Are you considering forming a new company or establishing a foreign subsidiary in Colombia? The information below will give you an overview of the most common legal structures for companies in Colombia.

 

Simplified Stock Company (S.A.S.)

The SAS company structure was introduced into Colombian legislation in December of 2008 to simplify the process of setting up a company. It is now the highly preferred company structure in Colombia because they are very easy to incorporate and quite flexible, which has led to over 95% of companies incorporated in recent years with the SAS structure.

Key points:

  • 1 shareholder is required (natural or legal persons, Colombian or foreign), and there is no maximum limit.
  • Shareholders are liable up to the amount of the contributed capital, and there is no minimum capital requirement.
  • May be incorporated by way of a private document, and the company bylaws may be amended in this manner as well.
  • Company name must be followed by the acronym SAS or by the words “simplified stock company” in Spanish, Sociedad por Acciones Simplificada.
  • May have an indefinite duration and an unlimited or undefined corporate purpose, so it may conduct nearly any type of business activity.

 

Stock Company or Corporation (S.A.)

An SA can be advantageous in situations where there are a large number of shareholders. In contrast to the Simplified Stock Company, the key features of an SA are:

  • Must have at least 5 shareholders (natural or legal persons, Colombian or foreign), and there is no maximum limit.
  • Shareholders are liable up to the amount of the contributed capital, and there is no minimum capital requirement.
  • Incorporated by means of a public deed executed before a public notary, and any amendments to the bylaws must be made in the same way.
  • Deed may be kept private if one of two conditions are met:
      • Company has less than 10 employees OR
      • Company assets are below 500 minimum wage salaries (approximately USD $125,000)
  • Company name must be followed by the acronym S.A. or by the words “stock company” in Spanish, Sociedad Anónima.
  • Must appoint a statutory auditor.

Limited Liability Company (LTDA)

The LTDA’s are formed by partners as opposed to shareholders, but they do share some similarities with SA’s. Key features include:

  • Must be incorporated before a public notary with a public deed unless one of two conditions are met (in which case the document may be kept private):
      • Company has less than 10 employees OR
      • Company assets are below 500 minimum wage salaries (approximately USD $125,000)
  • Must have between 2 and 25 partners (either natural or legal persons, Colombian or foreign persons).
  • Partners are only liable up to the amount of their contributed capital, except for labor and tax obligations, in which case they are called to answer jointly with the company.
  • Bylaw amendments or transfers of company shares or equity interests must also be made through a public deed.
  • Company name is always followed by the abbreviation “LTDA,” (Sociedad de Responsabilidad Limitada)

Branch Office of a Foreign Company

Branch offices are a possibility for companies headquartered in foreign countries, and they have been attractive options to foreign investors in mining and hydrocarbons because of foreign exchange benefits within those sectors. From a purely legal point of view, Colombian law views the branch office of a foreign company and its parent company as the same legal entity.

  • Parent company is therefore liable for the entire obligations of the branch.
  • Branch must be registered in Colombia by way of a public deed. 
  • Bylaws and corporate stakeholders are the same as those of the parent company.
  • Statutory auditor must be appointed.

There are a number of unique scenarios that could apply to any particular legal structure, so your company strategy and needs will determine the most appropriate option for you. A local partner with expertise in this area can help you identify tax saving measures in advance, so you would be well-advised to seek help and ensure you don’t make an expensive mistake that has to be corrected down the road, especially after you’ve already lost tens of thousands of dollars in unnecessary taxes.

As Latin America market specialist, Ongresso has the expertise to assist you with your expansion efforts based on your unique needs. Deciding on the right market entry strategy and legal structure is a complex process with many unknown and inherent risks. We will simplify this process by reducing complexity, saving you countless hours of researching local regulations and norms, and giving you peace of mind so you can focus on your core business. Contact us via email at contact@ongresso.com to determine which strategy and legal structure is optimal for your business.

Follow our social media at Linkedin and Facebook.

Sven Schnydrig

Sven Schnydrig

Ongresso Marketing Team

10 + 7 =

Our Offices

Ongresso Colombia
Medellín
Cra 41 # 9 - 60 Office 202 
Phone: +57 4 501 73 78

Bogotá
Cra 7#116-50
Phone: +57 317 441 06 29

colombia@ongresso.com 

 

 

Ongresso Perú
Lima

Jr. Monte Rosa #256 Office 502
Phone: +51 962 206 868

peru@ongresso.com

 

 

Newsletter

Facebook
Twitter
LinkedIn

9 StepsFor A Successful Market Entry In Latin America

You have Successfully Subscribed!

Apply For A FREE 30-MINUTE CONSULTATION

You have Successfully Subscribed!