Investment vehicles in colombia

2 Corporate matters
In Colombia, domestic and foreign investment vehicles are supported by Constitutional principles, such as the right of association, the right to equality, and the protection of free enterprise and private initiative. This chapter presents a summary of the most relevant legal aspects of the most commonly used investment vehicles in Colombia.

2.1 Most common Vehicles forchanneling Foreign Investment
There are three corporate vehicles that are most widely used by foreign investors to channel their investments in Colombia: the Corporation and the Limited Liability Company, which both belong to the category of commercial enterprises, and the Foreign Company Branch. There are also other corporate forms with particular characteristics that are not used very much byforeign investors, such as: a. Simplified Stock Corporation: This is a new type of corporation created by Law 1258 of December 5, 2008, which enjoys more flexible procedures and characteristics with respect to the company’s creation, amendments and other corporate acts. Although it is currently not the most widely used corporate vehicle, given that it has only recently been authorized, its convenientand flexible legal regime may very soon make it one of the most commonly used types of business associations. Sole Member Company: This is a company whose owner is the only member, which can be an individual or a legal entity (domestic or foreign). Once it has been registered in the commercial registry, the company becomes a legal entity distinct from its member. Pursuant to recent legalprovisions, Sole Member Companies will have to be transformed into Simplified Stock Corporation prior to June 5, 2009. General Partnership: A partnership in which a premium is placed on trust among the partners. In this type of partnership, each partner is liable not only up to the amount of his contribution but to the extent of their personal patrimony. Limited Partnership: This is formed by managingpartners (or general partners) and limited partners. The former have unlimited joint and several liability, while the liability of the latter is limited to their contributions. Limited partnerships are generally used for family businesses.

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2.1.1 General features of Business Companies
2.1.1.1 Creation
Business companies are created by the execution of a corporate agreement thatregulates basic matters, such as the company’s name, place of business and purpose; meetings of the corporate organs; and the scope and limitations of the powers of the legal representative, among others. The creation of these companies is subject to certain formalities for purposes of acquiring a legal status that is distinct from and independent of that of its partners or shareholders.

2.1.1.2Operation, amendments and right of withdrawal

Generally speaking, business companies do not require the prior authorization of any public authority in order to be able to operate. An exception exists for companies involved in financial, stock brokerage or insurance activities, as well as the management, exploitation and investment of funds obtained from the public. These companies requirethe prior authorization of administrative authorities. This is the case for banks, trust companies, securities exchanges, stock brokerage firms and insurance companies, among others. Also, as a general rule, amendments to corporate bylaws and articles of incorporation do not require the approval of the authorities, except if the amendments involve a corporate reorganization such as a merger orspin-off, which are subject to special notice and meeting procedures for the partners or shareholders, as well as the creditors of the company party to the amendment. Amendments that reduce capital by authorizing the reimbursement of contributions also require authorization. The right of withdrawal is defined as the possibility for partners to separate themselves from the company, with the resulting...