Appointment of the Replacement of the Legal Representative at Simplified Joint-Stock Companies (SAS)
On June 7, 2022, the Colombian Superintendence of Corporations referred to the resignation of the legal representative in Simplified Joint-Stock Companies (SAS, by its Spanish acronym) and the appointment of their replacement. In this regard, it recalled that what has been established in the bylaws regarding the company’s legal representation and the procedure that must be followed to choose a replacement in case of resignation, removal, permanent disability, death, termination of the stipulated term, or any situation that implies that the individual or company appointed ceases to hold this position, should be consulted first. In case nothing has been stipulated, the Colombian Commercial Code must be applied, especially the provisions about Stock Corporations.
In addition, article 28 of the Colombian Commercial Code establishes that the appointment of legal representatives of companies must be registered in the commercial registry. Thus, once the replacement of the legal representative is appointed by the highest corporate body, the company must proceed with the registration before the Chamber of Commerce of the minutes of the meeting in which this decision was made. Consequently, following the provisions of article 442 of the Colombian Commercial Code, until both the appointment and the registration of the minutes are made, the outgoing legal representative will remain in the commercial registry despite their resignation or any other situation that puts an end to their appointment. This is because the cancellation of the registration of their appointment is only possible through the election and registration of the new legal representative. In this regard, the Colombian Superintendence of Corporations refers to Judgment C-621 of 2003 in which the Colombian Constitutional Court established that the corresponding corporate organs must make the designation of the replacement within the term established in the company’s bylaws or, in the absence of stipulation in this regard, within 30 days following the circumstance that ended the previous appointment. Thus, during this period of time, the registered representative will continue to exercise their position with the fullness of the responsibilities and rights that this entails. However, in the event that this term is exceeded without the appointment of the corresponding replacement, the outgoing legal representative must notify the corresponding Chamber of Commerce of this situation. Once this notice is made, the outgoing legal representative withdraw from his duties and will no longer be liable towards third parties, even if their name continues to appear in the commercial registry.
Additionally, the superintendence specified that when the appointment of the legal representative’s replacement is not made in the aforementioned terms, the person designated as their alternate, if any, will be in charge of assuming their functions. In the event that an alternate has not been appointed, the statutory auditor may summon the highest corporate body to appoint the new legal representative.
On the other hand, shareholders of companies that are NOT part of the financial sector may request the Colombian Superintendence of Corporations to convene the highest corporate body when it has not met in the moments that the bylaws or the law indicate. However, for this request to proceed, the following must be taken into account:
- For companies that are not supervised by the Colombian Superintendence of Corporations and that as of December 31 of the immediately previous year have: (i) assets equal to or greater than 5,000 Colombian legal minimum monthly wages or (ii) income equal to or greater than 3,000 Colombian legal minimum monthly wages, the request must be made by one or more shareholders representing at least 10% of the share capital.
- For companies supervised by the Colombian Superintendence of Corporations, that is, those that as of December 31st, 2021 have assets or total incomes greater than 30,000 Colombian legal minimum monthly wages, either: (i) shareholders representing no less than one fifth of the subscribed shares, unless the bylaws indicate something different, case in which the provisions of these will prevail, or (ii) the company’s creditors and other public authorities in exercise of their legal powers, may submit this request. Additionally, this request will proceed not only when the highest corporate body has not met in the moments that the bylaws or the law indicate, but also when serious irregularities have been committed in the administration of the company that must be known or remedied by this body or when the number of shareholders mentioned above considers it necessary.
In case you have doubts about this or any other corporate issue, do not hesitate to contact us.