Under Colombian law, there are 5 types of commercial entities that can be incorporated:
General partnership (Sociedad Colectiva)
Partners have subsidiary personal liability, and the partnership board is the highest corporate body. A minimum of 2 partners is required at all times. General Partnerships are closed companies where partners must manage the company themselves or unanimously authorize a third person to do so, as well as unanimously authorize total or partial assignment of participation in the company, or the possibility for partners to carry out similar lines of business on their own.
Limited partnership (Sociedad en Comandita Simple y por Acciones)
A hybrid type of company, where partners can either be managing partners or limited partners. Each type of partner has different levels of liability, functions, voting rights and participation in the company. There are also 2 types of limited partnerships under Colombian law. The simple limited partnership, where partner's contributions are established as participation quota or membership interests; and the share limited partnership, where partner's contributions are established as shares.
Limited liability partnership (Sociedad de Responsabilidad Limitada)
The limited liability partnership is a hybrid type of company where partners can limit their responsibility to the amount of their contributions as a general rule, but there are certain exceptions, such as responsibility regarding taxation, labor regulation or if such extended responsibility is included in the company's bylaws. Limited liability companies must have a minimum of 2 partners and a maximum of 25.
Corporation (Sociedad Anónima)
Generally, shareholders have limited liability to the amount of the partners´ contributions. Nonetheless, the following exceptions may apply: (i) liability for outstanding obligations of the affiliate when the bankruptcy has been produced due to or as a result of the actions of the parent company; and (ii) subsidiary liability in compulsory liquidation proceeding when it has been proved that shareholders utilized the company to defraud creditors.
A corporation must have the Shareholders General Assembly as the highest corporate body, a board of directors, a legal representative designated by the board of directors and a statutory auditor. A minimum of 5 shareholders is required, and it is generally used for large enterprises or financial institutions that are subject to control and surveillance of the Colombian Superintendence of Finance.
Simplified stock company (Sociedad por Acciones Simplificada)
Most recent and flexible type of the commercial entity created under Colombian legislation. Shareholders have no personal liability, as long as they refrain from employing the company for unlawful activities or engaging in actions aimed at defrauding 3rd parties. A simplified stock company must have a Shareholders General Assembly as the highest corporate body and a legal representative. It can have a board of directors if shareholders require it. A minimum of one shareholder is required and there is no maximum requirement.
Article 261 of the National Development Plan 2022-2026 (Law 2294 of 2023) of the current government modified the simplified stock companies’ regime (Law 1258 of 2008) in order to authorize these types of companies to be issuers of securities, under the terms and conditions determined by the National Government through the Ministry of Finance and Public Credit. However, as of this date, the regulation for the issuance of securities by simplified stock companies has not been enacted, hence, the authorization granted for these purposes has not yet entered into force.
