Starting a business in Colombia requires careful consideration of the legal environment, and your enterprise's compass will be determined by the legal structure you choose. This guide shows the six notable legal frameworks in Colombia, each of which has a unique impact on the development of businesses and reflects the ever-changing dynamics of the Colombian market. Each organization meets a different need, from Simplified Stock Company (S.A.S.) with its streamlined efficiency to Stock Company or Corporation (S.A.) with its traditional solidity.
The SAS company structure was introduced into Colombian legislation in December of 2008 to simplify the process of setting up a company. It is now the highly preferred company structure in Colombia because they are very easy to incorporate and quite flexible, which has led to over 95% of companies incorporated in recent years with the SAS structure.
Key points:
An SA can be advantageous in situations where there are a large number of shareholders. In contrast to the Simplified Stock Company, the key features of an SA are:
The LTDA’s are formed by partners as opposed to shareholders, but they do share some similarities with SA’s. Key features include:
Society in Comandita Simple is specified through a balance of limited and general partners. This legal framework promotes risk sharing and division of labor, which makes it a good option for businesses looking to pool resources and experience in the Colombian business environment. Key features include:
A dynamic combination of shared management and limited liability is offered by Sociedad en Comandita por Acciones. This legal framework is a creative option for joint ventures in Colombia since it is ideal for companies looking for a balance between flexibility and efficiency.
Branch offices are a possibility for companies headquartered in foreign countries, and they have been attractive options to foreign investors in mining and hydrocarbons because of foreign exchange benefits within those sectors. From a purely legal point of view, Colombian law views the branch office of a foreign company and its parent company as the same legal entity.
There are a number of unique scenarios that could apply to any particular legal structure, so your company strategy and needs will determine the most appropriate option for you. A local partner with expertise in this area can help you identify tax saving measures in advance, so you would be well-advised to seek help and ensure you don’t make an expensive mistake that has to be corrected down the road, especially after you’ve already lost tens of thousands of dollars in unnecessary taxes.
As Latin America market specialist, Ongresso has the expertise to assist you with your expansion efforts based on your unique needs. Deciding on the right market entry strategy and legal representation is a complex process with many unknown and inherent risks. We will simplify this process by reducing complexity, saving you countless hours of researching local regulations and norms, and giving you peace of mind so you can focus on your core business. Contact us via email at contact@ongresso.com to determine which strategy and legal structure is optimal for your business.