COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Juan David Velasco, Natalia Ponce de León and Angelica Navarro, Baker McKenzie S.A.S.
Number of partners/shareholders There must be a minimum of five shareholders in an SA. Under Colombian law, no shareholder may have 95% or more of the outstanding capi - tal of the corporation. Liability Shareholder liability is limited to the amount of their contributions. However, in cases of fraudu - lent actions, overvaluations of contributions in kind and wilful misconduct, or actions of a par - ent company giving rise to the bankruptcy of an affiliate, the liability of shareholders could be extended. Capital requirements At the moment of incorporation, shareholders have to subscribe to at least 50% of the author - ised capital and make an initial payment of at least one third. The balance must be paid within one year from the date of incorporation. Governance An SA must have a board of directors. This must consist of at least three members and their alter - nates, as well as a legal representative. Other relevant matters An SA must have a legal reserve and statutory auditor. Foreign Company Branch Benefits and most common uses Branches are a great alternative for foreign com - panies that want to have a permanent presence in Colombia. A branch office is an extension of the company’s home office and is not a separate legal entity. Branches are widely used by inves - tors in the hydrocarbons sector.
Incorporation process The home office issues a resolution, which is formalised in a public deed granted before a Colombian notary public and registered with the chamber of commerce. Term The term is limited to the duration of the home office, but can be extended as long as it is within The branch is not a separate entity to the foreign company. The foreign company is therefore the sole owner. Liability As it is not a separate entity from the foreign company, the home office is liable for the assets and liabilities of the branches. They are jointly and severally liable for tax obligations. Capital requirements The allocated capital must be fully paid, and any increase in capital requires an amendment to the by-laws along with authorisation by the foreign company’s competent corporate body. However, increasing supplementary investment does not need a by-law amendment and can be made in cash from abroad. Governance Branches do not have any separate govern - ance bodies from their home office. A legal rep - resentative/general agent acts on behalf of the company. Other relevant matters A branch must have a legal reserve and statu - tory auditor. the duration of the home office. Number of partners/shareholders
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