How to register a foreign investment in Colombia
How to register a foreign investment in Colombia
It's not just about having the capital and knowing what to invest in Colombia. Foreign companies or individuals, who come to the country to diversify or increase their income, seek business opportunities in Colombia but don't always know how to invest in Colombia, or the steps they must take to operate within the established norms and avoid any issues.
First of all, every investment made by a foreigner, including foreign exchange entering the country through persons who are not Colombian residents, that is intended as a capital contribution for a company or a branch of a foreign corporation, must be registered as a foreign investment before the Bank of the Republic.
If the matter is currency, the registration is made by channeling the money through an exchange market intermediary, or a clearing account. A Declaration of Exchange for International Investments must also be completed (Form 4, available on the Banco de la República website).
Since Decree 119 of 2017, some of the rules for foreign investment have changed. The Bank of the Republic's verification function has been eliminated, for example. It has also been established that the information declared in the register must be made under oath, and it has been made possible for the legal representative of a company that receives foreign investment in Colombia to complete the registry and make corrections, updates, changes and cancellations at any time.
What kinds of companies exist in Colombia?
The following information may come in useful when deciding what to invest in Colombia. The first is knowing which companies are most often used by investors in the country:
- Limited Liability Company (S.R.L)
- Public Limited Company (S.A)
- Simplified Joint Stock Company (S.A.S)
The formation of companies is an important matter when it comes to discussing foreign investment in Colombia, because this is not just about contributing capital but about participating in a company's profits and decisions. This will make an investor's presence in the country more fruitful and make it easier for an investor to undertake other types of business within the local market. If you choose to set up a company in order to make an investment in Colombia, bear in mind the following steps:
- Formalize the company's bylaws by public deed before a notary.
- If the company is a Simplified Joint Stock Company, the bylaws may be made by means of a private document.
- Complete Form 1648 through the Dian portal.
- Register with the Chamber of Commerce, which must issue the certificate of existence and legal representation on a provisional basis, with the annotation: "NIT (Tax ID) is valid only for the application to open a bank account."
- Open a bank account.
- Formalize the Single Tax Registry (RUT) before the Dian and take a copy to the Chamber of Commerce for the issuance of, within 24 hours, the definitive certificate of existence and legal representation.
Branches of Foreign Companies in Colombia
Another way to make a foreign investment in Colombia is through a Branch of a Foreign Company. This is a model used by companies established outside the country that wish to develop permanent activities in Colombia and undertake investments in some sectors of the economy. The administrator of a Branch of a Foreign Company, once established, has the authority to represent the company legally so it can do business in the country.
Bear in mind that the activities developed in the branch are in the name of the matrix it represents, which implies that the rights and obligations are the same.
If you choose the Branch of a Foreign Company option, these are the permanent activities you can undertake, according to current regulations (articles 474 and 471 of the Commercial Code) in Colombia:
- Open commercial establishments or business offices, even if they have only a technical or advisory nature.
- Intervene as a contractor in the execution of works or in the provision of services.
- Participate, in any form, in activities aimed at the management, use or investment of funds from private savings.
- Dedicate yourself to the extractive industry, in any of its branches or services.
- Obtain from the Colombian State a concession, which is granted in any title or which in any way participates in its exploitation.
- Enable the functioning of assemblies of associates, boards of directors, management or administration in the national territory.
Finally, when creating a Branch of a Foreign Company, do not forget that the capital will be shaped by the amount determined by the matrix at the time of its constitution, and the one assigned to it in the development of the activities designated as its purpose. Here you will find the steps for establishing a Branch of a Foreign Company.
These are some of the models with which foreign investments have been established in Colombia. Would you like to get further information? PROCOLOMBIA will advise you to start or expand your business in this country.