Company formation
/registration services in Colombia
Entering the Colombian market and incorporating a company in our country is not a complex procedure, in which FTC is able to assist you.
FTC is expert on Corporate Law that can guide you through the process to incorporate/register/set up a company in Colombia.
Regardless the size of the organization or industry you operate in, FTC can help you to:
- Choosing the appropriate legal entity (i.e., the Simplified joint stock corporation, Joint stock corporation, limited liability corporation, branch, among others).
- Structuring the legal entity according to Colombian domestic rules but following your business interest.
- Determining how to fund Colombian’s operations i.e., by means of either capital investment v. debt v. payment of services, according to the Colombian Tax rules.
- Carrying out the legal procedure to incorporate the legal entity before the Colombian notary and/or Chamber of Commerce, as the case may be.
- Opening the bank account before a friendly bank for foreign investment.
Please, fill out the below and will respond as soon as possible:
Basic Guidelines for the Incorporation/registration of a SAS entity in Colombia
1. How to set up a company in Colombia:
Colombian Legal framework provides 7 types of corporate vehicles to incorporate in Colombia such as: Simplified Joint Stock Corporations (S.A.S.), Joint Stock Corporations (S.A.), Limited Liability Corporations, Collective Corporations, Simple Limited Partnerships, Partnerships Limited by Shares and Branches.
However, Simplified Joint Stock Corporations (S.A.S.) are the most used legal type by foreign and national investors. This is true, because S.A.S. entities constitutes a different legal entity from its shareholders and, therefore, shareholders are not, in principle, liable for the S.A.S.’ acts and contracts.
That said, the incorporation of a S.A.S. entity shall follow a legal procedure, which is not a complex procedure to walk through in Colombia.
2. What are the minimum legal requirements for the incorporation of a S.A.S. in Colombia:
- Have at least one shareholder, who can be either a foreign or national person or individual or corporation.
- Selection of the corporate name of the entity.
- Determination of the business purpose of the entity.
- Elaboration of the Bylaws of the entity.
- Appointing a Legal Representative.
- Register a business (tax) address.
- Determination of the Authorized and subscribed capital of the entity.
- Fill out the Tax Responsibilities form before the Chamber of Commerce.
Important note:
- Prior to register the entity before the Chamber of Commerce, it should be confirmed that the selected corporate name is available.
- The founding shareholder does not need to physically be in Colombia. This is, because the incorporation can be done by an attorney, in which case a Power of Attorney would be needed.
- There is neither a minimum authorized nor a subscribed capital required for the incorporation of the S.A.S. Nevertheless, the S.A.S. can be incorporated with a law subscribed capital i.e., USD$1.000 for instance.
- Be informed that the subscribed capital is subject to Registration Tax at 0,7% at the moment of the incorporation of the S.A.S. before the Chamber of Commerce.
3. What are the documents that the shareholder(s) must provide us for the incorporation of a S.A.S. in Colombia:
If the shareholder is an Individual
- Power of Attorney.
- Copy of the passport of the individual signing the Power of Attorney.
If the shareholder is an Corporation or Legal entity
- Power of Attorney.
- Copy of the passport of the individual signing the Power of Attorney.
- Certificate of Legal Existence and Legal Representation or Certificate of Good Standing or Incumbency.
If the document is not provided in Spanish, a sworn translation into Spanish shall accompanied it.
4. Timeline for the incorporation of the S.A.S. in Colombia:
Once the documents required have been provided by the shareholder(s), the incorporation of the S.A.S. takes at least one-business-day.
5. Tax Registration / Identification Number of the S.A.S.
Generally, the Chamber of Commerce carries out the procedure before the National Taxing Authority to assign the Tax Identification Number to the S.A.S.
Sometimes the Chamber of Commerce fails to carry out said procedure, in which case the attorney shall obtain the Tax Identification Number before the National Taxing Authority. This process may take up to 5 business days.
6. Opening a Bank account
Opening a Bank account is an independent procedure from the incorporation of the S.A.S.
That said, once the S.A.S. has been successfully incorporated, opening a bank account may take up to 5 business days – although this estimate time may vary depending on each bank-.
The minimum documents required for opening a bank account are the following: (i) Certificate of Legal Existence and Legal Representation of the S.A.S., (ii) initial balance sheet of the S.A.S., (iii) copy of the ID of the Legal Representative, (iv) Shareholder certification issued by an Accountant, and (v) beneficial ownership certification.
Common FAQs when registering a Legal Entity in Colombia:
The most frequent questions by foreign investors:
Can a foreign individual or corporation be a (sole) shareholder in Colombia?
Indeed. In Colombia, foreign investment is complete allowed, without any limitation. Therefore, there is no requirement to have a Colombian shareholder of a S.A.S..
Should the Legal Representative of the S.A.S. be a Colombian National and physically located in Colombia?
The Legal Representative can be either a Colombian National or a foreign person. Further, the legal representative shall not be physically located in Colombia.
However, from the practical perspective, it is advisable to have a Legal Representative to be physically located in Colombia, in order to deal with local and private authorities.
Please, be informed that tax returns of the S.A.S. shall be filed by using the e-signature of the Legal Representative. (Note: e-signature are only provided by the National Taxing Authority, once said person has registered himself/herself before the National Taxing Authority).
What are the legal implications of being appointed as Legal Representative?
The Legal Representative shall be deemed jointly and severally liable for the S.A.S.’ acts, contracts and tax returns, as he/she is regarded as administrator/manager of the company.
After the incorporation of the S.A.S., how can the S.A.S. hire personell?
After having incorporated the company and obtaining the Tax Identification Number, the company must be registered before the Labor Risk Administrator (ARL).
Further, the company must be registered before a Family Compensation Fund.
After having complete these registration process, the company will be able to hire employees, and register them before the Health Promoting Entity (EPS) for public health coverage. In this case, each employee has the right to choose their desired health entity, to which the company has to submit the required form.
Additionally, the employees must be registered before a pension fund, which is freely chosen by the employees.
It is important to determine the type of contractual relationship, namely, (i) on site work, (ii) remote work, (iii) hybrid work, (iv) management and trust employee and (v) type of salary, among others.
Labour aspects for foreign investment.
Key information on contracting in Colombia for foreign investors.
1. Common concepts of Labour contracts.
Working day
- 47 hours per week-gradually reduces these hours to 42 hours a week for the next 4 years*.
- Up to 6 days per week with a mandatory rest day (usually Sunday).
- Daily work: 4 to 10 hours per day without having to pay overtime.
- Workers who usually work on Sundays have the right to a remunerated weekly rest day in addition to the surcharge payment.
- Colombian has approximately between 15-18 public holidays per year.
*According to Law 2101 of 2021, the maximum working day must be reduced and gradually from 48 hours to 42 hours, in five or six days per week, so that the maximum working day will be 47 hours for 2024.
Sick leave
- Up to 180 days. The first 90 days receive 75% of the contribution base income as remuneration. The remaining 90 days receive 50%.
- The EPS does not recognize the first 3 days of the compensation of the disability, as it is the responsibility of the employer. But as of day 4, it is the responsibility of the EPS (Health care).
Supplementary work
- Day shift: 6am to 9pm.
- Night shit: 9pm to 6am.
Maternity and paternity leave
- Maternity: 18 weeks paid – 126 calendar days – multiple, plus 2 additional weeks for disability. 100% of salary.
- Paternity: 2 weeks, 100% of salary.
- Claim reimbursement to EPS proportional to the quoted time.
Extra hours (overtime - +10 hours per day)
- Night shift: Surcharge of 35% hour worked
- Daytime extras: Surcharge of 25% hour worked
- Night extras: Surcharge of 35% hour worked
- Sunday-holiday extras: Surcharge of 75% hour worked
- Sunday-holiday night extras: Surcharge of 75% + 35% hour worked.
Notes
- Overtime cannot surpass 2 hours per day nor 12 hours per week, additional overtime requires permission from the labor ministry.
- The positions of “direction, trust and management” are not beneficiaries of overtime or surcharges, except the surcharge for nightshift.
2. Employment type contracts.
Renewals or Extensions
Fixed term
- Term which is less than a year: x 3 times.
- In case for the x4, the term of the contract shall be for one year.
Trial Period
Undefined
- 2 months
Fixed term
- 20% of the term, without exceeding 2 months.
Duration of the Work
- 2 months
Notice for the termination of the agreement
Undefined
- Just cause: No notice period or 15-business-day-period, depending on the cause for the termination.
- Without just cause: No notice period.
Fixed term
- For no renewal: 30 days before the expiration of the contract.
- Just cause: No notice period or 15-business-day-period, depending on the cause for the termination.
- Without just cause: No notice period.
Duration of the Work
- When the work is finished.
Severance Payment
Undefined
- 10 minimum wages: 30 salary days for first year + 20 days of salary for the following years (proportionally for each year).
- + 10 smlmv:20 salary days for first year + 15 days of salary for the following years (proportionally for each year).
Fixed term
- The value of wages for the time remaining on the contract.
Duration of the Work
- Estimated remaining wages until the work is finished.
- The payment may not be less than 15 working days.
3. Labour contract – Mandatory social security payments to be added to the salary.
Our Company formation services
FTC provides the following services in order to expand your business activities in Colombia
Entity selection
FTC would analyse and assess your needs and objectives in Colombia, in order to determine the best legal entity to be incorporated in Colombia.
Incorporation of the Legal entity in Colombia
Once item 1 has been established, FTC will carry out all the requirements needed for the incorporation of the legal entity.
Post-incorporation support
Once the legal entity is incorporated, FTC will provide you (i) Legal and Tax advisory such us the elaboration of the labour agreements, data protection policy, registration of the trademark, secretary services, transfer pricing services, among others and (ii) Legal Representation services.
