Company Formation in Colombia
Updated on Tuesday 14th March 2023
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Due to the fact that Colombia’s economy is constantly developing at a rapid speed and also due to the highly qualified workforce and good geographic position, many foreign entrepreneurs choose to set up a company in Colombia.
Our team of company formation specialists can assist you with the process, so do not hesitate to contact us for more information.
Types of legal entities in Colombia
As a foreign investor it is important to make the right decision when it comes to what kind of legal entity is suitable for your plans.
Some of the business forms available in Colombia are: the sole proprietorship companies, the simplified limited liability companies (sociedades por acciones simplificadas), the public limited companies (sociedades anonimas), partnerships, joint ventures.
What other registration options are available in Colombia?
Besides the legal entities presented above, foreign investors who want to start the process of company formation in Colombia have the possibility of setting up a branch office.
A branch office is recommended when a foreign company wants to expand on a foreign market by implementing the same business model and management strategy as the one used by the parent company.
The branch office is seen as a sub-division of the parent company, therefore, during the process of company formation in Colombia, it will be required to present the parent company’s incorporation papers.
For the purpose of the registration, the parent company must present the following documents with the Colombian registration authorities:
- the statutory documents of the parent company;
- the certificate of incorporation, issued by the registration authorities of the country where the parent is incorporated;
- aresolution signed by the representatives of the parent company stating the decision to set up a branch.
The resolution should provide many details concerning the future branch, such as:
- the business sector in which the branch will operate;
- the domicile in Colombia;
- the duration of the branch;
- the name and personal details of the person who will be appointed to act as the representative of the branch;
- the amount of capital that will be used for the startup of the branch.
The process of company formation in Colombia for the registration of a branch involves a wide range of documents outside of the few presented above. Therefore, we invite you to contact our consultants in company registration in Colombia.
Please mind that you will also need to set up a corporate bank account, this being one of the main legal requirements when setting up a business of any type, in any country.
For instance, for those who are interested in the process of offshore company formation, it must be noted that the authorities of the offshore jurisdictions will always ask local and foreign businessmen to set up an offshore bank account for the newly founded company.
Requirements for opening a company in Colombia
These are the demands that need to be met when talking about the simplified limited liability company, which is the most popular amongst the choices of investors:
- minimum one director and shareholder (the nationality has no importance, he/she does not have to be a Colombian resident);
- minimum paid-up share capital of $1;
- appointing at least one legal representative who needs to be a resident of Colombia.
Steps for registering a company in Colombia
The first step of the process is registering with the Registry of Commerce and acquiring a pre RUT or pre-taxpayer ID at the Chamber of Commerce.
The next step of the company registration procedure in Colombia is to open a bank account and deposit the initial capital; for this phase some documents need to be submitted. Our company incorporation agents can assist you with all of the procedures.
Then you have to obtain an ID number for tax payers. This will be completed at the Tax authority agency.
The next step is registering the company with the Family Compensation Fund, the Colombian Family Institute and the Governmental Learning Service. Then you also need to register your employees for health coverage at the EPS (which is a kind of health promoter).
Finally, you need to register your employees with a severance fund where you first need to present a form stating the severance fund's affiliation to the employee. The employees have the right to choose the preferred severance fund.
Some of the rules of law concerning the process of company formation in Colombia are the Colombian Commercial Code, the Act 80 of 1993, the Act 222 of 1995, the Law 1014 of 2006, the Law 1607 of 2012, the Regulatory Circular issued by the Colombian Central Bank and the Tax Code (Article 79).
Investors must also observe the rules and regulations concerning employment in this country. One of the laws regarding this matter is the Act 1429 of 2010 – the Law of First Time Employment.
For in-depth information concerning the obligations, rights, benefits and other matters appearing from these laws, our consultants remain at your service.
Why invest in Colombia?
When choosing a destination to start a new business venture, investors will always be interested in knowing the characteristics of the respective jurisdiction.
Foreign businessmen who want to start the process of company formation in Colombia can find out from the list below some of the key characteristics of the Colombian economy:
- Colombia is the 1st out of the 5 most important economies in Latin America;
- the ranking was measured for 2022 and the estimates show that the economy of this country will further expand;
- according to the United Nations Conference on Trade and Development (UNCTAD), Colombia is also the 1st country in a list of 30 emerging economies that are preferred by foreign investors;
- overall, the economy of Latin America is expected to grow by 2% in 2023, with Colombia having the highest growth, of 3.5%;
- in comparison, the economic growth of other relevant economies are estimated for 2023 at 2.5% (Argentina), 3.1% (Peru), 2% (Mexico), 1% (Brazil) and 0.8% (Chile).
Our company formation experts can be contacted to help you with all these procedures, but also with further information on how to open a company in Colombia or in other countries.