The most common structures to conduct business in Colombia are: (i) the simplified stock company (S.A.S.); (ii) the corporation (sociedad anónima); iii) the limited liability company (Ltda); and iv) the branch of a foreign company.

A summary of the main characteristics of the most commonly used vehicles is set out below.

Simplified Stock Company or “S.A.S.”

A S.A.S. requires at least one shareholder and is incorporated by private document and registered at the local trade register. This is unless assets are being contributed at the time of incorporation. In this case a public deed is required for transfer (eg, real estate). The S.A.S. is a modern and flexible structure, providing the parties with greater freedom to agree the rights of, and restrictions on, shareholders. It is used for small single owner companies, multinational subsidiaries, family companies and joint ventures, among others.

The corporate purpose may be broadly defined and the term of the corporation can be indefinite. Liability is limited to the capital contribution in the absence of fraud or abuse.

Capital is represented in shares. The transfer of shares is carried out by endorsing the share certificates or issuing a letter of instructions and registering the new shareholder in the company’s stock ledger. Share issues and transfers may be subject to a right of first refusal in favour of the company and the shareholders, if expressly set out in the by-laws. A board of directors is optional but a statutory auditor must be appointed when certain thresholds are met.

Corporation or “S.A.”

An S.A. corporation requires a minimum of five shareholders. None of the shareholders may hold 95% or more of the outstanding capital of the company. It is incorporated by public deed granted before a Colombian Public Notary and registered at the local trade register.

Corporations must define the corporate purpose and a fixed term in the by-laws. A board of directors and statutory auditor is compulsory. This is the traditional type of stock corporation and is used for listed companies and banks, among others.

Capital is represented in shares. Liability is limited to the capital contribution in the absence of fraud or abuse. The transfer of a corporation’s shares is carried out by endorsing the share certificates or issuing a letter of instructions and registering the new shareholder in the company’s stock ledger. The transfer may be subject to a right of first refusal in favour of the company and the shareholders, if agreed in the by-laws. There is less freedom to agree different rules on the company structure, meetings, dividend distribution, reserves etc as these are regulated under the Colombian Commercial Code.

Limited Liability Company (Ltda)

This type of company must have at least two and no more than 25 partners. It is incorporated by public deed granted before a Colombian Public Notary and has to be registered with the local trade register.

Limited liability companies must define the corporate purpose and a fixed term in the by-laws. This type of company has fallen into disuse since the simplified stock company became available in 2008. However, it is still used in specific industries and sectors where this structure is required.

Capital is represented in quotas, which can only be transferred on exercise of a mandatory first right of refusal, amendment of the by-laws and registration in the public register. Liability for tax and employment matters can extend to those holding quotas in these types of companies. There is less freedom to agree different rules on the company meetings, dividend distribution, reserves etc as these are regulated under the Colombian Commercial Code. A board of directors is optional but a statutory auditor must be appointed when certain thresholds are met.

Branch of a Foreign Company

Branches are part of the same legal entity abroad (or home office) that sets up the branch so there is no limitation of liability. The board resolutions of the home office are incorporated into a public deed which is granted by a Colombian Public Notary and registered at the local trade register.

Corporate purpose will be narrowly defined and be within the home office’s corporate purpose. The corporate purpose must be defined. Branches are frequently used in the oil and gas sector and for public procurement.

Colombian legislation does not establish mandatory governance codes or equivalent for privately owned companies or groups of companies.

Companies with publicly traded shares must comply with the following corporate governance requirements.

Boards of directors must have between five and ten members. At least 25% of the members must be independent, which means that they cannot be:

• employees or officers of the company or of any of its affiliates, subsidiaries or controlling companies, including those individuals who have had this capacity throughout the year immediately preceding the appointment, except in the case of the re-election of an independent person;
• shareholders who directly or by means of an agreement direct, guide or control the majority of the voting rights of the entity or who determine the majority composition of the administrative, management or control bodies of the entity;
• a partner or employee of associations or companies that provide advisory or consulting services to the issuer or to the companies that belong to the same economic group of which it is part, when the income for the concept represents 20% or more of their operational income;
• an employee or director of a foundation, association or society that receives significant donations from the issuer (significant donations are considered to be those that represent more than 20% of the total donations received by the respective institution);

• an administrator of an entity in whose board of directors a legal representative of the issuer participates; and
• a person who receives any remuneration other than fees from the company as a member of the board of directors, the audit committee or any other committee created by the board of directors.

When a plurality of shareholders representing at least 5% of the subscribed shares submit proposals to the board of directors of the registered companies, these bodies must consider them and respond in writing to those who have made them, clearly stating the reasons for the decisions.

These companies will establish an audit committee, which will be composed of at least three members of the board of directors, including all independent members. The statutory auditor of the company will be present in this committee and will be able to speak but will not be able to vote. The committee will be in charge of supervising compliance with the internal audit programme and will ensure that the preparation, presentation and disclosure of financial information complies with the provisions of the law.

Listed companies must submit an annual and a quarterly report on environmental, social and governance (ESG) matters to the National Registry of Securities and Issuers (RNVE).

Throughout 2023 and 2024 there were several hot topics in corporate governance that had to be considered. These were aimed at improving sustainability, transparency and responsibility within companies.

ESG

Even though only listed companies must comply with mandatory ESG reporting, the implementation of sustainable policies has become crucial for all types of companies for a number of reasons, including:

• to enhance brand and customer loyalty generating a competitive advantage;
• to attract and retain talent as employees choose to work in a workplace that aligns with their values and has a supportive environment;
• cost and operational efficiencies: policies that reduce carbon footprint and improve the supply chain can lead to a cost saving, making companies more efficient;
• risk management: reputational and regulatory risk can be controlled by the implementation of policies that address issues that impact stakeholders; and
• attraction of investment: more robust governance and investor protection is becoming a prerequisite for outside investment.

In 2023, the Superintendence of Companies introduced non-mandatory regulations on reporting for unlisted companies that meet certain asset and revenue thresholds and operate in the construction, mining and other sectors. It also issued a new voluntary Sustainability Report for activities in 2024. Additionally, in 2025 it issued regulations creating a new format No 8 to report on sustainability, corporate governance and other legal and administrative matters in companies. These matters were previously reported by filing a business practices report, which has been eliminated. The filing of the sustainability report under the new format is voluntary in 2025 but it is likely to become mandatory in the near future.

Conflicts of Interest

According to Colombian regulations introduced in early 2024, when a legal representative or an administrator, such as a board member, may have a conflict of interest, all relevant information must be disclosed to the shareholders so that they can decide whether to waive the conflict, thereby releasing the legal representative from responsibility, and whether a general authorisation can be granted.

In December 2024, a draft bill was presented to the Colombian legislature to update corporate regulations. It introduced new rules on administrators’ duties and a broader definition for conflicts of interest, which will include events where the administrator has an economic interest in the operation. which could impair their judgment and independence.

The liability regime for administrators could now be extended to shareholders with personal interests if the company suffers damage. Administrators may also face compensatory damages for bad faith in requesting authorisations.

Liability Regime of Administrators

The liability regime of administrators applies to legal representatives, liquidators, members of boards of directors and any individual who exercises these duties in line with the by-laws of the company because they are considered corporate administrators. The business judgement rule was formally recognised in Colombian regulations in Decree No 46 of 2024 (see 4.6 Legal Duties of Directors/Officers).

Other hot topics are:

• compliance (which includes the SAGRILAFT and transparency programmes);
• diversity and inclusion policies; and
• digital transformation and how technology can be used to improve efficiency.

It is not currently compulsory for unlisted companies to report on ESG issues. However, the Superintendence of Companies issued External Circular 100-000010 on 21 November 2023 (the “Circular”) adding a further Chapter XV on ESG reporting to its Basic Legal Circular.

This Chapter establishes the recommendations to be considered by companies when preparing the sustainability report. The Superintendence of Companies has not yet established dates for when this information has to be filed. However, it issued guidelines in March 2025 for the voluntary filing of a Sustainability Report for the fiscal year 2024. The recommendations are aimed at companies that meet certain thresholds, ie, companies that are subject to the permanent supervision or control of the Superintendence of Corporations and that have reached total income or assets equal to or greater than 40,000 minimum wages, as of December 31 of the immediately preceding year and companies in the mining, manufacturing, construction, tourism and new technologies with revenue of 30,000 minimum wages. Reports must be based on international standards.

The legal representatives of the company (usually called general managers) are responsible for the day-to-day affairs of the business. As legal representatives they are able to legally bind the entity with third parties.

Board of Directors

Board members do not have individual authority to bind the company but instead form a consultative body for planning, setting long-term goals, managing risks and supervising the management. When a company does not have to have a board of directors the functions of the board are assumed by the shareholders’ assembly.

Shareholder’ Assembly

The shareholder’ assembly is the governing body of the company and is usually responsible for considering annual accounts prepared by the management, appointing directors and legal representatives when the company does not have a board of directors. It is also usually responsible for approving by-law amendments, setting economic guidelines for the business, starting corrective actions against the management and making decisions on the profits.

General managers must seek to improve a company’s performance and profitability and implement the strategy and vision of the company. They will hire employees, sign contracts (subject to any limitations in the by-laws) and prepare financial statements. Additionally, they are responsible for the day-to-day activities.

Boards of directors are usually involved in decisions concerning budgets, strategic decisions, review of annual accounts, share issues, approval of indebtedness, acquisition of relevant assets, appointment of management and authorisations of specific contracts.

Boards of directors are not mandatory for all types of companies in Colombia. When a board is included in the by-laws, rules for the issuance of shares, appointment of management and the issuing of authorisations to managers to enter into contracts restricted by a company’s by-laws are decisions usually reserved to this particular body.

The shareholder’ assembly adopts all other decisions, including approval of all by-law amendments, annual financial statements, appointment of officers, including the statutory auditor and considerations of conflicts of interest.

The shareholder’ assembly and the board of directors can make decisions by holding in-person or virtual meetings. Decisions can also be made by written ballots provided that all shareholders or all directors participate. In this case, the legal representative of the company must send the necessary information to allow the directors or shareholders to vote and ensure the timing and other legal provisions are met.

All decisions adopted in a meeting or by written ballot must be reflected in minutes which must be signed by the individuals authorised for this purpose or the individuals provided for in the law.

In principle, decisions of the shareholder’ assembly require the affirmative vote of the majority of the shares represented at the meeting. However, the law provides that qualified majorities apply for certain decisions and certain types of entities.

For example, simplified stock companies (S.A.S.) require a unanimous vote to modify provisions in the by-laws that: i) restrict the negotiation of issued shares; ii) require prior authorisation of the shareholders' assembly for the transfer of shares; iii) set out grounds for exclusion of shareholders; and iv) establish arbitration or amicable composition agreement for the resolution of corporate conflicts. The conversion of the company into any other type of corporate structure also requires the unanimous approval of the shareholders.

Corporations (S.A.), on the other hand, require a qualified majority for decisions such as: i) distribution of profits (at least 78% of the shares represented at the meeting); ii) issuance of shares without the pre-emptive right (70% of the shares represented at the meeting); and iii) payment of dividends in shares (80% of the shares represented at the assembly).

The board of directors may meet as agreed in the by-laws and its decisions will be made in line with the affirmative vote of the majority of its members. However, qualified majorities may be established in the by-laws.

The general managers or legal representatives of a company make business decisions following the policies established by the board of directors or by the shareholders. Under Colombian law, the general manager or other officers who are appointed as legal representatives under the by-laws, represent the company and are able to sign binding documents.

Corporations (S.A.) must have a board of directors. However, simplified stock corporations (S.A.S.) and limited liability companies (Ltdas) do not have to have a board of directors. For companies whose shares are not publicly traded, there are no legal requirements related to the structure of the board of directors, other than those set out in 4.3 Board Composition Requirements/Recommendations. The requirements for companies whose shares are publicly traded are set out in1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares. A president and a secretary are typically selected to lead and record the decisions taken in the board meetings. The appointment of independent members is not mandatory for unlisted companies. However, it is becoming more common.

The board of directors are considered administrators and form a collegiate body of the company. However, as directors, they cannot represent the company (unless they are granted a power of attorney by the legal representative). The legal representative is the officer of the company who represents it and can bind it with their signature and any delegation of authority must come from the legal representative, even if authorised by the board.

The board of directors is an advisory and collaborative body, which is empowered to order the execution or performance of certain acts or agreements. It can take particular decisions to enable the company to fulfil its corporate purpose and is usually in charge of the company’s policies.

Corporations must have a board of directors. The board must consist of at least three members with replacements specified. Directors must be individuals and cannot be companies. There are no residency or nationality requirements for members.

The members of a board of directors are appointed and removed by the shareholders’ assembly. The managers (legal representatives) are appointed by the board of directors or by the shareholders’ assembly.

The appointment of directors and legal representatives of a local vehicle must be registered at the Trade Register. For these purposes, the minutes/resolutions (ie, shareholders’ or board resolution) appointing the directors and officers, must be filed with the letter of acceptance and a copy of the appointed person’s identification document.

The appointment of the officers will be effective upon their registration at the Trade Register. The members of the board of directors can act as officers if this is accepted. They can do so even if their appointment has not been registered with the Trade Register if their decisions do not require public registration. Legal representatives must obtain a personal tax ID and update the company’s tax ID information.

The appointment of independent members is not mandatory for unlisted companies. However, it is becoming more common. Provision for this can be made in the company’s by-laws. Directors and officers should abstain from engaging directly or indirectly in their own interests or the interests of third parties in activities involving competition with the company or acts involving a conflict of interest, unless prior written authorisation has been provided by the shareholders’ assembly and is therefore not harmful to the company.

The law lists the duties that apply to administrators which include:

• making all efforts to adequately develop the corporate purpose;
• ensuring that the laws, by-laws and duties are strictly complied with;
• ensuring that the instructions of the statutory auditor are carried out; and
• confidential commercial and industrial information is protected.

Administrators are required to act in good faith and with due care and loyalty. They are also required to meet the standard of a good businessman. There is a presumption that in making a business decision, the directors of a company acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.

However, corporate administrators enjoy full autonomy when making business decisions and are protected from being held personally liable as long as the decisions do not contravene legal and statutory provisions. This autonomy is commonly known as the business judgement rule.

A company is bound by the acts of officers to the extent that these fall within the powers granted to them under the by-laws of the company and provided that they fall within the corporate purpose of the company.

Directors must exercise their duties in good faith, with loyalty and with the diligence of a good businessman. They will act in the interests of the company and take the interests of shareholders into account. Directors will be jointly and unlimitedly liable for any damage they may cause to the company, its shareholders or to third parties because of fraud or negligence.

The mechanism established by law for directors to repair the damage to the company is known as the company responsibility action (accion social de responsabilidad). This is valid in the cases where directors may have caused damage to the company, the shareholders or to third parties, in the performance of their duties because of fault or fraud. This action will be initiated by the company, after a decision of the shareholders’ assembly or the partners’ meeting.

When the shareholders’ assembly has decided to initiate this action but it has not started it within the following three months, it may be initiated by any director, the statutory auditor or any of the shareholders in the best interest of the company.

Creditors representing at least 50% of the company’s external liabilities may also initiate the action as long as the company’s assets are insufficient to satisfy their claims.

The company’s by-laws may establish other types of sanctions for directors who fail to perform their duties. It is not possible to absolve or limit the liability of the directors. Any clause that goes against this provision is considered unwritten. D&O insurance can be arranged to cover certain risks.

Any decision related to the remuneration of directors and officers must be approved by the shareholders’ assembly or the company’s board, as applicable. A legal representative or director must disclose any conflict of interest in matters involving remuneration, fees or other benefits.

Failure to do so means that the director or officer could be investigated for not disclosing the conflict of interest and the decision on the salary could be void. The director or officer must also indemnify against any damage caused.

According to Article 446 of the Commercial Code, the board of directors must prepare a report including details of expenditures for salaries, fees, representation expenses, bonuses, benefits in cash and in kind, transportation expenses and any other type of remuneration received by each of the company’s officers. This report is presented at the shareholders’ assembly.

Shareholders are the “owners” of the company. Their main role is to make a capital contribution to the company (either in kind or in cash) in return for a participation percentage in the company (shares or quotas), which will allow the entity to start its productive activity, in order to obtain profits that allow a subsequent distribution of dividends to the shareholders.

The term for the payment of capital contributions and the liability of the shareholders/partners for each type of entity are as follows.

Simplified Stock Corporations (S.A.S.)

The responsibility of the shareholders is limited to the amount of their contributions, except in cases of fraud or abuse by the company which causes detriment to third parties. The capital of the company must be paid within the two years following its incorporation.

Corporations (S.A.)

At incorporation, the shareholders must subscribe at least 50% of the authorised capital and pay at least one-third of the subscribed capital. The remaining two-thirds must be paid within a year of incorporation. Liability is limited to the capital contribution in the absence of fraud or abuse.

Limited Liability Companies (Ltdas)

The partners’ responsibility is limited to the amount of the capital contribution, which must be paid in full when the company is incorporated and on any additional increase, partners are not liable for the payment of any debt, except for tax obligations or labour liabilities, for which they are severally and jointly liable with the company and share capital that has not been fully paid.

Branches of Foreign Companies

Assigned capital must be fully paid. Any increase requires authorisation of the home office’s competent corporate body and registration in the Trade Register. Supplementary investment to assigned capital does not require any formalities and can generally be made in cash from abroad.

A branch does not have a separate legal personality to that of its home office. The home office is liable for the assets and liabilities of the branch in Colombia. The home office and the branch are jointly and severally liable for all business conducted in Colombia through the branch, including the tax and corporate obligations of the branch, without limitation.

In addition, the shareholders are in charge of approving by-law amendments, setting economic guidelines for the business and policies for the management of the company, starting corrective actions against the management and making decisions on the profits. These decisions are usually made following the quorum set out in the law or the by-laws for these matters.

Shareholders do not generally hold a managerial position solely because of their status as shareholders. However, they can be appointed to management positions as there are no legal provisions prohibiting this.

Apart from cases of legal representation, the administrators and employees of the company may not represent shares, other than their own, at the meetings of the board of partners or the shareholders’ assembly of corporations or limited liability companies, while they are in office, nor may they substitute the powers conferred upon them. They may also not vote on the balance sheets and accounts at the end of the fiscal year or on the liquidation accounts.

The shareholders or partners must hold an annual meeting within the term set out in the by-laws. Where no provision is made, the meeting must be held within the first three months of each calendar year. The matters to be considered at the annual meeting include the:

• appointment of directors, officers and statutory auditor;
• approval of the annual management report;
• approval of the statutory auditor’s opinion on the annual financial statements;
• approval of the annual financial statements; and
• approval of the project for the distribution of profits.

The company responsibility action (acción individual de responsabilidad) may be initiated when acts of the administrators (members of the board of directors, officers) caused specific damage to third parties or to a specific shareholder (and not directly to the company) by acting in the name and on behalf of the company negligently, fraudulently or in extra limitation of their functions as administrators. The damage suffered by the party by virtue of the violation of the duty of conduct must be demonstrated and the damage caused to the personal assets of the shareholder or third party affected by the actions of the administrators must be compensated for.

Companies that wish to register in the RNVE must provide a copy of their shareholder composition and give a breakdown of the beneficial owners. All issuers must disclose significant changes to the composition of the issuer’s shareholding (that is, any variation equal to or greater than 5% of the issuer’s capital) which has its origin in the purchase or sale of the capital by a person or group of persons who directly or indirectly form the same beneficial owner, in a truthful, sufficient, complete and understandable way for investors and the market in general.

Publicly traded companies listed in one or more stock exchanges also have to report information on their beneficial owners to the tax authority. Any and all individuals exceeding 5% or more of ownership/economic benefit or control over the Colombian entity must be reported.

Annual financial statements must be deposited in the Trade Register of the entity’s domicile or with the Superintendence of Companies (as applicable).

Entities permanently supervised or controlled by the Superintendence of Companies and entities that received a special request from the Superintendence of Companies must file financial statements with their notes, management’s report, statutory auditor’s opinion and minutes of the annual general meeting. If controlling companies have more than one entity in Colombia or have registered as a business group, they must also file consolidated or combined financial statements with the Superintendence of Companies.

If a business group has been registered, the companies must also file their consolidated or combined financial statements with the tax authority, according to Article 631-1 of the Tax Code.

Company by-laws are registered in the Trade Register’s office and are public. Corporate governance arrangements are not generally public for private companies. However, this is not so for listed companies where there is an obligation to disclose a report to investors, which should contain, among other things:

• an analysis of the corporate governance of the entity and a description of the management structure of the entity;
• compensation schemes of directors and officers;
• the composition of the board of directors and officers and backgrounds of the directors and officers;
• quorums of the meetings;
• management of conflicts of interest;
• statutory auditor’s fees; and
• a description of the committees established to control internal audit processes and equity treatment.

Companies that are supervised or controlled by the Superintendence of Companies can sign a Sustainability Report, which includes information on corporate practices and certain corporate governance matters. This new Sustainability Report option was introduced earlier in 2025 and is expected to become mandatory in the future.

The following filings are required and are also publicly available.

• Renewal of the commercial registration of the entity and its commercial establishments at the Trade Register.
• Renewal of the public contracting register.
• Documents of incorporation of a company or branch and any amendments.
• Appointment of administrators (legal representatives, members of the board of directors, statutory auditors and liquidators).
• Appointment of general powers of attorney granted by the company.
• Dissolution and liquidation of companies.
• Capital increases and reductions.
• Mergers and demergers.
• Global transfers of assets: where the company intends to dispose of assets and liabilities that represent 50% or more of the company’s liquid assets.

Failure to register these documents makes them unenforceable against third parties.

If the entity’s assets or gross income were more than 3.000 (approximately USD975,000) and 5.000 (approximately USD1,650,000) minimum monthly wages in the previous financial year, it must appoint a statutory auditor. The statutory auditor must be a Colombian public accountant and must meet the independence provisions. The following persons cannot be appointed as statutory auditors.

• Shareholders from the company, its parent company or any of its subsidiaries.
• Employees from the parent company.
• Those who are related by marriage or kinship up to the fourth degree or first or second degree.
• Those who are administrators’ partners and executive officers such as the cashier, auditor or comptroller of the company.
• Those who hold any other position in the same company or its subsidiaries.

Elected statutory auditors may not hold any other position in the company or in its subsidiaries during the same period.

Directors and legal representatives must ensure that the accountant keeps the company books and that statutory auditors are allowed to properly perform their functions.

They must implement a money laundering, financing of terrorism and financing of proliferation of weapons of mass destruction integral risk management and self-control system when the annual total assets or gross income exceed specific thresholds according to a company’s industry.

Likewise, a transparency and business ethics programme must be adopted when certain international transactions or contracts with state bodies exceed specific thresholds.