Over the last years, Colombia has become a core of business for Latin America thanks to its financial recovery and rapid social growth. Whether you are interested in opening a branch in Colombia or opening a brand-new business, here are some basics that would be very helpful to establish your company in Colombia.
When deciding to form a new company in Colombia there are five different types of legal entity to be considered. Of these, the three main legal company structures are:
- Capital Based: As its name suggests this type of company is one based on predominantly on capital and includesCorporations (S.A) and Simplified Stock Corporations (S.A.S).
- Person Based: Entities established under this format are known as Limited Liability Companies and the personal characteristics of the founding partners forms the central basis of the agreement. For this reason it is not always easy to allow new partners to join the company.
- Branch Office: A foreign company must establish a new branch office in Colombia when it engages in permanent activities to formally represent its local business. A branch office does not qualify as a separate legal entity and the foreign company remains directly liable for all local activities.
In order to actually establish any new company in Colombia your lawyer must prepare a set of specific documents which will allow the creation of articles of incorporation for your new business. The necessary information is as follows:
- Power of Attorney: Your lawyer will need this in order to manage your legal affairs in Colombia.
- Identification: The legal representatives for the new company will need to provide copies of their passports along with letters confirming their position in the new company.
- Minutes of Meeting: If a shareholder of the company is a foreign entity that entity must provide the minutes of the board meeting confirming the necessity to establish a new company in Colombia including the following information:
- Corporate name
- Address in Colombia
- List of company activities
- Assigned equity
- Division of equity shares
- Board of directors information – If the board meeting is not held in Colombia it must be translated into Spanish and apostilled.
- Good Will Standing Certificate: The foreign company that will act as a shareholder of the newly formed company in Colombia will need to provide its articles of incorporation and proof of its existence.
Your lawyer will file the request for registration of the new company before the local Chamber of Commerce. A standard fee of between US$17-873 is charged by the Chamber for the registration depending on the size of the company equity investment, as well as a contribution of 0.7% of the company’s equity.
After this has been done it will be necessary for a local company bank account to be established, following which the Tax Registration Number (RUT) must be obtained from the National Tax Authority (DIAN). The last step to be taken will be the payment of the company’s equity and the registration of this investment made at the Colombian Central Bank (Banco de la República).
Biz Latin Hub (www.bizlatinhub.com) is able to assist you during this process to ensure a smooth adaptation into Colombian business background. Don’t hesitate to contact us for further information.