By Brigard Urrutia
The concept of “control situation” is configured on the occasion of corporate subordination, which is when one company exercises decision-making power over another, under the terms of Articles 260 and 261 of the Commercial Code. The most common situation that gives rise to the configuration of control is when one owns, directly or indirectly, more than 50% of the shares of a company.
When a control situation is configured, it must be registered, within the following 30 business days, with its registration in the commercial registry of the domicile of the controlling entity (if it is Colombian) and/or of the controlled entity. Likewise, if there is any variation with respect to the control situation, the respective update must also be made before the Chamber of Commerce, within 30 business days after the variation has occurred.
In order to comply with the above obligation, a private document must be registered with the commercial registry indicating, with respect to the controlling entity, the intermediate entities through which control is exercised (in the case of indirect control) and, of the controlled entities, their (i) name, (ii) nationality, (iii) address and (iv) activity.
This obligation is quite well known with respect to Colombian companies; however, previously, there was debate as to whether the obligation to register the control situation was also required and/or applicable with respect to foreign entities with branches of a foreign company in Colombia.
On the occasion of the recent imposition of a sanction by the Superintendence of Companies on a foreign company with a presence in Colombia through branches of a foreign company (and companies), said discussion has been resolved, and it is clear that the criterion of this , foreign entities with a presence in Colombia through branches must also comply with this obligation.
Taking into account the above, it is clear that when a foreign company (i) has a branch of a foreign company in Colombia and (ii) is controlled, directly or indirectly, at a higher level, a control situation will have been established and it will be necessary to register. said situation in the commercial registry of the domicile of the branch of the foreign company in Colombia, within the following 30 business days.
In that sense, if there is no company at a higher level that exercises control over the foreign company, the control situation between the foreign company and the branch of the foreign company in Colombia would not be configured, so there would be no place for the registration of said situation before the commercial registry. That is, a foreign company does not exercise control over its own branch in Colombian territory, since it is the same legal entity (that is, an extension of itself).
Failure to comply with the above obligation gives rise to investigations by the Superintendency of Companies and may result in the imposition of fines, successive or not, of up to 200 current monthly legal minimum wages (that is, COP$260,000,000 for 2024).
June 2024
