SELECTION OF A COMPANY OR FOREIGN COMPANY BRANCH
What is a company?
A company is regarded as being a separate legal person, with a separate legal personality from its shareholders. This means that it has rights separate from its owners and managers to enter into contracts, employ people, own property and conduct business.
The contract of association (articles of incorporation) is the one by which one or more interested parties bind themselves to make contributions in order to share the profits generated by the company. The partners or shareholders are liable according to the type of company they choose to create; furthermore Colombian legislation foresees that share holders or partners can be legal entities or natural persons, foreign or national.
How to create a company:
It must choose the type of company wants to be created and its name.
According to the Colombian law, there are five types of commercial companies: partnerships, limited partnerships (single or stock), limited liability partnerships, corporations and simplified stock corporations (S.A.S for its acronym in Spanish).
Most common vehicles for channeling Foreign Investment:
Corporation: It is incorporated by a public deed in which at least five shareholders are liable for its own contributions.
It must be defined in the public deed the company duration, as well as it is expressed in the founding document or bylaws.
The shareholders’ meeting is the management head of the company. They define the tax inspector and the board of directors, who in turn defines the company’s legal representative.
The share capital is represented in stocks of equal value which are transferable securities, according to the authorized, outstanding and paid-up capital.
Limited Liability Partnership: It is created by a public deed in which at least two partners, and no more than twenty-five, agree to liable for its own contributions. A partner can have unlimited and joint liability upon bylaws authorization.
Partners must define in the public deed the company’s duration time and may delegate the management in the legal representative and manager which will be guided by the functions specified in the bylaws.
The share capital is represented in equal shares, which for its transfer should be done according to the conditions provided by law or bylaws.
Simplified Stock Corporation: It is incorporated by a notarized private document registered at the Chamber of Commerce, in which one or more shareholders are liable only for each one contribution.
The private document must contain the name, identification number and domicile address; the corporation’s places of business address, the authorized, outstanding and paid-up capital; the kind, number and par value of the stocks, and the terms under which they shall be paid.
The organizational structure, its management and operation of the corporation bodies can be set freely by the shareholders, who are only required to design the corporation’s legal representative.
