COLOMBIA Law and Practice Contributed by: Jaime Trujillo and Natalia Ponce de León, Baker McKenzie
7.4 Transaction Documents The SFC has the power to request disclosure of the transaction documents in full. However, they are usu - ally satisfied with detailed summaries of such docu - ments.
shares of a company lies solely with the shareholders, and not with the board of directors or any other body of the target. While the ad hoc committees can serve as an initial screening mechanism to identify potential conflicts of interest, the regulatory process is that, in the event of a conflict of interest, the director has the alterna - tive to either refrain from engaging in the conflicting activity or seek prior approval from the shareholders. Consequently, special committees are not entitled to definitively resolve conflicts of interest. 8.3 Business Judgement Rule The business judgment rule, recently formalised in cor - porate regulations, serves as a benchmark for judges when assessing directors’ decisions. It allows direc - tors the freedom to make business decisions without fear of being held accountable by judicial authorities due to negative outcomes in the business. However, this freedom is curtailed during takeover attempts by the passivity rule, which bars directors and manage - ment from deploying defensive tactics once a hostile tender offer is initiated. In the case of public offers, the target company’s management does not participate; the decision to sell shares in publicly listed companies rests solely with the shareholders. As a result, in Colombia, there is an absence of legal precedent regarding the assessment of directors’ behaviour in these scenarios, as they do not participate in the decision-making process. 8.4 Independent Outside Advice Private Companies A common and beneficial practice for directors is to draw on the expertise of external advisers who can provide an independent perspective on a business. These advisers may offer a wide range of services including, for instance, financial, tax, legal, regulatory and marketing consultancy. Listed Companies In a typical sale process, the target’s board of direc - tors does not play any role, and therefore it is uncom - mon for the board of director to seek independent outside advice. In business combinations, by way of acquisition, merger, or otherwise, the board of direc -
8. Duties of Directors 8.1 Principal Directors’ Duties
In a business combination, by way of acquisition, merger, or otherwise, directors of the potential buyer or merger party play an important role in leading the process. In both, private and listed companies, direc - tors’ fiduciary duties are owed to the company, as opposed to the interest of shareholders alone. Note that directors of the targets do not necessarily play a role in an acquisition, as the decision to sell the shares of a company lies solely with the shareholders, and not with the board of directors or any other body of the target. Directors are generally held to the standard of an informed “good businessman”, which demands a lev - el of care and diligence greater than that of an average individual. They should follow three fundamental prin - ciples of conduct: good faith, loyalty, and diligence. Good faith assumes the legitimacy of actions without deceit or malice, aligning with ethical standards. Loy - alty requires administrators to advance the company’s objectives without yielding to conflicts of interest, maintaining integrity and prioritising the company’s welfare over personal gains or those of any appointing shareholders. Lastly, diligence equates to the foresight and caution of an experienced professional, ensuring informed and thorough decision-making. 8.2 Special or Ad Hoc Committees It is common for companies (private and listed) to establish special or ad hoc committees when evalu - ating an acquisition, a merger or the sale of shares in another company. Note that directors of the targets do not necessarily play a role in an acquisition, as the decision to sell the
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