Form of entity
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; and the share limited partnership, where partner's contributions are established as shares.
Limited liability company (Sociedad de Responsabilidad Limitada)
The limited liability company 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)
Shareholders have no personal liability. 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. 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. Colombian law has opened the possibility that, beginning on June 4, 2020 and up to June 3, 2022 simplified stock companies that issue debt securities, which are offered to accredited investors (segundo mercado), can register them in the National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores) and trade them in the Colombian stock exchange.