Colombia has consolidated its position as one of the leading destinations for foreign investment in Latin America. This standing stems from its institutional stability, a clear legal framework for business, and a flexible corporate structure that facilitates the entry of both domestic and foreign capital through the Central Bank (Banco de la República). In recent years, the country has made significant strides in simplifying and digitizing procedures before the Chambers of Commerce and the National Tax and Customs Directorate (DIAN). This has reduced both timelines and administrative burdens for company formation.

Introduction to company incorporation

In Colombia, alternative mechanisms exist for initial market entry, such as indirect hiring schemes or the acquisition of existing corporate structures. However, the most common practice among international investors and companies seeking to establish stable operations is the incorporation of a local company.

In this context, the Simplified Stock Company (Sociedad por Acciones Simplificada or SAS) has positioned itself as the most widely used corporate type in Colombia due to its flexibility. This entity allows for easier administration, the possibility of having one or more shareholders, and a broad corporate purpose.

The SAS entity

The incorporation of an SAS in Colombia is, in practice, a standardized paralegal process. Therefore, the procedure can be broken down into the following stages:

1. Granting Power of Attorney (PoA) from abroad. If the shareholder or representative is not in Colombia, a PoA may be granted to a local attorney-in-fact. This must be notarized abroad and apostilled.
2. Recognition and use of the PoA in Colombia. The power of attorney is used to carry out corporate and administrative procedures before the Chamber of Commerce and other authorities.
3. Definition of the corporate structure. Determining the corporate type (SAS), number of shareholders, authorized/subscribed/paid-in capital, corporate purpose, registered office, and management structure.
4. Drafting and signing of the private bylaws. An SAS is incorporated via a private document containing the bylaws. A public deed is only required if contributions include assets that require such formality, such as real estate.
5. Registration with the Chamber of Commerce. The incorporation document is filed in the mercantile registry. This act legally creates the legal entity.
6. Obtaining the NIT and the Single Tax Registry (RUT). Once registered, the company is registered with the DIAN to be assigned a Tax Identification Number (NIT) and formalize the RUT.
7. Opening bank accounts. Using the certificate of existence, the RUT, and corporate documents, bank accounts are opened, subject to Know Your Customer (KYC) processes.
8. Setup of corporate and accounting books. The company must maintain shareholder ledgers, minutes, and accounting records, which can be kept in physical or electronic formats.
9. Obtaining sector-specific or local permits. Depending on the economic activity, municipal permits, land-use certificates, or health registrations (INVIMA) may be required.

Relevant considerations

The constant reform of Colombia’s legal and tax regimes means newly created companies must consider several key aspects:

• In a Simplified Stock Company (SAS), a board of directors is not mandatory unless the bylaws state otherwise. Management may be handled by one or several administrators.
• Administrators and the legal representative may be foreign citizens. Corporate regulations do not require residency in Colombia, without prejudice to the applicable immigration obligations if they carry out permanent activities in the country.
• Every company must have a tax domicile in Colombia. The Chamber of Commerce requires an address for the main domicile and an address for judicial notification; both may use the same address.
• Subscribed capital can be paid within a maximum term of two years, in accordance with the provisions of Law 1258 of 2008.
• It is not mandatory to pre-register the company name. The homonymy check is performed at the time of registration with the Chamber of Commerce.
• The SAS is not required to have a statutory auditor (revisor fiscal), unless it exceeds the legal asset or income thresholds established by current regulations, or when a special rule so requires.
• To ensure proper corporate, tax, and regulatory compliance, it is recommended to have corporate secretarial services and permanent legal support.

Conclusions

Under normal conditions, the complete process of incorporating a company in Colombia takes approximately three to six weeks, depending on the complexity of the structure and banking timelines.

If you are interested in expanding your multinational group or investment fund to Colombia, consult the corporate legal services provided by Auxadi and its subsidiary, Afiens by Auxadi.

At Auxadi, we offer comprehensive services in accounting, tax, payroll, transfer pricing and corporate legal services to multinationals and funds. With experience since 1979 and a presence in over 50 countries, including 26 proprietary subsidiaries, our advanced technological platform, MySPV, and proven methodology enable us to guarantee efficient management in compliance with local regulations.