Dissolution of Non-Operating Companies: Regulatory Decree 1068 of 2020


By: Dr. Luz Eneida Saldaña, attorney, Universidad del Rosario, specialist in Administrative Law and Financial Law.

In compliance with the 2018–2022 National Development Plan, "A Pact for Colombia, a Pact for Equity" — article 144 of Law 1955 of 2019, under which commercial companies supervised by the Superintendency of Corporations that fail to renew their commercial registration for a period of three (3) years, or fail to submit the information required by that Superintendency during that same period, will be presumed non-operating and may be declared dissolved by the Superintendency on its own initiative — unless the company proves otherwise.

To establish and regulate how that procedure is applied, guaranteeing the principles of legality, equality, legal certainty, good faith, legitimate reliance, and reasonableness, Decree 1068 of July 23, 2020 introduced amendments to the Single Regulatory Decree for the Commerce, Industry, and Tourism Sector, Decree 1074 of 2015.

While the Superintendency of Corporations won't begin exercising this discretionary power until 2021, and with the new year close at hand, it's worth keeping two aspects of article 2.2.2.1.4.9 in mind:

1. The transition period for counting the three (3) years referred to in article 144 of Law 1955 of 2019: the Superintendency will count a lack of commercial-registration renewal or timely financial reporting starting with the years 2019, 2020, and 2021 — with 2021 counting as the third consecutive year, and so on going forward.
2. The outreach process run by the Chambers of Commerce, which, within the three (3) months following January 1, 2021, will inform interested parties about article 144 of Law 1955 of 2019 and its regulatory decree — in particular, the consequences of failing to renew commercial registration and failing to submit financial information to the Superintendency of Corporations. This will be done by email to the address on file in the commercial registry, if any, as well as on each Chamber of Commerce's website, on Confecámaras, through at least one (1) published notice during that same period in a national newspaper, and on the RUES (Unified Business and Social Registry) website.

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With that in mind, it's worth covering the topic as follows:

Authority to declare non-operating companies dissolved, as a discretionary power of the Superintendency of Corporations: based on the powers set out in numeral 7 of article 218 of the Commercial Code, under the following conditions:

• The company has failed to renew its commercial registration for three (3) consecutive years, or
• The company has failed to submit the information required by the Superintendency during that same period
• The company isn't subject to supervision by a specialized entity
• The company isn't undergoing an insolvency proceeding under Law 1116 of 2006
• The following may be taken into account: (i) a risk-based approach, (ii) the Superintendency's supervisory policy, (iii) a phased work plan, and (iv) the technical and operational capacity available
• The three (3) consecutive years of missed commercial-registration renewal or financial reporting will be counted regardless of how much time has passed, starting with 2019, 2020, and 2021 — with 2021 as the third consecutive year, and so on going forward
• To apply the presumption of non-operation for failure to renew commercial registration for three (3) consecutive years, it will suffice to check the database maintained by the relevant Chamber of Commerce
• Each Chamber of Commerce must annually send the Superintendency of Corporations a database containing: (i) the company name, (ii) its tax ID number (NIT), (iii) its address for judicial notice, and (iv) a precise indication of the three (3) years during which its commercial registration wasn't renewed
• To apply the presumption of non-operation for failure to submit the financial information required by the Superintendency for three (3) consecutive years, the Superintendency will draw up a precise account of the unreported periods

Procedure followed by the Superintendency of Corporations:

• It must notify the company, at its physical or electronic address on file for judicial notice in the commercial registry, that one or both presumptions of non-operation have arisen, based on the verifications described above.
• Where the issue is a lack of commercial-registration renewal, the notice must reference the database sent by the Chamber of Commerce; where the issue is a failure to submit financial information to the Superintendency, the notice must include an account of the unreported periods.
• The Superintendency will grant the company presumed non-operating a thirty (30) day period to rebut the presumption by presenting whatever evidence it wishes to rely on.
• The procedure will follow the general administrative procedure rules set out in articles 34 to 45, Chapter I, Title III, of the Administrative and Administrative Litigation Procedure Code, or whatever rules amend, clarify, or supplement it.
• If, after reviewing the file, the Superintendency finds that no response was received within the given period, or that the presumption of non-operation wasn't rebutted, it will declare the company dissolved and in liquidation.
• Under numeral 7 of article 218 of the Commercial Code, once the administrative act declaring dissolution becomes final, the Superintendency will send it to the Chamber of Commerce of the dissolved company's domicile for registration in the commercial registry, so that it's reflected in the certificate of existence and legal representation.
• This dissolution registration is separate from the dissolution of legal entities resulting from the cleanup of the Unified Business and Social Registry (RUES) under article 31 of Law 1727 of 2014.
• Registering the dissolution declaration is an administrative act that must be submitted for registration by the Superintendency of Corporations, and therefore carries no cost or fee for the company.

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Evidence to rebut the presumption of non-operation:

• A commercial company can rebut the presumption of non-operation within the given period by proving that it's actually operating — that is, carrying out its corporate purpose — through a certification from its legal representative or any other evidence to that effect.
• None of the above exempts the company from complying with the obligations that come with being a merchant under the law, including submitting financial information to the Superintendency of Corporations.

Reactivation. The General Shareholders' Assembly, the Partners' Board, or the company's sole shareholder may, at any point after a dissolution declaration, agree to reactivate the company under the terms and requirements set out in article 29 of Law 1429 of 2010.

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