Simplified Stock Corporations (S.A.S.) are now regulated

The Superintendency of Companies, Securities and Insurance has issued the Regulations for Simplified Stock Corporations (S.A.S)[1]. The most important provisions in the Regulations are:

Separate Legal Personality:

• An S.A.S has separate legal personality from its shareholders (principle of corporate separateness).
• The corporation exists as of the date it is registered with the Superintendency of Companies, Securities and Insurance.
• Shareholders are only liable for up to the amount of their contributions. Shareholders may expressly waive in writing the principle of limited liability.
• If shares are transferred with unlimited joint and several liability, and the waiver has not been established in the bylaws, the assignee must expressly accept this liability. Otherwise, the liability will be limited to the amount of the contributions to capital.
• The shares issued by the S.A.S cannot be registered in the Public Stock Market Register, or be traded on the stock market. The S.A.S will be authorized to trade other negotiable instruments on the stock market.
  
  

Incorporation of the S.A.S

• Incorporation may be by electronic means.
• The S.A.S. is incorporated by means of a non-notarially-recorded document, which is recorded in the Companies Register of the Superintendency of Companies, Securities and Insurance.
• If the contributed assets comprise property for which the transfer requires a notarial instrument, the incorporation of the S.A.S. will be by means of a notarial instrument.
• If a foreign company is a shareholder in the S.A.S., its good standing must be certified in the country of origin both at the time of incorporation and on an annual basis. Furthermore, a complete list of all members, partners or shareholders will be submitted.
• The Regulations about the information which companies that have foreign companies as partners or shareholders must supply to the Superintendency of Companies, Securities and Insurance also apply to the S.A.S.
  
  

Capital and Shares

• The creation of different classes of shares can be agreed in the bylaws. Shares may be common or preferred. If the type of shares is not specified, they will be common shares.
• If a capital increase is agreed, the shareholders will have a preemptive right to subscribe to new shares in proportion to their shares; unless stated otherwise in the bylaws.
• If the capital increase is made with an application to balance sheet accounts, the shareholders will enjoy the right of allocation.
  
  

Organization of the corporation

• Unless stated otherwise in the bylaws, each shareholder will have one vote per share.
• Shareholders may attend meetings in person or via a representative. Representation is indivisible.
• They can attend meetings by videoconference or other digital means.
• The notice of meeting must be given at least five business days in advance.
• The resolutions passed by the meeting on corporate transactions must be made in a non-notarially-recorded document; unless it involves a transfer of property which requires a notarial instrument.
• If a company changes its corporate form to a S.A.S, the general shareholders’ meeting must approve the new bylaws.
  
  

Dissolution, liquidation, reactivation and cancellation

• The dissolution is by operation of law.
• The corporation can be dissolved voluntarily and early.
• It is possible to use the shortened process for dissolution, liquidation and cancellation.
• The process for reactivation and cancellation is provided for in the Companies Law and other application regulations.
• An S.A.S which is economically viable can avail of reorganization in bankruptcy.
  
  

Corporate Dispute Resolution:

• The differences that arise between shareholders, the corporation or the managers about the existence or operation of the corporation can be settled through mediation or arbitration.
• The bylaws can establish grounds for the voluntary separation of shareholders in order to settle fundamental disagreements.
  
  

[1] Resolution No. SVCS-INC-DNCDN-2020-015, published in the Official Register, Special Edition, No. 1071 on September 25, 2020.