Surprising fact: over 70% of new foreign businesses pick the S.A.S. when they enter this country, thanks to a single-shareholder option and fast setup times.
We open this article to guide investors and founders through the main choices for legal structures. The S.A.S. dominates new company formations, while the S.A., Ltda., partnerships, and branches still matter for certain strategies.
We explain how the number of partners or shareholders shapes governance, liability, and the company name. We also cover post-incorporation duties: appointing a legal representative, registering a fiscal address, and keeping commercial registration current.
Our aim is practical. We map out the compliance calendar and the tax backdrop, including DTTs, BEPS-aligned rules, CFC rules, and transfer pricing documents. We want you to move from plan to operation with confidence.
Key Takeaways
- Choose an S.A.S. for flexibility and faster incorporation.
- Match structures to liability and governance needs.
- Register with the Chamber of Commerce and DIAN promptly.
- Plan for annual meetings, filings, and UBO reporting.
- Account for cross-border tax rules when forming a company.
Choose the right legal entity structure before you allocate shares
We start by matching your capital plan, number of partners, and appetite for risk to the right legal form. This reduces rework and clarifies who answers for company obligations.
Simplified Stock Company (S.A.S.)
Simple setup and flexibility: A simplified stock vehicle allows one minimum shareholder and no minimum capital. Limited liability is tied to contributed capital, and bylaws can be set by private document.
Stock Company / Corporation (S.A.)
Corporations require at least five shareholders, public-deed incorporation, and a statutory auditor. The company name must include “S.A.” and deed privacy rules depend on number of employees and assets.
Limited Liability Company (Ltda.)
Best for closely held firms with 2–25 partners. Partners’ liability is limited to contributions, except for certain labor and tax obligations. Transfers may be restricted by the bylaws.
Partnerships, limited options and branches
General partnerships impose unlimited personal liability. Limited partnerships split managing and limited partners by liability and transfer rules. A foreign branch mirrors the parent and places full liability on the parent entity.
shareholder requirements colombia: minimums, liability, and naming rules we must meet
We map how minimum participation and naming rules shape corporate risk and governance in practice.
Minimums and participation: The S.A.S. allows a single participant and no cap on numbers. An S.A. must start with at least five members. A Ltda. needs 2–25 partners. General partnerships require two, while limited partnerships need at least one managing and one limited partner.
Liability and capital: In S.A.S. and S.A. entities, members face limited liability up to their contributed capital. Ltda. partners are generally limited to contributions but can face joint exposure for labor and tax obligations. Managing partners in general partnerships keep personal liability while limited partners have protection.
Shares, contributions and company bylaws
Contributions convert into shares or quotas that record each party’s participation and rights. Clear company bylaws should set capital structure, transfer rules, voting rights, and powers of the legal representative.
Naming and incorporation format: Names must include the legal suffix—S.A.S., S.A., or Ltda.—and partnerships must show their nature. An S.A.S. can form or amend by private document. S.A. and Ltda. use public deeds, though privacy exceptions apply below set asset or headcount thresholds under law.
- Record assets, capital and contributions to protect rights.
- Keep registers and certifications current to show the number of participants.
- Draft company bylaws to reduce disputes over voting and distributions.
Map the compliance process after incorporation to protect shareholders and the company
From day one we map the post‑incorporation steps that keep a company compliant and credible.
Appointing the legal representative and defining powers
All companies must appoint a legal representative during registration. This person can be local or foreign; a foreign representative must be recorded with the Tax Authority before taking office.
The legal representative signs contracts, tax declarations, opens bank accounts, and hires staff. Capture their powers clearly in the bylaws to avoid disputes.
Fiscal address and Chamber of Commerce registration
Register a permanent fiscal address and obtain the Merchant’s Certificate at the local chamber commerce. Renew the commercial registration every year to keep the company in good standing.
DIAN filings, meetings and UBO updates
File monthly DIAN tax declarations even if income is zero, and submit the annual colombian tax return on time. Hold the annual meeting before March 31 so the board can present financial statements for shareholder approval.
Register the Ultimate Beneficial Owner on DIAN at incorporation and update details when ownership or control changes.
When a statutory auditor is required
Entities such as S.A. and foreign branches must have a statutory auditor. Other companies face this obligation when thresholds tied to employees or assets are exceeded.
- Codify board workflows so filings, banking and hires are approved and recorded.
- Keep corporate books and asset records current to demonstrate compliance.
Understand tax implications for shareholders, investors, and corporate entities
We outline how cross-border tax tools shape returns and compliance for investors and companies operating in Colombia.
Double Tax Treaties: The country has DTTs with major partners that reduce withholding on dividends, interest and royalties. Treaties with Canada, Spain and the UK are in force, while several signed accords await effect. For a practical reference, see our global tax guide.
BEPS, CFC and reporting: Colombia applies BEPS measures, an MLI signature, CRS/FATCA exchanges, and a CFC rule when a resident holds ≥10% of an entity. That rule can trigger current taxation of passive foreign income and wider disclosure obligations.
- Transfer pricing: Master File, Local File and an informative return apply; per-transaction thresholds near USD 494,000.
- Digital services carry VAT on imports—register and remit to avoid withholding risk.
- Branches and subsidiaries face similar tax treatment, but branches may expose the parent to direct liability.
Checklist: align TP filings, DIAN returns, CFC inclusions and FATCA/CRS data to keep compliance on time and predictable.
Governance essentials: meetings, votes, transfers, and board-level obligations
We map the calendar and the controls that protect voting rights and smooth equity transfers.
Annual meeting timing. Hold the annual meeting before March 31 so the board can present and the shareholders can approve financial statements. We set the meeting calendar early to give directors time to prepare accurate accounts.
Agenda and approvals. Typical items include accounts approval, director appointments, and auditor reports. Clear agendas ensure votes are valid and rights are exercised under company law.
Transfer mechanics and impact
Transfer rules differ by entity. In a stock company, transfers follow corporate law and bylaws. A simplified stock entity can adopt flexible transfer limits, preemptive rights, and lock-ups in its bylaws.
In an Ltda., transfers and bylaw amendments require a public deed. Partnerships often need unanimous consent for managing partners and broad approval for limited partners.
- We record transfers promptly. Update registries and file public deeds when required.
- We assess voting effects. Transfers change voting power and economic rights; banks’ liens or assets tied to equity can complicate transactions.
- We review bylaws regularly. Periodic updates keep vote thresholds and transfer rules aligned with strategy.
| Entity | Transfer consent | Public deed required | Effect on voting rights |
|---|---|---|---|
| S.A. (stock company) | By corporate law and bylaws; possible preemptive rights | Generally yes for certain transfers | Shares transfer voting and economic rights per class |
| S.A.S. (simplified stock) | Set by bylaws; flexible (lock-ups, drag/tag) | Usually no for incorporation; transfers per bylaws | Can tailor voting blocks and classes |
| Ltda. | Partner approvals often required; thresholds set in bylaws | Yes—transfers and amendments via public deed | Quotas often restrict transfer of voting rights |
| Partnerships | Managing partner transfers often need unanimous consent | Yes for formal changes in many cases | Management control tied to named partners; transfers can shift control |
We recommend aligning banking covenants and bylaws before any transfer to avoid disputes. Respect the rules to protect votes, board actions, and the company’s assets.
Ready to set up in Colombia? Align entity choice, requirements, and compliance for a smooth start
We present an actionable checklist that turns entity options and governance into a clear launch plan for your business.
Decide whether a simplified stock S.A.S. or another entity fits your capital and liability needs. Remember S.A. and Ltda. often need public deeds, while a branch can expose the parent to full liability.
Next steps: appoint a legal representative, register at the Chamber of Commerce for the Merchant’s Certificate, and register for DIAN filings and UBO disclosure on time.
Align capital amounts, contributions and company bylaws to support banking and investor due diligence. Embed tax tools—DTTs, BEPS, CFC and transfer pricing—into the cross‑border plan.
For a practical formation guide, see our company formation in Colombia at company formation in Colombia.
