Population
Colombia is the third most populated country in Latin America. According to the latest report from the National Statistics Department ("DANE" for its acronym in Spanish), by 2023, Colombia will have an estimated population of 52,156,254 (51.2% women, 48.8% men).

Location
The Republic of Colombia is located in the Northwest corner of South America, bordered by the Caribbean Sea, between Panama and Venezuela, and the Pacific Ocean between Ecuador and Panama. Colombia is the largest country with a Caribbean coastline with an extension of 1,141,748 square kilometers (440,831 square miles). It is important to note that Colombia is the only country in South America with a coastline in the Atlantic and Pacific Oceans.

Climate and Ecosystems
Since Colombia is close to the equatorial line, there are no seasons; however, there are varying climates in different regions of the Country depending on the altitude and location. The average temperature in Colombia is 22° Celsius (72° Farenheight). From its tropical rainforest, Amazon jungle, deserts and marshes to the snowfall in the Andes mountains, Colombia’s wide-ranging ecosystems make it the second most diverse country in the world, containing within its borders between 10 to 14% of the world’s species.

Infrastructure
The Colombian Government has structured 4G, an ambitious toll road program and the 5G program that is characterized by its competitive and sustainable multimodal infrastructure. On one hand, the 4G program, is comprised of 29 projects aiming to build approximately 8,000 kilometers (4,970 miles) of roads. The average execution rate of the program reached 70% in 2022. And, on the other hand, the 5G program is composed of 7 toll road projects totaling approximately 1,000 kilometers (621 miles) only in its first wave.

Ports and Waterways
Since the issuance of Law 1 of 1991 (the “Ports Statute”), anyone willing to construct and/or operate a port in Colombia, whether it is for public or private service, must file a port concession request before the competent authority, which is the Agencia Nacional de Infraestructura, except for the ones regarding San Andres Island and the maritime area, or the Corporación Autónoma Regional del Río Grande de la Magdalena.

Airports
Colombia has 14 international airports, with most traffic coming from Bogota, Cali, Barranquilla, Medellin, and Cartagena. In addition, Bogota’s El Dorado International Airport built a second runway in 1998 under a 17-year concession agreement. The government has been selling its stake in local airports to allow for their privatization.

Water and Sanitation
Over the last two decades, the Government has given top priority to improving water and sewage coverage and quality. Inefficient management and obsolete technology have allowed private investors to assist the local and regional governments with the construction, operation and maintenance of water treatment plants Colombia has prioritized the accomplishment of the Sustainable Development Goals regarding the full coverage of water and sewage services to the whole Colombian population.

Electricity
In Colombia, there is an installed electricity capacity of close to 18,946 MW. Colombia’s electric energy market is experiencing an unprecedented transformation: from producing around 70% of its energy through hydroelectric power, and approximately 29% through thermoelectric sources, to a diversified electric energy matrix that would include at least 12% from renewable sources (other than water, mainly solar and wind power) by 2022.

Tourism
The Colombian Ministry of Trade, Industry and Tourism reported that approximately 3,279,256 foreign arrivals were registered in 2022, coming mainly from the United States (24.2%). During 2022, the largest variations in the number of foreign visitors are from Canada (115%), Brazil (102.2%), and Panamá (85.5%). Based on preliminary statistics, foreign visitors increased 115.7% compared to 2021 and 233.8% higher than in 2020.

Corporate law in Colombia provides two main alternatives to establishing a business in Colombia: (a) the incorporation of a subsidiary or (b) the establishment of a branch of a foreign company. The main types of legal entities under Colombian law are the corporation, the simplified joint stock company, the limited liability company, the limited partnership, the limited partnership, the branch of a foreign company, and the representative office.

Thus, the businessman will be able to choose which legal entity suits his business needs and proceed with its incorporation. However, we will mention the general characteristics of the most commonly used ones:

Simplified Joint Stock Company ("SAS", for its acronym in Spanish)

• Characteristics
  They are the most common type of legal entity incorporated in Colombia and may be formed by 1 or more shareholders (without limit). The capital of a SAS is divided into shares that are freely negotiable by endorsement unless the bylaws provide for restrictions on the transfer of shares. As a general rule, shareholders are only liable for the amounts contributed.
  
  SAS do not require a Board of Directors. However, the shareholder(s) may create this corporate body in the company's bylaws. The powers of the Board of Directors must be established in the bylaws. There are restrictions as to the activities that may be carried out by a SAS. For example, neither financial companies nor security and private surveillance companies can be SAS.
• Incorporation
  To incorporate a SAS in Colombia requires: (i) special power of attorney to be granted by the founding shareholders (optional); (ii) bylaws of the future company (containing the name or corporate name, corporate purpose, capital and term of duration of the legal entity); (iii) having an address, mailing address, telephone number in Colombian territory; (iv) letter of acceptance of office for the legal representative(s); (v) completed incorporation forms to be filed with the Chamber of Commerce of the domicile; (vi) obtaining RUT and RIT (Tax Registers); (vii) registration of the corporate books of the company and issuance of share certificates; (viii) opening a bank account; and (ix) finally the payment of the initial capital.

Incorporation of a Branch of a Foreign Corporation

• Characteristics
  According to Colombian law, a branch of a foreign company shares the same legal personality as its parent company and, therefore, does not have partners or shareholders, but: (i) an assigned capital, (ii) a defined corporate purpose, (iii) two administrators and (iv) statutory auditors. By sharing the legal personality, the parent company is liable for all operations and transactions of its Colombian branch.
• Incorporation
  A branch is incorporated by: (i) the granting of an apostilled resolution from its parent company; (ii) a letter of acceptance of office for legal representatives and statutory auditors; (iii) completed incorporation forms to be filed with the Chamber of Commerce of the domicile; (iv) having an address, mailing address, telephone in Colombian territory; (v) public deed before a local notary public of the domicile where the branch will develop its activities (which must contain among other things the bylaws and corporate documents of the parent company); (vi) obtain RUT and RIT; (vii) open a bank account and (viii) finally the payment of the initial capital.

Income Tax

• National legal entities, such as corporations or branches of foreign entities, or individual residents in Colombia are subject to income tax on their worldwide ordinary and extraordinary income and gains. Conversely, non-residents are only subject to income tax over their Colombian income.
• For tax purposes, entities are deemed as local if they: (i) have their principal domicile in Colombia; (ii) they have been established in Colombia in accordance with existing laws; or (iii) have their effective place of management in Colombia.
• Income tax is levied on the income earned by a taxpayer during the tax year (whether natural or legal persons) and consists of two specific components: income tax (35%) and capital gains tax (15%).
• Non-tax residents who have a Significative Economic Presence ("SEP") in Colombia will be subject to income tax over their gross income at 3% in case they opt to make an annual filing or at 10% through withholding. SEP includes, among others, the provision of certain services to users located in Colombia.

Dividends Tax

• Dividend tax is levied on profits distributed by Colombian entities. Dividends distributed by a Colombian entity to another Colombian entity, from profits that were taxed at the corporate level, will be subject to a 10% withholding tax on dividends (transferable to Colombian individuals or to any foreign shareholder subject to dividend tax).
• Dividends distributed from profits that were not taxed at the corporate level will be subject to the income tax rate applicable to the year of distribution (35%).

Value-Added Tax ("VAT")

• VAT is levied on the sale or transfer, at any title, of tangible movable and immovable goods, the sale or assignment of intangible assets associated with intellectual property rights, the provision of services within Colombia or from abroad to Colombian users, and the importation of tangible movable goods, unless it is expressly excluded from such tax.
• The VAT rate is generally 19% of the total value of the transaction, but different rates may apply to specific goods and services. Certain goods or services are taxed at 0% (exempt) and others are not subject to tax (excluded).

Industry and Commerce Tax ("ICT")

• The industry and commerce tax is a local tax on gross revenues derived from industrial, commercial, and service activities rendered in a municipality at approximately 1%.

Debit Tax

• Debit tax (0.4%) will apply on all financial transactions meant to dispose of resources placed in checking and saving accounts, as well as the deposit accounts in the Colombian Central Bank, and the drawing of managerial checks.
• It accrues when the transaction takes place and affects the resources that are left in the account and not the resources withdrawn.

Territoriality Principle
Colombian legislation establishes the principle of territoriality, which states that all employment relationships executed in Colombia shall be governed by Colombian laws, regardless of the agreements between the parties or the employee´s nationality. Consequently, national and foreign employers must comply with all the legal and economic obligations that arise from a Colombian employment relationship and pursuant to Colombian employment laws.

Employment Agreements
Colombian employment legislation assumes that every personal work relationship is governed by an employment agreement. Thus, for the purposes of declaring the existence of an employment agreement, the following elements must meet: (i) The personal activity of the employee; (ii) The continued subordination or dependency of the employee with respect to the employer, granting the employer the authority to give orders and instructions at any time concerning mode, time, or quantity of work; and (iii) A salary that compensates the employee for the services rendered.

Employment agreements may be classified according to their duration, as follows:

• Indefinite Term
  It does not have a specific duration.
• Fixed Term
  The parties establish a term of duration of the contract, which may not exceed three years. There are two types of fixed-term employment contracts: (i) those of less than a year and (ii) those between one and three years. It must be agreed in writing.
• For the Time That the Performance of the Work May Last
  Its duration depends on the period the duty lasts or the work that has been contracted.
• Occasional, Accidental, or Transitory
  For the fulfillment of duties that vary from the normal activities of the company, and its duration is less than a month.

Labor obligations arising from the employment agreement include:

• Payment of the Salary
  Is the main compensation for the services rendered. The minimum monthly legal wage ("mmlw") is established annually. For 2024 it is $1,300,000.
• Payment of Statutory Fringe Benefits
  In addition to their salary, all employers must pay their employees with ordinary salaries, the following statutory fringe benefits:
  • Legal Transportation Aid
    Paid every month to all employees with up to 2 mmlw.
  • Service Bonus
    30 days of salary (15 days paid in June and 15 days in December).
  • Unemployment Saving aid Plus Interest
    30 days of salary for each year of work or proportional to the time worked and is deposited in an unemployment savings aid fund chosen by the employee. Over this amount, annual interests of 12% are paid.
  • Footwear and Dress Endowment
    A pair of shoes and a work dress are delivered three times a year to employees who earn up to 2 mmlw.
• Vacations
  Paid for the remaining 15 working days for each year of work.
• Social Security
  All employers must affiliate their employees to the Integral Social Security System in Pensions, Health and Labor Risks and pay the monthly contributions to the different entities that make up the system. Said contributions must be paid jointly by employer and employee based on (i) the monthly salary, and (ii) the applicable percentage in accordance with law.
• Payroll Fees
  9% over the payroll´s amount.

Colombia has a regulated foreign exchange (“FX”) regime, of which the Board of Directors of the Colombian Central Bank (Banco de la República) exercises regulatory authority, while the Superintendence of Companies and the Colombian Customs Authority (“DIAN”) oversee monitoring compliance; depending on the type of operation conducted, they are invested with the power to impose sanctions derived from non-compliance. Additionally, the International Investment Regime is regulated by the National Government.

The FX regime in Colombia is free, which means that there is freedom of negotiation of foreign currency and free convertibility of currency, these operations are not subject to prior authorization by any authority.

Likewise, both the holding of assets abroad by residents in Colombia and the holding of assets in Colombia by residents abroad are authorized, in general terms they are subject to international investment procedures.

Operations Under FX Control and Obligations of Channeling Resources Through the FX Market
A limited list of operations are subject to FX control, which requires transferring funds in an appropriate manner using the systems recognized by law as part of the FX market: (i) through a process of purchase and sale of foreign currency to intermediaries of the FX market or, (ii) using an account abroad registered as a compensation account before the Colombian Central Bank. The following FX transactions are subject to FX market control:

• International Investment, including foreign investment in Colombia and investment of Colombian capital abroad
• Import of goods
• Export of goods
• International indebtedness (active or passive)
• Guarantees and collateral structures in foreign currency (particularly in cases of default)
• Derivatives and commodities transactions

In general, these transactions cannot be offset against each other or other types of obligations (except for some express exceptions, such as derivatives).

Registration Obligations
Some FX-controlled transactions have, in addition to the obligation to transfer funds through authorized means, the obligation of registration before the Colombian Central Bank.

In the case of international investments, the registration of these types of operations before the Colombian Central Bank grants its holder “foreign exchange rights”, including the right to transfer profits generated abroad, the amount resulting from the sale or liquidation of the investment, as well as the right to reinvest.

Foreign investment in Colombia may be direct - FDI (in national companies, subsidiaries, Colombian branches, trust businesses, real estate, private capital funds, intangibles, acts or contracts without capital participation) or portfolio (mainly stock market). Colombian investment abroad may be constituted by Colombian capital abroad (companies and agencies) or financial investment and/or assets located abroad (these may be both of the FX or free market).

In other cases, such as foreign credit and financial derivatives, the reports or records are mainly for statistical purposes and are necessary for the proper formalization of the transfer of resources.

Colombia has developed customs systems and procedures, which allow for a swift and efficient trade of goods and services. One of the most relevant mechanisms implemented by the Colombian Government is the Single Window for Foreign Trade (“VUCE”, for its acronym in Spanish). This platform aims to centralize all government procedures related to foreign trade operations in a single electronic interface, separated into 3 sections: Imports, Exports and Single Foreign Trade Form. Pursuant to Colombian Customs Regulations, import and export operations must be carried out before the Colombian Customs Authority (“DIAN”), complying with general and specific obligations for each trade operation depending on the relevant tariff classification of the goods and the applicable customs regime.

In Colombia, importations are defined as the entry of goods into the “National Customs Territory” from the rest of the world, or from a Free Trade Zone, for a specific task or purpose. The customs tariff code of 10 digits is listed in the Colombian Tariff Schedule set forth by Decree 1881 of 2021. This schedule lists the applicable tariffs for each tariff code (tariff subheading). Furthermore, goods can be imported to Colombia using various types of importation, some with considerable benefits, such as Importation for Consumption, Temporary Importations for Subsequent Re-exportation in the Same Conditions, and imports for transformation and assembly, amongst others.

On the other hand, exportations are defined as the exit of goods and/or services from the National Customs Territory to other countries or a Free Trade Zone. Exportation procedures begin with the filing of the request for boarding authorization (“SAE”, for its acronym in Spanish) issued by DIAN through electronic systems. There are various types of exportation, such as Definitive Export, Temporary Export for outward processing; and Temporary export for re-exportation in the same state, amongst others.

Finally, Colombia offers various alternatives to optimize foreign trade operations, some of which are: International Trading Companies; International Logistics Distribution Centers; Special Import and Export Programs (known as the “Vallejo Plan”), and, Free Trade Zones. Each of these is specifically regulated in the national Customs Regulation and offers diverse Tax and Customs benefits for their users.

The Colombian Government recently enacted Decree 659 of 2024, aiming to enhance control over import and export operations through the use of electronic information systems. The goal is to optimize customs controls and reduce operational inefficiencies by implementing technological tools that facilitate foreign trade activities.

Immigration regulation in Colombia considers different options to take into account when a foreigner wishes to carry out activities in the country. Within these considerations there are different distinctions depending on the activity, type of employment relationship, whether or not the foreigner has a university degree, etc. In general, whoever wishes to hire a foreigner in Colombia must consider (a) requesting a visa in accordance with the activity to be carried out, (b) complying with the reporting obligations before the government entities in charge and (c) requesting professional permits. depending on the case.

Visa Application
The Ministry of Foreign Affairs of Colombia has different types of visas within its regulations. The type of visa to apply for will depend on the activities that the foreigner wants to carry out in Colombia, the type of contract/bond they will have and the length of time they wish to stay in the country. From these initial characteristics, it is possible to define the best course of action and know the specific requirements of each type of visa, the processing time and the steps to follow during the execution of the process.

Reporting Obligations
Once the foreigner obtains the corresponding visa, it is necessary to make different types of reports to some government entities in Colombia. These reports are intended to keep the authorities informed, thus complying with the existing regulations on the processes after obtaining the visa. It is important to consider that these processes have strict deadlines that must be considered to avoid subsequent sanctions.

Professional Permits
If the foreigner will carry out activities within the regulated professions in Colombia, it will be necessary to verify the need to obtain a professional permit. In general, professional permits are temporary authorizations (generally, up to one year) issued by the bodies in charge of regulating each profession that allow foreigners to practice their profession within the framework of their work in the country. Complying with this requirement will prevent both the foreigner and the company from being sanctioned by these regulatory entities.

Colombian environmental legislation embodies a vast, complex and technically driven set of regulations addressing multiple environmental-related elements such as water, air, forest, waste, protected areas, climate change, and environmental justice, among others.

Aside from permitting and licensing issues, any person interested in undertaking activities that can potentially affect the environment in Colombia must comply with a vast set of general environmental obligations dealing with the protection of the environment and human health.

Pursuant to the Constitution, Law 23 of 1973 and Decree 2811 of 2974 ("Colombian Code of Natural Renewable Resources") environmental elements (air, water, soil, forests) are the sole property of the Colombian State, which act as a manager of said resources. The Colombian Constitution also recognizes the right to a healthy environment and incorporates the sustainable development criteria as a constitutional command.

Based on such principles, any project, work and/or activity that involves the use of natural renewable resources and/or that may affect the environment, will require the interested individual/company to apply for and obtain from the competent environmental authorities (either national, regional or local) the environmental licenses, concessions, permits and/or authorizations, prior to breaking ground or commencing the corresponding project.

The Constitution further defines Colombia as a multicultural state where several ethnicities coexist. In particular, the Constitution acknowledges the importance of indigenous and Afro-descendant groups, for whom it affords special protection. To ensure compliance with this constitutional mandate, the National Government introduced, by means of Law 21 of 1991, ILO Convention 169 on Indigenous and Tribal Peoples and, therefore, assumed obligations to obtain the previous and informed consent of ethnically differentiated groups whenever a project or a legislative measure has a direct impact over their territories or their interests.

In case of violation of the environmental regulations or damage to the environment, the victims affected by such violations and/or damages, or the competent environmental authority, may initiate judicial or administrative proceedings against the alleged infringer.

Generally, failure to comply with environmental regulation can imply other types of consequences, such as (i) contractual liability; (ii) tort liability; (iii) environmental liability; (iv) class actions; (v) group actions; (vi) injunction actions (“acciones de tutela”); (vii) criminal environmental liability; (viii) police actions, among others.

Colombia guarantees the protection of private property. Under Colombian law, property has a sense of public interest, which entails that property must benefit the common good and, in general, the welfare of the country’s citizens.

Except for the awarding of vacant lands (baldíos) located on national coasts or bordering regions, Colombian nationals and foreigners have equal rights and are subject to the same protections granted by law in connection with the enjoyment and disposal of rights over real property.

The most common agreements executed over real estate assets in Colombia for the development of business are purchase agreements (compraventa), lease (arrendamiento), usufruct (usufructo) and bailment (comodato) which grant different types of rights to the contracting parties and are subject to particular requirements.

When it comes to the acquisition or conveyance of rights in rem (i.e., rights that rely upon real property defined by the law as such) a double formality is required: title and mode. The most common title and mode used for the conveyance of rights in rem is a public deed executed before a public notary (title) and its registration in the certificate of conveyance and good standing that corresponds to the real property asset (mode). Once the registry is completed the right in rem is deemed as transferred.

Before entering into any type of agreement that involves real property, investors are advised to perform a title search in which the titles, current registered owners, conveyance and chain of tradition of the property are verified and a land use analysis by means of which the allowed uses and activities over the real property are reviewed.

In Colombia, trademarks (including other distinctive signs such as trade names and slogans), patents, utility models, industrial designs and trade secrets are governed by Decision 486 of 2000 of the Andean Community of Nations (herein “Decision 486”). Decision 486 sets forth the Industrial Property Common Regulations applicable to all countries that are members of the Andean Community (herein “CAN”) (namely Bolivia, Colombia, Ecuador, and Peru). In Colombia, the governmental agency in charge of industrial property is the Superintendence of Industry and Commerce (herein “SIC”).

Trademarks and Patents
Trademarks and patents are only protected through registration, whereas trade names and emblems attain protection by evidencing continuous and public use. Any act or agreement in connection with trademarks and patents, such as transfers, or even modifications regarding the owner’s name or his place of business, must be recorded before the SIC to become enforceable vis-à-vis third parties. Further to the FTA between the U.S. and Colombia, the failure to record trademark license agreements does not affect the standing, validity and/or enforceability vis-à-vis third parties.

Trademark registration affords protection throughout a 10-year term, which may be renewed indefinitely for subsequent equal terms. Patent protection is in force throughout a non-renewable 20-year term counted as of the application date subject to the payment of annuities. Utility model patents and industrial designs have a non-renewable 10-year term. for patents).

Patent owners who applied for a patent abroad, within a State member of the Paris Convention also enjoy a 12-month period to claim the Paris Convention Priority. Patent applicants in Colombia also have the alternative to use the Patent Prosecution Highway to take advantage of a patent examination conducted in other patent offices in the world to quicken the patent proceeding. Colombia is also a member State of the Patent Cooperation Treaty ("PCT").

Trade Secrets
Information that is meant to be used in industrial, productive or commercial activity, and whose nature allows it to be transferred from one party to another, will be protected as a trade secret, provided that (i) is secret, in such a way that it is not of public knowledge, nor may it be easily attainable by those knowledgeable in the respective matter; (ii) has a commercial value due to its secrecy, and (iii) has been subject to reasonable efforts to keep the information confidential. Consequently, industrial secrecy protection arises regardless of registration, whenever the requisites are met. Among others, know-how and confidential information can be protected as industrial secrets.

Copyrights
In Colombia, Copyrights are governed by Decision 351 of 1993 of the Andean Community, Law 23 of 1982, Law 44 of 1993, Law 599 of 2000 ("Colombian Criminal Code") and Law 1915 of 2018. Per Colombian law, authors are the individuals who craft a protected work, to whom moral and economic rights are conferred. Copyright protection is granted without the need for a registration. However, to provide enforceability vis-à-vis third parties and evidence, among others, authorship, and date of creation of a work. Therefore, it is advisable to register the work and contracts associated thereto before the Copyright Office.

Enforcement of IP Rights
The applicable legislation also contains regulations regarding legal actions that can be initiated in the event that third parties infringe copyrights or industrial property rights, including civil actions for infringement, unfair competition, or criminal procedures. The legislation also includes the possibility of requesting ex parte preliminary injunctions.

In Colombia, there is a special regime on consumer protection contained, mainly, in the Consumer Protection Statute - Law 1480 of 2011. There, the consumer is defined as "Any individual or entity who, as the final recipient, acquires, enjoys or uses a certain product, whatever its nature for the satisfaction of an own, private, family or domestic and business need when it is not intrinsically linked to its economic activity. The concept of consumer shall be understood to include that of user."

Some of the rights that consumers have are: (i) right to receive quality products; (ii) right to safety and indemnity; (iii) right to receive information; (iv) right to receive protection against misleading advertising; (v) right to complain; (vi) right to contractual protection; (vii) right to choice; (viii) right to participation; (ix) right to representation; (x) right to information; (xi) right to education; and (xii) right to equality.

In addition, consumers have certain corresponding duties which are: (i) to inform themselves regarding the quality of the products, as well as the instructions provided by the producer or supplier in relation to their adequate use or consumption, conservation and installation; (ii) to act in good faith before the producers and suppliers and before the public authorities; and (iii) to comply with the rules on recycling and disposal of waste of consumed goods.

This special consumer protection regime applies to all products marketed in the national territory (whether domestic or imported) as well as to all services provided in Colombia. However, the scope of application of the law is limited to entities located in Colombia. Therefore, in principle, foreign entities that are not located in the territory are excluded from the scope of application of this regulation.

As part of the UN and the Financial Action Task Force ("FATF"), Colombia must comply with the standards for the prevention and sanction of money laundering, financing terrorism, and financing the proliferation of weapons of mass destruction ("AML/FT/FPWMD"). This country's commitment is reflected in different regulations that impose obligations to companies aiming to prevent those risks.

For instance, for companies(1) of the real sector and those that are not supervised by any other entity, the Superintendence of Companies, through Chapter X of its Legal Basic Circular, imposes the obligation to implement a Self-Control and Integral Risk Management System for Asset Laundering, Financing of Terrorism and Financing of Weapons of Mass Destruction Proliferation ("SAGRILAFT" for its acronym in Spanish). In turn, companies related to the financial system including banks, insurance companies, trust companies, and stock exchanges, among others, that are under surveillance of the Financial Superintendence of Colombia ("SFC") must implement an AML/CFT system, called "SARLAFT 4.0"(2), according to the guidelines given by the SFC in External Circular 011 of 2022.

On April 28, 2020, Colombia formally joined the Organisation for Economic Co-operation and Development ("OECD"), which implied a greater commitment to the fight against corruption and transnational bribery. For instance, the Law on Transparency, Prevention and Fight against Corruption ("Law 2195 of 2022"), creates a regime of administrative liability for companies that have benefited from corruption and orders public entities to issue guidelines for the implementation of bribery and corruption prevention programs ("ABC"), such as the Transparency and Business Ethics Program of the Superintendence of Companies ("Chapter XIII of its Basic Legal Circular").

Under Law 2195 of 2022 the term ‘corruption’ encompasses crimes beyond those typically associated with public or private corruption as it incorporates <<any crime affecting public patrimony>>. This term includes, among others, the following crimes: Hoarding, Speculation, Alteration and modification of quality, quantity, weight or measure, deceptive offering of products and services, Profiteering, Profiteering of medicines and medical devices, Economic Panic, Illicit commercial exploitation, Damage to raw material, agricultural or industrial product, Usury, Usurpation of industrial property rights and plant variety breeders' rights, Illegitimate use of patents, violation of industrial or commercial reserve, subtraction of own thing to comply with constitutional or legal duties, fictitious export or import, fraudulent application of officially regulated credit, the illicit exercise of the monopolistic activity of rent arbitrage, tax evasion, and smuggling.

(1) The term companies refers to legal entities constituted in Colombia or foreign company branches domiciled in Colombia.

(2) Please note that entities related to the financial sector may be required to comply with other AML/FT systems or minimum elements of the Organic Statute of the Financial System ("EOSF") aimed to prevent AML/FT/FPWMD risks, depending on the activity that the company will carry out in Colombia.

Personal data, according to the Colombian General Data Protection Legal Framework (Law 1581 of 2012 and Decree 1074 of 2015, “CGDP”), is understood as any information that may be associated or connected to a given individual, in such a way it provides for her identification. The collection, storage, use, transfer, transmission, suppression, and, overall, processing of personal data that takes place in Colombian territory, is subject to the CGDP.

The legal basis for processing data under the CGDP is consent from data subjects. For consent to be valid, it has to be prior (before the processing takes place), express (through means where the data subject reveals her unequivocal intention) and informed (data subjects must be informed about (i) the name and contact details of the data controller (i.e., the entity that decides on the databases and the processing of the information contained therein.); (ii) their rights and means to exercise them; (iii) where to consult the applicable data protection policy; (iv) that the authorization to process sensitive data is entirely optional; (v) the specific data that will be collected and processed –especially if sensitive data is involved, and (vi) how the data will be used and for what purposes. This information must be provided at the time of obtaining consent at the latest and cannot be incorporated by reference. Evidence of consent must be kept and available to produce upon request from the data subject or the Colombian Data Protection Authority (“DPA”), the Superintendencia de Industria y Comercio.

Failure to comply with the CGDP may lead to administrative sanctions, including (i) fines of up to 2,000 minimum monthly regular wages (COP$ 2,600,000,000.00, approximately US$642,027), (ii) suspension of the activities related to the processing of personal data for up to six (6) months to implement corrective measures, (iii) temporary shutdown of operations or activities associated with the processing of personal data or (iv) definitive shutdown and/or termination of operations or activities related to the processing of personal data.

As per Colombian law, companies that undertake the same economic activity or participate in the same value chain and meet the thresholds set forth by the Superintendence of Industry and Commerce are required to inform the SIC about any proposed transactions to merge, consolidate, acquire control or integrate, regardless of the legal structure of the proposed transaction. The relevant economic thresholds established by the SIC are: (i) Individual or combined annual operating income as of December 31st of the year immediately preceding the transaction equal to or exceeding 1.641.044, Tax Value Units ("TVU")(3); or (ii) Individual or combined assets as of December 31st of the year immediately preceding the transaction equal to or exceeding 1.641.044,99 TVU.

Whenever the parties to the transaction have a corporate presence in Colombia in the form of subsidiaries or affiliates, the assets and operating income considered for threshold calculations will be those of the parties and their related group entities in Colombia. Otherwise, if the parties in the transaction do not have a corporate presence in Colombia and participate in the market through distributors or resellers, the assets and operating income taken into account for threshold calculations will be those of the parties and the worldwide group entities that participate in the same economic activity or value chain.

However, if the parties meet one or both aforementioned conditions, the applicable procedure before the SIC will depend on the combined market shares. If the parties hold a combined market share below 20% in the relevant market, they must present a short-form notification to the SIC describing the intended transaction. If the parties hold a combined market share above 20% in the relevant market, they must present a long-form filing before the authority.

The analysis conducted by the SIC aims to determine whether the transaction has any adverse effect on the relevant market or the consumers, or if it infringes competition. Obtaining clearance, when required, is a prerequisite for closing, and therefore any closing before clearance will be deemed to be a violation of Colombian antitrust law with the possibility to impose greater amounts of fines.

(3) (“TVU” –approximately COP 77.2 billion i.e., approximately $17.9 million USD for 2023)

In Colombia, public entities are required to publish their procurement processes in the Electronic System for Public Procurement ("SECOP"). This tool allows all interested citizens and investors to follow up on the procurement processes opened by the entities, as well as all the project documents. In terms of infrastructure, in recent years Colombia has stood out for its great development in the transportation sector, including major toll roads, and port and airport projects. Currently, one of the most ambitious infrastructure programs is being implemented, the “5th Generation Infrastructure Concession Program” (herein “5G”). The 5G program is the largest in the history of Colombia characterized by multimodal projects including toll roads, airports, railways and waterway access. These projects will contribute to the development of a more sustainable infrastructure in the country. On the other hand, in terms of public transportation, as part of the administration of Bogota's commitment to energy transition and decarbonization of public transport, the first hydrogen-powered bus for mass transport services in Colombia was installed and is currently operational. This vehicle, which will be used for public transportation, will run on renewable energy and is part of a pilot plan from the district.

Regarding the infrastructure sector, there has recently been significant interest in the development of the electric sector's infrastructure. The regime of state contracting does not necessarily apply to this industry. The activities encompassing transmission, distribution, commercialization, and energy generation are termed essential public utilities. Given the imperative to ensure continuous, universal, and efficient service provision to the entire population, this industry falls under high levels of state intervention. Hence, investors are required to establish themselves as public utility companies, register with the electric market operator, adhere to all resolutions of the CREG, and submit to the oversight and control of the Superintendence of Public Utility Services. The activities of transmission and distribution constitute natural monopolies, thus warranting the highest degree of state intervention. These activities are remunerated through charges determined by the CREG, payable by the entities utilizing their networks, which in turn compensate all invested capital. On the other hand, energy generation and commercialization activities are performed on a competitive basis. Generators sell their energy on the power exchange or through bilateral contracts. Furthermore, generators may receive compensation via the Reliability Charge, which remunerates their capacity to generate during system stress situations. In 2024 and 2025, it is foreseen that the CREG will call for a Reliability Charge Auction because our last Reliability Charge auction did not fulfill the required firm energy allowing the demand to be covered. Therefore, there is a great opportunity for investors to obtain financial incentives to develop the project. Lastly, commercial entities sell energy to other agents or end-users. The government is actively promoting diverse mechanisms and incentives to attract investment in the Colombian electric sector, particularly for the advancement of renewable energy sources. On the other hand, in early 2025, it is expected that the first offshore wind farms will be auctioned, allowing investors to participate in a competitive process to earn the right of exclusivity on a certain area of the ocean, to obtain economic feasibility of the offshore wind farms. Additionally, recently, the UPME and the IPSE (non-interconnected zone agency of the government) have been requesting bids for developing individual photovoltaic solutions for non-interconnected zones, creating the financial and subsidies environment required to develop these kinds of solutions by private individuals.

In the bylaws, the company must establish the grounds for dissolution, among which are: termination of the term or duration of the company, impossibility of carrying out the activities inherent to the corporate purpose, by the decision of the shareholders, among others. The liquidation described in this section refers to those causes that do not imply the determination of the liquidation by the authority. The main steps of such a process are as follows:

• Dissolution and Appointment of the Liquidator
  The General Shareholders' Assembly must approve the dissolution of the company and the appointment of the liquidator (an appointment that the liquidator must accept by means of an acceptance letter). These documents must be registered before the Chamber of Commerce.
• Continuity of the Corporate Bodies
  During the liquidation, the management bodies will continue to be active, but their functions must be exclusively aimed at the liquidation.
• Updating of Tax Records
  The company's National and Local Tax Registries ("RUT" and "RIT") must be updated.
• Publication of the Liquidation in the Newspaper
  Publish notification of the liquidation.
• Notification to the Tax Authorities
  The national and local tax authorities must be notified of the liquidation and asked if there are any such obligations pending payment.
• Inventory of the Equity
  The liquidator must prepare an inventory of the equity, which, depending on the case, must be approved by the General Shareholders Assembly or by the Superintendence of Companies.
• Payment of Corporate Obligations
  The liquidator shall collect the assets of the company and pay all the liabilities of the company, pursuant to the credit priority rules.
• Final Liquidation Account
  The liquidator must prepare the final liquidation account which must be approved by the General Shareholders Assembly. These documents must be registered before the Chamber of Commerce.
• Final Activities
  Distribution of the remainder and conducting the cancellation of the tax registries, foreign investment and bank account.

There are several Bankruptcy proceedings in Colombia. Specifically, the insolvency of commercial companies that have permanent businesses in Colombia, natural persons who execute acts of commerce and trusts that perform business activities will be regulated by Law 1116 of 2006 ("Law 1116") and its complementary legislation.

Law 1116 regulated four types of Bankruptcy proceedings: (i) Reorganization, (ii) Judicial Liquidation, (iii) Judicial Validation of an out-of-court Reorganization Agreement (iv) Cross-Border Insolvency.

The Reorganization Proceeding seeks to execute the reorganization agreement between the debtor company and all its creditors for the company to continue its business. The purpose of the Judicial Liquidation proceeding is to liquidate the company and award the asset to its creditors. The Judicial Validation of an out-of-court Reorganization Agreement seeks that the Bankruptcy Court confirm a reorganization agreement negotiated out of court. The Cross-Border Insolvency proceeding regulates the cooperation between Colombia and foreign States involved in insolvency proceedings that take place in several jurisdictions. It is regulated in accordance with UNCITRAL’s Model Law on Cross-Border Insolvency.

In the framework of the State of Emergency, Economic, Social and Ecological declared in 2020, the National Government issued Decrees 560 and 772 of 2020 which established four types of proceedings: (i) Emergency Negotiation of a Reorganization Agreements (the “NEAR”), (ii) Business Recovery Procedure (“PRE”), (iii) Abbreviated Reorganization, and (iv) Simplified Liquidation.

The NEAR allows debtors affected by the declaration of the State of Emergency to negotiate a reorganization plan in a term that may not exceed 3 months. The PRE is regulated by the Colombian Confederation of Chambers of Commerce and allows the company's liabilities to be restructured with the intervention of a mediator. The Abbreviated Reorganization and Simplified Liquidation proceedings are more expeditious and are only applicable to companies whose assets are equal to or less than 5,000 SMMLV.

Finally, Law 2277 of 2022 extended the validity of Decrees 560 and 772 of 2020 and their regulatory decrees until December 31, 2023. On August 22, 2023, a bill was submitted to the Colombian Congress to include the decrees as permanent legislation and was recently approved by the Congress. Currently, the bill is pending to be signed by the President.