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Corporate Governance Profile

An adequate Corporate Governance must include high standards on this subject, which contribute to an adequate strengthening of company administrations, reduce conflicts between interested parties, mitigate risks related to corporate administration, improve decision making capacity, among other aspects.

Accordingly, a Corporate Governance based on best practices permits to establish a clear framework of rights, obligations and roles and responsibilities among the different corporate government and control bodies, shareholders and various stakeholders.

Since 1970, with the issuance of the Commercial Code, the major aspects of Corporate Governance –General Stockholders’ Meeting, Board of Directors, Shareholders, Administrators, Statutory Audit, among others, started to be regulated in Colombia. In addition, Law 222 of 1995, Law 446 of 1996, Law 1228 of 2008 were passed, among other provisions, that regulate fundamental aspects on this subject. 

In turn, Corporate Governance rules of Issuers of Securities are set forth in Decree 2555 of 2010, Resolution 116 of 2002 and Law 964 of 2005 and Circulars 028 and 056 of 2008 and 007 of 2011 – Country Code-.

In the same way that a Good Corporate Governance must contain, in our opinion, at least the following elements and must contemplate the manner how the same interact among themselves, establishing in this way a weight and counterweight systems that generates the balance in the acts of each one: i) Shareholders; ii) Group of Interest; iii) Property Structure; iv) Stockholders’ Meeting; v) Board of Directors; vi) Administrators; vii) Control Bodies, among others. For the purposes of presenting the Corporate Government profile in Colombia we refer briefly to the shareholders, general stockholders’ meeting, board of directors, administrators and control bodies, in the following terms:


The rights of the shareholders are regulated by the Commercial Code and Law 222 of 1995. These rights are unalienable and consist in: deliberating and deciding in the Stockholders’ Meeting; right to a participation in corporate profits; right to negotiate freely the shares; right of inspection of business papers and books, and to participate in the corporate assets at the time of liquidation.

In addition, some protection mechanisms of shareholders are regulated in the Commercial Code such as the distribution of profits, right of withdrawal, corporate liability action, disclosure of agreements between shareholders, among other aspects.

For corporations that have their securities registered in the National Securities and Issuers Register, shareholders have additional protection mechanisms, such as, for example, the rules of public offers and relevant information –Decree 2555 of 2010-; as well as the jurisdictional powers that the Financial Superintendence has for protection of minority shareholders .Law 446 of 1996-, consideration of proposals of shareholders representing 5% of the subscribed shares by the Board of Directors, request for specialized audits –Law 964 of 2005-, among others.


At the time that a person acquires a share by delivering the corresponding contribution, he acquires the condition as shareholder of that company and with it the rights that such condition grants, which are unalienable; these rights are: to deliberate and decide in the Stockholders’ Meeting, right to participate in corporate profits, right to negotiate freely the shares; right of inspection of business papers and books and to participate in the corporate assets at the time of liquidation, as follows:

a) To deliberate and decide in the Stockholders’ Meeting: Each share grants to the shareholder the right to deliberate and vote for the making of decisions in the Stockholders’ Meeting. That is, that each shareholder attends the Stockholders’ Meeting with a right to speak and to vote thereat.

It should be remembered that to each share corresponds to one vote.

b) Participate in corporate profits:

The distribution of corporate profits is made proportionately to the portion paid of the shares that correspond to each one, save that the bylaws provide otherwise. In any event, the clauses of the corporate bylaws that provide the deprival in the participation profits of some associates are understood as not written.

The payment of the dividends may be made in cash or in paid-up shares of the company. In the latter event, the favorable vote of 85% of the shares represented in the respective meeting is required.

The Stockholders’ Meeting must determine the time when the respective dividends are to be paid, within the year following the date on which they are decreed.

c) Free negotiation of shares save when there is a preemptive right:

Stockholders are free to dispose of the shares to the person that they wish, save that the bylaws provide a preemptive right in the negotiation of shares, in which event it will be required to offer them first to the remaining shareholder of the company, except that those shares are listed in the Stock Exchange –in which event the preemptive right is understood as not written-.

The preemptive right is the one that shareholders have to subscribe in every new issue of shares, a number of shares proportional to the number of shares that they own on the date of approval of the regulations for placement of shares, or in the event that one of the shareholders intends to dispose of all or part of its shareholdings.  

In those cases in which the bylaws of a company provide the preemptive right in the negotiation of shares, it will be necessary to indicate the terms and conditions under which the preemptive right may be exercised, under the penalty of nullity. It should be made clear that the price and method of payment are sent in each case in particular.

d) Inspection of corporate books and papers

The right of inspection grants to the associates the power to examine either directly or through a delegate the corporate books and papers, in order that they may be informed both about the company’s financial situation and how the administrators have fulfilled their mandate; it addition, it seeks to provide to the associates the opportunity to take part in the management of the company, in those matters that are relevant.

In corporations this right is restricted, it can only be exercised during the 15 business days prior to the stockholders’ meeting, that is, as of the term for notice to the respective meeting until the day of the meeting.

In any event, it is necessary to bear in mind that this power is not extended to the documents that refer to industrial secrets or in the case of data which if disclosed, may be used in detriment of the company.

e. Participation in corporate assets at the time of liquidation:

Upon payment of the external liabilities of the company, it will be necessary to distribute among the shareholders the remaining corporate assets in accordance with their participation percentage, save in those cases in which the corporate assets exceed twice the amount of the liabilities inventoried and unpaid at the time of making the distributions.


a. Distribution of profits:

At least 50% of the profits in corporations different from joint stock companies and 70% in joint stock companies must be distributed; in the event that the percentage to be distributed is lower than the percentage indicated, a special majority is required for its approval corresponding to 78% of the shares or quotas of interest represented in the meeting.

b. Right of withdrawal:

The right of withdrawal seeks that in respect to specific determinations of great transcendence which eventually could affect the interest of the shareholders, absent or dissident shareholders have the possibility to withdraw in advance from the company, with the respective reimbursement of their contribution.

The right of withdrawal applies when the transformation, merger or spin-off impose on the shareholders a higher liability or imply a deterioration of their equity rights (reduction of participation percentage, reduction or limitation of the share equity value) or when the company is going to make a voluntary cancellation of its registration in the National Securities and Issuers Register.

The right of withdrawal can only be exercised by the absent or dissident shareholders of the respective meeting, within 8 days following the date on which the respective decision was adopted.

c. Corporate liability action:

Is an action or act initiated against the administrator or administrators who with their conduct in infringement of the law and/or corporate bylaws have caused damage to the corporation, its shareholders and/or third parties.

The corporate liability action against the administrators corresponds to the company, prior decision by the stockholders’ meeting, which may adopt it even though it is not included in the agenda. In this case, the meeting may be called by a number of shareholders representing at least twenty percent of the shares into which the corporate capital is divided.

The decision will be made by one half plus one of the shares represented in the meeting and will imply the removal of the administrator.

Nevertheless, in the event that upon adoption of the decision by the stockholders’ meeting no corporate liability action is initiated within the following three months, the same may be initiated by any administrator, statutory auditor or by any of the shareholders of the company. In this case, the creditors representing at least fifty percent of the company’s external liabilities, may exercise the corporate action provided that the assets of the company are not sufficient o satisfy its credits.


The Commercial Code and Law 222 of 1995 contain the rules for constitution, notice and type of meetings, binding nature of decisions, representation of shareholders, suspension of deliberations, inefficient, void or not opposable decisions, challenging of decisions, among other aspects.

1. Constitution:

The stockholders’ meeting is understood constituted with the quorum necessary to deliberate and decide. The stockholders’ meeting will deliberate with a plural number of shareholders representing at least one half plus one of the shares subscribed, save that in the bylaws a lower quorum is provided.

Decisions are made by the majority of votes present save the legal and bylaw exceptions (profit distribution, issuance of shares and method of payment of dividends). 

2. Notice of meeting:

Notice of meetings should be made in the manner provided in the corporate bylaws; in lieu of the foregoing, by means of a notice published in a newspaper of wide national circulation in the main domicile of the company.

In the case of extraordinary meetings, the agenda must be included in the notice.

For meetings where financial statements are submitted to consideration, the notice must be given at least 15 business days in advance. In the remaining cases, the advance must be made for at least 5 common days.

3. Types of meetings:

a. Ordinary:

Shareholders shall meet in an ordinary stockholders’ meeting at least once a year, at the time established by the bylaws. Said meeting shall be held in the place of the corporate domicile, prior notice sent in accordance with legal and bylaw formalities, under the penalty of inefficacy.

b. Extraordinary:

These are those that are not ordinary and are held in urgent or unforeseen situations of the company.

c. By their own right:

In the event that within the first three months of the year no General  Stockholders’ Meeting is called, the shareholders will meet by their own right on the first business day of the month of April, at 10 a.m., in the corporate domicile in the administration’s office.

d. Second notice:

If the stockholders’ meeting is adjourned for lack of quorum, a new meeting will be called which will be validly held with a plural number of shareholders. The new meeting must be held not less than 10 or more than 30 days after.

e. Universal:

The stockholders’ meeting may validly meet any day and at any time  without prior notice, whenever the total number of share holders is present.

f. Without physical presence:

When by any means the total number of shareholders may deliberate and decide by simultaneous or successive communication.

4. Obligatory nature of decisions

Decisions adopted by the number provided for that purpose are binding on all shareholders, even those who voted against.

5. Shareholders representation

Administrators and employee cannot represent in the stockholders’ meetings, shares other than their own while exercising their positions, or substitute the proxies granted upon them.

Proxies must be duly granted, indicating: i) Principal; ii) Proxy and iii) Date of meeting.

6. Adjournment of deliberations

Adjournments may be made as many times as required and the adjourned meeting may be resumed provided at least 51% of the shares represented in the respective meeting are present.

The deliberations may only be extended for over three days.

7. Inefficient, void and not opposable decisions:

a. Inefficient:

Decisions made that are contrary to legal and/or statutory regulations in respect to the place, quorum and notices of meetings.

b. Void:

Those that are adopted without the necessary or required majorities according to the law or the bylaws.

c. Not opposable:

The decisions that are not of a general nature.

8. Challenging of decisions:

Administrators, statutory auditors and stockholders that are absent or dissident may challenge the decisions whenever they do not conform to the legal or bylaw provisions.

It may only be attempted within two months following the date of the meeting in which the decision was made.

The challenging of decisions is process before the judges or the Superintendence in use of jurisdictional powers.


We will present a brief summary of the major provisions on Boards of Directors; more information related to same may be found in the Board of Directors section of this page.

The Commercial Code indicates that the board of director members must be elected through the electoral quotient system, it sets out generally the operating rules of this corporate body, leaving the details to the provisions set forth in the Corporate Bylaws.

In turn, Law 964 of 2005, in reference to the issuers of securities, points out that 25% of board of directors’ members must be independent, may or may not have alternates, may be elected through a mechanism other than the electoral quotient, and establishes rules on audit committee.


According to article 22 of Law 222 of 1995, as Administrators are considered: the Legal Representative, the Liquidator and the members of Boards of Directors, and those who according to the bylaws perform administrative duties –whether they are principals or alternates-.

On the other hand, article 23 of Law 222 of 1995 establishes that administrators must act in good faith, with loyalty and the diligence of good businessmen and that their actions will be performed in the interest of the company.

Moreover, the Commercial Code, as well as Law 222 of 1995 establish, in turn, prohibitions to the administrators; among these we find:  i) To represent, save in the cases of legal representation, in the stockholders’ meeting or Board of Partners, shares other than their own, or substitute the proxies granted upon them –article 185 Commercial Code-; ii) To vote on the balance sheets and end of period accounts or liquidation accounts, save the alternates who have not held the position in that period –article 185 of the Commercial Code- and who had not taken part in their preparation;  iii) To dispose of or acquire, by  themselves or through a third party, shares of the same company while in exercise of their duties, save in operations for reasons other than speculation and that have the authorization from the Board of Directors granted with the two thirds of its members excluding the one making the request, or by the Stockholders’ Meeting, with the favorable vote of the ordinary majority provided in the bylaws, excluding the one making the request –article 404 of the Commercial Code-; iv) When they are shareholders, to enter into agreement with other shareholders agreeing to vote in an equal or certain direction in the meetings –article 70 Law 222 of 1995-; v) To be designated or to hold simultaneously, a position of as director in more than five boards of directors even in the case of parent companies and its subordinates –article 202 Commercial Code-; vi) To form in the boards of directors majorities with people connected with each other by marriage or by family relationship within the third degree of consanguinity or second of affinity or first civil, except in the companies known as family companies –article 435 of the Commercial Code-.

Accordingly, the liability, rights, obligations and duties of administrators of corporations are set forth in articles 23, 24, 25 and 26 of law 222 of 1995. This law establishes, in addition, that administrators will be jointly and unlimitedly liable for the damages that because of willful misconduct or gross negligence are caused to the company, the shareholders or third parties, save that they have had no knowledge of the action or omission or had voted against, provided they do not execute it.

The gross negligence of the administrator will be presumed when there is non fulfillment or extra limitation of their duties, infringement of the law or of the bylaws, they have proposed or executed the decision on the distribution of profits in infringement of the provision of article 151 of the Commercial Code and other regulations on the subject. In this cases, the administrator will be jointly liable for the sums not distributed or distributed in excess and by the damages that may be applicable.

In case that the administrator is a legal person, the respective liability will be of that person and of whoever acts as its legal representative.


Control bodies, both internal –among which is Internal Auditor or the entity that acts as such- and external –Statutory Auditor, External Auditor, among others-, have the obligation to watch for or review that the company performs its activities in compliance with the provisions of its corporate object, that its operations comply with regulations in effect, that the accounting is kept regularly and in conformity with general accounting principles and that the financial statements adequately disclose their financial situation, among other aspects.


The Colombian legislation on commercial matters, as follows, Commercial Code and Law 222 of 1995 has established some parameters and principles on the subject of corporate governance, such as: right to vote of associates, treatment to utilities as protection mechanism to shareholders, method for giving notices to the meetings, rights and responsibilities of administrators, among other important aspects for their regulation.

Moreover, it is necessary to indicate that this type of companies have the discretional power to determine the issue and follow up of a Good Governance Code.


In addition to the existing regulations related to commerce matter, the issuers of securities must take into account the following provisions regarding Corporate Governance.

1. Decree 2555 of 2010 – Relevant Information – Formerly regulated by Resolution 400 of 1995

Relevant information is that which every issuer of securities shall disclose accurately and timely to the market through the Internet page of the Financial Superintendence and in that sense, it includes every situation that a prudent and diligent expert would take into account at the time of buying or selling or at the time of exercising his political rights, related to the issuer or his issue.

Some examples of relevant information are: Notice to a stockholders’ meeting, major decisions adopted by the general stockholders’ meeting and the board of directors, mergers, spin-offs among others.

2. Law 446 of 1998 – Protection of Minority Shareholders

Article 141 of the mentioned law provides the protection of minority shareholders that represent less than 10% of the shares outstanding or subscribed and that do not have representation within the administration of the company. Event in which they may resort to the Financial Superintendence when they consider that their rights have been damaged by the decisions of the Stockholders’ Meeting, the Board of Directors or the Legal Representative.

3. Resolution 275 of 2001 –  Good Governance Code Issuers of Securities

The Resolution contains the minimum parameters that issuers of securities must meet in order that pension funds can invest in them. For these purposes, they shall issue a Good Governance Code through which the minimum standards established on the subject of independence, the board of directors, protection of minority shareholders, etc. are established.

4. Resolution 116 of 2002 – General Stockholders Meeting

The Resolution of reference establishes the requirements that on the subject of the granting proxies by shareholders to be represented in the stockholders meetings of issuers of securities. In addition, it provides express prohibitions for administrators to represent in the meetings shares other than their own.

5. Law 964 of 2005 – Stock Market Law

Agreement between Shareholders

Agreements between shareholders must be disclosed to the stock market in order that they produce effects in respect to the company, its shareholders and third parties, save that the Superintendence will authority anything to the contrary.

Responsibility of the Legal Representative:

The Legal Representative is responsible for the maintenance and establishment of adequate financial information disclosure and control systems.

Considerations regarding the Board of Directors:

Election mechanisms different from electoral quotient

Minimum 5 members and maximum 10 principals

25% of members must be independent

Personal alternates

Legal representative cannot be chairman of Board of Directors

Audit Committee:

Minimum 3 members of the board of directors

All independents must belong to it

Chairman must be independent


Supervise the compliance with internal audit program.

Monitor the preparation, presentation and disclosure of financial information

Study and analyze the financial statements before they are submitted for consideration by the   board of directors and the maximum corporate body.

Creation of the SIMEV: RNVE; RNAMV and RNPMV

The SIMEV is the Integral Stock Market Information System, which is made up by the national Registers:  National Securities and Issuers Register – RNVE, National Register of Stock Market Agents – RNAMV, and the National Register of Stock Market Professionals – RNPMV.

This is the set of human, technical and management resources administered by the Financial Superintendence of Colombia to allow and facilitate the supply of information to the market. The responsibility for the truth of the information contained in the SIMEV, as well as the effects produced as a consequent of their disclosure will be of whoever provides the information.

6. External Circulars 028 and 056 of 2007, modified by External Circular 007 of 2011 – Country Code

The circulars referred to above establish 41 measures together with their respective explanations, divided into four groups.  In addition, they provide the obligations for issuers of securities to send an annual survey that must be published in the Internet page of the Financial Superintendence and which details if the measures are or not applied and why.

Characteristics and objectives:

To pass formal codes to a real corporate government scheme.

To create conviction regarding the goodness of corporate governance in the stock market.

To eliminate asymmetries on the subject of corporate governance.

To reach self-control schemes.

“COMPLY OR EXPLAIN” principle.

It does have binding force.

Contents: In total, there are 41 measures, divided into 4 large groups:

a) Stockholders Meeting

b) Board of Directors

c) Disclosure of financial and non financial information

d) Resolution of controversies

Each of these groups is preceded by an explanation of each of the measures.

Best practices survey:

Mechanism that covers all the measures established in the Country Code.

It permits the market to know the adoption or not of those measures and the explanation of the reasons why the respective issuer did not adopt that measure.

It remits them to the legal representative of the entity in charge of this item, between April 8th and 30th  making reference to the period from January to December of the previous year.

The survey has 80 questions (divided by subjects: Stockholders’ Meeting, Board of Directors, Disclosure of Financial and non Financial Information and Resolution of Controversies) of whether or not is applies plus a section for comments in each one of the questions.