Updated June 16, 2026 · Fabio Castro Forero

A shareholder blocking the company: how to protect the cash

A shareholder deadlocking the company: review governance, evidence, negotiation and the remedies available to protect cash, control and value while the deadlock lasts.

Category Corporate Law Updated June 16, 2026 Author Fabio Castro Forero

Corporate Law

Corporate deadlock

Unblock the company without giving away evidence or control Before forcing a decision, it is worth reviewing the bylaws, the minutes, the cash, the banks, the clients and the options of negotiating or turning to the authority.

The essentials before you act

A shareholder blocking the company rarely starts with a lawsuit. It starts with a signature that never comes, a shareholders' meeting that decides nothing, a bank that requires dual authorization or a conversation that turns into pressure. When that happens, the first reaction —calling, insisting, sending emails— usually worsens the position of whoever resorts to it.

This guide is written for shareholders, founders, managers and family businesses facing vetoes, withheld signatures or paralyzing parity. The order matters: first protect the operation, the cash and the evidence; then, with a cool head, design an exit —negotiated, under the bylaws, corporate or judicial—. An early, well-documented decision can change the course of the entire conflict.

In briefThe first objective is not to win the argument: it is to keep the conflict from destroying cash, clients and value. Document every decision proposed, every refusal and its operational impact. In a SAS the deadlock may have a way out —negotiated, under the bylaws or corporate— and where a vote is cast to cause harm or to obtain an unjustified advantage, it may amount to abuse of the right to vote —of majority, of minority or of parity— with nullity and damages before the Superintendencia de Sociedades (art. 43, Law 1258 of 2008). The best defense, however, is designed beforehand: the broad freedom the SAS enjoys in its bylaws (arts. 22 and 38) makes it possible to agree quorum requirements, majorities and tie-breaking mechanisms, and shareholders' agreements (art. 24) can lay down exit rules that prevent deadlock.

The underlying question

What can you do if a shareholder blocks urgent decisions?

Where a shareholder blocks essential decisions, the problem is not solved with informal pressure, but with three moves in order: read the bylaws, prove the deadlock and choose a proportionate corporate route. In a SAS, depending on who is blocking, which decision they are preventing and what verifiable harm they are causing, what is on the table may be abuse of the right to vote, a challenge to resolutions, liability of officers or a negotiated exit.

In practice, a deadlock is assessed with documents, dates and specific decisions, not with isolated accounts or stray remarks. Before escalating, it is worth sorting the problem into four fronts that almost always appear mixed together:

1Cash. Identify which payments, collections and obligations are genuinely at risk, and separate them from the underlying dispute.

2Votes. Review the quorum, the majorities and the rules on notice of meeting to work out which decision can be taken and which one is genuinely stuck.

3Minutes. Document every proposal, every refusal and its impact, because the evidence is built before suing, not afterward.

4Exit. Keep an exit route open —negotiated, under the bylaws or corporate— so as not to be trapped in the fight.

Before escalating

What to review before escalating the conflict

Escalating without reviewing is the most expensive mistake. Before sending a hard-hitting letter, calling an improvised shareholders' meeting or threatening to sue, it is worth confirming what the documents say and how solid your own position is. This guide does not replace advice on the specific documents in the case, but it does help you organize the conversation, avoid silent mistakes and arrive at a consultation better informed.

The difference between a deadlock that is broken and one that drags on forever almost always lies in the preparation: someone who arrives having read the bylaws, with clear dates and orderly evidence, negotiates from a different position than someone who arrives with the emotional version of what happened.

Depending on where you stand

A lawyer's reading for shareholders, management and the business family

The same deadlock looks different depending on the position each person holds. Identifying your own role helps to separate what you can demand, what you have to prove and what is best not to do.

1Majority shareholder. The focus is not on imposing a decision, but on showing that the company needs to act, that the notice of meeting and the majorities are properly structured and that the measure protects the corporate interest. The majority can also commit abuse if it uses its power to squeeze the minority.

2Minority shareholder. Blocking can be a legitimate defense where there is abuse, incomplete information or a conflict of interest. The strategy has to separate valid resistance from an abusive vote, because not every minority "no" is protected.

3Company officer or legal representative. Document urgent matters, the limits set by the bylaws, duties of diligence and the traceability of decisions. If you are also a shareholder, watch out for conflicts of interest: your liability as an officer is governed by Ley 222 de 1995 (art. 27 of Ley 1258 de 2008).

4Business family. It is worth distinguishing emotional conflict, weak corporate governance and a genuine legal deadlock. Not every family disagreement justifies a lawsuit, and treating a governance problem as a personal fight usually makes it more expensive.

Reading the deadlock

A matrix for unblocking cash, votes and governance

Not all deadlocks are alike, nor are they resolved in the same way. This matrix helps you read the situation, choose a prudent route and anticipate the risk worth watching in each case.

Situation	Legal reading	Prudent route	Risk to watch
No quorum because of non-attendance	Operational deadlock, not always abuse	Impeccable notices of meeting, minutes and evidence of the harm	Poorly convened meetings that invalidate the decision
A negative vote with no business reason	Possible abuse of minority, majority or parity	Document the harm and consider an action before the Superintendencia	Failing to prove the harm or the unjustified advantage
An officer who paralyzes contracts or payments	Possible breach of duties	Review of powers, removal or a liability action	Mixing the role of shareholder with that of officer
A conflict with weak bylaws	A corporate governance problem	A negotiated exit, an amendment to the bylaws or a private agreement	Promising an exclusion the bylaws do not allow

The turning point

When the deadlock stops being a fight and becomes a business risk

A shareholder blocking the company can halt payments, renewals, contracts, bank credit lines, hiring and decisions about continuity. The critical point is to tell apart four things that are often confused: legitimate disagreement, the veto agreed in the bylaws, abuse of the right to vote and economic pressure to force a buyback at an inflated price.

That distinction is not theoretical. It decides whether the right answer is to negotiate, to amend the bylaws, to remove an officer or to turn to the Superintendencia de Sociedades. Labeling the problem wrongly —calling a valid disagreement abuse, or tolerating as disagreement what is already abuse— costs time, money and credibility.

First, what is urgent

Cash, votes and deadlock: what to unblock first

Before acting, separate four tracks that almost never move at the same pace: decisions of the shareholders' meeting, day-to-day management, cash handling and obligations toward third parties. A 50/50 tie over dividends is not handled in the same way as a refusal to approve the payroll, renew contracts, pay taxes or hand over the accounting information.

The practical rule is to protect first what cannot wait —essential payments, due dates, critical relationships— and to leave the underlying dispute to the corporate arena, where it is actually decided who is right. Mixing the two tracks is what turns a disagreement into a crisis of continuity.

The first hours

The first 72 hours: cash, operations and evidence

The first hours make the difference between a contained problem and damage that spreads. It is worth moving on two fronts at once: securing the operation and preserving the evidence before it is lost or altered.

Protect the operation. Identify essential payments, tax due dates, payroll, critical suppliers, credit lines and contracts with default or early-termination clauses.
Preserve the evidence. Keep the minutes, notices of meeting, emails, chats, account statements, bank approvals, rejected proposals and every record of the harm, in their complete and original version.
Avoid irreversible moves. Do not sign to "buy time", do not delete conversations and do not answer sensitive communications without a defined position.

The document that governs

Corporate governance: bylaws, agreements and tie-breaking rules

In a corporate dispute, the document that governs is not the most aggressive chat, but the bylaws, the shareholders' agreements, the shareholders' ledger, the minutes and the registered powers of attorney. Before making any move, review the quorum, the majorities, voting restrictions, the board of directors, the powers of the legal representative, the rules on notice of meeting and the exit mechanisms.

This is where you can tell whether the company was designed with disagreements in mind. Ley 1258 de 2008 gives the SAS a freedom in its bylaws that other company forms do not have: its article 38 excludes it from several prohibitions of the Código de Comercio, so that it is possible to agree quorum requirements, special majorities, multiple voting and tie-breaking mechanisms tailored to the business. In turn, Article 24 enables shareholders' agreements —on purchase, sale, first refusal and restrictions on transfer— valid for up to ten years and renewable, which are the natural tool for preventing and resolving deadlocks. Tie-breaking and exit rules agreed in good time are worth more than any later lawsuit.

That said, that agreement among shareholders has a limit that is worth being clear about before using it to unblock a decision: it cannot contradict the rules the bylaws have already laid down. The Superintendencia de Sociedades made this clear when it examined the scope of the shareholders' agreement.

An agreement among some of the shareholders cannot override the majority-voting regime in the bylaws

In the Oficio 220-099807 of May 16, 2023, the Superintendencia de Sociedades explained that, although the shareholders' agreement under article 24 may deal with any lawful matter, "it is not enough that the matter be lawful; its interaction with what is laid down… in the company bylaws must also be possible". That is to say, the voting-majority rules and the other rules agreed in the bylaws cannot be disregarded in isolation by agreements among some of the shareholders, and the agreed direction of the vote must not conflict with the company's founding contract. This matters when unblocking a deadlock: the way out has to respect the quorum and the majorities set in the bylaws; a parallel pact between two shareholders is of no use for imposing what the bylaws reserved to a different majority. Because this is an official opinion, its content is general and not binding (art. 28 of the CPACA).

Read Oficio 220-099807 of 2023 →

Without giving away the company

Negotiating without giving away the company

The negotiation must protect value, not merely put an end to the discomfort. Depending on the case, it may include a purchase of shares, a sale to a third party, an interim management arrangement, a non-compete undertaking, the release of personal guarantees, a cash audit, an independent valuation and confidentiality agreements.

The most frequent mistake is to negotiate the price without closing off control, hidden liabilities and access to the accounting information. An agreement that sets how much is paid, but not who is in charge while it is being paid or what happens with the debts that have not yet surfaced, usually reopens the conflict months later. That is why it is best to agree clear rules before setting figures: who manages during the transition, how the liabilities are verified and how the departing stake is valued.

The difficult borderline

When a deadlock may be abuse of the right to vote

Not every corporate deadlock is abuse, and not every uncomfortable vote is illegitimate. The borderline lies in the purpose: the vote must be exercised in the interest of the company. A shareholder can vote against, ask for more information or trigger an agreed veto if this protects a legitimate interest of the company, if the decision is not sufficiently supported or if there is a real conflict of interest.

The problem appears when the vote is used to paralyze the company, to force a personal advantage, to punish another shareholder or to prevent a necessary decision with no verifiable business reason. Ley 1258 de 2008 expressly provides for that situation, and it does so in the three possible directions power can take within the company.

Abuse of the right to vote: of majority, of minority or of parity

The article 43 of Ley 1258 de 2008 provides that shareholders must exercise the right to vote in the interest of the company, and that it is abused —giving rise to liability for the harm caused— by those who vote with the purpose of causing harm to the company or to other shareholders, or of obtaining for themselves or for a third party an unjustified advantage. The rule spells it out in its three forms: abuse of majority, of minority and of parity. The Superintendencia de Sociedades may declare the nullity of the resolution adopted with abuse and order the compensation for the harm caused. The fact that the shareholder's liability is limited to their capital contribution does not shield them from this abuse: in Sentencia C-090 de 2014 the Corte Constitucional upheld the constitutionality of that limited liability precisely because the law provides counterweights such as the piercing of the corporate veil and the penalty on abuse of the vote (arts. 42 and 43).

Read Sentencia C-090 de 2014 →

This protection is not merely theoretical. The corporate justice administered by the Superintendencia de Sociedades has stepped in precisely where a shareholder is left trapped while those who control the company —or manage it— hollow out their rights. The best-known case in family companies shows how that oppression is assessed.

When the oppression of a shareholder becomes a matter for corporate justice

In Sentencia n.° 800-52 of June 9, 2016, the Delegatura de Procedimientos Mercantiles of the Superintendencia de Sociedades (the "Gyptec S.A." case) addressed the protection of the minority shareholder against oppression and the expropriation of their economic rights in a family company, and spelled out the duties of company officers under article 23 of Ley 222 de 1995 —to act in good faith, with loyalty and with the diligence of a good businessman, in the interest of the company and of all the shareholders—. The practical message is clear: blocking the distribution of profits, refusing information or running the company for the benefit of a few does not sit outside the law simply because whoever does it holds control; where that conduct oppresses a shareholder, the Superintendencia de Sociedades, sitting as a corporate court, can examine it and correct it. That is why documenting the economic harm and the officer's conduct is as decisive as counting the votes.

Read Sentencia 800-52 de 2016 →

Three typical scenarios

Deadlock, veto and abuse: not every disagreement is illegitimate

To read a deadlock it helps to place it in one of three typical scenarios. In each of them, the question is not only who holds more shares, but what the voting power is being used for.

Scenario	Main risk	Practical reading
50/50 parity	A structural tie that holds up banks, contracts or management	Review the tie-breaking rules, the shareholders' agreements, buy-or-sell mechanisms and a negotiation route with carefully kept minutes. Abuse of parity can arise here if a shareholder uses the tie to squeeze the company.
A minority with a veto in the bylaws	A legitimate veto if it was agreed, abusive if it is used with no corporate purpose	The question is not only who holds more shares, but what the veto was agreed for and how it is being exercised. Abuse of minority appears when the veto stops protecting a real interest and merely seeks to apply pressure.
A majority that imposes or blocks	Exclusion, dilution or squeeze-out of the minority	Compare the corporate interest, the information handed over, the economic impact and less harmful alternatives. The majority also commits abuse when it uses its power to force an unfair exit.

In Colombia, the corporate vote must be exercised in the interest of the company. If it is used to cause harm, to obtain an unjustified advantage or to paralyze an essential operation, a discussion of abuse of majority, minority or parity may be opened before the Superintendencia de Sociedades.

The routes available

A legal route without losing commercial momentum

Depending on the case, the legal route can combine several instruments without having to start with the most aggressive one. What matters is not to lose commercial momentum: the company must keep operating while the merits are being resolved.

A formal notice of meeting that is properly supported, to force the decision to be taken by the right body and to be placed on the record.
A challenge to resolutions adopted without a quorum, without the required majorities or with procedural defects.
An action for abuse of the right to vote before the Superintendencia de Sociedades, where the vote sought harm or an unjustified advantage (art. 43).
A company liability action against the officer who breaches their duties of good faith, loyalty and diligence (art. 27 of Ley 1258 de 2008, read together with art. 23 of Ley 222 de 1995), which the Superintendencia de Sociedades has enforced to protect the oppressed shareholder.
Measures to preserve assets, assisted negotiation or agreed arbitration, depending on what the bylaws and the shareholders' agreement provide.

The choice depends on who is blocking, which decision they are preventing and what verifiable harm they are causing. That is why the evidence is prepared beforehand: the right route is chosen with documents, not with assumptions.

What we see in practice

Legal signs of abuse of the right to vote

None of these signs, on its own, proves an abuse: each case depends on its context, its documents and its purpose. But in practice, when several of them come together it is usually worth reviewing the pattern carefully before going any further.

A 50/50 shareholder who votes "no" to everything until their stake is bought at a high price.
A legal representative who does not call the shareholders' meeting in order to avoid accounting for their conduct.
A shareholder who blocks critical payments but at the same time demands immediate dividends.
A joint bank signature used as a mechanism of personal pressure.
A shareholder who requests legitimate information and then uses it to hold back clients or the team.
An officer who claims to be acting for the company but negotiates on the side with suppliers.
Repeated rejection of essential budgets in order to starve the operation.
A shareholder who makes approval of the payroll or the taxes conditional on changes of control.
Blocking of the valuation because one side fears that liabilities or withdrawals will surface.
Use of relatives, employees or third parties to create reputational noise.

Deciding with a cool head

A decision table for dealing with a shareholder who blocks

When the deadlock appears, the temptation is to react. This table helps you do the opposite: name the real risk in each situation and choose a prudent decision that does not close doors.

Situation	Real risk	Prudent decision
50/50 tie	Operational paralysis	Propose a minimum agenda and leave a trace of the veto
Cash blockage	Defaults and reputational damage	Separate essential payments from the disputes over assets
Shareholder acting as officer	Liability of officers	Document decisions and consider a liability action
Refusal to sell	An unworkable exit or an inflated price	An independent valuation and a term sheet with clear conditions
A harmful vote	Abuse of the right to vote	Prepare the evidence before suing
Public threats	Reputation and loss of clients	A communications protocol and digital preservation

Watching what you say

A protocol for minutes, banks, emails and clients

A large part of the damage in these conflicts comes from messages sent in haste: defensive emails, long voice notes, answers to banks with no supporting records or family chats that end up as evidence. Before communicating, it is worth defining the channel, the spokesperson, the documents allowed and the purpose of each reply.

Channel	Risk if it is used badly	Practical rule
WhatsApp or internal chats	Impulsive remarks, partial screenshots and loss of context	Write briefly, keep the whole conversation and avoid threats
Corporate email	Unintended admissions or incomplete attachments	Answer with verified facts and reviewed attachments
A meeting with shareholders or family	Conflicting accounts and promises that are hard to prove	Prepare an agenda, a note of the meeting and commitments in writing
An answer to a bank or an authority	Contradictions or handing over too much information	Prepare the document file and a defined legal position
A communication to employees or clients	Reputational noise and information leaks	Appoint a spokesperson and limit the message to operational continuity

To arrive prepared

Questions that clarify whether it is better to negotiate or to sue

If you come to a meeting with these answers, the analysis moves faster and with less noise. It is not about having everything resolved, but about separating verifiable facts from hypotheses and from pending decisions.

What specific decision do I have to make this week about the deadlock?
Which original document proves the most important account?
Who held the formal authority and who held actual control?
Which payments, signatures, messages or minutes could be seen out of context?
Who could destroy or alter evidence if action is not taken quickly?
Which part of the problem is legal, commercial, family-related, reputational or accounting?
What practical outcome would be acceptable: to negotiate, to defend, to file a complaint, to correct or to exit?
What must I stop doing as of today so as not to worsen my position?

Gauging the urgency

Risk traffic light in a corporate deadlock

Not every deadlock calls for the same reaction. This traffic light helps you gauge the urgency and avoid overreacting —or underreacting— according to the stage the dispute has reached.

Level	How it looks	Suggested response
Low	There is unease, but the documents are complete and no one is pressing	Put the file in order and request a preventive review
Medium	There are payments, signatures, messages or documents that are incomplete	Pause sensitive moves and prepare a timeline
High	A bank, a shareholder, an authority, an auditor or an opposing party is asking for an answer	Respond only with a strategy and reviewed supporting records
Critical	There is a criminal complaint, a precautionary measure, an account freeze, a public threat or a loss of control	Activate the defense, preserve the evidence and decide who speaks for the company

What you need to gather

Documents and evidence worth gathering

The strength of any route —negotiating, challenging or suing— depends on the evidence available. Gathering it in time, in full and in its original version is what turns an account into proof.

Current bylaws and the certificado de existencia y representación legal (chamber of commerce certificate).
Shareholders' ledger and up-to-date shareholding structure.
Shareholders' agreements, family pacts or side letters.
Minutes, notices of meeting, records of quorum and of voting.
Emails and chats in which decisions are proposed or rejected.
Bank statements, cash flows, due dates and held-up payments.
Contracts affected by the deadlock and their default clauses.
Evidence of the harm: lost clients, penalties, interest and suppliers.
Records of conflicts of interest or of competing activity.

What you should avoid doing

Mistakes that weaken the case before it reaches the Superintendencia

Before reaching the Superintendencia de Sociedades, many cases weaken on their own. These are the most frequent mistakes and the decision worth taking instead.

Mistake	Why it makes the case worse	Better decision
Answering from memory	It creates contradictions and leaves loose ends	Prepare a timeline and a document file
Deleting chats or files	It can look like concealment and it destroys context	Keep the originals and complete copies
Making accusations without proof	It closes off negotiations and weakens your credibility	Put the facts in order before giving them a legal label
Signing to buy time	It shifts liability onto whoever signs	Put your reservations in writing and require competent supporting advice
Mixing family, business and reputation	It raises the temperature and makes agreement harder	Separate the conversations and the decision-making channels

When to consult

When it is worth talking to a lawyer before the next move

If the deadlock already touches documents, banks, shareholders, authorities, heirs, spouses, clients or reputation, an early conversation can save months of conflict. The best time to consult is not when there is already a lawsuit, but while the evidence can still be organized and the route chosen calmly.

A consultation yields more when it arrives with verifiable facts, not with loose accounts. Before each important move —a hard-hitting letter, a shareholders' meeting, an answer to a bank— it is worth reviewing whether that step strengthens or weakens your position, because in these cases the order of the moves matters as much as the merits of the matter.

Useful reading on corporate deadlock and company governance

If you would like to go deeper before taking the next step, these readings and services will help you understand the framework and make better decisions:

Corporate Lawyer to review bylaws, shareholders' agreements and corporate governance rules that prevent or resolve deadlocks.
Corporate law: an essential guide for companies and entrepreneurs, to place the dispute within the full picture.
Commercial law and business entities in Colombia, to understand how the SAS fits in and what its voting rules are.

So you can check it yourself

Sources and legislation cited

Law 1258 of 2008 — sociedad por acciones simplificada (official text, Función Pública): arts. 22 (quorum and majorities), 24 (shareholders' agreements), 27 (liability of officers), 38 (freedom in the bylaws), 42 (piercing of the corporate veil) and 43 (abuse of the right to vote).
Corte Constitucional, Sentencia C-090 de 2014 — limited liability of the shareholder, with the piercing of the corporate veil and the penalty on abuse of the vote as counterweights (arts. 42 and 43).
Superintendencia de Sociedades, Oficio 220-099807 of May 16, 2023 — a shareholders' agreement (art. 24) cannot disregard the majority-voting regime laid down in the bylaws; general opinion, not binding (art. 28 of the CPACA).
Superintendencia de Sociedades, Delegatura de Procedimientos Mercantiles (the Commercial Proceedings Division), Sentencia n.° 800-52 of June 9, 2016 (the "Gyptec S.A." case) — protection of the minority shareholder against oppression, and duties of company officers (art. 23 of Ley 222 de 1995).
Superintendencia de Sociedades — Cien preguntas y respuestas sobre la SAS (one hundred questions and answers on the SAS).

This guide was prepared by the team at Cafore Abogados for general guidance in Colombia and reviewed with legal judgment. It does not replace advice on the documents, the evidence and the specific dates of your case, which depend on the bylaws, the shareholding structure, the decision in dispute and the verifiable harm. Last editorial review: May 2026.

Let us review the deadlock before you lose cash or control

Unblock the company without giving away value or damaging the evidence

For an initial review, have at hand your role in the case, the document you received, a deadline, the amount or asset at stake and the decision that is pending. Cafore can help you protect the cash, organize the evidence and choose the route —negotiated, under the bylaws or corporate— before the conflict destroys value.

We answer your questions

Frequently asked questions about corporate law

What is a SAS and why is it the most widely used corporate form in Colombia?

The Sociedad por Acciones Simplificada (SAS) is a corporate form created by Ley 1258 de 2008 that is incorporated by private document, admits a single shareholder and offers broad flexibility in its bylaws. Its popularity is due to the fact that shareholders are liable only up to the amount of their contributions and that the bylaws can be widely adapted to the needs of each business project.

How is a SAS incorporated in Colombia, step by step?

A SAS is incorporated by private document with notarized signatures, or by public deed where assets are contributed whose transfer requires that formality, such as real property, under article 5 of Ley 1258 de 2008. That document must be recorded in the commercial registry kept by the Cámara de Comercio for the main domicile, at which point the company acquires legal personality.

Are the shareholders of a SAS liable with their personal assets for the company's debts?

Under article 1 of Ley 1258 de 2008, shareholders are liable up to the amount of their respective contributions, so their personal assets remain separate from those of the company. That protection may be set aside, however, where it is proven that the company was used to defraud the law or to harm third parties, a doctrine known as levantamiento del velo corporativo (piercing the corporate veil).

Which clauses are mandatory in the bylaws of a SAS?

Article 5 of Ley 1258 de 2008 requires the bylaws to state the corporate name, the domicile, the term of duration, the corporate purpose, the authorized, subscribed and paid-in capital, the form of management and the grounds for dissolution, if any are to be agreed. The absence of any of these elements may create problems of registration or of validity for later corporate action.

Can a shareholder lawfully block the company's decisions?

They can vote against, ask for more information or exercise an agreed veto if it protects a legitimate interest of the company. The limit lies in the purpose: if the vote is used to cause harm, to obtain an unjustified advantage or to paralyze an essential operation, it may amount to abuse of the right to vote (article 43 of Ley 1258 de 2008), which the Superintendencia de Sociedades (the corporate supervisor, which in Colombia also sits as a court) can penalize.

What is abuse of the right to vote in a SAS (sociedad por acciones simplificada, Colombia's simplified stock corporation)?

It means exercising the vote against the interest of the company in order to harm the company or other shareholders, or to obtain an unjustified advantage. Article 43 recognizes it in three forms —abuse of majority, of minority and of parity— and provides that the Superintendencia de Sociedades may declare the resolution null and order damages for the harm caused.

What do I do if the company is deadlocked by a 50/50 tie?

The first thing is to protect the cash and the operation, and to leave a trace of every proposal and every refusal. In parallel, it is worth reviewing the bylaws and the shareholders' agreement for tie-breaking or exit mechanisms; the freedom the SAS enjoys in its bylaws (article 38) and shareholders' agreements (article 24) make it possible to agree them. If there are none, the route is usually to negotiate an exit or to turn to the Superintendencia de Sociedades where the tie is being used abusively.

Can deadlocks be prevented in the bylaws?

Yes, and it is usually the most effective course. Article 38 of Ley 1258 de 2008 gives the SAS broad freedom in its bylaws to design quorum requirements, special majorities and tie-breaking mechanisms, and article 24 allows shareholders' agreements with rules on purchase, sale, first refusal and exit. Designing those rules before the conflict is far cheaper than litigating them afterward.

Where is abuse of the right to vote claimed?

Before the Superintendencia de Sociedades, the body empowered by Ley 1258 de 2008 to hear these matters, to declare null the resolutions adopted with abuse and to order damages for the harm caused. The specific route —and whether it is worth combining it with a challenge to the resolution, a liability action or negotiation— depends on the facts and the evidence in each case.

Is it better to negotiate a shareholder's exit or to sue?

It depends on the case. Negotiation can protect value better if it closes off control, liabilities and access to information, not only price. The corporate or judicial route is preferable where the deadlock is abusive, the evidence is solid and there is no real room for agreement. Separating verifiable facts, hypotheses and pending decisions helps you choose with less noise.

What options does a partner have where there is a serious disagreement with the other shareholders?

Where a corporate dispute arises, a partner may turn to direct negotiation, to mediation, to arbitration where the bylaws provide for it, or to proceedings before the Superintendencia de Sociedades in the exercise of its judicial functions. Choosing the right route depends on the bylaws, the nature of the dispute and how urgent the remedy is.

Can the Superintendencia de Sociedades resolve disputes between partners?

Yes. The Superintendencia de Sociedades exercises judicial functions in proceedings challenging corporate resolutions, in claims for the liability of directors and officers and in disputes between partners, among others, under the powers granted by the Código General del Proceso (General Procedural Code) and commercial legislation. It is a specialized forum whose decision has the standing of a court judgment.

Can a partner be excluded from a company, and on what grounds?

Exclusion of a partner is available where the bylaws expressly provide for it, or where the partner incurs statutory or bylaw grounds that justify it, such as failure to comply with their contribution obligations. The procedure must respect internal due process and may be challenged before the Superintendencia de Sociedades.

What is a challenge to shareholders' meeting decisions and when is it available?

A shareholder may challenge resolutions adopted at a shareholders' meeting or a junta de socios (the equivalent body in a limited-liability company) where they were taken against the law, the bylaws or the corporate interest, under articles 190 and following of the Código de Comercio (Commercial Code). The lawsuit must be filed within the two months following the meeting at which the resolution was adopted or, in the case of acts subject to registration, from their entry in the commercial registry (article 191 of the Código de Comercio), a very short lapse period, so it is advisable to act immediately.

Is a company's legal representative personally liable for the company's debts?

As a rule the legal representative is not liable with their personal assets for the company's obligations, but they can be held liable when they act with willful misconduct or negligence in the exercise of their duties, under article 200 of the Código de Comercio (Colombia's Commercial Code). That liability is enforced through an acción social de responsabilidad (the corporate liability action) before the Superintendencia de Sociedades (the Colombian companies regulator) or before the court with jurisdiction.

What duties do the directors and officers of a Colombian company have?

Directors and officers must act in good faith, with loyalty and with the diligence of a good businessman, under article 23 of Ley 222 de 1995. Their specific duties include acting in the interest of the company, refraining from taking for themselves business opportunities that belong to the company, and disclosing the conflicts of interest that may affect their decisions.

What is piercing of the corporate veil and in which cases does it apply?

Piercing the corporate veil is the power of a judge, or of the Superintendencia de Sociedades, to disregard the separation between the company's assets and those of its partners or controlling parties where it is proven that the legal personality was used to defraud the law, to evade obligations or to harm third parties. It is available only exceptionally and requires solid evidence of abuse of the corporate form.

What is a shareholders' agreement and what is it for in corporate governance?

A shareholders' agreement is a private contract between partners that governs matters such as voting, the transfer of shares, the appointment of directors and officers and the exit rules, complementing the corporate bylaws. It makes it possible to define the internal governance of the company precisely and to prevent future disputes; Ley 1258 de 2008 expressly recognizes its validity in a SAS.

How can a company increase its capital in order to attract investment?

A SAS may increase its authorized capital by amending the bylaws and issue new shares in order to take in investment from third parties, a process that must respect the preemptive rights of the current shareholders where the bylaws so provide. It may also issue multiple-vote shares, privileged shares or other types contemplated in Ley 1258 de 2008 in order to structure investment rounds.

What does a merger or spin-off of companies in Colombia involve?

A merger means that two or more companies are combined into one, transferring assets, liabilities and contracts; a spin-off divides a company in order to create new ones or to transfer part of its assets to other existing companies, under articles 172 and following of the Código de Comercio, in the case of the merger, and articles 3 and following of Ley 222 de 1995, in the case of the spin-off. Both mechanisms require approval by the company's governing bodies, registration with the Registro Mercantil and, in certain cases, notice to the Superintendencia de Industria y Comercio (Colombia's competition authority) because of possible implications for free competition.

When does a business group arise and what obligations does it create?

A business group exists where one company exercises control over one or more others and there is unity of purpose and direction among them, under article 28 of Ley 222 de 1995. Its existence triggers obligations to register with the Registro Mercantil, to consolidate financial statements, and a special regime of liability of the controlling company toward the subordinated ones.

How is a company wound up in Colombia and what steps does it involve?

The dissolution and winding-up of a company involves the adoption of the dissolution resolution by the competent body, the appointment of a liquidator, payment of external liabilities in priority to the partners' contributions and cancellation of the commercial registration, under articles 225 and following of the Código de Comercio. Poor handling of the process may give rise to personal liability of the liquidator toward creditors.

To go deeper

Related guides

Resources that expand on the key aspects of corporate law in Colombia.

SAS bylaws

Bylaws of a SAS: clauses that prevent disputes How to draft the bylaws of your SAS in order to prevent disputes between partners: exit clauses, right of first refusal, voting and internal governance. Read the guide →

Liability of directors and officers

Liability of the legal representative and the directors When the legal representative or a company's directors and officers are personally liable, and how to document decisions in order to limit that risk. Read the guide →

Incorporating a SAS

Incorporating a SAS in Colombia: 13 steps A practical guide with the complete process for incorporating a SAS, from drafting the bylaws through to obtaining the NIT (tax ID number) and the commercial registration. Read the guide →

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