Colombia has been characterized for being an attractive destination for company formation. Its strategic position as the main gateway to Latin America and high reception to businesses in various industries makes the country an ideal point for expanding business. However, not all companies established in the country achieve the expected success. Whether due to external situations or operational, managerial, or compliance complications, companies may choose or need to undertake liquidation procedures.
Key Takeaways:
| Steps to liquidate a company in Colombia | Hold a general meeting of the shareholders. File the minutes. Inform DIAN. Publish the decision to liquidate your company. Prepare an inventory. Make payments to creditors. Distribution of remaining assets. Prepare liquidation project. Approval of the liquidation. Register final settlement account certificate. Request the cancellation of the RUT. |
| Time generally needed | It should take approximately six months to a year to liquidate a company in Colombia, if everything is in order. |
| Reasons to liquidate a company in Colombia | These vary, but are usually due to financial insolvency in one way or another. Voluntary liquidation allows you to tie up loose ends in accordance with the law. |
| Involuntary liquidation | If a company is unable to pay its legal creditors, said creditors may petition the courts for a winding-up notice in order to recoup some of the debt. |
11 Steps to liquidate a company in Colombia
Here are the 11 steps to liquidate a company in Colombia:
- Hold a general meeting of the shareholders.
- File the minutes.
- Inform DIAN.
- Publish the decision to liquidate your company.
- Prepare an inventory.
- Make payments to creditors.
- Distribution of remaining assets.
- Prepare liquidation project.
- Approval of the liquidation.
- Register final settlement account certificate.
- Request the cancellation of the RUT.
Liquidating a company in Colombia is the process of closing operations for a company, paying outstanding debts and ending dealings with partners or shareholders with the company. It is a safe, legal and efficient way to withdraw from the Colombian market.
Below, we offer a step-by-step guide on how to liquidate a company in Colombia.
Depending on the type of company you own, you must hold a meeting in which shareholders approve the company’s dissolution and liquidation. The company must produce minutes outlining this decision.
The minutes must clarify the reason for dissolution, the appointment of a liquidator and where the Liquidator is designated. These decisions must comply with the general requirements of law.
2. File the minutes
The company must file the minutes with the Chamber of Commerce (Cámara de Comercio). The company may include additional documents or supporting information that justify the company’s liquidation request. Ensure this information up-to-date so as not to delay the approval process.
3. Inform DIAN
You must inform the Directorate of National Taxes and Customs (DIAN) of the liquidation status of your company in Colombia. In this step, the DIAN will modify your RUT (tax identification) to include the words “in Liquidation” on the end of your company name. In this step, the company Liquidator is responsible for responding to the Colombian institutions.
4. Publish the decision to liquidate your company
A publication must be made in a widely circulated communication medium announcing the company’s decision to liquidate.
This publication must be clear and detailed, and must include the Liquidator’s contact information.
5. Prepare an inventory
The company’s liquidator in Colombia and the Statutory Auditor or accountant must prepare an inventory of the corporate assets and the final balance of the company.
6. Make payments to creditors
You must make the payment of the company’s liabilities, as well as the payment of tax obligations and make the final income statement. If the company lacks external liabilities, the Liquidator has the power to call a meeting and request the approval of the inventory as the final settlement account.
7. Distribution of remaining assets
In the event that the liquidation of your company in Colombia is successful and all debts have been paid, the Liquidator must then distribute any remaining assets among the partners or shareholders.
8. Prepare liquidation project
The Liquidator will have to prepare a ‘liquidation project’. This is a document that must contain:
- inventory
- balance sheet
- profit and loss statement
- company liabilities
- payment of liabilities
- indication and destination of the remainder
- additional information as necessary.
9. Approval of the liquidation
The Liquidator must call a meeting of the shareholders to approve the liquidation project. The minutes of this meeting must contain the express indication about any remaining value amount after the liquidation.
In the event that there is no remaining value, said situation must be indicated in the document that will also contain the decision to approve the final settlement account, including the number of votes with which it is approved.
10. Register final settlement account certificate
The final settlement account certificate must be registered with the Chamber of Commerce, formally requesting the cancellation of the company’s business registry in Colombia.
11. Request the cancellation of the RUT
The company must request the cancellation of the RUT before DIAN. It is important to take into account the tax returns that arise in the liquidation process in Colombia. If the company is not up to date in the payment of its taxes, the cancellation of the RUT will not be effective.
Considerations when liquidating a company in Colombia
In case of not complying with the requirements when liquidating a company in Colombia, both the shareholders and the Liquidator will be directly responsible and must respond with the pending obligations of the process as follows:
- Members of the company: In case of not correctly undertaking liquidation procedures, the partners or shareholders of the company are exposed to sanctions by the Colombian institutions. The company’s legal representative may be affected, since they act as the face of the company before government authorities. Penalties may require a solution using the personal assets of the legal representative.
- Liquidator: If the Liquidator omits steps of the liquidation process or forgets to check the company’s status with social benefits, wages and payment of taxes, they exposed to a high range of accountability, and their personal assets may also be unprotected from certain sanctions.
FAQs on how to liquidate an company in Colombia
Based on our extensive experience these are the common questions and doubts of our clients when liquidating a local entity.
1. What is the process of liquidation in Colombia?
The liquidation process involves the following principal activities:
- Hold a general meeting of the shareholders.
- File the minutes.
- }Inform DIAN.
- Publish the decision to liquidate your company.
- Prepare an inventory.
- Make payments to creditors.
- Distribution of remaining assets.
- Prepare liquidation project.
- Approval of the liquidation.
- Register final settlement account certificate.
- Request the cancellation of the RUT.
2. How long does it take to liquidate a company in Colombia?
The liquidation process will normally take between six months and a year, assuming the entity is in good standing and no rectification work is required.
3. What are the reasons to liquidate a company in Colombia?
There are a number of reasons you may do so, such as the venture becoming unworkable, a change in laws or simple failure in the relevant markets. You may wish to close one business in order to start another or you may want to leave the country for other reasons. For whatever reason you eventually decide to liquidate a company in Colombia, it is best to do so in accordance with the law.
4. Can you be forced to liquidate a company in Colombia?
Yes, under certain circumstances. If a company is unable to pay its legal creditors, said creditors may petition the courts for a winding-up notice in order to recoup some of the debt.
Consult with experts to liquidate a company in Colombia
The process of liquidating a company in Colombia is complex, and can be difficult to navigate for foreign companies in Colombia.
Make sure you have local legal experts to help ensure that your market exit process is efficient and hassle-free. At Biz Latin Hub, our bilingual legal team has the professional experience to support your company liquidation in Colombia.
If you want personalized advice for the departure of your company from the Colombian market, contact us here at Biz Latin Hub.
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