During the past years, cross border operations regarding mergers and spin offs between companies from around the world have increased considerably. As a result of globalization, these procedures in Colombia have become a common interest figure for companies and investors worldwide, as the operations regarding international mergers and acquisitions have become a very important part of the international economic relations. Consequently, it is important to take into account the general procedure as well as the most important issues that must be taken into consideration whenever a merger or spin off involving a Colombian company takes place.
Colombian law does not specifically regulate the procedure to carry out international mergers or spin offs. However, the entity that controls companies in Colombia known as the "Superintendencia de Sociedades" (hereinafter, the "Superintendency of Companies"), has ruled these procedures throughout the issuance of concepts and rulings. Although these operations are not established under any specific law, they have been carried out in the country throughout the Superintendency rulings and concepts. In this regard, the Superintendency expressed in different concepts that an international merger or spin off is possible when a Colombian company is involved. At this point, it is important to bear in mind that these mergers or spin offs are afforded tax-free treatment in Colombia.
As a general principle, in order to formalize a merger or a spin off involving a Colombian company, an authorization prior to the operation must be requested before the Superintendency of Companies. It is important to bear in mind that the authorization regime applies only to those companies that in accordance with the Colombian law are supervised by the Superintendency of Companies.
However, throughout an external ruling of 2007, the Superintendency of Companies established a regime of general authorization for mergers and spin offs. By means of this ruling, the entity established the possibility for companies involved in these types of operations to carry out the merger or spin off without being obliged to request any prior authorization. The above mentioned means that in accordance with this ruling, there are two different procedures for mergers and spin offs involving Colombian companies supervised by the Superintendency, that is to say that certain operations require a prior authorization and some others will benefit from an...