COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Juan David Velasco, Natalia Ponce de León and Angelica Navarro, Baker McKenzie S.A.S.
1. Legal System 1.1 Legal System and Judicial Order
• the number of shares or membership interests acquired; • the destination of the investment; and • the origin of the funds. Depending on the type of investment, deadlines for registration will vary. Registering foreign investment ensures access, through the formal exchange market, to convertible currency to remit dividends and repatri - ate the investment. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance Although foreign investment is not subject to approval from governmental authorities, all investments made by non-residents must be registered with the Colom - bian Central Bank. Failing to properly complete this registration may lead to penalties being imposed. Under the Colombian exchange regime, the Super- intendencia de Sociedades (Superintendency of Corporations) has the authority to audit international investment records and impose sanctions for non- compliance. Although Decree 1746 of 1991 author - ises penalties of up to 200%, the Superintendencia de Sociedades typically enforces penalties that reflect the severity of the violation. 2.3 Commitments Required From Foreign Investors This section is not applicable in Colombia. 2.4 Right to Appeal This section is not applicable in Colombia. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The most common form of legal entity in Colombia is the simplified stock corporation (SAS) due to its flex - ible regime and the freedom that its shareholders have to establish the terms and conditions for its function - ing and internal governance structure. Corporations ( sociedades anónimas , or SA) and foreign company branches are vehicles that are also used.
Colombia’s legal system follows the civil law tradi - tion. The branches of government are the legislative, the executive and the judiciary. The ordinary judiciary structure is: • the Corte Suprema de Justicia ; • the Tribunales Superiores de Distrito Judicial ; and • the Juzgados . 2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments Foreign investments in Colombia do not require approval from the authorities. The country generally has a liberal approach to foreign investment, with a few exceptions. Foreign investment is not allowed in activities directly related to defence, national security, and the process - ing or disposal of toxic, dangerous or radioactive waste that is not generated in the country. Colombian companies can also be fully foreign owned, except for those in the national broadcast television sector, where foreign ownership is capped at 40%. Although foreign investment is not subject to approval from governmental authorities, all investments made by non-residents in Colombia must be registered in a timely way with the Colombian Central Bank, either directly or through the local financial institutions through which the funds are transferred. Foreign investments include, among others, the acquisition of equity interests in Colombian companies and con - tributions to local joint ventures or trusts. To complete this process, foreign investors must reg - ister the investment by submitting a foreign exchange declaration ( declaración de cambio ). The registration process requires the submission of
certain information, such as: • the value of the investment;
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