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It is important to be clear that in Colombia the corporate regime is aligned with other countries in the region, however, in the same way we must be clear that it has a particular legislation with corporate figures that are grouped into two classes, those of people and those of capital, both clearly regulated by commercial law. A Permanent Establishment “EP” can also be established, which is a special figure that applies to companies, natural persons or any other foreign entity without residence in Colombia.
What is relevant when choosing the type of company is the responsibility, number of partners, and the need for the new business.
First, we must be clear about the corporate purpose of the new company and the interests of the partners or shareholders. Among the types of companies we can find:
People Companies
Limited Liability Company
This type of company is characterized by the fact that the shareholders only respond to the amount of the capital (Quotas or parts of interest) that they contributed to set up the company.
Another characteristic is that the number of partners is a minimum of two and a maximum of twenty-five and the company name will end with the word “limited” or the abbreviation “Ltda”.
Collective Company
It is a type of society of people in which each of the partners responds jointly and unlimitedly.
The minimum number of partners for this type of company is 2 shareholders and there is no maximum limit. Usually at the end of the name of the Company it is accompanied by words like: “and company”, “and children”, “and brothers”.
Simple Limited Partnership
It is a type of company whose characteristic is that there are two types of partners: COLLECTIVES and COMMANDERS. The difference between the two is the responsibility in the company, the GROUPS that commit their responsibility in a solidary and unlimited way and the COMMANDERS with limited liability to the amount of their contributions.
The administration is the responsibility of the COLLECTIVE members or whoever they designate.
The name of the company will have the abbreviation “S in C” at the end and the capital contributions are called quotas or interest parties and are governed by the rules that regulate limited liability companies (Maximum twenty-five limited partners).
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Capital Companies
Stock Corporation
This corporate figure has as its main characteristic that its capital is divided into shares with a minimum of five shareholders and no maximum limit required.
The liability of the shareholders in the Public Limited Companies is limited to the amount of their contributions. It must be accompanied by the acronym “S.A.” or the word “Sociedad Anónima” at the end of the Company’s name.
Additionally, they must comply with the obligation to have a Statutory Auditor, keep the books stipulated by the commercial norm established in the Commercial Code and have the corresponding entities regulated for this type of company.
Simplified Stock Corporation
In Colombia, this corporate figure is the most used today, but one of the most recent since it was born in 2008. It was the response to the need for entrepreneurs to have a corporate figure that meets the conditions of the modern market and it could be constituted in an agile way by means of a private document that does not require notarial protocols unless assets are made that make it enforceable and is only limited to a notarized signature of the shareholders.
Regarding the number of partners, it can be one or more partners with no enforceable limit. The responsibility of the shareholders reaches up to the amount of their contributions. The company name is attached to the end of the words “Simplified Limited Company” or the acronym “S.A.S”.
Limited partnership for shares
It is a type of company whose characteristic is that there are two types of partners: COLLECTIVES and COMMANDERS. The difference between the two is the responsibility in the company, the GROUPS that commit their responsibility in a solidary and unlimited way and the COMMANDERS with limited liability to the amount of their contributions.
The administration is the responsibility of the COLLECTIVE members or whoever they designate.
The name of the company will have the abbreviation “S.C.A.” at the end and capital contributions are called shares and are governed by the rules that regulate corporations (minimum five limited partners).
Permanent Establishment (Only for foreigners not resident in Colombia)
Foreign Company Branch
In Colombia, this type of company is not considered an independent legal entity in Colombia and therefore, its treatment is like a dependent of a Company abroad to which the rules that regulate Public Limited Companies in Colombia apply, and for tax purposes they are liquidated. taxes in the same way.
Regarding the capital of this type of PE, the capital is called Assigned Capital Investment to the equivalent of the initial capital of a company and the contributions that are required later are registered with the Bank of the Republic as Supplementary Capital Assigned Investment “ISCA” the which has a special management in accordance with the Colombian Exchange Regime.
Headquarters documents such as minutes of the Company’s Board of Directors and official documents that certify the existence of said company in the country of origin must be attached, in the same way it must be included in the minutes or resolution of the Board of Directors of the Parent the corporate purpose of the Branch, the capital, the address, duration of the Branch, the legal representative in Colombia, among others. These documents must be duly apostilled.
The recommendation is to have a consultancy to be able to make a choice that adjusts to the requirements of the companies.
Jaime Sáenz
JS O&A
jsaenz@jsoadvisors.com
+57 300 814 1986
