Promoting Future Lawyers: BéndiksenLaw in the Business Trial Competition

In the business sphere, the law establishes the bases that guide the operation and management of companies. Without a firm understanding of the legal framework, they could face challenges that hinder their trajectory to success. For this reason, events such as the Student Business Trial Contest, organized by the Bogotá Chamber of Commerce, are crucial as they provide a platform where the next generation of legal and business professionals can interact, learn and grow.

This year, we are honored to announce that BéndiksenLaw’s Managing Partner, Sebastián Béndiksen, will participate as a judge in the competition that will take place on Friday, October 27. With a distinguished track record in the corporate legal field, Sebastián Béndiksen represents BéndiksenLaw’s dedication, experience and commitment to excellence and continuing education. The participation of our managing partner as a judge underlines the importance that BéndiksenLaw places on the connection between academia and professional practice. This competition is an opportunity for students to experience the practical application of legal concepts in a business setting, while receiving valuable feedback from experts in the industry.

At BéndiksenLaw, we are proud to be part of initiatives that nurture knowledge and collaboration between the legal and business sectors. Our firm is committed to providing exceptional legal solutions that meet the unique needs of each client in today’s dynamic business environment. We invite you to learn more about how BéndiksenLaw can assist you with your legal needs and how our experience and collaborative approach can provide the legal support your firm needs to thrive.

Contact us today.

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.

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.

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.

Requirement of Pre-Tax Registry to Create a Business before the Bogota Chamber of Commerce is Eliminated

One of the essential requirements to create a company, open branches of a foreign company or register non-profit entities, is the completion of a draft of the Tax Registry (RUT, by its Spanish acronym), known as “pre-RUT” and its filing before the Chamber of Commerce. This form contains all the information that allows the identification of the company and the individuals that constitute it. However, in order to simplify and expedite this process, the Bogota Chamber of Commerce and the Colombian National Tax Authority (DIAN, by its Spanish acronym) reached an agreement to eliminate this requirement.

The completion and submission of this “pre-RUT” form represented an additional process since it had to be reviewed and approved by DIAN officers, which implied a longer waiting time in the generation of the commercial registration. However, thanks to this decision to eliminate the “pre-RUT”, it is now only necessary to fill out the Business Registry Form (“RUES”, by its Spanish acronym) and submit it before the Bogota Chamber of Commerce virtually or in person, along with the other forms and documents required according to the type of company to be created. Once this application is submitted, the Tax Identification Number (NIT, by its Spanish acronym) will be obtained automatically and immediately, without any additional process being required.

It must be noted that the elimination of this requirement applies only to the Bogota Chamber of Commerce, that is, in the city of Bogotá and in the municipalities of Cundinamarca in which it has jurisdiction. However, it is expected that in the near future more Chambers of Commerce will join this decision in order to simplify this procedure throughout the country.

In case you require more information, do not hesitate to contact us.

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.