Is it Possible to Change the Domicile of a Colombian Company to a Foreign Country?

The Colombian Superintendence of Corporations recently resolved a query regarding the change of domicile of a company, specifically regarding the process of “cross-border re-domiciliation”. In this regard, it stated that this process consists of a company that is domiciled in a certain country, changing its domicile to another country without undergoing a liquidation process or merging or splitting-up with a foreign company. In accordance, it stated that in Colombia, national companies, those which have their domicile in the country, do not have the possibility of changing their domicile to a foreign country without carrying out any of the aforementioned processes. That is, there is no possibility to carry out a cross-border re-domiciliation. Likewise, it is also not possible for a foreign company to change its domicile to Colombia without liquidating, merging or splitting-up.

Following the above, the Superintendence stated that, according to Colombian legislation, it is only possible to carry out the company’s change of domicile within the national territory. However, bear in mind that this decision to change the company’s domicile requires a by-laws reform so it is necessary for the highest corporate body (shareholders’ assembly or meeting of partners) to meet and approve it. Subsequently, the reform must be registered in the Mercantile Registry. For this, it is enough for the companies to register the corresponding minute in which the approval of the decision to change the domicile of the company is recorded before the Chamber of Commerce of the domicile of origin. Finally, the Chamber of Commerce will be in charge of transferring the inscriptions that are in its files to the Chamber of Commerce of the new domicile.

If you have any questions, please contact us.

Applications for Registration or Transfer of Distinctive Signs of Business Groups

On August 5, 2022, the Colombian Superintendence of Industry and Commerce (SIC) issued Resolution 51804 of 2022, by which it added provisions related to applications for registration and transfer of distinctive signs of entities belonging to the same business group, to its Single Memorandum. In this regard, it establishes that when the authority carries out the examination of trademark registrability, it must take into account whether the precedents that prevent the registration or transfer of said sign belong to the same business group as the applicant, in which case, registration will not be understood as affecting the rights of a third party. (In this regard, bear in mind that there is a business group when: (i) there is a situation of control, that is, the decision-making power of a company depends on the will of another person or persons, and (ii) when there is unity of purpose and direction between members of the business group. Regarding this last requirement, the Colombian Superintendence of Corporations has established that it refers to all companies pursuing the same objective that has been set by the controlling company, without this preventing each of the companies from individually performing their corporate purpose and activities.)

For these cases, the resolution established that applicants have the obligation to inform the superintendence of the business group to which they belong. However, in the event that the applicant is a foreign person, they must provide: (i) a statement signed by the applicant’s legal representative or by any of the legal representatives of the member companies of the business group,  in which the existing unity of purpose and direction is exposed, and (ii) a document issued by the competent authority of the country to which the foreign person belongs, which also specifies the existing unity of purpose and direction among the members of the business group. Finally, it’s important to bear in mind that this resolution will come into force on September 1st of the current year.

In case of doubts, do not hesitate to contact us.

Learn About the New Colombian Regulation on Telework

On July 18, 2022, Decree 1227 of 2022 came into force, which modifies and adds some provisions on teleworking. In this regard, bear in mind that teleworking is a form of work organization that consists of the performance of activities by the worker using Information and Communication Technologies “ICT” as support. Thus, the contact between the worker and the employer occurs through ICT without requiring the physical presence of the worker in a specific place of work. Additionally, there are three types of teleworkers: (i) autonomous, when teleworkers use their own home or a different place agreed upon with the employer and only sporadically go to the company; (ii) mobile, when they do not have an established workplace and use mobile devices to perform their functions; and (iii) supplementary, when depending on the needs of the service, they work two (2) or three (3) days a week at home and the other days they work in the company. With this in mind, below we detail the modifications that you must take into account as an employer if you want to implement this type of employment contract in your company in Colombia:

  1. In the employment contract employers must indicate the necessary conditions for the performance of the functions assigned to the worker, the technological means required, the description of the equipment and computer programs and the responsibilities regarding the custody of work items and restrictions and responsibilities that the breaches of these conditions entail. Additionally, it must indicate the modality of telework that will be performed, the weekly working schedule that teleworkers will have, the security measures that they must know and comply with and the description of the minimum requirements in terms of ergonomics and technology that the workstation must comply with. Finally, the employment contract must indicate the procedure that teleworkers must follow to return the equipment that was delivered to them once the telework or contract ends.
  2. The previous requirement to include in the Internal Work Regulations (RIT, by its Spanish acronym) the special conditions for teleworking to operate and the provisions related to the proper use of equipment, programs and information management applicable to these workers, has been eliminated.
  3. The following obligations are established for employers: (i) affiliate teleworkers to the Labor Risk System and inform the workers’ compensation administrators (ARL, by its Spanish acronym) about the chosen telework modality, the weekly working schedule and the corresponding risk class. Additionally, for supplementary and autonomous teleworking, the chosen workplace for the teleworker to carry out their functions must be reported and for mobile telework, the conditions in which the contracted work will be performed; (ii) in the Annual Work Plan of the Occupational Health and Safety Management System (SG-SST, by its Spanish acronym) all the actions considered necessary to identify and control the dangers and risks of the company’s teleworkers must be implemented; (iii) order periodic medical evaluations that may be performed by telemedicine; (iv) adopt and publish a telework policy in which the terms, characteristics and conditions of teleworking are regulated in accordance with the needs and particularities of the service; and (v) inform the Colombian Ministry of Labor about the number of teleworkers that their company has.
  4. Towards teleworkers, employers have the following obligations: (i) inform them of the communication mechanisms they have to report any updates related to the performance of telework, work accidents and occupational diseases; (ii) provide them with adequate work equipment and tools, ensuring that they receive training and information on the risks arising from their use. However, this does not prevent teleworkers from using their own equipment and work tools; (iii) respect human dignity, the right to privacy and access to information of teleworkers; (iv) guarantee the right to disconnect from work and protect the mental health and emotional balance of teleworkers; (v) train them in advance, virtually or in person, in terms of mental health care, ergonomic or biomechanical risk factors, use and appropriation of ICT and digital security; (vi) inform them about the restrictions on the use of computer equipment and programs, protection of personal data, intellectual property, information security and penalties for non-compliance with these provisions.
  5. The possibility that the parties retain the right to reversibility of teleworking is established. That is, the parties may have the power to request at any time the definitive return of teleworkers to perform their functions in person at the company. However, this will depend on what the parties agree to in the employment contract and the possibilities that the employer has to locate the worker within their company.
  6. This decree states that the parties must seek flexibility regarding the time and mode of performance of the teleworker’s functions, provided that the established weekly working schedule is met. For this, the parties will be able to agree on schemes of compliance and monitoring of functions. However, this flexibility cannot affect the effective rest of teleworkers or their right to disconnect from work.
  7. The possibility that the parties agree that the teleworker use their own work equipment and tools is established. In this case, teleworkers must keep their equipment and tools in good functional condition to fulfill their functions and employers must refrain from subsequently requesting equipment other than those agreed upon. The parties can agree on a compensatory amount for the use of these tools, but it is NOT mandatory.
  8. The parties can agree on a monthly aid to compensate for the teleworker’s expenses on Internet, land and mobile telephony and energy. This aid is NOT mandatory and will depend on the will of the parties.

In case you have any doubts, please contact us.

Term to Exercise the Right of Inspection in Simplified Joint-Stock Companies (SAS)

The right of inspection is the authority that associates or shareholders of a company have to examine, the books and commercial papers of the company in which they made their contributions, either directly or through a person authorized for that purpose. This right is intended to allow partners or shareholders who are not part of the management of the company to know about the administrative, financial, accounting and legal situation of the company. Thus, directors of the company have the obligation of allowing partners or shareholders to access this information. Failure to do so is sufficient cause for the competent corporate body or the authorities to remove the directors from their position.

In addition to the above, article 20 of Law 1258 of 2008 establishes that in Simplified Joint-Stock Companies (SAS), shareholders may exercise their right of inspection during the five (5) business days prior to the meeting in which end-of-year balance sheets or transformation, merger or split-up operations must be approved. However, it also establishes the possibility that a higher term can be agreed upon in the company’s bylaws. In this regard, the Superintendence of Companies recently reiterated that it is possible for shareholders to agree in the bylaws to the possibility of exercising the right of inspection permanently. Thus, as established by law, in SAS-type companies the opportunity to exercise this right will depend on what the shareholders have established in the bylaws.

In case you have doubts about it, do not hesitate to contact us.

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.

Virtual Meetings of Corporate Organs After the Health Emergency

The Colombian Superintendence of Companies recently reminded the public that, despite the fact that the health emergency has ended, Decree 398 of 2020 is still in force. Therefore, it is possible for corporations to continue to hold their partners’ meetings, general assembly of shareholders or meetings of the board of directors in a non-face-to-face manner and complying with the requirements established both in the law and in the company’s bylaws.  In this regard, bear in mind that in order for non-face-to-face meetings to be held it is necessary that all members or partners participating in the meeting be able to deliberate or decide by simultaneous or successive communication, in accordance with the provisions of article 19 of Law 222 of 1995.

Additionally, the aforementioned Decree 398 establishes that the company’s legal representative must record in the minutes of the meeting on the continuity of the necessary quorum throughout the meeting. That is, they must certify that during the meeting the necessary number of participants were present to deliberate and decide in accordance with what is established in the law or in the bylaws of each company. Likewise, they must verify the identity of the participants to guarantee that they are in fact the partners, shareholders, or members of the board of directors or their proxies, as appropriate.

Finally, this decree specifies that legal and bylaw provisions on summons, quorum and majorities for in-person meetings are applicable to partners’ or shareholders’ meetings or the meetings of the board of directors held in a non-face-to-face or mixed manner (which allow the presence of participants both physically and virtually).

Contact us in case you require counsel regarding this or any other issue affecting your company.

The Deadline to Pay the Legal Bonus is Approaching

According to article 306 of the Colombian Labor Code, employers have the obligation to pay their employees a social benefit called “Legal Bonus” corresponding to 30 days of salary per year, that is, for each year worked, 30 days of salary must be recognized. This Legal Bonus must be recognized in two payments: half by June 30th at the latest and the other half no later than the first twenty days of December. The recognition of this payment must be made for the entire semester worked or proportional to the time worked.

In addition, bear in mind that all workers who are bound by an employment contract are entitled to the Legal Bonus, including domestic workers, family service drivers, daily workers or farm workers and, in general, those who are considered as dependent workers.

In accordance with the above, by June 30th at the latest, you will have the obligation to pay an amount equivalent to half of the monthly salary received by your workers for those that began working on or before January 1st. For workers who began after January 1st, payment must be made in proportion to the time worked. In case you do not make the corresponding payment before this date, you must pay, as compensation, a sum equal to the last daily salary for each day of delay, up to 24 months. If after 24 months you have not yet made the payment, you must recognize default interests[1].

In case you have doubts about this or any other work obligation, do not hesitate to contact us.

[1] Colombian Labor Code. Article 65.

FAQ: Deposit of Financial Statements

Article 41 of Law 222 of 1995 establishes that companies’ financial statements must be public, which is why a copy must be deposited, along with certain additional documents, in the Chamber of Commerce of the company’s domicile. This way, the Chamber of Commerce may issue a copy of these documents to third parties that request them and pay the associated costs. Here we answer the most frequently asked questions.

1.Who must  deposit this information?

All commercial companies have the obligation to publicize their financial statements through the deposit of these documents before the Chamber of Commerce of the company’s domicile.

2. Is this obligation fulfilled with the renewal of the commercial registration?

No, these are two different obligations. Although it is necessary to provide certain financial information to be able to renew the commercial registration, this does NOT fulfill the obligation to deposit the company’s financial statements.

3. What information must be deposited with the Chamber of Commerce and what is the deadline to do so?

The aforementioned article 41 of Law 222 of 1995 establishes that a copy of  the following documents must be deposited:

  • General-purpose financial statements, which may be basic or consolidated[1], and that consist of:
    • The balance sheet,
    • The income statement,
    • Changes in equity statement,
    • Changes in financial situation statement, and
    • The cash flow statement.

  • The notes to the financial statements and,
  • The statutory auditor’s opinion, if the company has one.

Additionally, article 41 establishes that the deadline for making this deposit is within the month following the date on which the financial statements are approved.

4. Do the financial statements have to meet any requirements?

Financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS). In addition, article 37 of Law 222 of 1995 establishes that the financial statements must be certified by the legal representative and the public accountant under whose responsibility they were prepared. This certification consists of declaring that the statements contained in them have been previously verified and that they have been faithfully taken from the company’s accounting books and comply with the requirements of the applicable technical regulations.  

In addition to the above, the financial statements may be submitted in a simple or authenticated photocopy with clear text so that their content can be reviewed without inconvenience. Additionally, the deposited documents’ name and date must be indicated and these documents must be signed by the company’s legal representative and by the public accountant that prepared the financial statements or the statutory auditor in cases where the company has one.

5. How is this information deposited?

The registration process of the documents mentioned above must be carried out before the Chamber of Commerce of the company’s domicile and may be done either virtually or in person, depending on the services offered by the corresponding Chamber of Commerce. For this, a letter signed by the company’s legal representative must be presented stating that the deposit of the financial statements will be made, along with the corresponding payment for these documents’ registration.

6. Are there any exceptions to this obligation? 

Article 41 establishes that the different entities that exercise “inspection, surveillance and control” may establish cases in which the deposit of this information is not required or an additional means of publicity is required. In this regard, it should be noted that, as a general rule, this entity is the Superintendence of Corporations, which has not established any exception or additional requirement for this obligation. However, depending on the economic sector in which a company’s activity is carried out, the inspecting entity may be different and there may be exceptions or additional requirements. (e.g. the Financial Superintendence inspects and surveils those companies that perform activities that involve the management, use and investment of resources collected from the public).

Moreover, this article establishes that in cases in which companies have already deposited their financial statements before the Superintendence of Corporations, either at the request of this entity or because they are obliged to annually present financial statements before this superintendence, it is not necessary to also deposit them before the Chamber of Commerce.

7. What happens if this obligation is not fulfilled?

The Superintendence of Corporations[2] has established that the non-preparation and dissemination of financial statements may result in the imposition of fines of up to 200 legal minimum monthly wages (approx. US$ 50.000). Additionally, the directors and the statutory auditor will be liable for the damages caused to the company, the partners or third parties for the non-preparation or dissemination of the financial statements.

In case you have doubts about this or any obligation of your company, do not hesitate to contact us.

[1] Superintendence of Corporations, Opinion 340-036460 of August 2, 2004

[2] Superintendence of Corporations, Opinion 220-51734.

What Should You Do if Your Workers Have COVID-19?

Decree 1109 of 2020 established various measures that must be considered when following up on cases of workers infected with COVID-19 or who had contact with infected individuals. Additionally, “Sustainable Selective Isolation” was regulated, understood as the guarantee that workers have to remain in mandatory isolation, due to their diagnosis or suspicion of contagion with this virus, without their income being affected. In this regard, the Colombian Ministry of Labor recently specified[1] that treating physicians will be able to determine the need to grant medical leave to workers in consideration of the symptoms they have. In addition, physicians must consider whether or not workers have the possibility of carrying out their work remotely, through telework or work from home. Thus, in the event that workers can perform their functions under any of the aforementioned modalities and their health allows it, medical leave will not be necessary. On the contrary, if workers’ physical presence in the workplace is required, treating physicians must grant medical leave to allow them to comply with mandatory isolation.

In addition to the above, the Colombian Ministry of Labor established how to proceed with workers who belong to the Contributory Health Regime and the differences with those who belong to the Subsidized Health Regime, as follows:

  1. In the event that workers belonging to the Contributory Health Regime have medical leave: healthcare entities (EPS, by its Spanish acronym) or workers’ compensation administrators (ARL, by its Spanish acronym), will be responsible for recognizing payments to workers.
  2. In the event that workers belonging to the Contributory Health Regime do not obtain medical leave despite their diagnosis or suspicion of contagion with COVID-19: employers must allow workers to perform their duties through telework or work from home during the period that they must remain isolated, without their salary being affected. This measure is also applicable to those workers who, although the performance of their functions does not use information and communication technologies, can nonetheless perform them without requiring their physical presence in the workplace.
  3. In cases where workers belong to the Subsidized Health Regime: If workers have a confirmed diagnosis of COVID-19 and comply with mandatory isolation, they will be entitled to receive a temporary economic compensation that corresponds to seven (7) days of the Colombian daily minimum wage, for a single time. In this case, whether or not they have a medical leave is not taken into consideration, only whether they complied with mandatory isolation.

In addition to the above, the Colombian Ministry of Labor reminded employers that they have different tools to protect and preserve jobs during the health emergency that lasts until June 30th, such as: (i) work from home, (ii) telework, (iii) annual, anticipated, and collective paid vacation, (iv) paid leave, (v) salary without provision of services, and (vi) compensable paid leave.

For more information regarding this topic, do not hesitate to contact us.

[1] Ministry of Labor, response No. 2EE2021410600000061823.

FAQ: Registration of Books of Commerce Before the Chamber of Commerce

In accordance with article 19 of the Colombian Commercial Code, all merchants must be registered in the commercial registry and must register all acts, books and documents required by law. Specifically, with respect to commercial books, article 28 of the Colombian Commercial Code establishes that the Partners’ or Shareholders’ Registration Book and the Book of Minutes of the Meetings of Shareholders or Partners must be registered. In this regard, we answer some of the most frequently asked questions: 

1.Which are the books that must be registered and what do they consist of?

The books that must be registered are two: (i) the Partners’ or Shareholders’ Registration Book and (ii) Book of Minutes of the Meetings of Shareholders or Partners. In these books, as the name implies, records must be kept of the shareholders or partners that own the company and the minutes of the meetings that these partners or shareholders hold to discuss and make decisions regarding company matters.

In accordance with article 56 of the Colombian Commercial Code, these books may be of removable sheets or formed by a continuous series of cards, as long as the sheets or cards are numbered and allow their filing in order. They may also be kept in electronic files where the inalterability, integrity, security and conservation of information must be guaranteed.

2. Where and by whom must this registration be done?

The application for registration must be submitted by the legal representative, or a third party who has a validly granted power-of-attorney to perform this registration, before the Chamber of Commerce in which the company is registered.

3. When and how can this registration be made?

The registration of these books can be requested at any time and must be filed at the offices of the Chamber of Commerce in which the company is registered. However, in case of electronic books, registration must be done annually and can be done virtually. 

4. Where can these books be purchased? 

As for the acquisition of the Partners’ or Shareholders’ Registration Book and the Book of Minutes of the Meetings of Shareholders or Partners, there are two options:

  • They can be purchased in stationery stores where different options are offered, varying in the orientation of the sheets, the number of folios or pages available, among others.
  • It is usual for the Chambers of Commerce to provide the service of selling printed and coded sheets, allowing merchants to acquire only the amount of sheets they consider necessary and facilitating the process of numbering and coding the sheets, since it will be taken care of by the organization. Thus, it would not be necessary to buy a complete book but simply the amount of sheets that are required, which must be kept in folders that allow their proper storage and custody.

5. How should books be submitted for registration?

Merchants must submit blank books, that is, without any information, except for the consecutive numbering of the sheets with the selected code, as explained in the following section, and the name of the book. Likewise, the covers of the books must be labeled with the name of the book and the name of the company.

With respect to electronic books, it is enough to submit the virtual application for registration, filling out the information requested by the corresponding Chamber of Commerce, which will be responsible for reviewing and deciding on the application.

6. What documents must be submitted during this process? 

A written request executed by the legal representative must be submitted, specifying (i) the date of the application, (ii) the company name, (iii) the tax number of the company, (iv) the registration number, (v) the name or destination of the books (book of partners, shareholders, or minutes), (vi) the amount of useable sheets in each book, (vii) the consecutive numbering and (viii) the numbering range. In case the book has removable sheets, the code that will identify them must be indicated; this code must be between one (1) and six (6) characters and may be made up of letters and / or numbers. This code must be included in each of the sheets of the corresponding book. As an example, for the shareholders’ book, the code “SHA” may be chosen and for the book of minutes of meetings of shareholders or partners, the code “MIN”. In any case, any other code that complies with the aforementioned character limit and consists solely of letters and numbers may be chosen. 

Nonetheless, it is usual for the Chambers of Commerce to have a pre-established form that will facilitate this task because it will only be necessary to fill in the blanks with the information required by the Chamber. This form must be executed by the legal representative. Additionally, in the event that the person who is going to file the application is not the legal representative, a limited power-of-attorney by which they are granted the authority to file said application must also be presented, along with a copy of their ID. 

7. What should be done in case the book runs out of sheets or is lost?

In case the company already has a registered book but all the sheets have been used, a new book must be purchased and a new application for registration must be submitted. Thus, it is necessary to complete the registration application form again and submit, along with the new book, the previous completed book or a certificate issued by the statutory auditor or the public accountant of the company informing of the completion of the book or that it is about to be completed.

On the other hand, in case the book has been lost or destroyed, a new book must also be acquired and the registration application form must be completed again. Additionally, a copy of the complaint regarding the loss or destruction of the book, filed before the competent authorities, must be attached, which must include the company name, the book name and the Chamber of Commerce registration number of said book.

In case you have doubts about this or any other procedure before the Chamber of Commerce, do not hesitate to contact us