Company incorporation and tailored bylaws in Colombia

What gets decided on the day of incorporation

The filing is short and the consequences are not. The bylaws are the contract between the people who are about to become partners, and they are negotiated well while everyone still agrees. Afterwards, every rule that was left out turns into an argument with someone who by then has a different interest. So we start by asking how the business works, who contributes what, who will run it and what would happen in the three or four scenarios that typically break a company apart. The bylaws come out of those answers, not out of a template.

Which corporate form suits the business

The simplified stock corporation handles most cases well, because of the freedom it allows in the bylaws and because shareholders are not liable with their own assets for the company's obligations, save in the situations the law allows. It is not, however, an automatic answer.

• Simplified stock corporation, public limited company, limited liability company and the other types set out in the Commercial Code.
• Branch of a foreign company and representation office, where the local operation does not justify a subsidiary.
• Structures with more than one entity, where it makes sense to separate the assets from the operating business or ring-fence a business line.
• Not-for-profit entities, where the project requires it.

The clauses where the company's future is settled

• Purpose and capital. Scope of the corporate purpose, authorised, subscribed and paid-in capital, the form and deadline for paying contributions, and contributions in kind with their valuation.
• Transfer of shares. Pre-emption rights on transfers and on the issue of new shares, prior approval by the shareholders meeting and temporary lock-ups.
• Majorities. What is decided by simple majority and what requires a reinforced one: borrowing, sale of material assets, issuing shares, changing the corporate purpose.
• Management. The legal representative's powers and their limits by amount or type of act, alternates, and whether a board of directors is worth having.
• Exits. Death, incapacity or withdrawal of a shareholder, the valuation mechanism and what happens to their shares.
• Disputes. How a disagreement between partners is resolved before it reaches a court.

What we do

1. Defining the structure. We review the activity, who the shareholders are, where the capital comes from and the growth plans, and recommend the corporate type and how many vehicles are needed.
2. Drafting the bylaws. Tailored text, with the sensitive clauses discussed one by one with the shareholders and explained in language they can follow without a lawyer beside them.
3. Incorporation and registration. Incorporation document, filing with the commercial register of the Chamber of Commerce of the domicile, and appointments with their acceptances.
4. Getting the corporate side running. Share register and minute book, first shareholders meeting minutes, powers of attorney, authority matrix and foreign investment registration where applicable.
5. Later amendments. Capital increases and reductions, changes of purpose, domicile or corporate name, and updating the bylaws when the operation has drifted away from the paper.

What the client receives

• Bylaws drafted for their business, with a written explanation of why each sensitive clause ended up as it did.
• The company incorporated and registered, with its certificate of existence and legal representation.
• The corporate books opened, the appointments registered and the acceptances signed.
• A list of the corporate obligations that start to run, with the dates on which they fall due.

Typical situations we handle

• Two or three founders who want the arrangement between them in writing before the business grows and the conversation gets harder.
• An entrepreneur who has been trading personally and needs to separate personal assets from the business.
• A foreign company about to invoice in Colombia that has to choose between a branch and a subsidiary.
• An existing company with off-the-shelf bylaws that will not survive an investor coming in.