Corporate Law is a synonym of what is known as Corporate Law , It refers to the areas of law that are related to the creation of companies, their operation, reorganization, development and end of these, as well as everything related to the government and administration of the same. Within this type of practice is everything related to the incorporation of companies, commercial register, merchant books, shares, classes of shares, capitalization, corporate governance, corporate reorganization, transformation, mergers, splits, meetings of the corporate bodies, shareholders ‘meeting, partners’ meetings, shareholders ‘agreements, board of directors, conflicts of interest, control, business group, branches, commercial establishments, companies with foreign participation, branches of foreign companies, company administrators, directors’ responsibility, liquidation and dissolution of companies, reactivation of companies, conflicts between shareholders, minority partners, among others.
Phantom Stock - As a corporate incentive within the Colombian legislative framework
- Equivalent to dividends
The benefit of the worker is reflected in the recognition of a value equivalent to that of the dividends of a share multiplied by a number of shares determined as the amount of the Phantom Stock. In this way, the worker does not receive the share, he receives a right represented by the economic benefits equal to those of the shareholders. That is, if he receives a thousand units of Phantom Stocks where each one corresponds to $ 10,000 pesos as annual dividends, he would receive a total of $ 10,000,000 pesos that year.
- Revaluation rights
This right arises from the higher value acquired from the shares of a company between the date of granting the Phantom Stock (as a right) to the employee and the date of its redemption or expiration. In this sense, the employee without having received shares from the company, on the redemption date of the Phantom Stock will receive in cash the value that results from the difference between the constitution value and the one that results from the valuation at market prices at the time of his redemption.
- Total value holdings
This methodology is similar to revaluation rights, where an employee is awarded a set number of units of Phantom Stocks with a vesting value of zero with a specific valuation date. Thus, on the valuation date, the worker receives in cash the total value of the company’s share multiplied by the number of Phantom Stocks.
Phantom Stock Benefits
One of the benefits of Phantom Stocks is that based on the basis that they would be recognized in principle as income from work, they would not carry the same tax burdens as any dividend distribution that is made in a company. In that order of ideas, the worker will not pay taxes on the value of the share, as the owner, but exclusively on the economic rights that it represents as an ordinary or extraordinary income, depending on the case.
Finally, Phantom Stocks are configured as an efficient tool for companies seeking to attract, retain and reward key employees. For the company it represents a great advantage not to lose political rights and to be in absolute control of its management; and for workers it is a great incentive to perceive the economic benefits of an action of the company they work for, encouraging them to produce positive results and stay in the company, which constitutes the maximum benefit for the employer.
Now, when it comes to the regulation of Phantom Stocks compared to Colombian legislation from the labor point of view, they have a place since they can be structured as non-salary recognitions by mere liberality of the employer such as extra-legal bonuses, bonuses or perks. In this regard, it must be taken into account that all payments that are a consequence of the individual performance of the worker will be considered salary. For this reason, so that Phantom Stocks are not considered as a benefit of a salary nature, they must arise from global goals and not individual ones, and be oriented to generate an incentive of permanence and corporate identification between the worker and employer. In this scenario and taking into account the health contingency, as a consequence of COVID-19, where the business sector and, therefore, employment, has been seriously affected, this tool would be useful for companies to alleviate the economic burden while still properly recognizing and rewarding your key employees, offering a mutually beneficial solution.
The Superintendency of Companies clarifies certain elements of the commercial trust contracts
I. When within a commercial trust contract the expiration of a term is agreed as a cause of termination, provided that said term is fulfilled before a settlor is admitted to a reorganization or liquidation process under Law 1116 of 2006, the The contract may be terminated by the parties without contradicting the general prohibition of termination of contracts established in article 21 of the aforementioned Law 1116. (Official Letter 220-106962 of July 6, 2020)
II. A guarantee trust contract can be considered as a security interest provided that one or more of its contractual provisions have the purpose of ensuring the payment of debts in favor of a creditor, in the terms of article 3 of Law 1676 of 2013. Without However, in the case of the execution of the guarantee, the parties are free to agree on the form of realization of the same since the same guarantee law indicates that only the requirements of registration, enforceability and restitution of the well delivered in precarious loan. (Official Letter 220-116294 of July 15, 2020)
These concepts make the guarantee trust a much more attractive figure to ensure compliance with obligations. By protecting any type of credit, the guarantee trust is an ideal mechanism not only to facilitate the recovery of credits, but also to ensure the compliance of contractors or counterparties in different business models.
Liability Regime of a Foreign Branch in Colombia
Consequently, in the event of a breach by the foreign branch that causes damage to third parties, the foreign company will be responsible for meeting the obligations and claims of its branch [2]. This is why in the event that the branch of a foreign company is used to commit fraud or to the detriment of third parties [3], and the counterpart affected with said behavior wishes to initiate an action to lift the corporate veil to hold the parties responsible. shareholders, this action must be taken against the foreign company and not the branch [4].
The foregoing given that, as has been said, the branch is not a different entity from the foreign legal entity to which it belongs. Once the foregoing has been clarified, it will be necessary to analyze it from the practice where the corporate veil lifting action must be instituted, being legally possible to do so in Colombia and with complete security at the place of residence of its main office (in the latter case, it will depend on applicable foreign law).
[1] Superintendency of Companies, Official Letter 2020-114734 of September 3, 2015.
[2] Ibid.
[3] Article 485 of the Commercial Code.
[4] Superintendency of Companies, Official Letter 2020-115939 of July 14, 2020.
Concept 220-002448 | Mercantile Registration Renewal
In line with this statement, in order to combat front or paper companies, the Superintendency of Companies promoted the inclusion of article 91 in the draft of the National Development Plan to incorporate the power of the Superintendency of Companies to declare ex officio the dissolution of companies that within three (3) years have not renewed the commercial registration or have not sent information required by this entity.
This project brings up certain new issues within which the presumption of lack of operability is included, that is to say that companies that do not comply with the renewal of the commercial registration or with the information report within the mentioned period, will be presumed as non-operational . Second, unlike what is established in Article 31 of Law 1727 of 2014, the project aims to grant the Superintendency of Companies the power to declare the companies as dissolved ex officio, that is, they are not understood to be dissolved simply by the To pass the time.
Concept 220-000871 of February 18, 2019 | Natural and legal persons can exercise control over entities of a corporate nature or not, and in general, over all organized activities.
Consequently, said Superintendency specified that the obligation to disclose in the commercial registry of the parent companies and in that of the subordinates the control situation “(…) both in the active part and in the passive part, be such companies, foundations, corporations, associations, natural persons, or even entities without legal status such as consortia, autonomous patrimonies, temporary unions or simply association or economic integration contracts. ”
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Concept 220-000871 of February 18, 2019 | Family companies are subject to the parent and subordinate regime.
Likewise, the Superintendency reiterated that the presumption of internal control by participation, in addition to being independent from the family or non-family nature of a company, must be evaluated by the administrators and partners in order to be duly registered in the relevant chamber of commerce, and in this way, comply with the rules on parent companies and subordinates, the non-compliance of which leads to the imposition of sanctions.
For more information contact prabelly@gomezpinzon.com