What is the main source of law authorising this entity form?

Colombian Commerce Code, book 2, Law 222/1995 and Law 1258/2008.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The S.A. has legal personality.

(Maximum) period of existence

There is no maximum period of existence. But, S.A.´s must have a term of duration.

Governing document(s)

The S.A. is governed by its bylaws (contained in the public deed of incorporation); Colombian Commerce Code and Law 122 of 1995.

Liability of incorporators / shareholders

Shareholders are not personally liable for the debts of the company, save to the extent to which their shares are not fully paid-up.

Limited liability is subject to piercing the corporate veil in certain circumstances.

(Governing) bodies

General Assembly of Shareholders (Asamblea General de Accionistas).

Legal representative

Board of Directors (Junta Directiva) (mandatory).

The S.A. must have at least five shareholders at all times.

Other particularities

N/A.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Under Colombian law, an S.A can enter into any kind of international restructuring transactions. Such transactions must comply with some legal requirements in Colombia.

Can this type of entity be publicly listed or held?

The S.A. can be listed or publicly held.

Can this type of entity be used for a non-profit or charitable organization?

Due to the commercial nature (distribution of profits) of these entities it is not possible for them to be used as a charitable or non-profit organization.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

The following are the main documents that must be filed with the Chamber of Commerce (Cámara de Comercio), for the incorporation of the company: (i) public deed with the bylaws; (ii) documents that evidence the existence and representation of the shareholders; (iii) pre registry tax form (iv) chamber of commerce forms; and (v) acceptance letters of the legal representatives, fiscal auditor (revisor fiscal) and of the members of the board of directors.

Involvement of notary, company register, governmental authorities

The shareholders or its attorneys can sign the public deed for the incorporation of the company and the bylaws.

If the shareholders are foreign companies, the documents evidencing their existence must be duly notarized and apostilled (or signed before a consul).

Timing (estimate)

Once the documents are filed, normally the Chamber of Commerce (Cámara de Comercio) takes five business days to issue evidence of incorporation.

Main costs, including registration and similar fees (excluding legal fees)

The main costs are the registration fees to be paid to the Chamber of Commerce (Cámara de Comercio),, registry tax (0.3% to 1% over the capital depending on the municipality) and notarial fees for the public deed.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The corporate purpose must be included in the bylaws of the S.A.

Minimum number of incorporators / shareholders and residency requirements

The S.A. must be incorporated by at least five shareholders and there are no residence requirements.

Minimum number of directors (or other applicable officers) and residency requirements

The S.A. must have at least one legal representative and an alternate. It must have a board of directors with at least three members with their alternates.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

There is no minimum capital amount required.

At least a third part of the initial subscribed capital must be paid at incorporation. The other part and any new issuance of shares must be paid within the following year.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

The execution of the private document or the public deed for the incorporation can be made by virtue of a power of attorney.

There are no requirements of physical presence for the directors or legal representatives.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

A tax identification number (NIT in Spanish) is required. To this effect, a Pre- Tax Registry Form (Pre-RUT) must be filed with the Chamber of Commerce at the moment of incorporation. If the Chamber of Commerce does not assign a NIT, it must be obtained directly from the Tax Authority.

What is the title of the applicable company registry?

Unique Commercial and Social Registry (Registro Único Social y Empresarial) managed by the Chambers of Commerce.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The information listed below must be filed at the Trade Register (Registro mercantil) and is publicly available:

• Private document or public deed for the incorporation.
• Bylaws and its amendments.
• Tax identification number.
• Corporate Purpose.
• Corporate Name.
• Commercial and judiciary e-mail.
• Commercial and judiciary address and telephone.
• Authorized, subscribed and paid capital.
• Commercial activities.
• Board of directors’ names and faculties.
• Legal Representative name and faculties.
• Corporate Group.
• Control Situation.
• Mergers and Spinoffs.
• Insolvency and Bankruptcy.
• Dissolution and liquidation.
• Financial Statements.

 

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The Legal Representative (Representante legal) represents the company and carries out the management duties according to the bylaws.

The Board of Directors (Junta Directiva) is the main management corporate body.

How are the members of the executive body appointed, dismissed and replaced?

The Legal Representative is appointed, dismissed and replaced by the Board of Directors (if existent) or the General Assembly of Shareholders in the case of an S.A.S. with no Board of Directors.

The members of the Board of Directors are appointed, dismissed and replaced by the General Assembly of Shareholders.

Is it possible to appoint corporate directors or must all directors be natural persons?

Yes, when applicable.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

The company can have non-executive members without restriction. They would be in a one-tier board with executive and non-executive members.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The General Assembly of Shareholders (Asamblea General de Accionistas) is the highest corporate body. The following are its principal rights and duties as established in the applicable law: (i) approval of the financial statements; (ii) approval of the distribution of profits; (iii) approval of the dissolution and liquidation of the company; (iv) issuance of new shares; and (v) mergers and spin offs.

In addition, the General Assembly of Shareholders has all the rights and duties that are not assigned to any other corporate body.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Generally, decisions are taken by shareholders in accordance with an absolute majority (50% + 1). This general rule can vary depending on the bylaws and in specific cases provided by the law.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

The companies that have assets or income equal or higher than COP $ 27.255.780.000 in 2020 (approximately USD $7.940.000) are subject to the permanent vigilance of the Superintendence of Companies.

Such vigilance means that several decisions are subject to prior or subsequent approval of this entity.

For S.A. listed at stock exchange

These companies must fulfill several requirements such as the issuance and compliance with a corporate governance code according to the Colombian model (Código País).

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

At all times the company must maintain accounting records of the financial situation of the company.

The financial statements as of 31 December of each year are prepared by the legal representative and accountant and presented to the board of directors if applicable and are submitted to the general assembly of shareholders within the first three months of each year.

Is the entity permitted to determine its own financial year?

All companies must have at least one financial year period ending as of 31st December.

All companies may establish more interim financial periods.

Is the entity subject to any statutory (external) auditor obligations?

Every S.A. must have an external fiscal auditor (revisor fiscal) at all times beginning with its incorporation.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

There are no requirements for the appointment of such persons. Thus, the bylaws can establish any internal procedure for such purposes. In the case of accountants, they must be recognized by Colombian law, as a public accountant.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares (Acciones)

Are different classes of ownership interests possible? If so, what are some examples of different classes?

The types of shares that can be created in an S.A are.: (i) ordinary shares; (ii) preferential shares without voting rights; and (iii) privileged shares.

What documentation is required for the transfer of ownership interests?

A transfer of shares can be made through the endorsement of the share certificate or any other document that evidence the transfer of the shares.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The seller issues an instruction letter for the legal representative to record the transfer in the shareholders ledger.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.

How are shares issued? (including information on payment obligations, registration requirements)

Shares are issued after approval by the General Assembly of Shareholders and/or the Board of Directors when applicable. Rules for the subscription of shares must include payment terms, the number of shares issued, and the offer period to subscribe and pay for the shares, among other provisions.

An increase of the subscribed and paid shares must be registered with the Chamber of Commerce.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

The shares can be paid through contributions in kind or through industrial contributions. A premium in the subscription of shares can be established in the rules for the subscription of shares.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Share cancellations and share repurchases can be made if the company has net profits. Capital reductions are possible when certain requirements established by law are met.

Any requirements with respect to distributions to shareholders?

Profits can be distributed without any limit provided the profits are evidenced in approved financial statements.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Renewal of the commercial license with the Chamber of Commerce is required annually. The amount of the renewal fees depends on the assets of the company.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The general corporate tax rate is 31% for 2021 on profits.

Companies may be required to pay national taxes such as (i) withholding tax, (ii) Statement of foreign assets and (iii) Value added tax.

Additionally, companies may be required to pay local taxes such as a withholding of industry and commerce tax.

 

Summary of any specific matters, e.g. recent or prospective major legal developments

No imminent major legal developments are expected in 2021.