In Colombia, the creation of commercial companies, private companies and branches of a foreign company are regulated by the Commercial Code. Any of the above modalities may be adopted by a foreigner in order to advance their business in Colombia. Our legal system identifies the partnership contract, as that by which two or more people (national or foreign) are obliged to make a contribution in money, work or other assets in order to share the profits generated by the growth of the company.
In Spanish known as “Sociedad por Acciones”. Its creation, transformation and dissolution is made through a private document registered in the “Registro Mercantil de la Camara de Comercio” (the Chamber of Commerce’s Mercantile Registry) where the corporation establishes its principal location, as long as no donations subject to public deed are received. In this case, its creation must be done through a notarized public deed according to article 5 of Law 1258 of 2008. It has a minimum of one shareholder and no maximum. Social capital is divided in freely negotiable shares. Capital formation is divided into three steps.
Authorization: A fixed quantity that determines the maximum capitalization of the corporation.
Subscription: the part of the authorized capital that the stakeholders compromise to pay in installments of a maximum of two years. At the moment of the creation of the corporation a payment is not needed, according to article 9 of the Law 1258 of 2008.
Payment: The part of the subscription that shareholders have effectively paid and deposited into the corporation. The stakeholders responsibility is limited to the amount of contributions and are not responsible for labor and tributary obligations, except on the case of law fraud or abuse of the simplified joint stock company to the disadvantage of a third party. The stakeholders have the possibility to determine an undefined term of duration for the company.
In Spanish known as “Sociedad Colectiva”. Its creation, transformation and dissolution is made through a notarized public deed. It has a minimum of two shareholders and no maximum. The social capital of the partnership can be divided into various parts of social interest of equal value and must be completely paid off before the creation of the company. The parts of interest can be made though a kind payment, labor or capital. General partnerships answer solidarily and unlimitedly to social operations in agreement with article 294 of Codigo de Comercio (Code of Commerce).
With respect to labor obligations, article 36 of the Código Sustantivo del Trabajo (Substantive Code of Labor), general partnerships are solely responsible for labor obligations only until the limit of responsibility to each partner. With respect to tributary responsibilities, article 794, subsection 1 of the Tributary Statute establishes: “Partners must answer solidarily for taxes, upgrades and pro-rata interests of their contribution to the partnership during the taxable period.” In the case of a partner’s release, the yielding part is not freed from the immediate previous obligations, instead it is held responsible until a year following the release. The duration of the partnership is limited by the terms establish by in the statues.
In Spanish known as Sociedad por Responsabilidad Limitada Ltda, it is one of the most common business structures in Colombia. It can be created through a public deed signed in the presence of a Notary and needs a minimum of two shareholders, who can be either individuals or corporate bodies, and has a maximum of 25 stakeholders. Although the limited liability company will need to appoint a Colombian resident as the company’s legal representative, it can appoint at least 2 directors who can be of any nationality and do not necessarily have to reside in the country. The Ltda is not required to appoint an auditor, unless if by the end of the year it has a total of net assets an amount higher than 5,000 legal minimum wages or has a revenue higher than 3,000 legal minimum wages. The social capital is divided in quotas or parts of equal value. All capital must be paid off before the creation of the company. The transfer of quotas implies a statutory reform. In the case of the death of a partner, capital will stay with the partner’s heirs, unless stipulated otherwise. Representation rests on all partners, unless it is delegated to a third party. Partners are only responsible for the amount of their contributions, however, stipulations could be made for a greater responsibility
In Spanish known as “Sociedad Anonima”. A public company can be established through the ordinary procedure established in the Commercial Code for the other commercial companies, or through successive subscription of its shares. It must have at least five shareholders and has no maximum. The shareholders respond for the company’s obligations up to the amount of its contribution. The capital of the public company is divided into shares of the same value that are represented through negotiable securities. Such shares may be ordinary or privileged according to the rights granted to the shareholder. The legal representative,the board of directors and the general shareholders’ assembly are in charge of the management and administration of the company.
In Spanish known as “Empresa por Acciones Simplificadas SAS”. Its creation, transformation and dissolution can be done through a private document registered in the Mercantile Registry of the Chamber of Commerce of the place where the company establishes its principal location, as long as they do not receive contributions subject to public deed, in which case the creation must be made by Public Deed before a notary, as provided in Article 5 of Law 1258 of 2008. A Joint-Stock Company has a minimum of one shareholder and does not have a maximum limit. Shareholders respond up to the amount of their contributions. A Joint-Stock Company must have a Fiscal Auditor when gross assets as of December 31 of the immediately preceding year are equal to or greater than 5,000 legal minimum wages in force and / or whose gross income is equal to or greater than 3,000 legal minimum wages in force.
Any foreign company that tries to develop permanent activities in Colombia must establish a branch in Colombia. Even when it a foreign company develops activities that are not considered permanent by commercial legislation, it has the possibility to establish a branch in the country. For its creation it is necessary to register documents showing the existence and legal representation of the foreign company, and the resolution or act stating the decision of the foreign company to establish a branch in Colombia. The constitution requires a public deed of protocolization, which is registered in the chamber of commerce of the location chosen in the country. Technically, the branch of a foreign company is a business establishment of its parent company and for that reason it does not have legal status. The capital of the branches is determined by their parent company and it constitutes the general guarantee of their obligations in Colombia. The representation of these branches is carried out by a general representative who represents the company in the country and with third parties of the parent company.