COLOMBIA Law and Practice Contributed by: Clare Montgomery, Karen Santamaria, Catalina Garzón and Diana Guerrero, Baker McKenzie S.A.S.
4.11 Disclosure of Payments to Directors/Officers
of fault or fraud. This action will be initiated by the company, after a decision of the sharehold - ers’ assembly or the partners’ meeting. When the shareholders’ assembly has decid - ed to initiate this action but it has not started it within the following three months, it may be initiated by any director, the statutory auditor or any of the shareholders in the best interest of the company. Creditors representing at least 50% of the com - pany’s external liabilities may also initiate the action as long as the company’s assets are insufficient to satisfy their claims. 4.9 Other Bases for Claims/Enforcement Against Directors/Officers The company’s by-laws may establish other types of sanctions for directors who fail to per - form their duties. It is not possible to absolve or limit the liability of the directors. Any clause that goes against this provision is considered unwritten. D&O insurance can be arranged to cover certain risks. 4.10 Approvals and Restrictions Concerning Payments to Directors/ Officers Any decision related to the remuneration of directors and officers must be approved by the shareholders’ assembly or the company’s board, as applicable. A legal representative or director must disclose any conflict of interest in matters involving remuneration, fees or other benefits. Failure to do so means that the director or officer could be investigated for not disclosing the con - flict of interest and the decision on the salary could be void. The director or officer must also indemnify against any damage caused.
According to Article 446 of the Commercial Code, the board of directors must prepare a report including details of expenditures for sala - ries, fees, representation expenses, bonuses, benefits in cash and in kind, transportation expenses and any other type of remuneration received by each of the company’s officers. This report is presented at the shareholders’ assem - bly. 5. Shareholders 5.1 Relationship Between Companies and Shareholders Shareholders are the “owners” of the company. Their main role is to make a capital contribu - tion to the company (either in kind or in cash) in return for a participation percentage in the company (shares or quotas), which will allow the entity to start its productive activity, in order to obtain profits that allow a subsequent distribu - tion of dividends to the shareholders. The term for the payment of capital contributions and the liability of the shareholders/partners for each type of entity are as follows. Simplified Stock Corporations (S.A.S.) The responsibility of the shareholders is limited to the amount of their contributions, except in cases of fraud or abuse by the company which causes detriment to third parties. The capital of the company must be paid within the two years following its incorporation. Corporations (S.A.) At incorporation, the shareholders must sub - scribe at least 50% of the authorised capital and pay at least one-third of the subscribed capital.
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