COLOMBIA Law and Practice Contributed by: Jaime Trujillo and Natalia Ponce de León, Baker McKenzie
remit dividends and repatriate the investment. Failure to report and register may result in fines and compel investors to rely on the informal exchange market to acquire convertible currency. Equal Treatment for Foreign Investors Foreign investors receive equal treatment as local investors. Access to convertible currency is guaran - teed with respect to registered foreign investment, with limited exceptions reserved for extraordinary circumstances. One such exception may arise when international reserves fall below the value of three months’ worth of imports. To our knowledge, there have been no reported instances of such exceptions being invoked. 2.4 Antitrust Regulations In Colombia, an antitrust filing before the SIC is required prior to a business combination if: (i) there are market overlaps, meaning the parties are engaged in the same business (horizontal overlap) or carry out activities within the same value chain (vertical overlap), directly or indirectly through other controlled compa - nies; and (ii) the aggregate operating incomes or total assets of the parties exceed certain thresholds. Whenever a business combination meets the criteria described above, the parties have to obtain clear - ance from the SIC prior to closing, either through a fast-track notification proceeding or through a pre- evaluation proceeding, depending on the joint market share of the parties in any of the overlapping markets (ie, market threshold), in accordance with the rules outlined below. Fast-Track If the aggregate market share of the parties to the transaction is below 20% in all the overlapping mar - kets, the business integration is deemed authorised provided that the transaction is previously notified to the SIC. Pre-Evaluation If the parties’ joint market share is 20% or higher in any of the overlapping markets, express prior approval from SIC is required. These are information-intensive proceedings, with the SIC undertaking a substantive
analysis of the transaction (a “pre-evaluation”) before deciding. 2.5 Labour Law Regulations The primary labour law regulations that acquirers should be concerned about in any jurisdiction will significantly depend on whether the transaction is structured as a share deal or an asset deal. Share Deals When a business is transferred through a share deal, there is no change of employer. Consequent - ly, employee conditions, benefits, and entitlements remain unaffected. Consent from employees or labour unions is not required for the transfer, unless spe - cifically defined in a collective bargaining agreement (which is uncommon). Asset Deals In asset-purchase transactions where the assets con - stitute an ongoing concern, the transfer of employees directly linked to such assets operates automatically by virtue of law: transferred employees cannot legally refuse the change of employer or demand the pay - ment of benefits. This is because the employment agreement remains intact and is not terminated, sus - pended, or modified. As a rule, however, the former and the new employer will be jointly and severally liable with respect to the obligations accrued prior to the transfer. 2.6 National Security Review Colombia has not formally adopted any national secu - rity review. However, foreign investment in activities directly related to defence or national security is pro - hibited. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments Mercantil Galerazamba S.C.A & others v Muñoz Meri - zalde & CIA (2020), an arbitral award, created signifi - cant legal precedent by shedding light on the inter - pretation of key aspects of Colombian law-governed M&A transactions, such as: (i) the validity and enforce - ability of sandbagging and anti-sandbagging provi -
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