Before the first contract, the first employee and the first invoice, you decide something that conditions everything else: what type of company you are going to operate under. That defines how much of your own assets stays separate from the business, who is in charge, how capital comes in and goes out and how much structure you sustain each year. This guide compares the types in force in Colombia —SAS, limitada, anónima, comanditas and colectiva— and gives you criteria for deciding which one suits you. Choosing a type is designing the legal architecture of your company, and it is costly to correct if you choose badly.
The essentials
- The company is a person distinct from you (article 98 of the Código de Comercio); the type chosen decides how solid that separation is.
- The SAS dominates. A private document, a single shareholder, bylaws made to measure and the clearest limitation of liability (Ley 1258 de 2008, articles 1 and 5); according to Confecámaras (the confederation of Colombia's chambers of commerce), more than 98% of new companies.
- The limitada limits less than its name suggests. The partners are liable up to the amount of their contributions (article 353 of the Código de Comercio), with labor and tax exceptions (article 36 of the CST and article 794 of the Estatuto Tributario).
- The S.A. is the structure for large capital. It requires five shareholders, a board of directors and a statutory auditor; it is the natural vehicle for the public securities market (articles 373 et seq. of the Código de Comercio).
- The comanditas separate control from capital. The gestores manage and are liable with all their assets; the comanditarios contribute and are liable up to the amount of their contributions (article 323 of the Código de Comercio).
- The colectiva is hardly ever used, and with good reason. All the partners are liable jointly, severally and without limit for the company's transactions (article 294 of the Código de Comercio).
- Changing later is possible, but it costs. The conversion moves from one type to another without liquidating the company (articles 167 to 171 of the Código de Comercio).
Here we compare the types and give criteria for choosing. The step-by-step registration process —bylaws, cámara de comercio, RUT— is set out in how to incorporate a company, and the life of the company once it is up and running —meetings, renewals, books, reports— in commercial law and business companies.
The starting point: the company agreement and legal personality
Company law rests on an idea worth fixing before comparing types: where two or more persons undertake to make a contribution —in money, in labor or in other assets appreciable in money— in order to share out among themselves the profits of an enterprise, they enter into a company agreement which, once the formalities are met, gives rise to a legal person distinct from the partners, with its own assets and its own capacity.
That separation makes it possible to go into business without betting the house: the creditors of the business pursue, in principle, only its assets. But the intensity of that separation varies: at one extreme, the colectiva, where the partners are liable with everything despite the legal personality; at the other, the SAS, where the shareholder is not liable for the labor or tax obligations, except in cases of fraud. Choosing a type is choosing where to place yourself on that scale.
As to form, the general rule is an escritura pública registered in the commercial registry (articles 110 and 116), with two exceptions: the SAS, always by private document (article 5, Ley 1258 de 2008), and any company that qualifies as a small business —up to ten workers or assets below five hundred minimum wages— (article 22 of Ley 1014 de 2006). If real property is contributed whose transfer requires a deed, the matter returns to the notary's office.
Legal personality is not an absolute shield: the Corte Constitucional, in examining the articles that enshrine the limitation of liability, held it consistent with the Constitución but recalled that it may not be used to defraud third parties. If it interests you as a serious strategy for protecting your assets —which is not the same as hiding them—, we deal with that angle in the strategies for protecting your assets.
The SAS (Ley 1258 de 2008): why it dominates and what lies behind its flexibility
What it is. The sociedad por acciones simplificada is a capital-based company, always commercial whatever its purpose, created by Ley 1258 de 2008. It is the youngest type and the one that changed practice: today the vast majority of the companies that are registered are SAS, because it solves better almost everything the others solved only halfway.
Incorporation. It is created by agreement or by unilateral act in a private document registered in the commercial registry (article 5), with no notary involved unless assets are contributed whose transfer requires an escritura pública, such as real property. It allows an indefinite duration, an unspecified corporate purpose and a single person, whether natural or legal.
Liability. Article 1 contains the most explicit shielding formula in the legal system: the shareholder is liable up to the amount of their contributions and not for the company's labor or tax obligations. That sentence, which the Ltda. does not have, marks the practical difference between the two types.
Capital and shares. The capital is divided into shares at three levels —authorized, subscribed and paid-in— with freedom to agree on subscription, payment, proportions and time limits; the only mandatory limit is that payment of the subscribed shares may not exceed two years (article 9). It allows fine-grained share engineering: privileged shares, shares with a preferential dividend and no voting rights, shares with a fixed annual dividend and shares issued in payment (article 10), single or multiple voting (article 11), restrictions on transfer for up to ten years, renewable (article 13), and prior authorization of the shareholders' meeting in order to transfer them (article 14).
Corporate bodies. The internal structure is designed with almost total freedom (article 17): the shareholders' meeting —or the sole shareholder— and a legal representative are enough. The board of directors is optional (article 25) and the statutory audit is mandatory only by reason of the size of the company (article 28).
Who it is for. For almost everyone: the person starting out alone, the family, the startup that will take in investment, the group that needs a subsidiary. Left outside are the projects that aim for the stock exchange —SAS shares may not be traded on the stock exchange or listed in the Registro Nacional de Valores y Emisores (article 4)— and the regulated activities that require another type.
An example. Suppose that you have spent three years invoicing as a consultant and decide to grow. With a SAS you incorporate as the sole shareholder by private document, issue your partner shares with a preferential dividend and no voting rights, agree that none may be transferred to third parties without the authorization of the shareholders' meeting for five years, and retain the legal representation.
The common mistake. Confusing flexibility with informality. Because the SAS allows almost everything to be agreed, many agree nothing: a template, the default majorities, and no rules on exit, on deadlocks or on the valuation of shares. It works until the first serious disagreement, and the bylaws have no answers. We deal with those disputes in disputes between partners.
The sociedad de responsabilidad limitada (Ltda.): the name promises more than it delivers
What it is. Governed by articles 353 to 372 of the Código de Comercio, the Ltda. was for decades the standard vehicle of the small and medium-sized business and of the family business. It is a hybrid: it has the limited liability of capital-based companies and the closely held, partner-centered character of partnership-type companies. Few are incorporated today, but thousands of old limitadas survive.
Partners. A minimum of two and a maximum of twenty-five: one incorporated with more than twenty-five is null and void as a matter of law, and if the limit is exceeded later, there are two months to convert or to reduce the number of partners (article 356).
Capital and quotas. The capital is divided into quotas of equal value and is paid in full on incorporation and on every increase (article 354): the whole contribution comes in at the outset, without the SAS's two-year time limits. The partners are jointly and severally liable for the value of in-kind contributions, so overvaluing them commits them all.
Liability, with its asterisks. The rule in article 353 —liability up to the contribution— has exceptions. Labor: article 36 of the Código Sustantivo del Trabajo makes partnership-type companies and their members jointly and severally liable for labor obligations, and the limitada is one of them. Tax: article 794 of the Estatuto Tributario makes the partners liable for the company's taxes, except the shareholders of anónimas and equivalent types —where the SAS fits (article 3, Ley 1258 de 2008)—. Plus the joint and several liability for in-kind contributions and the possibility of agreeing on greater liability for some partners (article 353, second subsection).
Corporate bodies. The partners' meeting is the highest corporate body: each partner votes according to their quotas and ordinary decisions are taken by an absolute majority (article 359). Legal representation belongs by law to all the partners (article 358), although it is usually delegated to a general manager. Amendments require at least seventy percent of the quotas (article 360); a statutory auditor is mandatory only where the statutory thresholds are reached or in the situation contemplated by article 203.
The exit is slow. Transferring quotas is not a simple endorsement: it is an amendment of the bylaws that is executed as an escritura pública granted by the legal representative, the transferor and the transferee (article 362), subject to a prior right of first refusal unless otherwise agreed (article 363); without a deed, the transfer is ineffective (article 366). In a SAS it is enough to record it in the shareholders' register.
Who it is for. Today, for few new cases: those who deliberately want a closely held vehicle with the notarial formalities as a lock, or family traditions that value it. If you are already a partner in an old limitada, the question is not whether it was a good choice —it was—, but whether it is advisable to keep it or to convert it.
An example. Suppose a hardware store that you and your brother incorporated as a Ltda. in 2004. If it runs into trouble and is left owing wages and statutory employment benefits, even if it is liquidated, the workers may invoke the joint and several liability of article 36 of the CST against the partners, and the DIAN that of article 794 of the Estatuto Tributario for the unpaid taxes. In a SAS, absent fraud, personal assets stay outside.
The common mistake. Believing that "limitada" limits everything. It limits liability as against ordinary commercial creditors, but it leaves windows open as against the two most persistent ones: the workers and the tax authorities. Choose it today knowing that, not out of inertia.
The sociedad anónima (S.A.): the structure for large capital
What it is. Governed by articles 373 et seq. of the Código de Comercio, the anónima is the capital-based company par excellence: a corporate fund of shareholders who are liable up to the amount of their contributions, administered by temporary and removable managers. Its logic is institutional —the capital of many with professional controls—, and that is why its governance structure is not negotiable.
Shareholders. It may not be incorporated or operate with fewer than five shareholders (article 374), with no maximum cap.
Capital and shares. The capital is divided into shares of equal value represented by negotiable instruments (article 375). On incorporation, not less than fifty percent of the authorized capital is subscribed and not less than one third of each share is paid in (article 376), with the balance due within one year at most (article 387). The share is an instrument of circulation: shareholders come in and go out without amending the bylaws.
Corporate bodies. Here lies the difference with the SAS: the anónima has full corporate governance by mandate of law —a general shareholders' meeting (articles 419 and 420), a board of directors of no fewer than three members with alternates, elected by electoral quotient (articles 434 and 436), a legal representative appointed by the board, and a mandatory statutory auditor by reason of being a stock corporation (article 203)—. That scaffolding protects minority shareholders and third parties, and it costs.
Liability. The shareholder enjoys the classic separation of assets: they are liable up to their contribution, the labor joint liability of article 36 of the CST does not reach them —it is a capital-based company— and article 794 of the Estatuto Tributario excludes them from the tax joint liability. The Corte Constitucional upheld its constitutionality in Sentencia C-865 de 2004: the limitation of risk yields in the face of fraud that harms workers, pensioners or third parties.
Who it is for. For the large-scale enterprise: many shareholders, broad investment, the issue of shares or bonds on the public securities market —the anónima's terrain, since the SAS is barred from it— or regulated activities that require this type.
An example. Suppose that you lead an agro-industrial business with forty shareholders among families and funds, with a five-year plan to issue shares on the stock exchange for a plant. The S.A. is the vehicle that fits, and the board with independent directors and the statutory auditor become the language investors expect. There the duties of the managers and compliance weigh as much as the bylaws: see the criminal liability of company directors and a criminal compliance program.
The common mistake. Incorporating an S.A. "for prestige" for a business with three partners: oversized corporate governance —five shareholders, two of them straw shareholders, a paper board, a permanent statutory audit—. If the size does not justify it, the SAS gives the same limitation without the scaffolding.
The comanditas: gestores who are in charge and comanditarios who contribute
What they are. The sociedad en comandita —simple and by shares— is built on an asymmetry: some partners manage and are liable without limit (gestores or colectivos) and others contribute capital and are liable up to the amount of their contributions (comanditarios). It is the only type where the law, not the bylaws, imposes that division.
A company name with a penalty attached. The company name carries the name or surname of one or more gestores plus "y compañía" or "& Cía.", followed by "S. en C." or, if it is by shares, "S. C. A."; omitting this gives rise to a conclusive presumption that it is a colectiva (article 324), and a comanditario who allows their name to appear in it is liable as a gestor. The capital is contributed by the comanditarios, or by them together with the gestores, and the comanditario is never a socio industrial —a partner whose contribution is labor, not capital— (article 325).
Comandita simple. For a few partners who trust one another. The deed is granted by the socios colectivos (article 337); the capital is divided into quotas; transferring the gestor's stake requires the unanimity of the partners, and transferring the comanditario's quotas, that of the other comanditarios, by escritura pública (article 338). Amendments require the unanimity of the gestores and an absolute majority of the comanditarios (article 340). On matters not provided for, the gestores are governed by the rules of the colectiva and the comanditarios by those of the limitada (article 341).
Comandita por acciones. It reproduces the scheme with share capital: a minimum of five comanditario shareholders (article 343), capital in instruments of equal value (article 344), subscription of at least fifty percent and payment of one third with the balance due within a year (article 345), and amendments by unanimity of the gestores plus a majority of the comanditario shares (article 349). On matters not provided for, the gestores are governed by the colectiva and the comanditarios by the anónima (article 352); by reason of being a stock corporation, it requires a statutory auditor (article 203).
Who they are for. Their historical habitat is the family company: the parents, as gestores, keep legal control; the children, as comanditarios, share in the capital without managing, and that lock comes from the type itself, not from majorities. Today the SAS replicates a good part of the effect with multiple voting and restrictions in the bylaws, which is why new ones are scarce; but the existing ones still serve.
An example. Suppose that you are sixty years old, with some assets and three children. An S. en C. in which you are the gestor and your children are comanditarios allows you to transfer them a stake right away without handing over management: none of them sells their quota without the unanimity of the other comanditarios, nor manages without risking their limitation of liability.
The common mistake. Two. On the gestor's side: forgetting that they are liable with all their assets, just like a socio colectivo. On the comanditario's side: "helping to manage" without a formal delegation —signing contracts, giving orders, negotiating—, conduct that article 327 penalizes by making them jointly and severally liable as a gestor.
The sociedad colectiva: the founding form, today almost obsolete
What it is. The colectiva (articles 294 et seq. of the Código de Comercio) is the partnership-type company in its pure state: people who trust one another so much that they accept that all of them are liable, with everything they have, for the debts. Today it is almost a museum piece, but it matters because it explains the regime of the gestores in the comanditas and it is the type to which the law redirects anyone who fails to meet certain formalities.
A partner-centered regime. Management belongs to all the partners, although it may be delegated (article 310). Assigning a partner's stake, delegating management to an outsider or competing with the company requires the authorization of the other partners (article 296). The transfer of partes de interés —the partners' stakes in a colectiva—, the admission of partners and any amendment require a unanimous vote, and each partner has one vote regardless of their contribution (article 316). The company name carries the names of the partners followed by "y compañía", "hermanos" or "e hijos" (article 303).
Who it is for and why almost no one uses it. For small teams built on absolute trust, where the partners' personal credit is the main asset. But the types that limit liability without losing the closely held character have left it without a niche: today almost no one risks the house when alternatives exist.
An example. Suppose that you and a colleague set up a machine shop as a colectiva (general partnership). An accident leads to a judgment that exceeds the shop's assets: the plaintiff may pursue the personal assets of either of you for the full amount —the house, the car, the savings— and your internal agreement on how the risk is shared cannot be asserted against the creditor.
The common mistake. Ending up in a colectiva without knowing it: operating as a sociedad de hecho (an unregistered company that exists only in fact), where everyone is liable jointly, severally and without limit and any clause limiting that liability is deemed unwritten (article 501 of the Código de Comercio, Colombia's Commercial Code); omitting "Ltda." from a limitada (article 357); or omitting "S. en C." from a comandita (article 324).
And what about the empresa unipersonal? The form the SAS left behind
Before 2008, the only way to go into business alone with a separate estate was the empresa unipersonal (single-member enterprise) of Ley 222 de 1995. A natural or legal person allocates part of their assets to commercial activities and, once registered, forms a separate legal person (article 71). It is created by private document (article 72) —bearing the abbreviation "E.U.", whose omission makes the entrepreneur liable without limit—, its capital is divided into quotas (cuotas) and, on matters not provided for, it is governed by the rules of the limitada (article 80).
The SAS (sociedad por acciones simplificada, Colombia's simplified stock corporation) eclipsed it: single ownership is covered by its article 1, the sole shareholder exercises the powers of every corporate body (article 17) and the protections are more explicit. Ley 1258 closed off the "sociedades unipersonales" of article 22 of Ley 1014 de 2006: no more may be incorporated, and those already in existence had six months to become a SAS (article 46). The empresa unipersonal of Ley 222 remains in force, but today it is rarely preferable to a SAS; a company reduced to a single partner may convert into an empresa unipersonal without being wound up (article 81).
Master table: the company types side by side
The table summarizes the features that decide the choice. We do not include cooperatives or nonprofit entities: they belong to another logic —the solidarity-based economy and the nonprofit sector— and to other legislation.
| Type | No. of partners/shareholders | Liability of the partners/shareholders | Incorporation | Governing bodies | Ideal for |
|---|---|---|---|---|---|
| SAS Company Formation (Ley 1258 de 2008) | 1 or more, with no maximum | Up to the amount contributed; no liability for labor or tax debts, except in cases of fraud (arts. 1 and 42) | Registered private document; escritura pública (public deed) only where real property is contributed (art. 5) | Shareholders' meeting (or the sole shareholder) and legal representative; board of directors and revisor fiscal (statutory auditor) only where they are agreed or the law requires them | Almost any business that does not aim for the stock exchange: entrepreneurs, families, startups, subsidiaries |
| Ltda. (limited liability company; not a U.S. LLC) (C. de Co., arts. 353 et seq.) | 2 to 25 (art. 356) | Up to the amount contributed, with labor (art. 36 CST) and tax (art. 794 ET) exceptions, plus joint and several liability for in-kind contributions | Escritura pública; private document where it qualifies as a small business (Ley 1014 de 2006, art. 22) | Partners' meeting and general manager; amendments require 70% of the quotas; transfer of quotas by escritura pública | Closely held vehicles by tradition; today it is more common to consider converting them |
| S.A. (sociedad anónima, stock corporation) (C. de Co., arts. 373 et seq.) | Minimum of 5, with no maximum (art. 374) | Up to the amount contributed; excluded from the labor and tax joint liability of partners | Escritura pública | Shareholders' meeting, board of directors (at least 3 members with alternates), legal representative and mandatory statutory auditor (art. 203) | Large capital, many shareholders, the public securities market, regulated sectors |
| Comandita simple (limited partnership) (arts. 323 and 337 et seq.) | At least 1 gestor (general partner) and 1 comanditario (limited partner) | Gestores: joint, several and unlimited; comanditarios: up to the amount contributed | Escritura pública granted by the gestores | Gestores manage; comanditarios inspect; transfers require unanimity (art. 338) | Family companies and estate planning with strong control by the founder |
| Comandita por acciones (partnership limited by shares) (arts. 343 et seq.) | At least 1 gestor and 5 comanditario shareholders | Gestores: joint, several and unlimited; comanditarios: up to the amount contributed | Escritura pública | Like the sociedad anónima for the comanditarios; gestores manage; statutory auditor mandatory | Larger-scale wealth structures with capital divided into shares |
| Colectiva (arts. 294 et seq.) | 2 or more | All of them: joint, several and unlimited; any agreement to the contrary is deemed unwritten (art. 294) | Escritura pública | Management by all the partners; amendments by unanimity; one vote per partner | Practically obsolete; absolute personal trust |
| Empresa unipersonal (Ley 222 de 1995, arts. 71 et seq.) | 1 owner | Up to the amount contributed, with an anti-fraud rule of its own (art. 71, parágrafo) | Private document | The owner and the managers appointed; the rules of the Ltda. apply by reference | Still in force, but displaced by the single-shareholder SAS |
How to decide: six criteria that structure the choice
The question "which type of company suits me?" is answered badly in the abstract and well against criteria. These are the six we use, in the order in which they usually weigh.
1. How much asset protection you really need
Start from the risk of the business itself —payroll, supplier credit, how litigious the sector is—. If it is significant, the types with robust separation —SAS and S.A.— are the starting point, and the Ltda. requires accepting its labor and tax exceptions. If there is to be a gestor in a comandita or a partner in a colectiva, that person commits all of their assets. And remember the limit of every shield: piercing of the corporate veil for fraud.
2. Whether outside investment will come in, and of what kind
If your horizon is the public securities market, the answer is the S.A.: SAS shares may not be listed in the Registro Nacional de Valores y Emisores (Colombia's registry of securities and issuers) or traded on the stock exchange (article 4, Ley 1258 de 2008). If it is private capital, the SAS is superior: classes of shares (article 10), multiple voting (article 11) and shareholders' agreements protect the founder's control. The Ltda. is the worst candidate: every entry or exit is an amendment before a notary, subject to a right of first refusal.
3. Whether it is a family business
Two models compete. The classic one: the comandita, parents as gestores and children as comanditarios, control by operation of law. The modern one: the SAS with multiple voting, restrictions on transfer for up to ten years (article 13) and approval of the shareholders' meeting in order to transfer (article 14), plus a family protocol. The SAS gives flexibility; the comandita, a lock that does not depend on majorities. Leaving it to chance does not work: almost every family dispute arises from a failure to plan for succession or for a partner's exit.
4. How much structure you can sustain each year
Each type brings different burdens. The S.A. and the comandita por acciones always pay for a statutory auditor; in the others, only once the thresholds of the accounting statute are exceeded. The S.A. adds a board of directors with alternates. The types under the Código de Comercio amend their bylaws by escritura pública; the SAS, by registered private document (article 29, Ley 1258 de 2008).
5. How you will exit on the day you want to exit
Few people choose a type thinking about their exit, and it is one of the things that weighs most afterward. In the S.A. and the SAS, the stake is a share that is traded; in the Ltda., a quota subject to a right of first refusal, an escritura pública and an amendment of the bylaws; in the comandita simple, unanimity; in the colectiva, the authorization of the other partners. If you foresee turnover, inheritances or a sale, the liquidity of the instrument matters as much as liability.
6. Taxes, in their proper place
Against a widespread myth: among the commercial types there are no substantial differences in taxation. All pay income tax under equivalent rules, and the SAS is taxed under those of the sociedad anónima (article 3, Ley 1258 de 2008). What matters is not what the company pays but what the partner risks: the joint and several liability of article 794 of the Estatuto Tributario (Colombia's Tax Code) reaches the partner in a Ltda. and not the shareholder of an S.A. or a SAS. Choosing "in order to pay less tax" solves an imaginary problem.
If your case does not fit cleanly into any box —partners abroad, real estate assets, a regulated activity, an ongoing probate proceeding—, structural advice is advisable before signing. On when to involve a specialist, see when to turn to a corporate lawyer.
Changing type later: the transformación (conversion)
Getting it wrong is not irreversible: a company may adopt another of the regulated forms, before it is dissolved, by means of an amendment of the corporate agreement. That is the transformación, and its essential feature is continuity: no new legal person is born and the previous one is not wound up; the same company keeps its contracts, assets, liabilities and history.
The typical cases: the old Ltda. that becomes a SAS in order to modernize (the unanimity of article 31); the limitada that has gone past twenty-five partners and has two months to convert (article 356); the closely held S.A. that migrates to a SAS so as not to maintain a board and a statutory auditor; and the company reduced to a single partner that avoids liquidation as an empresa unipersonal (article 81, Ley 222 de 1995) or, more commonly today, as a SAS.
Two warnings. First: the conversion protects third parties, it does not erase the past; obligations arising before registration keep their regime (article 169), so moving from Ltda. to SAS does not extinguish joint and several liability already incurred toward workers or the tax authorities. Second: a conversion that increases anyone's liability requires that person's unanimous consent (article 168).
What NOT to do when choosing your type of company
- Do not copy bylaws off the internet. A template leaves control, exit and deadlocks unresolved, and that is where the fights happen.
- Do not choose on tax grounds. Taxation is equivalent across types; what changes is the partner's exposure.
- Do not pick a Ltda. out of inertia. If you prefer it over the SAS, do so aware of the labor and tax joint liability.
- Do not set up an S.A. for appearances. Straw shareholders, a paper board and a permanent statutory audit: real cost for imaginary prestige, and risk from sham shareholdings.
- Do not sign on as a gestor without sizing up what it means. The gestor of a comandita and the partner in a colectiva are liable with all their assets, present and future.
- Do not operate without registering. The sociedad de hecho makes everyone liable jointly, severally and without limit (article 501 of the Código de Comercio).
- Do not neglect the abbreviations. Omitting "Ltda.", "S. en C." or the type from the company name increases liability (articles 357 and 324 of the Código de Comercio).
- Do not mix the accounts. Treating the company's cash as a personal pocket leads to piercing of the corporate veil (article 42, Ley 1258 de 2008; article 794-1 of the Estatuto Tributario).
Common myths
- "The SAS is only for small businesses." False: very large groups operate as a SAS. The only structural ceiling is the stock exchange.
- "In a Ltda. I am never liable with my own assets." False: labor joint liability (article 36 of the CST, Colombia's Labor Code), tax joint liability (article 794 of the Estatuto Tributario), overvaluation of in-kind contributions and omission of the abbreviation are four routes by which personal assets answer.
- "A single-shareholder SAS is useless because I am the owner." False: the registered company is a legal person distinct from the sole shareholder (article 2, Ley 1258 de 2008), unless you yourself blur that line.
- "You have to keep the authorized capital in the bank." False: what is enforceable is the subscribed capital, which in the SAS may be paid in over up to two years (article 9) and in the sociedad anónima in thirds, with the balance due within one year (articles 376 and 387).
- "Changing type means liquidating and starting over." False. The conversion preserves the legal person, the contracts and the seniority (articles 167 to 171 of the Código de Comercio).
- "Banks only respect the S.A." False today: credit looks at financial statements, collateral and track record, not at the type of company.
Checklist for deciding your type of company
- Count the actual partners, today and three years out: the number alone rules out types (the S.A. requires 5; the Ltda. tolerates 25; the SAS allows 1).
- Measure the risk of the business: the greater the risk, the more the shield of the SAS or the S.A. weighs.
- Define the future investment: the stock exchange (S.A.), private capital (a SAS with classes of shares) or your own resources?
- Write down who is in charge: majorities, vetoes, multiple voting, a board. If it is a family company, choose between the lock of the comandita and the flexibility of the SAS.
- Design the exit from the moment of entry: how the stake is sold, with what preferences, at what value and with what tie-breaking mechanism.
- Budget for the annual structure: statutory audit, board, notary fees for amendments; check the thresholds of Ley 43 de 1990.
- Confirm the requirements of your sector: some regulated activities impose a particular type or governance requirements.
- Draft bylaws made to measure and, if there are several partners or family members involved, add a shareholders' agreement or a protocol.
- Review the whole with a corporate lawyer before signing: it costs a fraction of a badly chosen structure.
A structural decision, not a form to fill in
Company law exists to allow people to do business under clear rules, protecting partners, workers and third parties. Choosing the type is the first act of that protection. The SAS will be the answer in most cases, but not in all: there are families where a comandita is still unbeatable, scales at which the S.A. is mandatory in practice, and old limitadas where the intelligent course is to convert in good time.
If you are going to incorporate a company, bring in a partner, have inherited a stake in a company you do not understand or suspect that your type no longer serves you, at Cafore Abogados we study your case and propose the structure that matches your risks and your plans. Write to us or call 313 8411825.
Laws and case law cited
- Código de Comercio (Decreto 410 de 1971), arts. 98, 99, 110 and 116 — the company agreement, legal personality, deed and registration. Source
- Código de Comercio, arts. 167 to 171 — conversion of companies. Source
- Código de Comercio, arts. 203 to 207 — companies required to have a statutory auditor. Source
- Código de Comercio, arts. 294, 296, 303, 310, 316 (sociedad colectiva) and 501 (sociedad de hecho) — joint, several and unlimited liability and the regime of the unregistered company. Source
- Código de Comercio, arts. 323 to 352 — comandita simple and comandita por acciones companies. Source
- Código de Comercio, arts. 353 to 372 — the limited liability company (Ltda.). Source
- Código de Comercio, arts. 373 to 436 — the sociedad anónima (S.A.). Source
- Law 1258 of 2008 — sociedad por acciones simplificada: arts. 1 to 5, 7, 9 to 14, 17, 25, 28, 29, 31, 42, 45 and 46. Source
- Ley 222 de 1995, arts. 71, 72, 80 and 81 — the empresa unipersonal. Source
- Ley 1014 de 2006, art. 22 — incorporation of small businesses by private document. Source
- Código Sustantivo del Trabajo, art. 36 — joint and several liability of partnership-type companies (sociedades de personas) and their members for labor obligations. Source
- Estatuto Tributario, arts. 794 and 794-1 — joint and several liability of partners for taxes (excluding sociedades anónimas and equivalent types) and piercing of the veil in tax matters. Source
- Ley 43 de 1990, art. 13, parágrafo 2 — thresholds that make a statutory auditor mandatory. Source
- Corte Constitucional, Sentencia C-865 de 2004 (M. P. Rodrigo Escobar Gil) — constitutionality of limited liability and piercing of the corporate veil in the face of fraud. Source
- Corte Constitucional, Sentencia C-865 de 2004 — limits on the limited liability of partners; piercing of the veil. Official text.
- Corte Constitucional, Sentencia C-090 de 2014 — limited liability of the S.A.S. shareholder and its exception for fraud. Official text.
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