Penalties for failing to register control situation

The obligation to register the control situation before the chambers of commerce of the registered office of the companies is contemplated in Article 30 of Law 222 of 1995..

When should I report the control situation?

This must be registered within thirty days following the configuration of the situation of control, for which reason it may be the case that a situation of this type did not exist at the time of the incorporation of the company, but that, due to the development of its corporate purpose, such situation has been configured by the acquisition of additional participations in the company, or the acquisition of additional political rights that lead to having the capacity to decide the operation of the company.

The law contemplates the following assumptions of presumption:

a. Internal control by participation: It is verified when more than fifty percent (50%) of the capital is owned in the subordinate, either directly or through or with the assistance of the subordinates.

b. Internal control by the right to cast votes constituting the minimum decision majority: This modality occurs when the company has the power to vote in the shareholders' meetings or in the shareholders' meetings, or by having the number of votes necessary to elect the majority of the members of the board of directors.

c. External control: This form of control is verified through the exercise of dominant influence in the decisions of the administrative bodies, due to an act or business entered into with the controlled company or with its partners, without requiring that the controlling parties participate in the capital stock of the subordinate.

What can Superintendency of Corporations do?

The Superintendence of Corporations has the power to initiate investigations to determine the existence of situations of control or business groups when:

• There is a complaint by any citizen against a company that has not registered the control situation.
• Ex officio it considers that there is a relationship between certain companies that has not been reported.
• When any document presented in any procedure before the entity may generate suspicions of the configuration of a situation of control by a parent company.

The obligation to register the control situation before the chambers of commerce of the registered office of the companies is contemplated in Article 30 of Law 222 of 1995. Likewise, article 86 of Law 22 of 1995 allows the Superintendency to impose sanctions for up to 200 legal monthly minimum wages, which to date is equivalent to $284,700,000.

Some obligations and effects derived from the control situation:

a. Obligation to report consolidated financial statements.

b. Verification of transactions between related companies.

c. Subsidiary liability of the parent or controlling company.

Whenever the Superintendence of Corporations requires the registration of a control situation, must I do it?

Each case has special characteristics, but not every time the Superintendence of Corporations requests the registration of a situation of control, or in its absence, every time this entity initiates administrative investigations on this issue, it means that you must comply or that you are not complying with the law. Therefore, it is important to get advice in order to be able to recognize when you are in non-compliance or not with the law, and to be able to act accordingly.

How can we help you?

In Forvis Mazars, we have a specialized team with which you will be able to:

• Know when you must register a control situation before the commercial registry.
• Know if you may be at risk of being sanctioned by the Superintendence of Corporations.
• Obtain tools for adequate advocacy against the opening of an investigation by the Superintendence of Corporations for configuration of a situation of control.

In addition to providing this diagnosis, we can perform all actions aimed at ensuring full compliance with the associated requirements: registration with the chamber of commerce, responses to requirements of the superintendence, and representation before the various sanctioning institutes.