Economic Relief for Companies in Bankruptcy

The Colombian government issued Decree 939 of 2021 which authorizes the National Tax Authority (DIAN) and other state entities to make reductions in capital, interest, penalties, and fines, among others, to past-due debts of companies that took advantage of the bankruptcy regime established in Decree 560 of 2020 due to the health emergency started by COVID-19. These bankruptcy reductions will not be applied to: (i) withholding tax, (ii) value added tax (VAT), or (iii) debts derived from conviction in a fiscal responsibility proceeding advanced by the National Comptroller Authority.

Article of Decree 939 establishes that the DIAN or the state entity that makes the discount must consider: the payment plan established in the reorganization agreement, the behavior of the debtor, and the offset of credits. The payment plan is a vital part for the analysis and estimation of these incentives. If the debt is deferred for one (1) to three (3) years, a capital reduction of forty percent (40%) will be applied. If debt is deferred for a period of five (5) years, the company can opt for a reduction of twenty percent (20%). Finally, if the debt is deferred up to a maximum of seven (7) years, a discount of five percent (5%) will be applied. In other words, the longer the payment is postponed, the lower the discount.

Finally, this decree creates a committee for the approval of reductions, which will be made up of at least three (3) members who belong to the DIAN or to other state entities that can apply these benefits. The committee will be responsible for approving the reductions requested by the companies within a maximum period of sixty (60) business days from the date of filing of the request by the debtor.

If your company or any subsidiary is in a bankruptcy process, BéndiksenLaw can help you determine if any of the discounts established by Decree 939 are applicable to you.

Contact us for more information.

Creation of the New Paternity Privileges in Colombia

The President of Colombia sanctioned Law 2141 of 2021 in which key aspects of new paternity privileges are regulated, modifying Articles 239 and 240 of the Substantive Labor Code. The novelty of this law consists in the creation of a “paternity jurisdiction” which prohibits employers from dismissing a worker whose spouse, partner, or common-law spouse: (i) is pregnant or is within eighteen (18) weeks after childbirth, and (ii) does not have a formal job.

The worker who is protected by the paternity privileges may only be dismissed when there is just cause and the decision is authorized by the Labor Inspector or the Municipal Mayor, in places where there is no Labor Inspector. If the dismissal is carried out without the required authorization, the employer is exposed to the possible reinstatement of the worker by court order and to monetary penalties, including a reparation to the worker equivalent to wages for sixty (60) days of work.

However, paternity privileges do not arise automatically. For this protection to be generated, it is necessary for the worker to give notice to the employer that his spouse, partner, or common-law spouse is in a state of pregnancy and to declare under oath that she does not have a formal job. This notice may be given orally or in writing and must be accompanied by proof of pregnancy.

At BéndiksenLaw we are aware of legislative changes relevant to your company. If you have any questions about the application of paternity law do not hesitate to contact us.

New Fine to Corporation for Breach of the Consumers’ Rights Statute

The Superintendency of Industry and Commerce imposed a fine of more than 220 million pesos on the company Pepe Ganga for its non-compliance with regulations established in the Consumers´ Rights Statute (hereinafter “the Statute”). It was determined that Pepe Ganga incurred three (3) contraventions against the norms of Law 1480 of 2011, which generated the fine.

First, Pepe Ganga failed to comply with the product delivery deadlines that were announced to customers, thus defrauding their expectations which, according to the authorities, violates Article 6 of the Statute. This article refers to the obligation of suppliers to guarantee the quality offered, in this case the Superintendency considered that Pepe Ganga was incurring in a failure in the quality of its after-sales service.

Likewise, it was accredited that Pepe Ganga was in breach of Article 26 of the Statute which obliges suppliers to inform the consumer of the total sale value of the product in Colombian pesos, including the additional costs that may be generated, such as taxes and shipping costs, among others. Since the pricing system used in its physical stores did not meet the objective of truthfully reporting the price to consumers due to it not containing some of the specifications mentioned above, non-compliance was configured.

Finally, the SIC analyzed the advertising campaign “Anniversary ALL THE WAREHOUSE 40% DISCOUNT, 25% discount on appliances and beauty electronics, 40% on Oster, Black + Decker and Remington appliances, 10% additional discount paying with the Colpatria credit card or 20% additional discount paying with Colpatria Pepe Ganga credit card ” as part of its investigation, finding a third infraction. According to the Statue, suppliers have the duty to inform the number of units available to be sold under a certain offer. In this case, the advertising campaign by Pepe Ganga did not comply with this obligation and only included the expression “while supply lasts”.

We are seeing an increasing degree of scrutiny by the Superintendency in its oversight and investigations of the lack of compliance with the duties established in Law 1480 of 2011, therefore at BéndiksenLaw we carefully analyze the advertising campaigns of our clients to avoid penalties. If you have any questions regarding your compliance with the Consumers’ Rights Statute do not hesitate to contact us.

Reminder by the Superintendency of Corporations on the Perpetuity of the Obligation of Renewal of the Commercial Registration

The Superintendency of Corporations recently issued its Opinion 220-093666 which makes reference to non-operating companies. These are companies that have presumably ceased their activities and the legal entity is inoperative. In accordance with the opinion, it will be understood that a company is inoperative when it is subject to supervision by the Superintendency of Corporations and omits, for three consecutive years, the obligation to renew its commercial registration or when it fails to send the information required by the Superintendency for a period of three consecutive years.

The declaration of inoperability of a company has a serious consequence, which is the dissolution of the company by the Superintendency, which will send notice about the presumption of inoperancy to the physical or electronic address noted in the commercial register. After this, the entity grants the corporation a period of thirty (30) days to refute the presumption against it. If the company does not reply, it will be declared dissolved and in a state of liquidation.

The point that the Superintendency of Corporations highlights in Opinion 220-093666 is that once the liquidation process has begun, the liquidator must include in the inventory the pending obligation of the dissolved company to renew its past-due commercial registrations for the number of years it failed to comply. Subsequently, the liquidator must make the payment to the corresponding Chamber of Commerce and eliminate this liability.

Remember to comply with for your company’s legal obligations and avoid a declaration of inoperability. If you want to get support for the fulfillment of your obligations in BéndiksenLaw we can counsel you.

Contact us for more information.

New strategy to generate employment for young people

The president of Colombia issued Decree 688 of 2021 which creates an incentive system for employers and companies to generate employment for young people ages 18 and 28. This legislative initiative seems promising when contemplating the current economic landscape generated by the COVID-19 pandemic in which unemployment has become one of the main social concerns, especially for young people who just entered the labor market.

Decree 688 creates a subsidy accessible to employers who hire additional personnel during 2021 ages 18 to 28. The subsidy equals 25% of a monthly legal minimum wage which will be deposited monthly for each qualifying employee.

The conditions for employers that are seeking to be beneficiaries of this subsidy are:

Proof of their quality as an employer trough the social security payment spreadsheet – “PILA”.
Having an account that accepts deposits with a financial entity that is supervised by the Financial Superintendence or with a credit and savings cooperative that is supervised by the Superintendence of Solidarity Savings.
To determine the “additional” number of workers that qualify to generate the subsidy, the number of employees for which the employer made payments to the social security system during March of 2021, will be used as the initial employee count.
For new businesses, the number of dependent employees will be taken into account.

If you consider that your business could be a potential beneficiary of this initiative, the application can be submitted by delivering the following documents to the financial institution with whom you have a deposit account:

Document, issued by the legal representative of the company, requesting to become a beneficiary.
Document, issued by the legal representative or the individual employer and the statutory auditor or accountant, that certifies:
That the young employees who qualify for the subsidy were paid their salary the month before the application.
That, at the time of application, the payments to the social security system for all employees are up-to-date.

The financial institutions and savings and credit cooperatives will verify all the documents submitted by employers.

If you wish to file an application for the subsidy, BéndiksenLaw can help you in this process.

Contact us for more information.