Commercial Law and Business Companies in Colombia

What are the Companies?

Corporations are legal entities formed by one or more persons who are associated with the purpose of carrying out commercial activities, and to obtain an economic benefit. These entities have a legal personality separate from its partners, which means that they can acquire rights and incur obligations for themselves.

Types of Corporations in Colombia

The commercial Code and other statutory provisions establish different types of corporations, each with specific features that are tailored to the needs of entrepreneurs:

1. Sociedad Anónima (SA)

• Definition: It is a society in which the capital is divided into shares and the liability of the shareholders is limited to the amount of their contributions.
• Requirements: Requires a minimum of five shareholders for their constitution.
• Main features:
  • The management is in charge of a board of directors.
  • It is ideal for large companies.

2. Simplified joint Stock company (S. A. S.)

• Definition: It is a capital company simplified that it offers flexibility in its structure and functioning.
• Requirements: May be constituted by a single person.
• Main features:
  • Allows you to negotiate freely the bylaws.
  • It is the kind of society most commonly used in Colombia for entrepreneurs and small businesses.

3. Limited Liability Company (Ltda.)

• Definition: It is a society in which the capital is divided into shares.
• Requirements: The number of partners can not exceed 25.
• Main features:
  • The partners respond to the amount of their contributions.
  • It is suitable for family businesses or small businesses.

4. The Collective Society

• Definition: Is a partnership in which partners respond unlimited and solidarity for social obligations.
• Main features:
  • There is a greater connection between the partners, who tend to actively participate in the management.

5. Limited partnership

• Definition: It is divided into limited partnership and by actions.
• Main features:
  • Combines partners managers with unlimited liability and limited partners with limited liability.

Formation and Registration of a Company

To incorporate a company in Colombia bajo cualquiera de los tipos societarios anteriores, es necesario seguir una secuencia de pasos formales ante notaría y Cámara de Comercio. Le explicamos a continuación cada uno de ellos:

1. Develop the bylaws: This document sets forth the rules of operation of the society.
2. To formalize the public deed: You must be signed before a notary public.
3. Register the company: It is obligatory to register the company in the Commercial Register of the Chamber of Commerce concerned.
4. To obtain the RUT: The Single Tax Registration (RUTH) is needed to comply with tax obligations.

Obligations of Corporations

The companies have various legal obligations, among which stand out:

• Record and update mercantile: Must renew their registration at the Chamber of Commerce each year.
• Presentation of financial statements: It is mandatory to submit financial statements to the end of each accounting year.
• Tax compliance: Includes the declaration and payment of taxes such as the VAT and the income tax.