Colombia, the 3rd largest economy in South America and the 2nd most biodiverse planet worldwide, is very understandably becoming more and more of an attractive playground for potential investors. Between 2011 and 2016, Europe invested close to an estimated USD$30 billion in Colombian, with almost $5 billion in 2016 alone. What’s more is that Europe only represented 34% of Foreign Direct Investment (FDI) in Colombia during this period, displaying exactly the widespread nature of global interest in Colombia. The industries of particular prominence in Colombia are in textiles, oil, mining, manufacturing, and agriculture. Given the recent change in Canadian laws regarding cannabis, the export industry for Medicinal Marijuana could also see a sharp pick up in growth in the coming months/years.
Form a Colombian S.A.S.
There are several different types of companies/legal entities in Colombia and the type of company must be chosen according to the needs of the business and the legal framework which fits the business model. However, one of the most common types of Colombian corporation is a form of limited liability company – also known as S.A.S. legal entity (Sociedad por Acciones Simplificadas). This type of company is a simplified share company with one or more shareholders (individuals or companies) who are only liable for the amount of capital they have invested in the company.
Forming a Colombian S.A.S can at times be a complex process but provided you have the advice and support from a local legal partner and that you comply with the necessary requirements outlined below, the incorporation steps are relatively straightforward.
Continue reading for answers to FAQs about forming an S.A.S in Colombia.
Colombian Company Formation (S.A.S) Fact Sheet
Is foreign ownership allowed?
– Yes, up to 100% foreign ownership is allowed
Can the company sponsor foreign employees?
– Yes (noting that some conditions apply)
Are there capital controls?
Is there a minimum share capital?
What is the minimum required number of shareholders?
– There must be at least (1) shareholder
Are a fiscal address and legal representation required?
– Yes, both are required
Company Incorporation Steps (S.A.S)
- Draft and Sign a Power of Attorney (POA)
- Create the company bylaws
- Register the company with local authorities
- Obtain a company ID number (RUT) and tax ID number (NIT)
- Open a corporate bank account
- Deposit the required capital to activate the corporate bank account
Company Share Capital?
The company share capital is the amount of capital (i.e investment in the company) that is subscribed by the shareholders during the initial stages of the company incorporation. The share capital is relevant in a variety of situations; when applying for loans (banks of financial institutions), working in joint ventures or bidding on government contracts. The value of the share capital can impact the ability to be granted loans; a corporation with a high share capital will have a greater chance of being granted a loan than a company with a low share capital. The share capital is able to be increased or decreased at any point, but the share capital should reflect the company’s size and business activities.
In most cases, companies begin with a share capital of approx. USD$400. However, if the company wishes to sponsor foreign employees’ visas (either a working visa or an investment visa), this minimum share is significantly higher.
Legal Compliance in Colombia
Appointment of the Legal Representative
The Company Legal Representative acts as the “legal face” of the company and is the signatory for all company operational activities; in-turn, they have the full legal responsibility to ensure the good operation and standing of the business. In being appointed, the individual assumes specific legal liabilities and hence it is a position that is to be taken seriously. The Company Legal Representative must be either a Colombian national or a foreigner who legally resides in Colombia (i.e with the legal right to live and work in the country).
Fiscal/Legal address – ‘Domicilio Fiscal’
A fiscal address (called ‘domicilio fiscal’ in Colombia) is a minimum statutory requirement for all legal entities in Colombia and is registered with the Colombian tax authorities (DIAN). This will be the registered address of the company, and as such, will be used for all official communication such as mailing and tax purposes.
Monthly Tax Declarations – Legal Compliance
All companies in Colombia, regardless of their size or activities, must declare their taxes with the national tax authority (DIAN), on a monthly and annual basis. Foreign companies often opt to work with a local partner who can assist with tax filing and accounting requirements.
Corporate Bank Account in Colombia
The bank with which you open your corporate bank account will depend on your banking requirements and necessities. Many banks will require a deposit to be made in order to active the bank account – this amount will vary depending on the specific financial institution.
Next Steps for your Incorporation
Colombia is an incredible place to form a company and remain assured that your investment is being made in a growing, increasingly diverse economy. From the varied terrain and abundance in natural resources to the increasing involvement in international trade, this country in northern South America represents just some of the opportunities that the Latin American region has to offer.
So there you have it: everything you need to know about the steps in incorporating your company in Colombia.
If you have any questions please do not hesitate to get in touch with our CEO, Mr. Craig Dempsey at [email protected] or visit our website to learn about our range of tailored business services to help with your business incorporation.
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