COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Juan David Velasco, Natalia Ponce de León and Angelica Navarro, Baker McKenzie S.A.S.
3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The most common form of legal entity in Colom - bia is the simplified stock corporation (SAS) due to its flexible regime and the freedom its share - holders have to establish the terms and condi - tions for its functioning and internal governance structure. Corporations ( sociedades anónimas , or SA) and foreign company branches are vehi - cles that are also used. SAS Benefits and most common uses The SAS offers greater flexibility than other types of corporate vehicles in Colombia. Its incorporation process is simple, there are fewer administrative requirements, and shareholders have greater freedom to determine operational terms and internal structure. The SAS is used for almost any business (except those that, by law, An SAS can be incorporated by a private docu - ment registered with the relevant chamber of commerce or by public deed (if assets are being contributed to the company for its incorporation, the simplified stock company must be incorpo - rated by means of a public deed granted before a Colombian notary public). Term The term can be indefinite. Number of partners/shareholders require a corporation). Incorporation process An SAS must have a minimum of one sharehold- er, and there are no limits on how many shares they can hold. There is also no limit on the maxi - mum number of shareholders.
Liability Liability is limited to shareholder contributions, except in situations involving company fraud or abuse that harms third parties. Capital requirements Shareholders have a maximum term of two years from incorporation to pay for the subscribed shares. Governance The shareholders of an SAS appoint manag - ers responsible for the company to represent it before third parties (called legal representatives). Although the SAS may have a board of directors, The SAS does not need a legal reserve, and a statutory auditor is only required if their profits are above 3,000 minimum monthly wages. SA Benefits and most common uses A corporation or SA offers a more traditional structure. Their shares can be registered and traded on the national stock market. Banking institutions and listed companies must be cor - porations by law. Incorporation process An SA can only be incorporated by a public deed granted before a Colombian notary public and registered with the chamber of commerce. By- law amendments would have to be formalised by public deed. Term The term must be limited but may be extended by the shareholders. it is not a requirement. Other relevant matters
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