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 Colombia’s legal system follows the civil law tradition. 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 gen - erally has a liberal approach to foreign invest - ment, with a few exceptions. Foreign investment is not allowed in activities directly related to defence, national security, and the processing 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 own - ership is capped at 40%. Although foreign investment is not subject to approval from governmental authorities, all investments made by non-residents in Colom- bia 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 invest - ments include, among others, the acquisition of equity interests in Colombian companies and contributions to local joint ventures or trusts.
To complete this process, foreign investors must register 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; • the number of shares or membership inter - ests 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 repatriate the investment. 2.2 Procedure and Sanctions in the Event of Non-Compliance Although foreign investment is not subject to approval from governmental authorities, all investments made by non-residents must be registered with the Colombian Central Bank. Failing to properly complete this registration may lead to penalties being imposed. Under the Colombian exchange regime, the Super- intendencia de Sociedades has the authority to audit international investment records and impose sanctions for non-compliance. Although Decree 1746 of 1991 authorises penalties of up to 200%, the Superintendencia de Sociedades typically enforces penalties that reflect the sever - ity 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.
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