twelve million Cordobas (C$ 12,000,000.00). Net income for such taxpayers will be determined as the difference between incomes and cash outflows; therefore, the total value of any acquired asset that is subject to depreciation will be deducted from income when the acquisition occurs.

Capital Income and Earnings and Loss of Capital
The law considers capital income the income earned or received in cash or kind from the exploitation of assets or transfer of rights, which is to say, comes from wealth itself, rather than any specific production or direct work. Earnings and loss of capital are changes in the value of the assets of the taxpayer as a result of the sale of goods, or assignment or transfer of rights. Furthermore, income from gambling, betting, donations, heritages and bequests, and any other similar income.

Resident
An individual shall be considered a tax resident of Nicaragua if the individual is present in Nicaragua for a period or periods totaling in the aggregate at least 180 days in the fiscal year concerned. Additionally, a legal entity will be deemed as a resident, if its principal office or operations are in the country unless such entity proves that its residency or tax domicile is in another country.

The law establishes that nonresident legal entities are subject to a withholding rate of 15%. However, if the non-resident belongs to a State considered as a Tax Haven the withholding shall be 17%. Non-resident individuals are subject to a 20% withholding rate.

Value-Added Tax (“VAT”)
VAT is levied on the sale or transfer, at any title, of tangible movable and immovable goods, the sale or assignment of intangible assets associated with intellectual property rights, the provision of services within Colombia or from abroad to Colombian users, and the importation of tangible movable goods, unless it is expressly excluded from such tax.

The VAT rate is generally 15% of the total value of the transaction, but different rates may apply to specific goods and services. Certain goods or services are taxed at 0% (exempt) and others are not subject to tax (excluded).

Territoriality Principle
Colombian legislation establishes the principle of territoriality, which states that all employment relationships executed in Colombia shall be governed by Colombian laws, regardless of the agreements between the parties or the employee´s nationality. Consequently, national and foreign employers must comply with all the legal and economic obligations that arise from a Colombian employment relationship and pursuant to Colombian employment laws.

Employment Agreements
Colombian employment legislation assumes that every personal work relationship is governed by an employment agreement. Thus, for the purposes of declaring the existence of an employment agreement, the following elements must meet: (i) The personal activity of the employee; (ii) The continued subordination or dependency of the employee with respect to the employer, granting the employer the authority to give orders and instructions at any time concerning mode, time, or quantity of work; and (iii) A salary that compensates the employee for the services rendered.

Employment agreements may be classified according to their duration, as follows:

• Indefinite Term
  It does not have a specific duration.
• Fixed Term
  The parties establish a term of duration of the contract, which may not exceed three years. There are two types of fixed-term employment contracts: (i) those of less than a year and (ii) those between one and three years. It must be agreed in writing.
• For the Time That the Performance of the Work May Last
  Its duration depends on the period the duty lasts or the work that has been contracted.
• Occasional, Accidental, or Transitory
  For the fulfillment of duties that vary from the normal activities of the company, and its duration is of less than a month.

Labor Obligations Arising from the Employment Agreement

• Payment of the Salary
  Is the main compensation for the services rendered. The minimum monthly legal wage (mmlw) is established annually. For 2023 it is $1,160,000.
• Payment of Statutory Fringe Benefits
  In addition to their salary, all employers must pay their employees with ordinary salaries, the following statutory fringe benefits:
  • Legal Transportation Aid
    Paid every month to all employees with up to 2 mmlw.
  • Service Bonus
    30 days of salary (15 days paid in June and 15 days in December).
  • Unemployment Saving Aid Plus Interests
    30 days of salary for each year of work or proportional to the time worked and is deposited in an unemployment savings aid fund chosen by the employee. Over this amount, annual interests of 12% are paid.
  • Footwear and Dress Endowment
    A pair of shoes and a work dress are delivered three times a year to employees who earn up to 2 mmlw.
• Vacations
  Paid rest of 15 working days for each year of work.
• Social Security
  All employers must affiliate their employees to the Integral Social Security System in Pensions, Health and Labor Risks and pay the monthly contributions to the different entities that make up the system. Said contributions must be paid jointly by employer and employee based on (i) the monthly salary, and (ii) the applicable percentage in accordance with law.
• Payroll Fees
  9% over the payroll´s amount.

Business Transactions with Nationals, Residents or Non-Residents
In general, nationals are legally defined as (i) those born in Nicaragua, (ii) those whose mother or father is Nicaraguan, or (iii) foreign individuals who have previously renounced their nationality and have fulfilled the legal requisites to request and obtain the Nicaraguan nationality. Central American persons may request the Nicaraguan nationality without renouncing it to their original nationality.

On the other hand, residents are foreign individuals who have their legal residency, temporary or permanent, in Nicaragua; while non-residents are those who have entered the country for a limited period, visiting the country for specific purposes without establishing their legal residency in Nicaragua.

There are some limitations or restrictions when conducting business with non-residents in Nicaragua; is important to mention that a non-resident is not legally allowed to perform economically compensated activities in Nicaragua, unless having the corresponding work permit issued by the Nicaraguan Immigration Authority and, there are some institutions (public authorities, banks, etc.) that do not recognize non-residents as legal representatives for companies, but only Nicaraguan residents –or Nicaraguan citizens- for purposes of legal representation.

Additionally, given that companies in Nicaragua are registered as employers before the Social Security System, reporting employees is a requirement and, therefore, resident employees are also reported to such system. Moreover, within the documents to be filed before the Immigration Authority when requesting legal residency for work purposes, the contract must be filed as well; such contract must contain a special provision indicating that it will enter into force and effect only when the Residence Card is issued by the Immigration Authority.

Investment Controls
From a general perspective, there are no restrictions on direct or indirect investments in the country. However, there are a few restrictions on the control bodies of the company as well as on the stock’s percentage for foreign investors, depending on the business sector.

There are no general requirements for investors to make declarations on the nature of their investments. However, for specific businesses there is the need to request prior authorizations before the corresponding authorities and, once authorized, filing periodic reports is required (regulated sectors, such as free trade zones, banking and financial institutions, telecommunications, maritime and air transportation, energy and mining, etc.).

Money Transfer
According to Law No. 732 “Central Bank Organic Law” (“Law 732”), the Central Bank is in charge of determining and executing the monetary and exchange policies, in coordination with the Government´s economic policy in order to contribute to the economic development of the country.

The official currency in Nicaragua is the “Córdoba” (“C$”). According to Law 732 prices, taxes, rates, wages, salaries, contracts and obligations of any kind which should be paid, collected, or executed in Nicaragua should be expressed and liquidated in Córdobas. However, the same Law 732 sets forth a number of exceptions to the above, among which there are those obligations in which a reference to a foreign currency may be converted to Córdobas by means of applying a determined or determinable exchange rate at the time of payment. In practice, parties use the official exchange rate in connection with the U.S. dollar as published by the Central Bank of Nicaragua.

Money transfer into or out of the country is subject to reporting restrictions when such transfer is equal or superior to USD 10,000.00. Such reporting requirement is aimed at determining the source and destiny of the money, as part of the legal mechanisms implemented to prevent money laundering activities; reports are to be made before the Customs Authority (if cash) or before the bank involved (if a wire transaction), in this case the bank will report it to SIBOIF. Hard currency may be taken out of the country following the same reporting restrictions depending on the amounts involved.

Remittance of profits abroad is taxed depending on the source of the profits in Nicaragua and as long as such profits are not under any special tax exemptions. For instance, according to the Concertation Tax Law, dividends paid to shareholders of companies are subject to a withholding tax of 10%. Such withholding taxes must be duly reported and paid to the Nicaraguan Tax Authority.

Not applicable.

In Nicaragua, Law 761 “Immigration and Foreign Status General Law”, approved on March 31, 2011, and published in The Gazette No. 125 and 126 on 6 and 7 July 2011, along with its Regulations, are intended to regulate the entry and stay of foreign nationals to the national territory.

The following are the most relevant aspects:

• Foreigners enjoy the same rights recognized for Nicaraguans in the Political Constitution (excepting political rights).
• Free movement of foreigners among the republics of El Salvador, Guatemala, Honduras and Nicaragua, under the Law of the Central American Single Visa.
• There are a series of migratory categories and special permits of permanence, for instance, 1. Diplomats 2. Guests 2. Residents and 4. Nonresidents.
• For residency status, some of the common applicable requirements are: Original Passport with a minimum validity of six months; two passport size photos: Birth Certificate or Naturalization, if the case, Health Certificate; Criminal record certificate; Employment contract or marriage Certificate (if the spouse applies to the Nicaraguan residence). Some other specific requirements may apply depending on the specific immigration category.

In Nicaragua, regulations on environmental issues can change depending on the corporate business. Companies' commercial activity is regulated by the laws of the sector in which they are engaged. Decree 20-2017 regulates the environmental evaluation of permits and authorizations to promote the sustainable use of natural resources.

Companies that want to carry out any construction or renovate a building must obtain an Environmental Endorsement from the municipality and formal permits.

The main specific legal framework on environmental matters is found in Law No. 217 “Natural Resources and Environment General Law”, its Amendments (Law No. 647) and its Regulations (Decree 9-96); which contains norms for the conservation, protection, improvement and restoration of the environment and natural resources, ensuring its rational and sustainable use(9).

Such legal framework adopts the constitutional principle that establishes the natural resources as national patrimony(10); creating, therefore, the legal provisions aimed to protect this patrimony through institutions such as MARENA, which is the one empowered to issue environmental permits for projects that may involve the use of national resources11, which is a requirement that must be fulfilled prior to starting activities related with the project.

In order to obtain the environmental permit, investors must prepare and conduct an environmental impact assessment and file it with MARENA for approval. It is also important to mention that natural resources may only be given to investors, foreign or nationals, by means of permits, licenses or concessions for a determined period, depending on the project and the natural resources involved. Every activity in connection with natural resources and the environment is executed under the control and regulations of MARENA and the specific authority for the specific natural resource affected, which is entitled to supervise the activities and to impose sanctions against those in breach of environmental laws and regulations.
Furthermore, the Nicaraguan Criminal Code has gathered in a specific chapter the Environmental and Natural Resources Crimes; punishing with prison and pecuniary sanctions the behavior of those committing criminal acts against the environment (such as pollution of soil, subsoil, waters and atmosphere; breach to provisions contained in environmental impact assessments; illegal use of natural resources; among others.). A special unit of the District Prosecutor Office (Environmental Division) is currently in charge of investigating and prosecuting this kind of crime.

Nicaragua guarantees the protection of private property. Even though in our country there is a complete and clear legal framework regarding to Real State, due to the events that occurred in Nicaragua in the second half of the 20th century and to avoid any kind of complications, is necessary to know which are the documents that we should analyze prior to the signature of a Real Estate Contract. Therefore, we have to divide them into key documents and additional documents. Within the first, we have the following:

• Title of Domain
• Certificate related to the precedents of the Property
• Updated certificate related to any encumbrance that could fall on the property
• Municipal Solvency

Regarding the Domain Title, we can say that it has to be a Testimony of a Public Deed authorized by a Nicaraguan notary in which state that the person with whom we are going to contract is the legal owner of the property and it has to include the official seal and registration data of the Public Registry of the Immovable and Commercial Property of the Department in which the real estate is located.

In relation to the Certificate related to the precedents of the property, as its name indicates, it is an official document issued by the Public Registry in which the successive tract of the property is recorded, that is to say, who has been the owners of it and how the domain of the good has been transferred. This document helps us to verify the way in which the property came into the hands of the person with whom we wish to contract and if those transfers have been made in accordance with Nicaraguan law. Is advisable to request this Certificate in relation to the last thirty years because this is the term of the Extraordinary Acquisitive Prescription.

As a third essential document, is necessary to review an Updated certificate related to any encumbrance that could fall on the property, it is also an official document and allows us to know if any encumbrance falls on the property, such as the constitution of a mortgage or usufruct in favor of a third party.

Finally, we have the Municipal Solvency, which is an official document issued by the Municipality in which the property object of the contract is located; with this document, we can verify if the owner of the property has fulfilled its obligation to pay the taxes that fall on the property and at the same time allows us to corroborate that the registered owner is the same person who is registered as such in the municipality.

Once we analyzed the key documents, it is necessary to review certain "Additional Documents" such as:

• Cadastral Certificate.
• Approved Topographic Map.
• Certificate of Non-Objection issued by the General Attorney Office of Nicaragua.
• Cadastral Technical Report.

Another important aspect to mention is that in Nicaragua, the importance of registering real estate contracts and purchase deeds in a timely manner is essential to ensuring legal security and protecting the rights of property owners. One of the main benefits of timely registration of real estate titles/deeds is the legal protection it provides to owners. This is because the proper registration of property transfers, mainly purchases, ensures that the property you acquired cannot be affected by third parties. That is to say, if you are the registered owner, the previous owner, their heirs, or any other person, cannot sell, mortgage, or establish any other type of rights over it.

Intellectual Property Laws
In Nicaragua, intellectual property is regulated and protected through different laws, specifically for each legal regime. The General Registry for Intellectual Property ("DGRPI" for its acronym in Spanish) is the administrative body responsible for ensuring the use, protection, development and respect of the intellectual property system in our country.

Some of the laws related to this sector are: Law No. 312 “Copyright Law and Related Rights”, Decree No. 22-200 “Regulations to Law of Copyright Law and Related Rights”, Law No. 380 “Trademark and other Distinctive Signs Law”, as amended; Decree No. 83-2001 “Regulations to the Trademarks and Other Distinctive Signs Law” “Reform Law number 1024, to the Law number 380 Trademark and other Distinctive Signs” Law as amended; law No. 318 “Plant Varieties Protection Law”; Decree No. 37-2000 “Regulation to the Protection of New Plan Varieties Law”, Law No. 354 “Patents of Invention, Utility Models and Industrial Designs Law”; Decree No. 88-2001 “Regulation to the Patents of Invention, Utility Models and Industrial Designs Law” “Reform law number 1025, to the Law number 354 Patents of Invention, Utility Models and Industrial Designs Law”; Law No. 322 “Protection Act program- Carrying Satellite Signals Law”; Decree No. 44-2000 “Regulation to the Protection Program- Carrying Satellite Signals Law”; Law No. 361 “Protection of Layout-Designs of Integrated Circuits Law”; Decree No. 38-2001 “Regulation to the Protection of Layout- Designs of Integrated Circuits Law”.

All the above-mentioned laws represent an effort to adapt Nicaraguan legislation to international standards and have as its main objective to protect trademarks and other distinctive signs, as well as to implement updated regulations and controls providing greater legal protection to the owner of industrial property rights.

The use of the intellectual property system is a tool that enables businesses to be more competitive and have better trading conditions:

Tariffs

• Basic rate US$ 135.00
• Additional Class US$ 65.00
• Renewal US$ 135.00
• Transfers US$ 40
• Certificate US$ 25.00

Source: Law N° 380 “Trademark and other Distinctive Signs”, and “Law number 1024, reform to the Law number 380 Trademark and other Distinctive Signs”.

International Treaties
Nicaragua is a signatory and member of different treaties and Conventions, among others:

• General Inter-American Convention on Protection of Trademarks and Trade Names;
• Universal Copyright Convention;
• Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite;
• Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement");
• Paris Convention for the Protection of Industrial Property;
• Berne Convention for the Protection of Literary and Artistic Works;
• Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations;
• Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of Their Phonograms;
• International Convention for the Protection of New Varieties of Plants ("UPOV Convention");
• Patent Cooperation Treaty ("PCT");
• WIPO Copyright Treaty ("WCT");
• WIPO Performances and Phonograms Treaty ("WPPT");
• Lisbon Agreement for the Protection of Appellations of Origin and their International Registration;
• Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure;
• Trademark Law Treaty.

Approvals by National Investment Boards
To proceed with the registration of trademarks, Patents, Copyrights and others is not necessary to obtain the approval of any chamber of commerce or investments, the person (national or foreigner) interested in protecting their rights, will proceed before the national authorities in charge of the Registry and submit their applications as requested by the National Legislation.

Notarization Requirements
The power of attorney needed for the registration procedure of Trademarks, Patents, Copyrights and other intellectual and/or industrial rights, must be executed before a notary, and subsequently apostilled in the country where the document is being issued. For countries that are not part of the La Hague Convention on the Apostille, the power of attorney should be legalized by the Consulate of Nicaragua where the document is issued, to be finally legalized by the Foreign Affairs Ministry in Nicaragua.

Furthermore, the transfer document, co-existence agreements, documents evidencing corporate merger or any other of this kind, should be filed before the national authorities for the registration or amendment of an industrial property right or intellectual right, and also requires notarization, apostille or legalization by the Nicaraguan consulate, as applicable. If this document is in other languages other than Spanish, then it will also require an official translation into Spanish before a Notary in Nicaragua.

Exceptions or Requirements in Relation to Particular Products
For the registration of trademarks in Class 5, the Intellectual Property Office will not accept the description of products in general as indicated in the nice classification. Instead, it requires that the products to be protected be clearly specified, a situation that is not provided by the National legislation, however, it is applied as a result of agreements with the authorities in charge of granting the corresponding sanitary permits for pharmaceutical products.

Generally, for the other classes, there are no problems if the applicant indicates the products in general, based on the description provided in the nice classification of products and services.

On other matters, there are no provisions establishing thresholds for royalties; though royalties for Non-Residents are subject to a rate of 10% of Withholding Tax.

Competition Promotion Law establishes in Art. 4 Subsection “a”, that the exercise of Intellectual Property rights is not under competition provisions; unless the right holders incur in anticompetitive practices.

In Nicaragua, there is a special regime on consumer protection contained in Law No. 842 “Law for the Defense of Rights of Consumers and Users” (“Law 842”).

Some of the rights that consumers have are: (i) right to receive quality products; (ii) right to safety and indemnity; (iii) right to receive information; (iv) right to receive protection against misleading advertising; (v) right to complain; (vi) right to contractual protection; (vii) right to choice; (viii) right to participation; (ix) right to representation; (x) right to information; (xi) right to education; and (xii) right to equality.

In addition, consumers have certain corresponding duties which are: (i) to inform themselves regarding the quality of the products, as well as the instructions provided by the producer or supplier in relation to their adequate use or consumption, conservation and installation; (ii) to act in good faith before the producers and suppliers and before the public authorities; and (iii) to comply with the rules on recycling and disposal of waste of consumed goods.

This special consumer protection regime applies to all products marketed in the national territory (whether domestic or imported) as well as to all services provided in Nicaragua. However, the scope of application of the law is limited to entities located in Nicaragua. Therefore, in principle, foreign entities that are not located in the territory are excluded from the scope of application of this regulation.

As part of the UN and the Financial Action Task Force ("FATF"), Nicaragua must comply with the standards on prevention and sanction of money laundering, financing of terrorism, and financing the proliferation of weapons of mass destruction ("AML/FT/FPWMD"). This country's commitment is reflected in different regulations that impose obligations to companies aiming to prevent those risks.

The following are significant laws regarding such matters:

Law 976, Law of the Financial Analysis Unit (Ley de la Unidad de Análisis Financiero), duly published in the Official Gazette No. 138 of July 20, 2018, and has derogated Law 793, Law of the creation of the Financial Analysis Unit (Ley Creadora de la Unidad de Análisis Financiero), its regulation Decree 07-2013 and its amendment Decree 19-2014, in order to regulate suspicious operation including, any act, operation or transaction, isolated, repeated, simultaneous or serial, regardless of the amount thereof, made or attempted by any person natural or legal, which according to the regulations in force, the use or customs of the activity in question, is unusual or lacking apparent economic or legal justification.

Regarding the powers granted to the Financial Analysis Unit ("UAF"): According to Law 976, it has the power to receive and request reports of suspicious transactions, or any other information related to said reports to the obliged subjects. Notwithstanding the foregoing, the UAF may directly request that the obligated subjects and any public or private entity, including mercantile companies, cooperatives, (that among the activities carried out with their associates, include financial intermediation) and Non-Profit Organizations, provide financial or legal information related to operations allegedly related to Money Laundering/Financing to Terrorism/Financing the Proliferation of Weapons of Mass Destruction ("ML/TF/FP") and predicate offenses associated with Money Laundering ("ML").

Regarding the obligation to report, this is contained in Article 8 of Law 976, which among other obligations mandates that the obliged subjects who suspect that a client’s assets are linked to ML/FT/FP and Previous offenses associated with the ML at the time of performing or attempting to perform an operation that it requests or upon completion of the analysis of its operations, must report these suspicions immediately to the UAF. In the same way, they will report the operations and assets of fund providers, services, associates, employees, partners and business allies that are suspected of having a relationship with ML/FT/FP and preceding crimes associated with ML. Likewise, said article indicates that natural persons, public and private entities and obligated subjects will be relieved of their duty of secrecy, regardless of whether this has been established by laws or contracts, including, without limitation, banking secrecy, reservation of Microfinance operations, tax secrecy and professional secrecy.

Article 10 establishes the obligation for the Association of Public Accountants of Nicaragua to establish an entity that centralizes the information of unusual operations or situations identified by the Obliged Subjects under its jurisdiction.

According to Article 12 of Law 976, it is established that under no circumstances are the obligated subjects, their directors, administrative managers, compliance officers or employees to reveal to their clients, suppliers of funds, services, associates, employees, partners and allies of business or to third parties that:

• Information was sent to the UAF. In this case, the violation of this mandate will be subject to criminal or administrative liability, as appropriate.
• A report concerning suspicious transactions related to ML/FT/FP and preceding crimes associated with ML was sent, has been sent or will be sent to the UAF.
• A criminal investigation regarding their business is in process or has been concluded in relation to ML/FT/FP activities and preceding crimes associated with ML.
• The decision not to provide a product or service when it has been determined is based on suspicions that the client’s assets come from ML/FT/FP activities.

Additionally, and in accordance with what is indicated in the preceding paragraphs, Law No. 977, Anti-Money Laundering Law, Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction (Ley No. 977, Ley Contra el Lavado de Activos, el Financiamiento al Terrorismo y el Financiamiento a la Proliferación de Armas de Destrucción Masiva), has also been enacted and published in the Official Gazette No. 138 of July 20, 2018.

In this Law, Chapter II Article 9, establishes that those who are considered obligated subjects must inform the UAF directly and without being able to claim any type of secrecy, the natural or legal persons that carry out activities such as Financial Institutions, and Activities and Non-Financial Professions, these being the following:

• Financial Institutions supervised by the Superintendence of Banks and other Financial Institutions:
  • Banks,
  • Financial institutions,
  • Insurance, reinsurance and security companies and insurance intermediaries,
  • Companies of general warehouses of deposit
  • Stock exchange companies,
  • Central of securities,
  • Stock exchange positions,
  • Liquidation and settlement companies,
  • Fund management companies,
  • Investment companies,
  • Pension Fund Management Companies.
  • Representation offices of banks and foreign financial entities,
  • Companies of special regime referred to in the General Law of Banks, Non-Banking Financial Institutions, and Financial Groups

• Entities supervised by the National Microfinance Commission:
  • Intermediary Microfinance Institutions
  • Microfinance Institutions.
• The following entities will be supervised by the UAF in matters of ML/FT/FP prevention:
  • Companies that do not maintain ownership, administration, use of corporate image or links/relationships with banks or other regulated non-banking financial institutions when carrying out the following activities:
    1. Issuance and Administration of means of payment.
    2. Factoring operations.
    3. Financial leasing.
    4. Remittances v. purchase and/or exchange of currency.
  • Microfinance institutions that are outside the regulation of CONAMI, regardless of their legal status.
  • Cooperatives that, within the activities carried out with their associates, grant any form of financing or that includes financial intermediation.
  • Pawn and loan houses.
  • Casinos,
  • Real estate brokers,
  • Merchants of precious metals and/or precious stones,
  • Dealers of new and/or used vehicles,
  • Fiduciary service providers.
• Authorized Public Accountants, registered in the Public Accountants Association of Nicaragua.
• Any other natural or legal entity that in accordance with Law 977 (or any other specific law that creates it), has been designated as an obligated subject.

The Political Constitution of Nicaragua provides certain general rights concerning privacy and data collection. The main specific law on this matter is Law No. 787, the Personal Data Protection Law ("Law No. 787") and its regulations. Law No. 842 also establishes certain provisions relating to customers' data protection. In addition, certain laws enacted under the Political Constitution of Nicaragua establish specific rights and forms of recourse (the habeas data recourse) that affected parties can exercise in connection with these matters.

The legal basis for processing data is consent from data subjects. For consent to be valid, it has to be prior (before the processing takes place), express (through means where the data subject reveals her unequivocal intention) and informed (data subjects must be informed about (i) the name and contact details of the data controller (i.e., the entity that decides on the databases and the processing of the information contained therein.); (ii) their rights and means to exercise them; (iii) where to consult the applicable data protection policy; (iv) that the authorization to process sensitive data is entirely optional; (v) the specific data that will be collected and processed –especially if sensitive data is involved, and (vi) how the data will be used and for what purposes.

Please note that to this date the authority in charge of observing the application of Law No. 787 hasn´t been properly formed, as such, there are no references for us to share related to the practice of this Law.

Procompetition ("Procompetencia") is a public law institution created by Law 601 that operates as an autonomous administrative court recognized nationally and internationally for its contribution to the development of the country and consumer welfare, through the protection and promotion of free competition.

Any type of concentration as defined by Nicaraguan Competition Law meeting any of the following (alternative) thresholds must be notified to and approved by the Nicaraguan Competition Authority (“PROCOMPETENCIA”): (i) When as a result of the concentration, a market share equal to or greater than 25% in the relevant market is acquired [Local counsel advises that in general the market share test refers to the national market. However, some other circumstances may have a bearing on a case-by-case basis.]; OR (ii) Economic agents involved in the concentration have a combined income equal to or greater than 642,857 minimum salaries (approx. 5,503,794,491.22 NIO, USD 150,253,739.86 ). The average minimum wage as communicated by local counsel amounts to approx. 8561.46 NIO (approx. USD 233.72). [LL note: we would be grateful if you could please update these amounts and include, if possible, EUR estimates.] PROCOMPETENCIA takes into consideration the average minimum salary in effect on the day prior to the notification. In practice, it is not clear whether a worldwide or local income threshold should be the basis of analysis in a concrete case, given that Nicaraguan law defines income “whether in Nicaragua or abroad”. A case-by-case assessment is recommended.

PLEASE NOTE that all transactions incurring a change in the shareholding structure of a Nicaraguan company are now reportable to PROCOMPETENCIA (and require a notification to the Registry of the Final Beneficiary) EVEN IF the transaction does not reach the above-mentioned merger control thresholds. If the transaction does not meet the merger control thresholds PROCOMPETENCIA will issue a letter of no objection. If the transaction is reportable, PROCOMPETENCIA will review the transaction and order that the notification process should be started within 15 days (Reform and additions to Law No. 698 General Law of Public Registries and Commercial Code of the Republic of Nicaragua), a case-by-case analysis is recommended to consider the applicability of such requirement on indirect shareholding modifications that involve a Nicaraguan company. The PROCOMPETENCIA considers both the seller’s and the buyer’s turnover as part of the turnover calculation of the economic agents involved in a transaction.

A case-by-case analysis is also recommended in order to clarify whether the income specified applies to worldwide income or income in Nicaragua only. In the absence of a specific provision on this matter in Nicaraguan law, it becomes an interpretation issue where the PROCOMPETENCIA might adopt any of both positions on a case-by-case basis, analyzing a specific transaction and elements connected thereto and deciding whether or not such transaction should be subject to filing due to worldwide or domestic income.

This matter remains a grey area, but it is possible to file a consultation letter with the PROCOMPETENCIA, without revealing names, just hypothetical scenarios, in order to obtain the PROCOMPETENCIA’s non-binding general view on this topic. However, the PROCOMPETENCIA may ask for more specific information and details on the transaction (e.g., names of the parties involved, relevant market, competitors, consumers, etc.), in order to provide a response to such a non-binding consultation.

In any event, a case-by-case analysis of the notification requirement in Nicaragua is strongly recommended by local counsel as the PROCOMPETENCIA has not provided any definitive criteria in this respect. For example, where a transaction exceeds both thresholds, but the acquiring party does not have any assets, any legal presence or any participation or business of any kind in Nicaragua, such a transaction might be deemed to be a mere “change of ownership” (as opposed to a concentration requiring notification). However, this is for the PROCOMPETENCIA to determine, so if any of the thresholds are met, filing would be in principle required.

In Nicaragua, the administrative contracting processes of the public sector are regulated by Law N 737, “Law on Administrative Contracting of the Public Sector” approved on October 19, 2010, and published in La Gaceta, Official Gazette No. 213 and 214 of November 8 and 9, 2010. All bidders must be registered and have their registration certificate in the State Supplier Registry, which is publicly accessible through the single web portal, managed by the Directorate. General of State Contracting. This platform also allows both the general public and investors to know the current bidding processes for contracting.

Nicaragua stands out for being the country with the best pace of execution of infrastructure projects in Central America. Likewise, it is classified as the country with the best road infrastructure in the entire Central American region, thus facilitating land trade. Nicaragua has also shown its great commitment to sustainable development, installing more than 60 charging stations for electric vehicles, betting on electric mobility and thus helping to preserve the environment. But Nicaragua has not only improved its road system but also its water and sewage system, since through the Acueducto y Alcantarillados company it has brought drinking water service to 92% of the total population, unlike in 2006. in which only 65% of the population had said service.

By 2024, the Ministry of Transportation and Infrastructure, ("MTI"), is expected to complete the construction of 7 new roads, as part of the development of the country's 5 strategic corridors. In addition, 51 new bridges and bridge boxes will be built nationwide. The government is also promoting the financing of 20 new roads with the cooperation of the People's Republic of China and the Central American Bank for Economic Integration ("CABEI"), these roads will have a great impact in areas of high economic potential, regions of high productivity and tourist attractive areas of the country. Likewise, the government has signed a contract with the company China CAMC Engineering Co., Ltd, for the reconstruction, expansion and improvement of the Punta Huete International Airport, which will be located in the San Francisco Libre area in Managua, which will reduce significantly increases the number of air connections between Nicaragua and Asia, Europe, Africa and Oceania, making the country an attractive destination for tourists from these continents.

To terminate a business in Nicaragua, it is necessary to dissolve and then liquidate the company.
The process of dissolution of the company is the legal act that opens the liquidation process that results in the extinction of the company as a contract and as a legal entity.

The liquidation process is the set of operations necessary, so that after the dissolution the pending business of the company is terminated, that is to say, it is oriented to pay all the obligations that the company has, such as: paying the liabilities, taxes, taxes, collect the credits, pay the internal obligations of the company (salaries of workers, labor benefits, social security, etc.) and only when all the above-mentioned obligations have been satisfied if there are dividends or goods within the company, they can be distributed among the partners. It is important to mention that, in accordance with Nicaraguan legislation, when a business is in the process of dissolution and liquidation, the first obligations that must be covered and/or paid are the labor obligations, that is to say, these have priority over the other obligations.

Voluntary Liquidation
The dissolution and liquidation of the company must be decided in accordance with the percentage of shares established for such purpose in the Articles of Incorporation and bylaws of the company; otherwise, if nothing was stipulated in this respect, then it will be decided in accordance with the provisions of the Nicaraguan Commercial Code, which requires the favorable vote of 75% of the capital stock. The steps of such a process are as follows:

• The shareholders meeting in a General Meeting must appoint the liquidators.
• In the same act of appointing the liquidators, they must set the term within which the liquidation process must be completed.
• Once the liquidators have accepted their appointments, they will proceed to carry out all the pertinent procedures for the liquidation of the company.
• After the liquidators have finished their work, they will submit to the general meeting for approval the final accounts and an explanatory report on the performance of their mandate, accompanied by all the documents that clarify and justify their work.
• Once the liquidation is duly approved, a certification of the minutes will be issued, which must be published in the Official Gazette of the Republic of Nicaragua.
• After the publication of the certification of the minutes, the Public Deed of Dissolution and Liquidation of the Company must be prepared for its corresponding registration in the Public Mercantile Registry.
• Subsequently, all the documentation must be presented to the rest of the institutions to follow up on the closing of the operations of the company, such as the Mayor's Office, General Directorate of Income, Nicaraguan Institute of Social Security, General Directorate of Customs Services and others.

When an investor or entrepreneur has ceased to comply with its obligations, i.e. has stopped making its payments and therefore has fallen into insolvency, then it is in a legal situation of bankruptcy. Bankruptcy may be filed by the bankrupt investor or businessman himself or by the creditor. The bankruptcy petition must be filed before the competent judge, who is the only one who can declare it.

The Nicaraguan Commercial Code establishes that when the investor has ceased payment of its current obligations and presents in its last balance sheet that its liabilities are greater than its assets, it is obliged to declare bankruptcy within ten days following the suspension of the last payment.

From the moment the Bankruptcy is declared, the investor is separated from the administration of all assets subject to seizure, in accordance with the general laws, such assets are transferred to a creditors' representative appointed in accordance with the Commercial Procedure Law ("Commercial Code"). Therefore, he cannot appear in court as plaintiff or defendant, except in those proceedings that exclusively concern his person or that have as object rights inherent to him.

After the bankruptcy is declared, the creditors must make use of their rights through the legal figure of insolvency proceedings, in which they must file a judicial proceeding for the adjudication of the remaining assets of the company. Bankruptcy results in the liquidation of all of the company's obligations (with labor, tax, suppliers, bank loans and other services being prioritized or preferred).