AuthorCarlos Urrutia Valenzuela - Tomás Holguín
* The following additional memb ers of Brigard & Urrutia have contributed to this chapter:
Laura Carreño, Tomás Holguín (corpora te); María Fernanda Castellanos (i ntellectual property
and information technol ogy); María Catalina Jarami llo (taxes); Catalina Santos (labor and
employment); Francisco Uribe (real estate); Alejandro G arcía (antitrust); Richard Galindo
and Giovanni Acosta (contracts and p roduct liability); Susana Hidvegi and María Victoria
Munevar (insolvency and litigation); Omar M artínez and Andrés Felipe Parra (regulatory and
government procurement); Laura Villaveces (stock exchange regulations); José Francisco
Mafla (customs); Irene Velandia (Internet regulation); and Natalia Hernández (environmental).
Carlos Urrutia Valenzuela
Tomás Holguín
Brigard & Urrutia*
Colombia is organized as a ce ntralized republic. Its pol itical system is based upon
strong democratic institut ions. They include the election by popul ar vote of a presi-
dent for a four-year term, with possible reele ction for an additional term, a nd a
Congress composed of two cha mbers, the Senate and the House of Representatives.
Colombia’s Constitution was the subject of a major reform enacted in 1991 by the
Constituent Assembly with t he participation of all the major parties, including rep -
resentatives from the former guerr illa group M19. The new Constitution places sig-
nificant emphasis on the civ il rights of citizens , as well as on the social role of the
state. Although historic ally Colombia operated as a two-pa rty system composed of
the Liberal and the Cons ervative parties, the 1991 Constitution afforded part icipa-
tion to minorities and new politic al movements. As a result, Colombia is today a
multiparty system i n which the traditional polit ical movements control less than
50 percent of the members of Congress, a nd for the past three terms , the president
did not originate from either one of the tradit ional parties.
Colombia has approximately 47 million people distributed a mong 32 “depart-
ments.” Bogota is the capital city, with over 7.5 million inhabitants. Spa nish is the
132 Chapter 5
official langua ge, but various indigenous communities still maint ain their aborigi-
nal languages.
Over 90 percent of the population belongs to the Roman C atholic Church.
However, the Constitution provides for freedom of religion, and t he state has no
religious affiliation.
The Constitution assig ns an important role to private enterprise a nd respects
the principle of private property. Since the 1990s, t he state has retreated from sec-
tors that had historically be en in the hands of government, i ncluding power gen-
eration and distribution, telecommunications, and water and sewer ser vices. Many
of the government-owned entities that u ntil recently had absolute control of their
respective markets have by now been privatize d, and new players actively partici-
pate in an environment of free compet ition. As a result, the role of government
today is that of a regulator that supervi ses and brings order to the markets.
Until the early 1990s, C olombia’s economy was heavily dependent upon
exports of coffee. However, with the advent of the 1991 Constit ution, the Colom-
bian economy was liberalized a nd opened to trade in the global scen ario. Colom-
bia is an active member of the World Trade Organization and mainta ins dynamic
relations with the major economies of Europe , Asia, the Americ as, and, to a lesser
extent, Afric a. Colombia has entered into a network of free-t rade agreements that
encompasses nations including the Un ited States, Canada , the European Union,
Korea, and virtually all of Latin A merica. Colombia is also a foundi ng member
of the Pacific Allia nce with Mexico, Peru, and Chile. The Pacific A lliance is an
open and non-exclusive deep integration area t hat seeks to advance progressively
toward the free movement of goods, services , people and capital among the mem-
ber nations. Together, the members of the Pacific All iance represent 50 percent of
all trade within t he Latin Americ an/Caribbean region, 36 percent of the region’s
GDP, and 41 percent of foreign investment flows.
Colombia’s economy has diversified significantly, to the point that coffee i s no
longer the leading export product . Indeed, today Colombia’s main export products
originate from natura l resources, mainly coal (production in excess of 90 m illion
tons for 2013) and oil (production of over one million barrels per day for 2013).
The Colombian currenc y is the peso (COP). The exchange rate varies da ily in
accordance with supply and demand in t he exchange market. At present, one US D
is equivalent to 2,400 pesos.
Colombia is located in the northwest t ip of South America. It occ upies
1,138,910 square kilometers and is the largest cou ntry with a Caribbe an coastline.
Colombia’s territory borders Venezuela, Brazil, Peru, Ecuador, and Pana ma. Addi-
tionally, Colombia has over 1,500 kilometers of coastline on each of the Atlantic
(Caribbean Sea) and the Pacific O ceans. Colombia’s territory also includes the Sa n
Andres and Providencia arch ipelago of islands located in the Ca ribbean Sea, as
well as the Gorgona and Malpelo isla nds in the Pacific.
In light of the import ance that the world community attaches to the envi-
ronment, it is worth mentioning t hat due to Colombia’s position as a land bridge
Colombia 133
between North A merica and South A merica, nearly 14 percent of the species of
flora and fauna accounted for by scientis ts on a global scale are found i n Colom-
bia, which makes it the second-most biologically diverse countr y in the world. The
country ranks fourth with 2. 2 percent of the world’s total water supply, includ-
ing 1,200 perm anent rivers, 1,640 lagoons and la kes, and 1,940 swamps. Fu r-
thermore, Colombia’s 58 national natural parks, wild life sanctu aries, and other
reserves occupy over 10 million hect ares, equivalent to 11 percent of the country’s
During the past 50 year s, Colombia has experienced a n internal conflict with
guerrilla forces, the Revolutionary Armed Force s of Colombia (FARC) and the
National Liberation Army (E LN), that has left m illions of victim s and close to
200,000 deaths. Currently, the government is in the proc ess of negotiating with the
guerrillas to end the con flict.
Permanent Structures
Colombia has improved in reducing the requirements to formalize the incorpora-
tion of companies in the countr y. It is important to point out that Colombian law
provides a regulation regarding “perm anent businesses” for cases in wh ich foreign
entities undertake busi ness directly i n Colombia. Thus, the Commercial Code lists
some of the most common activities t hat are considered and qualif y as permanent.
This list is not exhaustive and, therefore, other activit ies may be considered perma-
nent as well, analyzed on a cas e-by-case basis. The Commercial Code considers t he
following activities to be per manent:
the opening of a local est ablishment or a business offic e in the country; t he
law specifically mentions t hat these include technic al or consultancy off ices
participating as contrac tor in the construct ion industry or in the renderi ng
of services
obtaining a governmenta l concession or participating i n any way in the
exploitation of natura l resourc es
Colombian law affords different options for the i ncorporation of a local entity
in the country: (i)subsidiary companies, such as a lim ited liability company, a cor-
poration, and simplified stock compa ny, and (ii)the branch of a foreign company.
The capital of a corporation is divided into sha res, which are freely negoti able
by endorsement, unless the bylaws provide for a right of fi rst refusal in favor of
the remaining sha reholders. The corporation requires t hat there be at least five

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