Company Incorporation in Colombia for Foreign Citizens

Colombia has established itself as a highly attractive market for foreign investors who want to expand their businesses or start a commercial project in an ever-growing economy.

However, starting and creating a company in a foreign territory usually generates multiple doubts and concerns, since the legal, tax, and operational regulations are typically unknown and unfamiliar to international entrepreneurs.

Therefore, in this article, we analyze the main characteristics, feasibility, and key regulatory aspects that every investor should know to establish their company in Colombia safely and efficiently.

What Types of Companies Can Be Incorporated in Colombia?

Colombia offers different corporate alternatives for incorporating a business in the country, which in practice is mainly concentrated in three types of entities: the Limited Liability Company (Ltda.), the Corporation (S.A.), and the Simplified Stock Company (S.A.S.).

The Limited Liability Company (Ltda.) is a type of partnership—where the identity of the partners is of paramount importance—in which the liability of the partners is limited to the amount of their capital contributions, except for specific exceptions in labor and tax matters established by law, which we will address later.

Drawing a parallel, the Limited Liability Company (Ltda.) shares the principle of asset protection with the American LLC (Limited Liability Company), limiting the associates' liability to the amount of their contributions.

However, because it is a partnership, any change in the composition of the partners or the capitalization processes is more complex and requires greater formalities. Consequently, it is usually not a flexible corporate structure for foreign investors.

Additionally, as a partnership, the partners are also jointly and severally liable for obligations arising from employment contracts, as well as for the company's tax obligations, in accordance with the provisions of the Substantive Labor Code and the Tax Statute, respectively.

For these reasons, in practice, the use of the Ltda. company is almost exclusively reserved for specific activities that require this corporate structure by law, such as private security and armored transport companies.

On the other hand, the Corporation (S.A.) is a capital-based corporation—where the financial contribution of the partners is the most important factor—in which the capital is divided into shares of equal value (which may or may not be listed on the stock exchange), and where shareholders have limited liability up to the amount of their contributions to the company.

The Corporation (S.A.) operates under a scheme similar to that of a U.S. C-Corporation, so its structure is usually designed for large corporations or public capital raising, requiring a high administrative and supervisory burden.

In Colombia, the Sociedad Anónima (S.A.) requires at least five shareholders for its incorporation, the mandatory appointment of a board of directors, and the appointment of a statutory auditor (revisor fiscal). This typically translates into operating costs and formal requirements that are difficult to justify for medium-scale investments or ventures in their establishment stage.

For this reason, the S.A. is not usually a viable vehicle for structuring new businesses where operational agility and financial resource optimization are priorities. Consequently, it is mainly used in sectors where regulations specifically require this type of entity—such as financial institutions, insurance companies, and professional football clubs—sectors that, by their nature, demand greater corporate robustness.

Finally, the Simplified Stock Company (S.A.S.) is another type of capital-based corporation of a commercial nature, which can be formed by one or more natural or legal persons, where shareholders' liability is strictly limited to the amount of their capital contributions.

Since its introduction under Law 1258 of 2008, the Simplified Stock Company (S.A.S.) has established itself as the most efficient and recommended corporate vehicle for international investment. This entity acts as a flexible model that combines the asset protection of a Corporation with the contractual autonomy and operational simplicity of an LLC. As a result, today, more than 95% of new companies incorporated in Colombia are S.A.S.

Why the S.A.S.?

The Simplified Stock Company (S.A.S.) has consolidated its position as the preferred vehicle for foreign investors thanks to its operational and legal flexibility.

This model allows for single-shareholder incorporation and offers complete asset separation between the shareholders' personal assets and the company's liabilities, without requiring the mandatory creation of a board of directors.

Its main advantage lies in the freedom to draft corporate bylaws and structure governance rules tailored to each business, guaranteeing an agile, secure administration aligned with the specific needs of each project.

For a detailed analysis of this entity type, we invite you to read our dedicated article here.

Requirements to Incorporate an S.A.S. in Colombia

One of the main advantages of the S.A.S. is that, as a general rule, its incorporation and registration with the Chamber of Commerce are executed by private document, significantly simplifying the entire process.

The only exception to this rule occurs when assets subject to public registration—such as real estate—are contributed as capital, in which case it is mandatory to formalize the act through a public deed before a notary public.

In addition to the standard registration forms, the primary requirements to register an S.A.S. include:

Bylaws

This is the company’s primary governing document. It establishes the corporate name, corporate purpose (the scope of activities to be conducted), authorized, subscribed, and paid-in capital, total number of shares, founding shareholders, and corporate governance rules—such as voting thresholds for decision-making and limitations on the legal representative's authority.

This document must be authenticated before a notary public in Colombia or at a Colombian embassy/consulate if the shareholders are located abroad.

Appointment of Legal Representatives

The legal representative(s) who will act on behalf of the company to execute its corporate purpose must be formalizing designated and must explicitly accept their appointment.

It is worth noting that multiple legal representatives may be appointed—whether principal or alternate—and they are not required to be shareholders of the company.

Identification Documentation for Shareholders and Representatives

Finally, valid identification documents for all shareholders and legal representatives must be submitted. In the case of foreign nationals, a valid passport or a Colombian Foreigner Identification Card (Cédula de Extranjería)—if the individual holds a valid Colombian visa—may be used.

Incorporating an S.A.S. as a Foreigner

In Colombia, one of the most attractive aspects for investors is that incorporation requirements are identical for both nationals and foreign individuals. Consequently, no special visa or permit is required to establish a company, and foreign citizens can fully identify themselves using their passport.

Additionally, this process can be conducted 100% remotely without the need to travel to Colombia. It can be executed through a Special Power of Attorney granted before a Colombian consulate or via a private power of attorney duly apostilled or legalized in the country of origin.

Corporate Legal Representation

Although Colombian law allows the legal representative of an S.A.S. to be a foreign citizen identified solely by passport, in practice, this can sometimes present operational hurdles when opening corporate bank accounts or executing certain legal contracts within the country.

To prevent administrative bottlenecks, investors typically choose one of two alternatives:

• Appointing a Resident Legal Representative: Temporarily or permanently designating a Colombian citizen or a foreign resident holding a valid Cédula de Extranjería to streamline bank account setups and contract executions.

• Applying for a Resident/Investor Visa: Applying for a Colombian visa type that grants eligibility for a Cédula de Extranjería*, such as the M-Type Partner/Owner Visa.

*Learn more about Colombian visa options here.

Conclusion

Incorporating a company in Colombia is a strategic step toward launching operations in a thriving market that offers attractive opportunities and high corporate flexibility for foreign investors.

To navigate local regulations smoothly, securing specialized legal guidance throughout the process is essential. At JG Lawyers, we assist international entrepreneurs in structuring their companies and registering foreign direct investments in Colombia in a clear, responsible, and integrated manner.

Are you an international investor planning to incorporate a company in Colombia?

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Frequently Asked Questions (FAQ)

Can an S.A.S. in Colombia have a single foreign shareholder?

Yes. A single individual or legal entity (sole shareholder) can incorporate the company and own 100% of its corporate shares.

Can the company's legal representative be a foreign national?

Yes. A foreign citizen can hold the position of legal representative and identify themselves using their passport. However, to streamline banking procedures and administrative filings before local government agencies, appointing a legal representative with a Colombian ID (Cédula de Ciudadanía) or a Foreigner Identification Card (Cédula de Extranjería) is highly recommended.

Can I apply for a Colombian visa as a business owner or investor?

It depends. Once the company is incorporated and the foreign capital is properly registered through the required foreign exchange channels with the Central Bank (Banco de la República), the invested amount may qualify the shareholder to apply for an M-Type Partner/Owner Visa before the Ministry of Foreign Affairs.