Colombian Business Structures: What is an SAS?

Investing in Colombia is a potentially lucrative venture, but where to begin? If you’re thinking about starting a business in this country, one of the most crucial steps is deciding on the right company type for your operation.

In this series on Colombian business structures, you’ll find out about the different options, so that you can make the right choice for your operation. Here, you’ll learn the basics of how an SAS, Colombia’s most popular business model, works.

What is an SAS?

SAS stands for “Sociedad por Acciones Simplificadas” in Spanish, which roughly translates to “simplified stock company” or “simplified corporation.”

SASs are the most common type of business in Colombia as they are favorable for both locals and foreign investors. This company type is easy to set up, and shareholders retain a great deal of control over their operations. SASs can also be publicly traded on the Colombian stock market.

Key features of an SAS

The following are important aspects of the SAS model, some (but not all) of which differentiate it from the other business structures explored in this series.

The name: Business names in Colombia must include the abbreviation for the company type, in this case, SAS. For example, if you were to establish a business called Natural Food Imports, it would always have to appear as Natural Food Imports SAS.

Shareholders: Only one shareholder is needed to start an SAS, and there is no upper limit. Shareholders do not need to be Colombian residents, and they are never liable for the company’s debt obligations unless their shares aren’t fully paid.

Capital: Unlike other Colombian business models that require a minimum amount of capital for establishment, SASs are not held to one.

Share flexibility: In the SAS model, issuing and transferring shares is relatively simple, making it possible for a business to take on new partners easily.

Duration: SASs can grow long into the future. You can establish your SAS for an indefinite period or define the duration of your choosing.

Reserve: SASs are not required to have a legal reserve, unlike other common business models in the country.

Dissolution: SASs can be dissolved for several reasons, including:

  • If the company reaches the end of its set duration period
  • If the partners vote to close the business before the end of the duration period (if one had been set; SASs can be established with an undefined duration)
  • If the authorities mandate the closure of the company

Administration: SASs require at least one shareholder. The shareholder(s) form the company’s general assembly. SASs must also have a legal representative, but a board of directors is not mandated. If you do decide to have a board, it can be formed with just one member.

Taxes: SASs must pay business income tax, which is currently 35% in Colombia. Other taxes a corporation may be liable for include:

  • VAT (sales tax, which the company collects from the consumer)
  • Local income tax
  • Excise taxes
  • Customs duties
  • Property taxes
  • Corrective taxes (on operations that generate potentially damaging substances like sugary foods, carbon emissions, or plastic)
  • Capital gains taxes
  • Employee social security and other benefits contributions

Why establish an SAS

SASs are an excellent model for large and small operations for which the business owner and any other shareholders wish to retain a great deal of control. Plus, you can get started quickly.

Part of what makes SASs easy to establish is that they can be founded via a private document (the company bylaws). Other Colombian business models (like SLRs and SAs) often require public documentation. This said, keep in mind that while SASs are governed by their internal bylaws, they must still operate within Colombian laws and commerce codes.

Another reason to establish an SAS is that this business model can cover any type of operation; that is, the company is not required to state a specific social purpose.

Finally, SASs are particularly attractive for foreign investors as shareholders do not have to be Colombian residents or on-site for the business’s incorporation. The company’s bylaws can be registered with the Chamber of Commerce by a local third party with power of attorney, and this person can sign on behalf of the foreign investor as needed.

Other considerations

SASs are an ideal business model for many, with one of the few drawbacks being that a larger corporation may not be taken as “seriously” by some more cautious investors if incorporated as an SAS instead of an SA (Sociedad Anónima), the traditional Colombian corporation model.

How to start an SAS

One of the primary reasons SASs are so attractive to local and foreign investors alike is the ease of incorporation. Once you’ve found a legal representative, created your company’s documentation, and submitted the required registration to the Chamber of Commerce, you can receive evidence of incorporation in as few as five business days.

While each case is a bit different, you can generally expect to perform the following steps before receiving that evidence of incorporation:

  1. Establish the company bylaws.
  2. File the bylaws with the local Chamber of Commerce and provide other required information like proof of the existence of at least one shareholder and the company’s legal representative. The legal representative will also have to provide a statement accepting their role.
  3. Apply for a tax ID with DIAN (the Colombian tax authority) and present this information to the Chamber of Commerce.

You can further explore how to correctly establish a business in Colombia here.

Let experts help you start a Colombian company

Starting a business in a foreign country can seem like a daunting task, even when the incorporation procedure is fairly straightforward.

Streamline your business establishment process with advice from the experts at LaGrande Global who deeply understand the Colombian context. Enter this exciting market with confidence.

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