JANUARY 2010 | LEGAL REPORT #11
REMARKABLE ADVANTAGES OF TRANSFORMING YOUR ENTITY INTO A SIMPLIFIED CORPORATION (SAS IN SPANISH)

The Simplified Corporation by shares (hereinafter "SAS") is a legal entity which is less regulated, simpler to manage and less expensive than other corporations. By means of the SAS, an effective "tailor made" vehicle is easier to design in order to carry out your business in Colombia.


Therefore, it is advisable to review the convenience of transforming your current entity (corporation, partnership, etc.) into a SAS.

Main benefits of the SAS

The most important arguments supporting the convenience of transforming your entity into a SAS are the following:

Normal Corporation	SAS
1. Number of shareholders: five or more are required.	1. Number of shareholders: no minimum number is required. Thus, the SAS can be incorporated by one shareholder or more.
2. Incorporation procedures: a public deed and its registration before the chamber of commerce are required. Both (deed and registration) are levied with fiscal burdens.	2. Incorporation procedures: No public deed is required. A private document should be registered before the chamber of commerce. Therefore no notary fees apply, just registration taxes. Nevertheless, public deed is required whenever certain contributions in kind are made (e.g. real state).
3. By-laws amendments: a public deed and its registration before the chamber of commerce are mandatory in order to carry out such amendments.	3. By-laws amendments: only registration in the chamber of commerce is required.
4. Term: it must be agreed. Wind up is mandatory after the corresponding term of duration has expired.	4. Term: there is no mandatory term; therefore duration could be indefinite.
5. Corporate purpose. The corporation is allowed to perform only activities stated or connected to the corporate purpose that is written in the by-laws. Activities performed out of such purpose are deemed void.	5. Corporate purpose: the corporate purpose may consist in all legal activities, without limitations.
6. Subscribed capital at the incorporation: at least 50% of the authorized capital shall be subscribed at the incorporation.	6. Subscribed capital at the incorporation: no limit applies to SAS.
7. Paid-in capital at the incorporation: at least a 33.3% of the subscribed capital shall be paid at the incorporation. The term to pay the remaining subscribed capital cannot exceed one year.	7. Paid-in capital at the incorporation: no limit applies in this regard. If the payment of the subscribed capital is subject to a term, it cannot exceed two years.
8. No piercing of corporate veil: disregarding fraud, no piercing of corporate veil is possible, therefore, shareholders are not joint and severally liable.	8. There is no difference in this regard.
9. Board of directors. It is mandatory to have a board of directors.	9. Board of directors: although the SAS may have it, it is not mandatory.
10. Auditor. It is always mandatory to have an auditor.	10. Auditors: it is mandatory for SAS with certain amount s of assets or equity/net-worth.
11. Mergers and spin-offs. By means of spin-offs or mergers, shareholders are not allowed to receive goods or money, only a proportion of stock or participation.	11. Mergers and spin-offs. By means of spin-offs or mergers shareholders are entitled to receive money or other assets instead of shares or participations.

Transformation procedure:

Any partnership or commercial entity is entitled to transform into a SAS, if that is unanimously decided at a stockholders meeting. The transformation must be registered before the corresponding chamber of commerce.