Corporate Law in Colombia.

Frequently asked questions

What clients ask us most.

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• 01

  What type of company should I incorporate to start a business in Colombia?

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  The S.A.S. (Simplified Stock Company) is Colombia's most widely used corporate form thanks to its statutory flexibility: it can be incorporated with a single shareholder, requires no minimum capital, the board of directors is optional, and shareholders' liability is limited to their contributions. Regulated activities (such as the financial or insurance sectors) require specific corporate forms by law (the corporation/S.A., among others), so the choice should always be preceded by an analysis of the corporate purpose and the applicable regulatory framework.
• 02

  What duties do the directors of a SAS have?

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  Directors must act with the diligence of a prudent business person, refrain from taking part in conflict-of-interest situations, keep the corporate books up to date, and report to the shareholders' meeting annually (Article 23, Law 222 of 1995). As a general rule, their liability does not extend to their personal assets; however, they will be jointly, severally and unlimitedly liable when a breach of their duties causes harm to the company, the shareholders or third parties.
• 03

  How is an M&A transaction structured in Colombia?

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  An M&A transaction typically goes through five phases: (i) confidentiality agreement and letter of intent; (ii) due diligence (legal, financial, tax and labor); (iii) negotiation and execution of the contract; (iv) closing; and (v) post-closing obligations. Two aspects deserve special attention: merger control before the SIC, which requires checking whether the deal crosses the notification thresholds or needs prior authorization; and tax structuring, since each type of combination produces different tax effects that must be analyzed in detail before closing.
• 04

  What is a shareholders' agreement and when is it advisable?

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  It is an agreement entered into among all or some of the shareholders, or with third parties, in order to add to, modify or complete certain aspects of the company outside the bylaws. Some typical matters agreed upon are: tag-along, drag-along, rights of first refusal, exit mechanisms, dividend policy and corporate governance. It is highly advisable when shareholders have different interests (majority vs. minority, founder vs. investor) and especially in transactions involving private equity funds.
• 05

  What are the steps to voluntarily wind up a SAS in Colombia?

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  Voluntary liquidation comprises the following stages: (i) approval by the shareholders' meeting with the quorum and majorities set out in the bylaws; (ii) appointment of the liquidator and registration of the minutes with the Chamber of Commerce; (iii) preparation of the inventory and liquidation balance sheet; (iv) payment of liabilities in the legal order of priority; (v) distribution of any remainder among the shareholders; and (vi) registration of the final liquidation minutes. The process can take between 10 and 18 months depending on the complexity of the company's assets and liabilities.