How to Liquidate a Company in Colombia: Real Steps and Costs

## When is a company liquidated?

A company in Colombia can be liquidated in two ways:

Voluntary liquidation: the shareholders decide to dissolve the company by agreement. Forced liquidation: by court order or failure to meet legal obligations (Law 1116 of 2006 — the insolvency regime).

This guide focuses on voluntary liquidation, the most common one.

Step 1: The decision to dissolve

For an SAS (Simplified Stock Corporation), dissolution is decided through a shareholders' meeting resolution. It doesn't require unanimity unless the bylaws demand it — the established majority is enough.

The minutes must include: - The decision to dissolve, with grounds (expiration of the term, losses that reduce net equity below 50%, among others) - The appointment of the liquidator (can be one of the shareholders or a third party) - The date from which the dissolution takes effect

Step 2: Registration with the Chamber of Commerce

Once the decision is made, you must register the minutes with your city's Chamber of Commerce. Required documents:

• Commercial registration cancellation form
• The duly signed dissolution minutes
• Certification from the statutory auditor (if applicable)
• Payment of registration fees (varies by city, approx. $60,000–$120,000 COP)

From registration onward, the company's name must include "en liquidación" (in liquidation).

Step 3: Inventory and liquidation balance sheet

The liquidator must prepare:

1. An inventory of assets (property, receivables, investments)
2. A list of liabilities (labor, tax, commercial obligations)
3. A liquidation balance sheet

This process can take 1 to 6 months depending on the company's complexity.

Step 4: Paying obligations — the order is mandatory

The law sets a strict order for paying liabilities:

1. Labor obligations (wages, final settlements, social benefits)
2. Tax obligations (DIAN taxes, property tax, etc.)
3. Secured creditors (banks with a mortgage or pledge)
4. Unsecured creditors (suppliers, clients with outstanding debts)
5. Shareholders (if anything remains)

Skipping this order can create personal liability for the liquidator.

Step 5: Canceling the tax registration and tax obligations

Before permanently canceling the registration, you must:

• File all outstanding tax returns
• Request cancellation of the tax registration with DIAN
• Cancel the tax ID number
• Request a tax clearance certificate

Step 6: Canceling the commercial registration

With all liabilities paid and the tax clearance in hand, the liquidator calls another shareholders' meeting to approve the final liquidation account.

Once approved, it's registered with the Chamber of Commerce and the company is legally extinguished.

Approximate costs of the process

Common mistakes that complicate liquidation

• Not registering the dissolution in time
• Distributing assets among shareholders before paying labor obligations
• Not preparing the inventory with a certified accountant
• Forgetting to cancel secondary registrations (trademarks, sector-specific permits, business establishments)
• Not keeping the accounting books (they must be kept for 5 years after liquidation)

Are you thinking about liquidating your company? An advisor can make this process much smoother and help you avoid penalties. Tell us about your case.

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