Changes to Foreign Investment in Colombia: Substitution, Cancellation, and Capital Recomposition
After the initial registration of a foreign investment with the Central Bank (Banco de la República), any later change in its holder, purpose, receiving company, or amount constitutes a modification of the foreign investment that must also be registered.
In this article, we explain what each of these modifications involves, what recently changed regarding penalties for late registration, why it remains important to register them in any event, and what implications this process can have when a visa is linked to the investment.
When Does a Foreign Investment Modification Occur?
First, it is important to clarify that a foreign investment registered with the Central Bank may undergo later changes that require updating its registration. In practice, these modifications mainly involve three mechanisms: substitution, total or partial cancellation, and capital recomposition (recomposición del capital).
Below, we analyze each of these mechanisms and the circumstances in which they apply.
Substitution of a Foreign Investment
A foreign investment substitution can occur through a change of holder, a change of purpose, or a change of receiving company. Each of these types arises from different circumstances and can result in the partial or total cancellation of the initial registration and a corresponding new registration.
In any case, the substitution must be registered through the Foreign Exchange Information System (Sistema de Información Cambiaria), following the procedure established by the Central Bank and without the need to submit supporting documents for the transaction.
Substitution Due to a Change of Holder
A substitution due to a change of holder occurs when ownership of an investment passes from one non-resident investor to another non-resident investor. This can occur through transfers made free of charge or for consideration, such as a gift, sale, or exchange, among others, as well as through an allocation of the investment (adjudicación).
For example, if a non-resident investor holds a registered investment equal to all of the shares of a Colombian Simplified Stock Company (S.A.S.) and later sells them to another non-resident investor, the holder of the investment changes. Even though the receiving company remains the same, the substitution must be registered.
Similarly, a substitution can occur when the investment is represented by real estate in Colombia. For example, if a non-resident investor has a registered investment in a property and later sells it to another non-resident investor, ownership of the investment passes to the new investor and the corresponding substitution must be registered.
Substitution Due to a Change of Purpose
A substitution due to a change of purpose occurs when the initial purpose of the investment is replaced by another of the purposes that the regulations recognize as foreign capital investment.
For example, a non-resident investor may hold a registered investment in real estate in Colombia and later contribute that property to the share capital of a Colombian S.A.S., receiving shares in the company in exchange.
In this case, the investment initially represented by the property is now represented by an equity interest in the company. This entails a change in the purpose of the investment, and the substitution must be registered.
Substitution Due to a Change of Receiving Company
A substitution due to a change of receiving company corresponds to the contribution of the equity interests—shares, membership quotas, or contributions representing capital—of an initial investment to a new receiving company, or to the allocation of those interests as a result of the liquidation of the initial investment.
For example, if a foreign national holds a registered investment in a Colombian S.A.S. and, as a result of a corporate reorganization, such as a merger or a spin-off, the shares representing that investment become linked to another company, the receiving company of the investment changes and the corresponding substitution must be registered.
In these cases, the corporate reorganization may change the company in which the investment is represented, without necessarily meaning that the investor ceases to be its holder.
Cancellation of a Foreign Investment
A cancellation occurs when a foreign investment previously registered with the Central Bank decreases or is liquidated, in whole or in part, or when the non-resident investor ceases to be the holder of the investment as a result of a legal act or event. Depending on the scope of the transaction, the cancellation may be partial or total.
Partial Cancellation
A partial cancellation occurs when part of the registered investment decreases while the investor retains ownership of the remainder.
For example, if a foreign national holds a registered investment equal to 100% of the shares of a Colombian S.A.S. and later sells 40% of those shares to a Colombian resident, the foreign investment decreases in that proportion. In this case, the cancellation corresponding to the 40% transferred must be registered, while the remaining 60% continues to be registered as foreign investment.
A partial cancellation can also occur, among other cases, as a result of a reduction in the receiving company's capital that lowers the foreign investor's equity interest.
Total Cancellation
A total cancellation occurs when the investor ceases to be the holder of the entire foreign investment previously registered.
For example, if a foreign national holds all of the shares of a Colombian S.A.S. and the company is liquidated, the investment may result in a total cancellation when, as a consequence of the liquidation, the registered investment disappears and no other investment registration is generated.
Likewise, if a foreign national holds a registered investment corresponding to real estate in Colombia and later sells the property to a Colombian resident, the investor ceases to be the holder of the investment and its total cancellation must be registered.
Capital Recomposition
Capital recomposition occurs when, within the same receiving company and without a change of holder, the composition of the equity interests that make up the registered foreign investment is modified, without any change to the total value of the capital.
For example, if a foreign national holds a registered investment equal to 1,000 shares of a Colombian S.A.S., with a par value of COP $10,000 each, and the company later changes the par value of the shares to COP $5,000, increasing their number to 2,000 shares, the total value of the capital remains COP $10,000,000. In this case, neither the holder of the investment nor the receiving company changes, and the total value of the capital is not modified either; only the composition of the equity interests changes.
These modifications must be reported to the International Exchange and Payments Department (Departamento de Cambios Internacionales y Pagos – DCIP) of the Central Bank, by means of a Special Request (Solicitud Especial) submitted through the Foreign Exchange Information System.
As a result of this request, the Central Bank generates an International Investment Cancellation Declaration (Declaración de Cancelación de Inversiones Internacionales) and an International Investment Registration Declaration (Declaración de Registro de Inversiones Internacionales), in order to update the information corresponding to the registered investment.
Therefore, capital recomposition makes it possible to reflect certain changes in the composition of the equity interests of an investment that remains with the same investor and in the same receiving company, without modifying the total value of the capital.
When Must a Foreign Investment Modification Be Registered?
Modifications and cancellations of a foreign investment must be registered with the Central Bank when the circumstances giving rise to them occur. Currently, these registrations can be made at any time, provided that the investment was effectively made and complies with the applicable legal provisions.
As a historical note, before Decree 1044 of 2026 came into force, the regulations set a maximum period of six months, counted from the date of the transaction, for registering substitutions and cancellations of international investments. Failure to meet this deadline could result in penalties under the foreign exchange regime.
Even so, although this six-month deadline no longer exists for these transactions, this does not mean that registration has ceased to be mandatory. The modification or cancellation must be registered when applicable, even if a considerable period has passed since the transaction took place.
What Did Decree 1044 of 2026 Change?
The Decree 1044 of 2026, issued by the Ministry of Finance and Public Credit on August 5, 2026 and in force since August 7, 2026, amended Article 2.17.2.5.1.1 of Decree 1068 of 2015 to eliminate the six-month deadline that applied to registering changes in holders, purpose, or receiving company, as well as cancellations of international investments. Going forward, these transactions can be registered at any time, provided that the investment was effectively made and complies with the corresponding legal provisions.
It is important to remember that the Decree eliminates the six-month deadline, but does not eliminate the obligation to register substitutions and cancellations when applicable. In other words, the fact that registration can currently be made at any time does not mean that the modification can simply be ignored.
In addition, the change is relevant to sanction proceedings related to non-compliance with the former deadline, since it incorporates favorability rules for the situations to which it applies.
For this reason, the regulatory change makes it easier to regularize registrations that were not made within the former six-month period, but it does not turn registration into an optional procedure. The information on the investment must be kept up to date in light of any changes that occur.
Tax Obligations That Remain in Place
The Decree also maintains the investor's formal tax obligations, in particular the income tax return for a change in ownership of the foreign investment and for indirect transfers, provided for in Article 1.6.1.13.2.19 of Decree 1625 of 2016, in addition to any other formal tax obligations that may apply, each under its own terms.
In this regard, the tax authority (DIAN) may require the investor or their attorney to provide the proof of registration with the Central Bank in order to subsequently verify compliance with those obligations. In addition, the Decree does not modify the procedures, forms, and registration conditions that the Central Bank establishes through its general regulations. Therefore, when the ownership of a foreign investment changes, it is advisable to review both the foreign exchange registration and the tax obligations associated with the transaction.
Why Is It Still Important to Register Modifications?
The elimination of the six-month deadline does not mean that modifications to a foreign investment can stop being registered. Keeping the information up to date with the Central Bank remains relevant both to preserve the foreign exchange rights associated with the investment and to comply with the other obligations that may arise from the transaction.
In addition, when the foreign investment is linked to a visa, updating the foreign exchange registration can have consequences that go beyond the foreign exchange sphere and must also be analyzed from an immigration perspective.
The Investor's Foreign Exchange Rights
A foreign investment that has been effectively made and duly registered allows the investor to access the foreign exchange rights recognized by the regulations. These include:
reinvest profits or keep undistributed profits in surplus with the right to transfer them abroad;
capitalize amounts that carry the right to transfer;
remit abroad, in freely convertible currency, the verified net profits of the investment; and
remit abroad the amounts derived from the sale of the investment, the liquidation of the company, or the reduction of its capital.
For this reason, keeping the registration up to date is especially relevant when the investment has changed. If the information registered with the Central Bank does not reflect the current situation of the investment, practical difficulties may arise when carrying out transactions that involve exercising these rights.
Registration Remains Relevant Under the Penalty Regime
Decree 1044 of 2026 eliminated the six-month deadline and, with it, the penalty scenario specifically associated with filing a registration late within that period. However, this does not mean that the other obligations under the foreign exchange regime have disappeared, or that any breach has ceased to be sanctionable.
Submitting inaccurate information, failing to comply with other foreign exchange obligations, or engaging in conduct that constitutes a different violation may still give rise to penalties, in accordance with the applicable rules.
Therefore, although a modification can now be registered after more than six months have passed, it remains important that the information submitted to the Central Bank reflects the actual situation of the investment and that the other applicable foreign exchange obligations are met.
When the Investment Is Linked to a Visa
When a foreign investment serves as the basis for a visa, as is the case with Migrant (M) Business Partner/Owner or Investor visas, changes in the circumstances that led to the visa being granted can create additional obligations before the immigration authority.
The principal holders of these visas must report to the Immigration and Visa Authority any change in the circumstances that led to the visa being granted, and this notification must be made when the change occurs.
Therefore, when a relevant modification occurs in the investment, such as a change in ownership, a decrease in the investment, or a change in the conditions that supported the visa's issuance, the obligation to report that change to the immigration authority must also be reviewed.
This obligation is independent of registering the modification with the Central Bank, so the elimination of the six-month deadline introduced by Decree 1044 of 2026 does not change the duty to promptly notify the immigration authority of the changes that must be reported.
In this way, the foreign exchange registration and the immigration notification are separate procedures that must be handled independently, even though they are related when the investment is the basis for the visa.
To learn about the consequences of not reporting these changes to the immigration authority on time, read our article on the early termination and cancellation of a visa.
Conclusion
Foreign investment substitution, total or partial cancellation, and capital recomposition are different mechanisms that make it possible to update the registration of a foreign investment with the Central Bank, and each one responds to specific circumstances and procedures under Circular DCIP-83.
With Decree 1044 of 2026, the six-month deadline for certain registrations was eliminated and, with it, the penalty scenario associated with filing them late. However, a modification of an investment that must be registered continues to be subject to registration, and the other obligations under the foreign exchange regime remain applicable. The investor's formal tax obligations are also maintained.
When the investment is linked to a visa, a modification can also have effects that go beyond the foreign exchange sphere. In these cases, it is necessary to review both the update of the registration with the Central Bank and the obligations that may arise before the immigration authority.
At JG Lawyers, we assist foreign investors with registering and updating their investments before the Central Bank and with analyzing the immigration implications when the investment is linked to a visa.
Do you need to update the registration of your foreign investment?
Frequently Asked Questions
What Happens If I Did Not Register a Modification of My Foreign Investment Within Six Months?
Under Decree 1044 of 2026, the six-month deadline that previously applied to registering certain modifications and cancellations of international investments was eliminated. Currently, these registrations can be made at any time, provided the conditions set out in the regulations are met.
This does not mean that registration has ceased to be mandatory. When an investment undergoes a modification that must be registered, the information must be updated with the Central Bank, even if more than six months have passed since the change occurred.
Does Decree 1044 of 2026 Eliminate the Tax Obligations Associated With a Change in Ownership of an Investment?
No. The Decree maintains the investor's formal tax obligations, in particular the income tax return for a change in ownership of the foreign investment and for indirect transfers. In addition, DIAN may require the investor or their attorney to provide proof of registration with the Central Bank in order to verify compliance with those obligations.
How Is a Foreign Investment Modification Registered?
The procedure depends on the type of modification that has occurred. The substitution and the cancellation are registered through the Central Bank's Foreign Exchange Information System, while the capital recomposition is processed through a special request when the circumstances provided for this mechanism are present.
Therefore, before registering, it is necessary to determine whether the change corresponds to a substitution, a cancellation, or a capital recomposition.
What Is the Difference Between Substitution and Cancellation of a Foreign Investment?
A substitution occurs when the holder of an investment changes in favor of another non-resident investor, or when its purpose or receiving company changes, in accordance with the situations established in the regulations.
A cancellation, by contrast, occurs when the registered investment decreases or is liquidated in whole or in part, or when the investor ceases to be the holder of the investment.
The difference therefore depends on the situation that has occurred and on how it affects the registered investment.
What Happens If I Sell My Shares of a Colombian S.A.S. to Another Foreign Investor or to a Resident?
The treatment depends on who acquires the shares. If a non-resident investor sells its shares to another non-resident investor, a substitution due to a change of holder occurs.
If the shares are acquired by a Colombian resident, the non-resident investor ceases to be the holder of that investment and the corresponding cancellation must be registered, which may be total or partial depending on the proportion of shares transferred.
Can a Foreign Investment Modification Affect a Visa?
Yes. When the investment is the basis for a visa, certain changes to the investment can affect the circumstances that led to the visa being granted and create obligations before the immigration authority.
For example, a change in ownership, a decrease in the investment, or a change in the conditions that supported a Business Partner/Owner or Investor visa may require the holder to report the change to the Immigration and Visa Authority at the time it occurs.
This obligation is independent of registration with the Central Bank. Therefore, the elimination of the six-month deadline introduced by Decree 1044 of 2026 does not eliminate the duty to notify the immigration authority of the changes that must be reported.
Comments