Colombian Superintendence of Corporations Issues a Guide on Conflict of Interest

Recently the Colombian Superintendence of Corporations issued a guide about the conflict of interest in which the directors of a company may be involved and the way in which they must act in case this happens. In this regard, the Superintendence recalls that, according to article 22 of Law 222 of 1995, the following are considered directors: (i) the legal representative, (ii) the members of boards of directors, (iii) the liquidator, (iv) the business manager, and (v) those who, in accordance with the bylaws, perform administrative functions. Additionally, the jurisprudence of this superintendence has understood that the alternates of the aforementioned persons when they act in such a capacity due to temporary or definitive absences of the principals, will also be considered directors. Finally, Law 1258 of 2008 establishes that those persons who are not directors of simplified joint-stock companies but who interfere in management, administration or direction activities of the company, must also comply with the directors’ responsibilities and may be subject to the sanctions applicable to them.

Additionally, the superintendence recalls that the directors’ actions must be governed by the principles of good faith, loyalty and diligence of a prudent businessman and explains each of these concepts. It is for this reason that directors must refrain from participating in activities in personal interest or that of third parties that involve competition with the company, as this would imply a conflict of interest. It is understood that there is a conflict of interest when the directors’ neutrality in decision-making processes may be affected because the interests of the company and those of the director or third parties that they may want to favor concur, as happens in the event that they want to do business with themselves or with companies represented or controlled by their relatives.

In accordance with the above, in the event that directors face a situation of conflict of interest or competition with the company, they must obtain an authorization from the highest corporate body to be able to carry out the intended activity, as long as the interests of the company are not harmed. For this, they must convene this corporate body and present all relevant information so that a decision in this regard can be made. Finally, this authority reiterates that in the event that a director does not refrain from participating in the aforementioned situations, interested parties or the Public Ministry may request: (i) the nullification and voiding of the performed acts, (ii) the restitution of matters to their previous state, (iii) sentencing the director to the payment of compensatory damages, and (iv) the imposition of pecuniary fines or penalties such as the inability to perform commercial activities. Additionally, a court of competent jurisdiction may order the aforementioned measures ex officio, that is, without the request of any interested party being required, when it is evident that these acts were carried out in violation of the directors’ obligations.

In case you have doubts regarding this subject, do not hesitate to contact us.

To download the complete guide (in Spanish), you can click here.

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.

Share Capital Reduction with Reimbursement of Contributions

On April 27th, the Superintendence of Corporations issued Opinion No. 220-106568 on the share capital reduction of a Colombian company with reimbursement of contributions, in which it relates its previously issued opinions on this matter. Bear in mind that the share capital of a company is made up of the contributions that the partners or shareholders have made, which then become part of the assets of the entity, which can use these good to pursue its corporate purpose.[1] In accordance with article 122 of the Colombian Commercial Code, this decrease in share capital requires the company’s by-laws to be reformed, therefore, in addition to requiring the approval of the partners or shareholders to proceed with this measure, it must comply with what the by-laws and the law establish for the approval and formalization of by-laws reforms[2]. Additionally, the reimbursement of contributions refers to the repayment to associates of the amount of the contribution they previously made to the company. This amount will be calculated depending on the share capital reduction that is effectively enacted and in proportion to each associate’s participation, if something different has not been established in the by-laws[3].

In addition to the above, the Superintendence of Corporations has established in its Basic Legal Memorandum that, in accordance with article 145 of the Colombian Commercial Code, it authorizes, in a general manner, the share capital reduction of all companies that are subject to its inspection, surveillance or control and that are included in one of the following circumstances: (i) the company does not have external liabilities, (ii) the company does have external liabilities, but once the capital reduction is made, the company assets are at least double the external liabilities, or (iii) the creditors expressly accept in writing the share capital reduction, regardless of the company’s assets amount. However, in the event that the above is not met, the company must submit in writing a special request for the superintendence to authorize the intended share capital reduction with reimbursement of contributions. Additionally, in the event that the external liabilities of the company stems from social benefits, the competent labor authority must give its approval.

The reimbursement of contributions to interested partners or shareholders can be made through the delivery of money or goods. However, the way in which this reimbursement will be made and the appraisal of the assets that will be delivered to the associates, must be discussed and approved by the highest social body (shareholders’ assembly or meeting of partners), since there is no legal provision that indicates the procedure to be followed.

Finally, it is important to bear in mind that the company’s legal representative and statutory auditor (if appointed), are liable for any damages caused to the associates that do not participate in the reimbursement, or to the company itself, with the execution of this operation. Likewise, they must ensure that the pursuit of the company’s purpose is not adversely affected by the realization of this reimbursement operation.

For more information, contact us.


[1] Official Letter 220-53255 of 2001, Colombian Superintendence of Corporations.

[2] Article 147, Colombian Commercial Code.

[3] Article 144, Colombian Commercial Code.