[ESTABLISHING A BUSINESS ENTITY IN COLOMBIA] 117
The capital once again is divided into the same three categories mentioned above. The capital will be conformed with the contributions of the limited partners or with those of these joined simultaneously with those from the managing partners. Upon incorporation of a corporation, at least 50% of the authorized capital must be subscribed for, and at least one-third of the value of the issued shares must be paid. The remainder must be paid within a one-year period. Regarding the profits and distribution of dividends the same process mentioned above applies. Specifically, corporate profits are distributed among the managing partners and limited liability partners in the manner stipulated in the contract (incorporation document). Where not specified, profits are distributed among the limited partners in proportion to their shares, but the benefit of the managing partners must be met first. (iii) Limited Liability Company Under Colombian provisions, the establishment of a Limited Liability Company will require the assignment of the following elements: (i) the purpose of the company which in Colombia is known as “objeto social;” (ii) the domicile of the company; (iii) The term of duration and the causes for termination; (iv) Capital Contributions (v) Corporate bodies: Legal Representative and Board of Directors (not mandatory) (vi) Designation of an auditor, if the assets or income of the company exceed certain limits established by law (i.e., if the gross assets of the company at the end of the preceding year exceed or are equal to 5,000 minimum legal wages, or if its gross income in the preceding year exceeds or is equal to 3,000 minimum legal wages). The capital once again is divided into the same three categories mentioned above. The
capital of the company is divided into shares of equal value. The capital of the company must be entirely paid-in at the moment of incorporation and every time a capitalization takes place the corresponding article of the bylaws must be amended. Such amendment must be formalized by means of a public deed and the amount of capitalization must be paid upon the formalization of the decision. Partners are entitled to transfer their shares, but all other partners have a statutory right of first refusal proportional to their existing participation, unless the bylaws provide otherwise. In other words, the partners shall have the preferential right to acquire the outstanding shares of the company on a first basis, whenever the other partners decide to sell their stake. As a general rule, the liability of the partners is limited to the amount of their capital contribution, however Colombian labor provisions establish that, the partners will be jointly liable for the employment obligations towards the company’s employees; and tax laws provide that partners of a limited liability company are jointly liable for all the income tax obligations of the company. Regarding the profits and distribution of dividends the same rules mentioned for Corporations will apply. (iv) Simplified Shareholding Company (S.A.S: Sociedad por Acciones Simplificadas): Under Colombian provisions, the establishment of a Simplified Shareholding Company will require the assignment of the following elements: (i) the purpose of the company which in Colombia is known as “objeto social”, however it may have an indeterminate object; (ii) the domicile of the company; (iii) The term of duration which in this case may be indefinite, and the causes for
ILN Corporate Group – Establishing a Business Entity Series
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