COLOMBIA Law and Practice Contributed by: Clare Montgomery, Karen Santamaria, Catalina Garzón and Diana Guerrero, Baker McKenzie S.A.S.
Capital is represented in quotas, which can only be transferred on exercise of a mandatory first right of refusal, amendment of the by-laws and registration in the public register. Liability for tax and employment matters can extend to those holding quotas in these types of companies. There is less freedom to agree different rules on the company meetings, dividend distribution, reserves etc as these are regulated under the Colombian Commercial Code. A board of direc - tors is optional but a statutory auditor must be appointed when certain thresholds are met. Branch of a Foreign Company Branches are part of the same legal entity abroad (or home office) that sets up the branch so there is no limitation of liability. The board resolutions of the home office are incorporated into a public deed which is granted by a Colombian Public Notary and registered at the local trade register. Corporate purpose will be narrowly defined and be within the home office’s corporate pur - pose. The corporate purpose must be defined. Branches are frequently used in the oil and gas sector and for public procurement. 1.2 Sources of Corporate Governance Requirements Colombian legislation does not establish manda - tory governance codes or equivalent for privately owned companies or groups of companies. 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares Companies with publicly traded shares must comply with the following corporate governance requirements. Boards of directors must have between five and ten members. At least 25% of the members
must be independent, which means that they cannot be: • employees or officers of the company or of any of its affiliates, subsidiaries or control - ling companies, including those individuals who have had this capacity throughout the year immediately preceding the appointment, except in the case of the re-election of an independent person; • shareholders who directly or by means of an agreement direct, guide or control the major - ity of the voting rights of the entity or who determine the majority composition of the administrative, management or control bodies of the entity; • a partner or employee of associations or companies that provide advisory or consult - ing services to the issuer or to the companies that belong to the same economic group of which it is part, when the income for the con - cept represents 20% or more of their opera - tional income; • an employee or director of a foundation, association or society that receives significant donations from the issuer (significant dona - tions are considered to be those that repre - sent more than 20% of the total donations received by the respective institution); • an administrator of an entity in whose board of directors a legal representative of the issuer participates; and • a person who receives any remuneration oth - er than fees from the company as a member of the board of directors, the audit committee or any other committee created by the board of directors. When a plurality of shareholders representing at least 5% of the subscribed shares submit pro - posals to the board of directors of the registered companies, these bodies must consider them
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