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Ordinary shares in Colombia
Colombian Ordinary shares are the most common type of stock created in the corporate sector. This type of shares represents the pure and simple contributions made by shareholders and grant them certain rights.
Therefore, the acquisition of ordinary shares will grant identical rights to all shareholders in legal terms, although they may differ in quantity depending on individual contributions. In other words, shareholders will have equal rights, but may have different levels of contribution.
The Colombian Commercial Code establishes that the owners of ordinary shares will have the following rights enshrined in article 379:
Participate in the deliberations of the general shareholders’ meeting and exercise their right to vote.
Receive a proportional share of the social benefits established by the end-of-year balance sheets, subject to the provisions of the law or the bylaws.
Freely trade the shares, unless the right of preference is stipulated in favor of the company or the shareholders, or even both.
Right to inspect, freely, the company’s books and papers within 15 business days prior to the general meeting where the end-of-year balance sheets are examined.
Receive a proportional share of the company’s assets at the time of liquidation and once the external liabilities of the company have been paid.
Colombian Preferred shares also called preferenciales.
On the other hand, Colombian preferred shares are those that include some privilege or economic right unlike ordinary shares.
The rights granted in preferred shares are specified in the Commercial Code in article 381 as follows:
A right of preference for reimbursement in case of liquidation up to the amount of their nominal value.
The right to have a certain determined, accumulative, or non-accumulative portion of the profits allocated to them first. This accumulation cannot extend for a period longer than five (5) years.
Any other prerogative that is exclusively of an economic nature.
Therefore, since the rights granted in a preferred share must be exclusively of an economic nature, privileges such as multiple voting or permanent deprivation of rights for owners of common shares cannot be granted.
If you have question, please contact us fur further consultation.
www.doingbusinessincolombia.com
EMAIL: info@doingbusinessincolombia.com
TEL +57-305-461-9162
