Corporate Governance / Published legislation and draft legislation

New rules for commercial companies

Bill 231/2017

Bill 231/2017, establishing new rules over companies and corporate governance in private-sector firms in Colombia, is at the proposal stage in the Colombian Senate. It has particular relevance for simplified limited companies [ Sociedades Anónimas Simplificadas (SAS)], the accountability of company directors, lawsuits against directors, and on the commercial registration of companies, as well as some changes to the Companies Authority’s powers.

The law would exempt SAS from holding annual general meetings, appointing a tax reviewer and preparing the management report, when the company’s sole shareholder is a single natural person. Likewise, SAS may carry out any kind of economic activity apart from those requiring authorisation from Colombia’s Financial Authority or from companies whose shares and other securities are listed on the National Securities and Issuers’ Register (RNVE).

If the SAS equity is owned by a natural person (one-person companies), the chambers of commerce will as part of their normal duties record the control of these companies in the name of that person.

A longer list has been drawn up of persons to be considered “directors” of companies. Thus, in addition to the legal representative, the list will include the receiver, the Board members, the factor and all those with administrative roles according to the company’s by-laws –whether they are the principals or their stand-ins, defined as directors under Law 222/1995. This list includes, furthermore: i) all those exercising senior management roles, such as the Chair, the Managing Director, the Deputy Chairs, the area managers and the financial officer, ii) the committees and other collegiate bodies fulfilling administrative functions, according to the company deeds that brought them into existence.

The bill explicit declares the directors to be subject to a duty of loyalty, and describes the obligations inherent to that loyalty. It also makes provisions for directors’ joint and several liability in respect of companies, shareholders and third parties for damages arising from their actions or failure to act, when this is in bad faith or in dereliction of duty. It also describes directors’ related parties, for the purposes of managing conflicts of interest.

This bill seeks to introduce a requirement for chambers of commerce to issue electronic certificates validating the existence of companies and of their legal representatives, and of any other institutions required to register with these bodies.  These electronic certificates will be taken as genuine.

Finally, the draft provides for jurisdictional powers to be created for the Companies Authority to resolve disputes relating to the interpretation and application of Company Law regulations.

 

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