COLOMBIA Law and Practice Contributed by: Gabriela Mancero, Daniel Peña, Maria Fernanda González and Andrea Sánchez Gallardo, Peña Mancero Abogados
1. Market Trends 1.1 Technology M&A Market
investment. This shift has become particularly important for the financial sector and companies publicly listed on the Colombian stock exchange (BVC), as they are required to report ESG-related information – a requirement now extending to companies under the supervision of the Super- intendence of Companies. Additionally, the Colombian government, in alignment with the country’s long-term sustain- able energy goals, is promoting investment in renewable energy through incentives and regula- tory adjustments to support green investments. Finally, both investors and companies should be mindful of the recent enforcement of stricter antitrust and competition regulations by the Superintendence of Industry and Commerce (SIC), which particularly impacts tech compa- nies. This shift has been evident in high-profile cases involving major telecom entities, aimed at ensuring competitive market conditions, notably in cases of potential market dominance. 2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company Place of Incorporation In Colombia, most start-up companies are typi- cally incorporated in the country. Additionally, commercial law establishes that foreign com- panies must incorporate a branch if they intend to carry out their main activities in Colombia on a permanent basis, and from a tax point of view, the figure of permanent establishment is applied when a foreign company carries out all or part of its activities in the country for income tax and supplementary tax purposes.
The mergers and acquisitions (M&A) market in Colombia has seen a decline in both the num- ber and value of transactions during the first nine months of 2024. Specifically, there has been a 7% drop in transaction numbers and a 14% decrease in their total value. In total, M&A transactions in Colombia reached approximately USD2.868 billion. However, when compared to the overall trend in Latin America, Colombia’s performance appears relatively strong, especially given the 20% drop in M&A activity across the region during the same timeframe. Notably, the software sector has emerged as a leader in Colombia’s M&A landscape, registering 28 transactions, which marks a 33% increase from the same period in 2023. This growth in the software sector is largely attributed to the accelerated digital transforma- tion that many companies are undergoing as they seek to modernise operations and adapt to an increasingly competitive landscape. The ris- ing demand for technology and digital solutions has prompted many firms within the software sector to pursue growth opportunities through M&A. 1.2 Key Trends The continued growth of the technology sec- tor has raised concerns regarding the need for strengthened data protection and cybersecurity regulations, which are now critical factors in M&A due diligence amid ongoing digital trans- formation. Companies are also increasingly aware of sustainability and environmental, social and governance (ESG) initiatives, adapting to international ESG standards to attract foreign
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