Types of Business Structure

Find out about the various business structures in Colombia and how to get a venture started...

In Colombia there are a number of business structures. Each one has particular characteristics relating to fiscal aspects, responsibility of the shareholders, incorporation requirements, transformation (which implies a change from one business structure to another), and dissolution as outlined below:

Sociedad por Acciones (S.A.) - Corporation

  • Incorporation, transformation, dissolution: Through public deed signed in the presence of a Notary
  • Number of shareholders: Minimum of five with no maximum number
  • Capital: Divided into shares
  • Capital stock:
    • Authorized: A fixed amount that determines the maximum amount of capital the company can hold
    • Subscribed: Portion of the authorized capital that the shareholders pay in installments, within the space of one year, which must be no less than half of the authorized capital at the time of incorporation
    • Paid: The part of the subscribed capital that has been effectively paid and has become part of the assets of the business
  • Shareholders’ responsibilities: The shareholders are liable up to the amount of their payments to the company's capital, for debts including salaries, bank loans, employee’s pensions and health payments of the business
  • Financial Auditor: Regardless of the assets of the company, appointing an auditor (revisor fiscal) is mandatory

Sociedad por Acciones Simplificadas (S.A.S.) – Simplified Shares Corporation

  • Incorporation, transformation, dissolution: Through a private document, unless an asset is contributed to the business by one of the shareholders, in which case a deed in the presence of a notary is required
  • Number of shareholders: Minimum of one with no maximum number
  • Capital: Divided into shares that are freely negotiable, however, through company byelaws these can be restricted for up to ten years

  • Capital stock:
    • Authorized: A fixed amount that determines the maximum amount of capital the company can hold
    • Subscribed: Portion of the authorized capital that the shareholders pay in instalments, within a maximum of two years, that does not need to be paid at the time of incorporation
    • Paid: The part of the subscribed capital that has been effectively paid and has become part of the assets of the business
  • Shareholders’ responsibilities: The shareholders are liable up to the amount of their payments to the company’s capital, for any debts incurred by the business. If any fraudulent actions are detected within the company, the shareholders are liable to pay the debts and damages caused, even beyond the starting amount paid to capital, from their personal assets
  • Financial Auditor: The appointment of an auditor is voluntary. However, companies with net assets on 31 December of the previous year totalling or higher than the amount of 5,000 legal minimum wages, or with revenue totalling or higher than 3,000 legal minimum wages, are required to have an auditor

Sociedad por Responsabilidad Limitada Ltda.  – Limited Liability Company

  • Incorporation, transformation, dissolution: Through public deed signed in the presence of a Notary
  • Number of shareholders: Minimum of two with a maximum of 25
  • Capital stock:
    • Capital is divided into equal value share assignments
    • The capital must be paid in full at the time of incorporation
    • Cession of share assignments implies a change of company byelaws
    • In the case of the death of a partner the heirs will continue with the company unless otherwise stated in the company byelaws
    • The Board of representatives is responsible for all the partners, unless delegated to a third party
  • Shareholders’ responsibilities: Shareholders are liable only up to the amount of their payments to the company's capital. However, it can be stipulated in the byelaws that one of the owners is more liable than others for company debt. Note: Exceptions to the limits of liability in these companies apply to the labour and fiscal obligations that a company may have, for example debts to the tax authority or unpaid employee salaries. To fulfil these debts, the personal assets of the partners will be liable beyond their initial payments to capital
  • Financial Auditor: Appointing an auditor is not compulsory. However, companies with net assets on 31 December of the previous year totalling or higher than the amount of 5,000 legal minimum wages or with revenue totalling or higher than the amount of 3,000 legal minimum wages are required to have an auditor

There are a few other business structures available in the country, however, 90 percent of the registered businesses operating in Colombia today subscribe to one of the above. The SAS structure is the most frequent because of the tax benefits and other advantages at the time of creating a company, which include facilitating procedures and reducing requirements.

Information provided by Jose Ignacio Rojas of JL CONSULTING SAS Address: Calle 168 Nº. 9-71. Zona Norte Tel: 320 4911688 e-mail Copyright © 2014 JL CONSULTING SAS All Rights Reserved