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.

Time Frame for Responding to Requests for Information are Back to Normal

Article 23 of the Colombian Constitution recognizes citizens’ right to submit requests and petitions before the authorities, in order to obtain information on situations of general and/or particular interest. In addition, the Colombian Code of Administrative Procedure establishes that it is possible for citizens to also file petitions before private organizations when it is necessary to guarantee their fundamental rights. These requests must be answered within the term that the law indicates. 

In this regard, bear in mind that within the framework of the health emergency caused by COVID-19, Legislative Decree 491 of 2020 was issued, which established an extension of said terms. Thus, public and private entities that received petitions had a longer period to give a substantive response to the requests that were submitted to them. However, on May 17, through Law 2207 of 2022, this measure was repealed, so terms to respond to the different requests are once again those indicated in article 14 of the Colombian Code of Administrative Procedure, namely:

  1. For documents and information requests, entities will have ten (10) business days to respond counted from the receipt of the request. 
  2. For requests addressed to the authorities on consultations regarding issues that are in their charge, thirty (30) business days, counted from the receipt of the request.
  3. Other requests that are not within any of the aforementioned cases must be resolved within fifteen (15) business days.

For more information, 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.

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: Non-Compliance with the “Ongoing Business Hypothesis” as a Cause for Dissolution

Law 2069 of 2020 expressly repealed the ground for dissolution for losses, according to which, companies had to be dissolved when losses decreased their assets below 50% of their share capital. In its place, this law establishes that companies will enter into dissolution for non-compliance with the principle of ongoing business hypothesis. Below, we answer the most frequently asked questions.

1.What is the ongoing business hypothesis?

It is understood as the intention and capacity that a company has to continue with its operations in the foreseeable future. Thus, an important consideration to take into account in the analysis of compliance with this hypothesis is if the company has the necessary resources to fulfill its obligations when they are enforceable[1]. In accordance with the above, in the event that the company’s financial, operational or legal information does not allow this continuity in business to be inferred, it will be understood that this cause for dissolution has been fulfilled, since the company has no real alternatives other than termination of its operations and liquidation[2].

2. When should compliance with this hypothesis be verified?

Decree 854 of 2021 establishes that verification of compliance with the ongoing business hypothesis must be done at the time of preparation of the general-purpose financial statements at the end of each financial year. However, during the accounting year, the company’s directors must monitor the company’s financial information to determine if there is any loss of equity or risks of insolvency.

3. What information should be considered when verifying this compliance?

Decree 854 establishes that, for the verification of compliance with the ongoing business hypothesis by the company’s directors, all information and projections about the company’s future must be considered. This information must cover, at least, the twelve (12) months following the end of the reporting period. Thus, it is presumed that in cases where a company has a history of profitable operations and easy access to financial resources, it complies with the ongoing business hypothesis and a detailed analysis is not required.

Additionally, Decree 1378 of 2021 establishes that, for the verification of compliance with this hypothesis, directors must take into account all the indicators that are applicable to the company’s business model and the sector in which the corporate purpose is pursued and, if applicable, the following:

  • In the event that the company’s total assets are less than $0, a loss of equity is to be understood.
  • Likewise, there is a loss of equity when negative profits are obtained in the results of two consecutive corporate years.
  • There will be a risk of insolvency when during two consecutive corporate years a result of less than 1.0 is obtained from dividing current assets by current liabilities for each year.

However, it is important to bear in mind that these indicators are intended to facilitate the monitoring of the company’s situation but the fact that there is a loss of equity and / or risk of insolvency does not necessarily imply that the company must be dissolved and liquidated. In these cases, the company’s directors must inform the highest company body of the possible breach of the ongoing business hypothesis, for it to determine if it is possible to continue with the company’s business or whether, on the contrary, it should be dissolved.

4. What should directors do if they find that the hypothesis is not met?

In cases in which directors reasonably consider that the company does not comply with the ongoing business hypothesis and that it is therefore in grounds for dissolution, or when the analysis of the financial statements and projections of the company indicates losses of equity and risks of insolvency, as explained in the previous section, they:  (i) must not initiate new operations other than those of the ordinary course of the company’s business and, (ii) must immediately convene the general assembly of shareholders or partners’ meeting to inform them of this situation and to let them adopt the decision to dissolve and liquidate the company or continue operating the business. This is because the ongoing business hypothesis allows the company´s associates to carry out an analysis of the company’s situation according to their own criteria and taking into account the company’s particularities, since it is not a strict and objective cause that necessarily results in dissolution. If the directors do not comply with these obligations, they will be jointly and severally liable for the damages caused to the associates or to third parties (Article 4, law 2069 of 2020).

5. Is this cause of dissolution in force?

In order to support companies and reduce the effects generated by COVID-19, this cause of dissolution was temporarily suspended. However, this period of temporary suspension expired on April 16, 2022 so that, from this date, it again came into force.

In case you have doubts regarding this or any other issue affecting your company, please contact us.

[1] Annex 5 of Decree 2420 of 2015.

[2] Opinion 220-047475 of 2021, Colombian Superintendence of Corporations.

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.

New Regulation for Work-From-Home Agreements in Colombia

On April 27, through Decree 649 of 2022, the Colombian Ministry of Labor regulated the procedure for authorizing work from home, understood as the occasional, temporary, and exceptional authorization given by employers to workers to perform their work from their home. This authorization is granted based on extraordinary circumstances that are expected to be overcome given time, which allows employers to accept that workers can perform their functions in a different location from their usual place of work, without this implying a modification or affectation to the rights and guarantees of workers or to the working conditions agreed upon at the beginning of the labor relationship. Thus, we explain bellow what the procedure for authorization is, as established in this new decree.

The authorization to work from home may be requested by workers, who must inform in writing, either by physical or digital means, of the occurrence of exceptional circumstances, attaching the evidence that accredits their occurrence, and asking for the authorization to carry out their duties from home. However, the mere submission of the application does not imply that employers must accept it, since it is not the worker’s right. On the other hand, the authorization to work from home may be implemented by employers regarding one or more of their workers because of the occurrence of these extraordinary situations, without the need of a prior request. In both cases, the decision to enable work from home must be made in writing, by means of a notice sent to workers, physically or digitally, in which they are informed of: (i) the occasional and exceptional situation that allows for the authorization of working from home to be granted; (ii) the term of this authorization, which may be a maximum of six (6) months, unless the circumstances that gave rise to the authorization persist, in which case it will remain in force until such circumstances disappear[1]; (iii) the duties that the worker must perform during the authorization; (iv) the means of communication through which employers and workers may report any updates, (v) the channels for complaints from workers so they may  submit their concerns or claims of infringement of their right to disconnect from work or of workplace harassment; (vi) the physical address from which workers will perform their duties, (vii) if there is an agreement for workers to use their own equipment for the performance of their duties, and if compensation will be paid or not, otherwise in case of a lack of agreement, it must be supplied by employers, indicating all the equipment and tools that will be delivered along with the liability regarding their custody and the procedure for the delivery and return of said tools, and (ix) the computer security measures workers must comply with. In addition, this decree also establishes new obligations, prior to the authorization for working from home, that employers must comply with, such as: (i) filling out the form provided by the workers’ compensation administrators (ARL, by its Spanish acronym), informing them about the authorization to work from home, the period for which the authorization will be granted and the physical address from which  workers will perform their tasks, (ii) having the necessary procedure to guarantee the right to disconnection from work, and (iii) training workers to ensure the proper use of information and communication technologies.

In case of receiving a request to authorize work from home, employers must respond in writing within a period not exceeding five (5) days and, take into account within the criteria to grant the authorization, in addition to the existence of exceptional circumstances, the possibility that workers’ duties can be performed outside the usual place of work without affecting the adequate provision of the service or workers’ productivity and whether the company has the necessary tools. Once the authorization to work from home is granted, employers must include work from home within their methodology to identify, evaluate, assess and control dangers and risks to workers and adopt all the necessary actions in the Annual Work Plan of the Occupational Health and Safety Management System (SG-SST, by its Spanish acronym). Likewise, employers must take the corresponding actions to protect and guarantee human dignity and workers’ rights.  When the period of authorization to work from home expires or the conditions that gave rise to this authorization are overcome, employers must inform workers, immediately, about the expiration and their return to the usual place of work.

Finally, bear in mind that the authorization to work from home includes the possibility of working from abroad with the prior authorization of the employer, who must report this situation to the ARL and take all necessary measures to ensure that workers are enrolled and protected by the Social Security System of Colombia. Additionally, there is also the possibility of implementing work from home under the alternation model, that is, employers may determine that some days of the week workers perform their duties in person at the usual place of work and other days from home.

In case you have doubts regarding these obligations or any labor issue, do not hesitate to contact us so that we can provide you with the counsel you need.

[1] Law 2088 of 2021, article 7.

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.