Corporate Law in Colombia: Company Formation and Foreign Investment

Start the company properly, not quickly

Incorporating a company in Colombia takes hours. Incorporating it correctly takes one conversation beforehand. The difference gets paid for years later, when the chosen vehicle cannot take on an investor, when the corporate purpose blocks a licence, when profit distributions turn out to be taxed in a way that could have been avoided, or when two shareholders with no written agreement discover that neither of them can make a decision.

For foreign clients there is an additional layer. Structures that work perfectly in the client’s home jurisdiction, and that their home counsel confidently recommends, sometimes produce a poor outcome once Colombian tax, exchange control and corporate rules apply to them. We have unwound more than one of those.

Our corporate practice covers the full life cycle of the company, from vehicle design through reorganization or wind-up. And it does so from a tax firm, which means every corporate decision is also assessed for its fiscal effect before it is signed.

Formation and structuring

The choice of vehicle is not a formality. It determines shareholder liability, flexibility to raise capital, reporting obligations and, in many cases, the effective tax burden of the business.

We handle the formation of:

Sociedad por Acciones Simplificada (S.A.S.), Colombia’s most widely used vehicle, governed by Law 1258 of 2008. It offers limited liability, extensive freedom to draft bylaws, a single shareholder if desired, and the ability to create share classes with differentiated rights.
Corporations (S.A.) and limited liability companies (Ltda.), where a regulated sector, a governance requirement or a counterparty demands it.
Branch of a foreign company, for the group that prefers to operate without creating a separate Colombian legal entity, with the tax and exchange control consequences that choice carries.
Single-shareholder enterprises, non-profit entities and joint venture structures as the project requires.

Our work includes: designing the corporate purpose and capital structure; drafting bespoke bylaws rather than generic forms; registration with the Chamber of Commerce and obtaining the RUT and NIT tax identification with the national tax authority (DIAN); filing with the Ultimate Beneficial Owner Registry; opening bank accounts and supporting the client through the bank’s onboarding and due diligence process, which for foreign shareholders is regularly the slowest step in the whole timeline; and registering foreign investment with the Central Bank where the capital comes from abroad.

Corporate governance and shareholder relations

Most of the shareholder disputes that reach our office could have been prevented by fifteen pages signed at the outset.

Shareholders’ agreements with real provisions on majorities, veto rights, deadlock, drag-along and tag-along, transfer restrictions and exit mechanics.
Governance architecture: the powers of the shareholders’ meeting, the board and the legal representative, and express limits on the legal representative’s authority.
Ongoing corporate housekeeping: minutes of shareholders’ and board meetings, share and minute books, bylaw amendments, annual commercial registration renewal, and reporting to the Superintendency of Companies where the entity is subject to supervision or control.
Reorganizations: conversions, mergers, spin-offs, global asset transfers, capital increases, share buy-backs and voluntary liquidation, always with the tax effect of the transaction analysed in advance.

Commercial contracts, domestic and cross-border

We draft, negotiate and review the contracts the business actually runs on:

Sale of goods and services, supply and distribution.
Commercial agency. Foreign principals should pay close attention here. Article 1324 of the Colombian Commercial Code grants the agent a statutory payment on termination that is frequently overlooked when the relationship is set up and is discovered, at considerable cost, when the principal decides to exit the market. The structure of the relationship at the outset determines the exposure.
Assignment of contracts, receivables and assets.
Mandate, brokerage, representation and services agreements.
Joint ventures, consortiums and temporary unions, including the liability regime toward the counterparty and the different tax treatment each figure attracts.
Contracts with foreign suppliers and clients, covering governing law, jurisdiction, arbitration, exchange control compliance and withholding tax on payments abroad.
Confidentiality, exclusivity and non-compete undertakings.

Ongoing legal support for local and foreign companies

For the client who needs a legal function without carrying an in-house team, we provide continuous support under retainer:

Sector permits, licences and registrations before the competent authorities, including municipal and district procedures required to begin operations in Barranquilla and the Atlántico department.
Employment matters: employment contracts, internal work rules, corporate policies, hiring of foreign personnel, terminations and severance calculations, and adaptation to the labour reform enacted by Law 2466 of 2025, which changed material elements of the Colombian employment framework.
Data protection and regulatory compliance, including processing policies, database registration and responses to authority requests.
Recurring corporate and tax compliance, coordinated with the client’s accounting team.
Representation in administrative proceedings before authorities.

Establishing operations in Colombia

For the foreign company assessing entry, the order of the decisions matters as much as the decisions themselves.

We handle the full process: comparative analysis of subsidiary versus branch, including the tax burden of each alternative and the treatment of profit remittances; incorporation of the vehicle and appointment of a legal representative and statutory auditor where required; registration of foreign direct investment with the Central Bank, which is the condition for exercising the exchange rights attached to the investment, including the repatriation of capital and the remittance of profits; account opening and design of the foreign exchange flow; first hires and the immigration position of expatriate staff; and transfer pricing structuring with the parent company.

A recurring warning we give early: the investment registration is not a bureaucratic afterthought. Clients who skip it or handle it late tend to find out at the worst possible moment, which is when they want to take money out of the country.

Public procurement and foreign trade

Tenders and contracting with public entities: review of bidding documents, verification of eligibility requirements, structuring of consortiums and temporary unions, submission of bids through the SECOP public procurement platform, and support during contract performance.
Import and export of goods and services: registration as importer or exporter, tariff classification analysis, customs regimes, free trade zone operations and other special regimes, and compliance with the exchange control rules applicable to foreign trade transactions.

This line connects directly to our customs law and exchange control practices.

Frequently asked questions

How long does it take to incorporate a company in Colombia? Registration with the Chamber of Commerce is usually resolved within a few business days once the bylaws are settled and the shareholders’ documents are in order. The real timeline is set by what follows: tax registration, electronic invoicing enrolment, bank account opening and, where there is foreign capital, investment registration. Bank onboarding is the most common bottleneck for foreign-owned entities. We plan the full timeline at the start so the client does not discover the constraints halfway through.

Can a foreigner own or be the legal representative of a Colombian company? Yes. Colombian law does not require shareholders to be nationals or residents, and there is no general local shareholding requirement. There are practical and tax implications worth analysing, and whoever acts as legal representative needs the appropriate immigration status to carry out that activity in the country. We assess both together with our immigration practice.

Is an S.A.S. or a branch better for my group? It depends on the business plan, the investment horizon, how funds will be returned to the parent, and whether a double taxation treaty applies. They are structures with materially different tax and exchange control consequences. We run the comparison before incorporation, not after.

Do I need to travel to Colombia to set up the company? Generally no. The process can be completed through a power of attorney granted before a Colombian consulate or before a foreign notary with apostille under the 1961 Hague Convention. Bank account opening is the step most likely to require the legal representative’s presence or an in-person interview, and requirements vary by institution. We confirm the specific bank’s position before committing to a timeline.

My company is already incorporated but the bylaws are a standard form. Is that a problem? It is common and it is fixable. We review the bylaws, identify the critical gaps, propose the amendment and, where there is more than one shareholder, complete the picture with a shareholders’ agreement. Doing this before a dispute is considerably cheaper than doing it during one.

Let’s discuss your matter

Email: evilardy@vaabogados.com.co WhatsApp: +57 300 612 1685 Location: Barranquilla, Colombia

This page is informational and does not constitute legal advice for any specific case.