Acquiring a business in Colombia may take several forms, such as the purchase of shares, the transfer of assets and, occasionally, mergers.

(a) Purchase of Shares: The acquisition of Colombian entities by share purchase may take place through the issuance of new shares or the purchase of existing shares. In both cases, the relevant shareholder approvals will need to be sought in compliance with the company's bylaws. As in many jurisdictions, it is customary for the seller to give the buyer representations and warranties associated with the company, its business, assets, liabilities and financial position. Parties may also make the payment and the transfer of shares conditional on certain events and may limit their responsibility and the amount to which they may be liable in the event of a breach of contract. Where new shares are issued, the capital contributions are made to the company and not to its shareholders or partners. Where existing shares are purchased, the payment is made to the selling shareholder.

(b) Transfer of Assets: There are two ways to undertake a transfer of assets. By means of the transfer of the individual assets or by the transfer of a commercial establishment or ongoing concern.

(i) Transfer of Individual Assets: They allow the buyer to cherry-pick the assets it requires and only assume the liabilities associated with those assets, if any. Those individual assets are not organized or registered as a commercial unit before the Chamber of Commerce.

(ii) Transfer of a Commercial Establishment or Ongoing Concern: Consists of a group of assets that are destined by an entity to form a separate commercial unit, registered as such before the Chamber of Commerce. If a business is sold as an ongoing concern, the sale is deemed to take place over the commercial establishment as a single economic unit, without requiring the parties to specify each of the assets.

(c) Mergers: Must be approved by shareholders (or partners) and can be implemented by the formation of a new company (which will absorb one or more dissolved, not yet liquidated corporations) or by an existing company absorbing another. The surviving company assumes all assets, obligations and liabilities of the absorbed company or companies. Where the proposed surviving company holds more than 90% of the shares of a simplified corporation, a streamlined merger process is available, whereby approval of the general assembly is not required.

Mergers are generally used in Colombia as a reorganization mechanism to simplify corporate structures or to seek tax efficiencies. It is uncommon in Colombia to acquire a nonaffiliated company by means of a merger.

The four most common corporate structures are the following: (i) simplified stock companies (sociedades por acciones simplificadas), (ii) corporations (sociedades anónimas), (iii) limited liability companies (sociedades de responsabilidad limitada), and (iv) branches of a foreign company (which do not have a legal personality different from that of its parent).

Corporations (sociedades anónimas), simplified stock companies (sociedades por acciones simplificadas) and limited liability companies (sociedades de responsabilidad limitada) are the types of companies with limited liability.

As noted above, a branch of a foreign company does not have a legal personality different from that of its parent, so the parent is liable for the assets and liabilities of the branch in Colombia. The foreign company and the branch are joint and severally liable for the tax obligations of the company, without limitation.

The following are the applicable restrictions for corporations (sociedades anónimas), simplified stock companies corporations (sociedades por acciones simplificadas) and limited liability companies (sociedades de responsabilidad limitadaSRL):

As a general rule, shares are freely negotiable unless a right of first refusal in favor of the current shareholders is set out in the bylaws or, in the case of simplified companies, when a prohibition on the transfer of shares is set forth in the bylaws. Partners in a limited liability company have a statutory right of first refusal in the amount of their existing participation unless the bylaws provide otherwise.

Title to shares in a corporation or a simplified corporation is transferred to the buyer from the seller by the agreement of the parties. For the transfer to be effective vis-à-vis third parties and to be formalized, the transfer must be registered by the company in its stock ledger (which it will be required to do once it has received the duly endorsed share certificates or a letter from the seller requesting that the operation be recorded). The transfer of quotas in a limited liability company is considered an amendment to its bylaws and it must be formalized in a public deed duly registered before the Chamber of Commerce.

(a) Transfer of Individual Assets: In the case of the transfer of individual assets, no special procedure needs to be followed. The transfer will be governed by the asset purchase agreement entered into between the parties. However, the legal formalization of the transfer of assets will need to be undertaken following the rules to transfer each specific asset (e.g., real estate needs to be transferred by means of a public deed that must be duly registered with the applicable registry office).

(b) Transfer of a Commercial Establishment or Ongoing Concern: While, in principle, there are no special voting majorities required to dispose of a business as an ongoing concern, the company's bylaws often establish limitations or requirements in this regard. For simplified stock companies, when the proposed transaction is thought to transfer assets and liabilities that represent 50% or more of the net equity of the company on the date of the transfer, the transfer must be approved by the shareholders with a simple majority vote and registered before the Chamber of Commerce. Dissenting and absent shareholders will have withdrawal rights.

The seller must deliver financial statements for the commercial establishment, listing the liabilities, which must be certified by a public accountant. When the business is transferred as an ongoing concern, a notice of the sale must be published in newspapers. Creditors then have two months to oppose the sale and to demand guarantees or security for payment. The sale must then be registered before the Chamber of Commerce. Unlike mergers, governmental authorization is generally not needed.

(c) In both cases, the following considerations should be taken into account in connection with the transfer of assets:

(i) Labor liabilities: If the transfer of assets includes a transfer of employees (by way of an assignment of employment contracts or - in the case of the sale of a commercial establishment or ongoing concern - by way of "employer substitution") the entity transferring the assets and the entity receiving such assets will be jointly and several liable for the obligations incurred prior to the transfer of the employees

(ii) Tax liability: As a rule, tax liabilities will not be transferred to the entity to which the assets are transferred; only real estate taxes and vehicle taxes would be carried over. For the city of Bogota, some liability may arise for the transferee, in local revenue, regarding industry and commerce tax (ICA), if the asset deal transaction is structured as a sale of a commercial unit.