To carry out proper due diligence as required by Colombian law, the following general guidelines on corporate duties, government permits, labour matters and taxation should be followed.
The most important document in the analysis of the corporate side is the Certificate of Incorporation and Legal Representation, issued by the Chamber of Commerce. In this certificate corporate changes are registered, for example, incorporation, public deeds that contain any amendment to the by-laws, capital, legal representative and directors.
Government regulations and filings
There are numerous government institutions in Colombia. Some of the most important, by sector, are:
- Mining and energy: The Ministry of Mining and Energy is in charge of all concessions and licences.
- Banking: the Banking Superintendency is in charge of the authorization of incorporation and the supervision of all financial institutions.
- Public services: corporations that provide public service are supervised by the Superintendency of Public Services, and such corporations must register with it.
- Telecommunications: in addition to registering with the Superintendency of Public Services, corporations which render any telecommunications service using the electromagnetic spectrum must obtain permission from the Communications Ministry.
- Securities: any securities traded in Colombia's capital markets must be registered with the Securities Superintendency. The public offering of securities must also be authorized by the Securities Superintendancy, except in the case of a private placement of securities issued by non-publicly traded companies, in which case authorization must come from the Superintendency of Corporations.
- Environment: every project having an impact on the environment must obtain an environmental licence from the Ministry of the Environment or one of its subsidiary bodies.
- Corporations: some corporations are subject to the supervision of the Superintendency of Corporations and therefore need to register with this entity.
- Real estate: the Registration Office of Public Instruments keeps a record of all real property.
Employees in Colombia have various social security entitlements, and all employers must file the appropriate application forms and report the corresponding payments to the institutions in charge of issuing benefits.
These rights include:
- Pension funds: this payment is the joint responsibility of the employer and employee, and is made to either the Institute of Social Security (ISS), a public entity, or to a private pension fund;
- Health: employers must pay a monthly quota either to the ISS or to a private entity, the EPS, for disability, old age and maternity benefits;
- Bonus (cesantía): employers must pay the equivalent of one month's salary to all employees at the end of each year. This payment is not made directly to employees, but to a fund that holds the money on their behalf.
- Payments to other institutions must also be made by the employer during the term of the employment contract. These institutions are: the Family Welfare Institution, Family Compensation Funds and the National Training Institution.
In Colombia all corporations are identified for tax purposes by a Tax Identification Number (NIT). This number is issued by the National Department of Tax and Customs (DIAN) and must be obtained by the corporation immediately on incorporation.
Another important aspect of due diligence is the verification of the due payments of all national and local taxes. In Colombia the following taxes may be payable: income tax, withholding tax, remittance tax, value-added tax, stamp tax and some local taxes such as industry and commerce tax and real estate tax.