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.

Reminder from the Tax Authority About Registering as Importer

Recently, the National Direction of Taxes and Customs (“DIAN”) issued its Opinion (“Concepto”) 905913 2021 in response to a query seeking to determine whether a citizen who intends to import merchandise for commercial purposes should update their status in the Unique Tax Registry (“RUT”).

The DIAN confirmed that those individuals or entities that intend to import merchandise for commercial purposes must have the status of importers in the RUT. This status allows for correct tax calculations and the inclusion of fiscal benefits established in law.  An example of such benefits is found in Article 485 of the Tax Statute which establishes that taxes paid on the importation of goods are discountable taxes. Therefore, the status of importer must be set in the RUT before initiating commercial activities, if the individual or entity already have the RUT, they must make the corresponding modification and request the cancellation of the status they previously had, if applicable.

The rule about obtaining the status of importer in the RUT has some exceptions established in Article of the Unique Decree on Tax Matters. As such, the following persons are not obliged to have the status of importers: “Non-resident foreigners, diplomats, diplomatic missions, consular missions and technical missions accredited in Colombia, non-resident international transporters, individuals receiving or sending goods as postal traffic and urgent shipments, except when used for the import and / or export of commercial shipments”.

If you require help updating or modifying your RUT, BéndiksenLaw can help you.

Contact us for more information.

Apostille is Unnecessary if the Document is Issued Before a Colombian Consul

The Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents came into force in 1961 and created a vehicle to grant legal validity to documents that were issued in one country and need to be reputed valid in a different country. This vehicle is the apostille and it seeks to certify that the signature on a foreign document is from a public servant in exercise of his duties, and that the signature is authentic.

The apostille is now extremely relevant due to the high degree of globalization. Concretely, in the possibility for companies and individuals to carry out legal transactions in different parts of the world and, therefore, the need that documents be reputed valid abroad. However, it must be acknowledged that the apostille represents additional costs and legal procedures that can affect the dynamics and agility of businesses. Therefore, the Financial Superintendence issued its Authoritative Document (“Circular”) N° 44 reminding the entities under its vigilance to abstain from requesting the apostille for foreign documents that have been recognized or authenticated by a Colombian consul. This, taking into consideration that due to the Vienna Convention of Consular Relations, Colombian consuls act as notaries abroad, therefore the documents they sign have legal force in Colombia without the need of further legalization. Also, trough Law 455 of 1998 the government eliminated the apostille requirement for documents sign by a diplomatic agent and/or consul.

The Superintendence issued this reminder to pursue a “positive effect in the experience of financial customers accessing and using financial products and services” by reducing the necessary paperwork when those customers come from abroad. Likewise, the Superintendence also encouraged the entities under its vigilance to abstain from requesting original documents that were recognized or issued by Colombian consuls.

In BéndiksenLaw we can help file legal paperwork that requires foreign documents in the quickest way possible.

Contact us for more information.

Are Your Publicity Adverts Complying with the Law?

Publicity is a crucial tool for businesses and companies that are sellers and/or providers of goods and services. With it, businesses and companies can display their offers to consumers, and convince them to acquire their products. However, publicity can turn into a double-edged sword if, during its planning, a legal approach is not taken into consideration.

On July 8, 2021, The Superintendence of Industry and Commerce (“SIC”), penalized American School Way with a fine of $ 181.705.200 colombian pesos for their publicity adverts and information contained in their web page. The millionaire fine was due to non-compliance with the norms established on the Consumer Rights Statute, more specifically, of articles 3, 23 and 33.

Article 3 contains the rights and duties of consumers, among which are the right to obtain clear, truthful, and sufficient information about the offered products. Article 23 refers to the minimum information that must be presented by suppliers and/or producers when advertising their products. If the minimum information is not provided, they will be held responsible for all damages caused to consumers caused by the lack of information.

In its investigation, the SIC determined that American School Way was not complying with its obligation of providing clear and truthful information by omitting from its “Terms and Conditions of the Education Services Agreement” and its “Enrollment Rulebook” information relative to the benefits for the subscribers of their programs. Additionally, the SIC found that the information provided through the American School Way website relating the terms to request a change of campus was not sufficient for consumers.

Lastly, Article 33 of the Consumer Rights Statute refers to the obligation for promotional adverts and offers to include information on the conditions of how and when consumers can access the offered benefits. In this case, American School Way neglected to inform in its “Black Friday” advertisement the terms and conditions to access the offered incentives.

The infringement of the rules contained in the mentioned statute led to American School Way being penalized with a millionaire fine imposed by the authorities, which could have been avoided with the correct counsel. BéndiksenLaw is qualified to bring a legal approach to the marketing campaigns of our clients, where we can determine if the adverts and information comply with the requirements established by the Consumer Rights Statute, and other important regulations, to avoid penalties or difficulties with the authorities.

Contact us for more information.

Responsibilities According to the Selected e-Commerce Model

E-commerce has gradually entered people’s everyday life. Now, it is used daily by millions of individuals to satisfy multiple needs. This way of doing business is highly regulated to ensure the rights and duties of the parties who intervene in this process. If your company is thinking about operating via e-commerce, it is important to understand the obligations derived from it, according to the adopted business model.

In this vein, the Superintendence of Industry and Commerce differentiates between two business models for e-commerce:

  1. Contact portals: they consist of electronic platforms that enable direct contact between sellers and buyers. Those who operate under this model are mere intermediaries and do not have control over the quality, or any other aspect, of the goods and/or services offered by the sellers. Therefore, they do not have any responsibility related to the purchase executed due to their intermediation. The only obligation for these portals consists of providing the necessary information about the sellers, listed in the contact portal, to buyers.
  2. E-commerce platforms: these platforms are not limited to serving as a bridge between buyers and sellers. On the contrary, they are a party in the commercial relationship since these platforms generate revenue through: sales commissions, the number of transactions from buyers and/or providing their own payment services for consumers, among others, which means that these platforms have an active role in commercial transactions.

By being considered another party in commercial relationships, e-commerce platforms have certain obligations towards consumers, which are:

  • Providing truthful, clear, and up-to-date information to consumers about the offered products and/or services.
  • Issue a purchase receipt that contains a description of the product and information regarding its delivery.
  • Provide efficient mechanisms for consumers to file their petitions, complaints, or claims and to follow up on these matters.
  • Answer directly to customers for any inconvenience or defects of the acquired products, and/or for misleading advertisements.

If you are thinking about implementing one of these business models, BéndiksenLaw can advise you.

Contact us for more information.

Thanks to the “Shared Leave Now” bill, fathers will be able to enjoy their newborns for longer

The Colombian Congress approved the bill “Shared Leave Now”, which seeks to extend the term of paid paternity leave, equalize the responsibilities of both genders in relation to childcare, and reduce inequality between men and women in terms of access to labor. This bill has four essential points:

  1. Extension of paternity leave. Paternity leave is the time given to a father to contribute with the arrival of his newborn and enjoyment with his partner. This leave currently lasts eight (8) business days, which are paid. The extension in paternity leave would be done according to unemployment reduction. For each percentage point that the unemployment rate decreases, a week will be added to the paternity leave until it is extended to five (5) weeks.
  1. Shared parental leave. This leave is granted to the mother and father so they can be absent from their jobs when their babies are newborn.
  1. Flexible parental leave. The leave is granted to both parents. They can freely distribute the last six (6) weeks of parental leave between each other.
  1. Measures against work discrimination. With the addition of the new types of parental leave and the extension of the paternity leave, Congress seeks to eliminate gender-based discrimination present on the labor market. Additionally, this bill aims to ban questions about reproductive or family plans, or sexuality in job interviews.

The co-author of this bill stated that when hiring personnel, employers tend to choose men over women, which constitutes a disadvantage for them in the labor market. According to the co-author, this preference is related to the time of maternity leave, which is eighteen (18) calendar weeks, during which women do not perform tasks for their jobs. They also acquire special guarantees such as “reinforced labor stability”. On the contrary, the paternity leave only lasts eight (8) business days and men do not acquire “reinforced labor stability” or any other type of employment guarantee during this period.

If you have any questions or concerns about this bill, please do not hesitate to contact BéndiksenLaw to help you solve them.

Contact us for more information.