Volume 5, Number 9, Page 3

Colombian Corporations: Annual Requirements

by Gómez Pinzón y Asociados

Commercial corporations in Colombia must comply with certain legal requirements each year. These requirements include:

• Preparing inventories, general financial statements and profit and loss statements of the last operation period of the corporation. Preparers of the consolidated financial statements of the parent or controlling company must consider making public the general purpose consolidated financial statements that reflect the financial situation, operational results and other items of the parent company as well as of its subordinates, as if they were one entity. Circular 30 of November 26, 1997, issued by the Superintendency of Corporations ("Circular 30"), requires the parent or controlling companies which, according to law, have to keep their accounting in Colombia, to prepare and make public the general purpose consolidated financial statements. Corporations must comply with regulations regarding audited and certified financial statements, as well as making public these statements.

• Corporations must make use of the "Plan Unico de Cuentas" (PUC) or Unified Accounting Plan when preparing financial statements in order to have correct accounting.

• Whenever a control situation or business group situation arises, the controlling corporation must register with the Commercial Registry the control situation or business group. This registration must take place within 30 days following the fact that led to such situation.

• It is important to point out that, according to Circular 30, the obligation to register with the Commercial Registry such situation of control or business group is also binding for the parent or controlling companies. In the event there is a business group, the administrators of the controlled companies and the controlling company must present a special report to the highest governing body of the company in its annual ordinary meeting.

• Corporations must renew commercial registration within the first three months of the year. The legal representative of a corporation must complete and submit a special form to the Chamber of Commerce of the locality of domicile of the corporation and pay the corresponding fees.

• A corporation’s legal representative must notify the Board of Directors or the General Shareholders of an ordinary meeting that must take place within the first three months of the year. This summon must be carried out at least fifteen working days before the meeting date.

• Financial statements of the last operation period of a corporation, as well as the distribution of profits, must be approved at this ordinary meeting.

• Since June 1996, “non-personal” meetings and written decisions in lieu of a meeting are allowed.

• If a company which has its shares registered in the stock exchange market plans to discuss in its meeting: (i) an increase of its authorized capital, (ii) a decrease of its subscribed capital, or (iii) cancellation of its inscription before the National Securities Registry, the company must include such an item in the notice of the meeting. The same obligation applies to companies that plan to discuss a merger, spin-off or transformation of the company.

• Due to the fact that the Chamber of Commerce currently has legal control over certain acts, it is important to clarify in the corresponding minutes that the majority of the elected members of the Board of Directors are not related members of a family or, if such is the case, clarify that it is a family company.

• In the event that a corporation has registered foreign investment before the Central Bank, the legal representative must submit to the Central Bank the new information updating the corporation’s foreign investments, within three months following the meeting of the Board of Directors or General Shareholders.

• Companies subject to the supervision of the Superintendency of Corporations must present before this entity certified financial statements of the last operation period and a statement of profit and loss account, meeting the standards set by law.

• For this purpose, the Superintendency provides a diskette containing the corresponding forms to submit the requested financial information.

• Corporations which are under the supervision of the Superintendency of Securities, the Banking Superintendency or the Superintendency of Public Utilities must pay a special fee to these entities, the amount of which depends on the corporation’s assets.

Gómez Pinzón & Asociados is located in Bogotá, Colombia. Practice areas include international finance and investment and corporate law.