Colombia has many different types of stock companies of which there are two main ones, widely used in the country. These are Simplified Joint Stock Companies (S.A.S. by its acronym in Spanish) and Joint Stock Companies (S.A. by its acronym in Spanish).
In this article we will briefly describe each one of them and point out their main differences, so you can decide which one is a better fit for your business plan in Colombia. Depending on your goals, the S.A.S. or the S.A. might be a better fit.
What distinguishes Simplified Joint Stock Companies (S.A.S.) from Joint Stock Companies (S.A.)?
First, it is important to establish that both are stock equity companies, meaning they prioritize the financial contributions of their shareholders, with the goal of generating profits. Beyond this, however, they have plenty of differences, from their organizational structure to the legal requirements for their incorporation.
SIMPLIFIED JOINT STOCK COMPANIES (S.A.S.)
This type of company has existed in Colombia since 2008 and is characterized by a quick and simple incorporation process, as well as the possibility of being formed by just one shareholder.
Each partner makes a contribution (which can be money, contracts, contribution-in-kind, credit rights, among others), and based on this, their liability is limited to the amount contributed.
When it comes to the shareholders, there can be shareholders with ordinary shares, some without voting rights, and others with multiple voting rights, or any other type that is created by the shareholders in the company bylaws.
One attractive feature of S.A.S. is that it offers greater flexibility in terms of organizational structure and decision-making, allowing it to adapt to the specific needs of the business. For example, it is not required to have a Board of Directors, but it must have at least a legal representative.
JOINT STOCK COMPANIES (S.A.)
This type of company has been present in Colombia for longer than the S.A.S. In fact, it has been used for decades in the country, particularly by medium and large companies.
By law, establishing a S.A. requires a more formal process and more documentation compared to a S.A.S. It is created through a public deed between five or more shareholders and must have a defined corporate purpose.
These shareholders contribute capital, which is represented in shares, and depending on the amount, they have limited liability.
It has a traditional structure that includes a Board of Directors, General Shareholders’ Assembly, and Legal Representative.
What is the novelty when it comes to S.A.S. vs S.A.?
For many years, only S.A. could be listed on the country’s stock exchange. However, this all changed last year, in 2023, when it was determined that now S.A.S. can do so as well. This has brought more dynamism to Colombia’s stock exchange.
Understanding the main characteristics and differences between these two types of companies in Colombia is central to determine the one that can better adapt to your business needs. In this process, legal counsel from experts is ideal, so do not hesitate to contact us.
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Andrés Alonso
Corporate Law
Director
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