Recently, the press reported a historical sanction imposed by the Superintendence of Companies in relation to the non-registration of the control and corporate group situation, which is highly relevant from a corporate law perspective, particularly for foreign companies with branches in Colombia.
 

For easy reference, the concept of "control situation" is derived from the existence of a corporate subordination, in which a company (the "Parent Company") holds the power of decision over another (the "Subordinate"), in the terms of Articles 260 and 261 of the Code of Commerce. 

On the other hand, the concept of "corporate group situation" requires the existence of a subordination relationship (and, consequently, of a control situation), in which, additionally, there is unity of purpose and direction among the Parent Company and its Subordinate(s). These situations must be registered by the Parent Company in the commercial registry, in accordance with Article 30 of Law 222 of 1995.

 
Previously, in Colombia, there was a debate as to whether or not this registration obligation was also enforceable and/or applicable with respect to branches of foreign companies in Colombia.

The recently imposed sanction can be considered as a milestone, since it (i) settled the discussion regarding branches, due to the fact that the authority sanctioned the Parent Company for the lack of registration of the control and corporate group situation of various foreign companies with branches in Colombia, and, (ii) imposed to the Parent Company the maximum legal sanction allowed, equivalent to 200 SMLMV (COP$260.000.000 c. US$65.000), an amount of which we had no previous record.
 

On February 27, 2024, Brigard Urrutia will hold a forum event on this matter with expert speakers. More information coming soon through our media platforms.