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Mergers, spin offs and group reorganizations before a Colombian exit: corporate steps, creditor rights, tax neutral tests and the foreign investment registration

Last verified: 2026-10-27 · Status: Stable

A merger or spin off can move a Colombian business into the right entity before a sale or close a redundant company without liquidating it. Corporate law requires shareholder approval of a detailed project, a national newspaper notice and a 30 day window in which creditors can demand guarantees. For tax, mergers and spin offs are neutral when shareholders keep at least 75 percent (unrelated parties) or 85 percent (related parties) continuity and receive at least 90 or 99 percent of the consideration in shares; otherwise they are taxed as sales of fixed assets.

USD figures use the TRM (tasa representativa del mercado) of COP 3,157.94 per US dollar valid 27 October 2026, from the official TRM series certified by the Superintendencia Financiera and published on datos.gov.co. Conversions are for orientation only.

Key facts

Acquisitive merger or spin off: minimum shareholder continuity for neutrality	75 %ET art. 319-4, as of 2026-10-27 · in force
Acquisitive merger or spin off: minimum consideration in shares	90 %ET art. 319-4, as of 2026-10-27 · in force
Reorganizing merger or spin off: minimum shareholder continuity	85 %ET art. 319-6, as of 2026-10-27 · in force
Reorganizing merger or spin off: minimum consideration in shares	99 %ET art. 319-6, as of 2026-10-27 · in force
Foreign to foreign merger: Colombian assets threshold for neutral treatment	20 %ET art. 319-8, as of 2026-10-27 · in force
Creditors' period to demand guarantees after merger or spin off notice	30 daysCódigo de Comercio art. 175; Ley 222 art. 6, as of 2026-10-27 · in force

The rule

1. A merger occurs when one or more companies dissolve without liquidating to be absorbed by another or to create a new one; the absorbing company acquires their rights and obligations when the merger is formalized. The shareholders' meetings approve the merger agreement with the quorum for mergers or, failing that, early dissolution; it must contain the reasons and conditions, figures from the books, valuation of assets and liabilities, an annex on valuation methods and exchange ratio, and certified balance sheets. The legal representatives publish a notice in a national newspaper.
Cost to do it: Registration of the merger deed at the chamber of commerce: 6 UVB per act, COP 72,660 (US$23) in 2026, plus notary and publication costs.Código de Comercio (Decreto 410 de 1971), Art. 172, 173 and 174, 1971-03-27 official text · verified 2026-10-27

2. Within 30 days after publication, creditors of the absorbed company may demand satisfactory guarantees; if justified, the judge suspends the merger as to that debtor until guarantees are given or debts paid. After that the absorbed companies' obligations survive only against the absorbing company, which acquires their assets and takes on their internal and external liabilities. The merger deed must include any competition clearance, approvals of in kind valuations for supervised companies and the merged balance sheets.Código de Comercio, Art. 175, 177 and 178, 1971-03-27 official text · verified 2026-10-27

3. A spin off occurs when a company, without dissolving, transfers in block one or more parts of its equity to existing or new companies, or dissolves without liquidating and divides its equity among them. The project is approved by the majority for bylaw reforms, published in national and local newspapers and communicated to creditors, who have 30 days from the last notice to demand guarantees unless assets of the companies involved are at least twice their external liabilities. Assets and liabilities pass in block when the deed is registered.Ley 222 de 1995, Art. 3, 4, 5, 6 and 9, 1995-12-20 official text · verified 2026-10-27

4. When a transformation, merger or spin off increases members' liability or impairs their economic rights (for example reduces their percentage or the value of their shares, or limits transferability), absent or dissenting members may withdraw. A company in private liquidation can still be part of a merger or spin off.Ley 222 de 1995; Ley 1429 de 2010, Ley 222 art. 12; Ley 1429 art. 31, 2010-12-29 official text · verified 2026-10-27

5. Acquisitive mergers and spin offs (between unrelated entities) are tax neutral for the companies, with carryover tax cost, and for shareholders if holders of at least 75 percent of the shares continue in the resulting entity with equivalent rights and receive at least 90 percent of their consideration in shares; if the acquirer sells the transferred assets within two years it cannot offset accumulated losses against that gain. Reorganizing mergers and spin offs (between related entities, parent and subsidiary absorptions, and spin offs by creation) need 85 percent continuity and 99 percent consideration in shares. A shareholder who receives cash or other assets in place of shares is deemed to sell all its shares.Estatuto Tributario (art. 319-3 to 319-6 added by Ley 1607 de 2012 art. 98), Art. 319-3, 319-4 num. 4 and 5, 319-5 and 319-6, 2012-12-26 official text · verified 2026-10-27

6. Mergers and spin offs that do not meet those conditions are taxed as sales of fixed assets, and a spin off is only treated as such if the part spun off is a business unit or commercial establishment, not individual assets. Cross border reorganizations are neutral only where the absorbing or beneficiary entity is Colombian. Transfers of Colombian assets in mergers or spin offs between foreign entities are taxed as sales unless Colombian assets are no more than 20 percent of the group's consolidated assets.Estatuto Tributario (added by Ley 1607 de 2012 art. 98), Art. 319-6 par. 1 and 2, art. 319-7 and art. 319-8, 2012-12-26 official text · verified 2026-10-27

7. Contributions in cash or kind to Colombian companies in exchange for new shares are not a sale and produce no income for either side if the deed states that both submit to ET art. 319: the company takes the contributor's tax cost and the contributor's shares take the cost of the assets contributed.Estatuto Tributario (added by Ley 1607 de 2012 art. 98), Art. 319, 2012-12-26 official text · verified 2026-10-27

8. Cancellations and substitutions of foreign direct investment arising from mergers or spin offs are registered by the investor, its attorney or representative, or the Colombian company's legal representative in the Sistema de Información Cambiaria, choosing the cause "Reorganización empresarial", without supporting documents. Mergers between competitors or within a value chain above SIC thresholds need prior notice to the Superintendencia de Industria y Comercio.Circular DCIP-83 of Banco de la República; Ley 1340 de 2009, DCIP-83 num. 7.2.1.4 lit. a and b; Ley 1340 art. 9, 2026-08-25 official text · verified 2026-10-27

Type	Parties	Continuity	Shares as consideration	Source
Acquisitive	Unrelated	75 percent	90 percent	ET art. 319-3, 319-4
Reorganizing	Related, parent and subsidiary, spin off by creation	85 percent	99 percent	ET art. 319-5, 319-6
Taxed	Conditions not met	n/a	n/a	ET art. 319-7

Tax neutrality tests for Colombian mergers and spin offs

Worked example

Before selling one of two business lines, a group spins the line off into a new SAS (a reorganizing spin off by creation): the parent keeps 100 percent continuity and receives only shares, so no tax arises; the new SAS's shares then take the old tax cost, and their later sale is taxed under the share sale rules.
Two dormant related subsidiaries are merged into the operating company instead of being liquidated separately; creditors get the 30 day window and the investment registration is updated with the "Reorganización empresarial" cause.

Step by step

Choose merger or spin off and test the tax neutrality conditions (related or unrelated, continuity, share consideration).
Prepare the project with valuations, certified financial statements and exchange ratio.
Approve it at each shareholders' meeting; check withdrawal rights of dissenting members.
Publish notices and notify creditors; wait 30 days for guarantee claims.
Obtain any SIC clearance; formalize and register the deed; transfer registered assets.
Update Banco de la República registrations as reorganization substitutions or cancellations.

Common traps

Paying any cash to a shareholder in a neutral merger can taint that shareholder's entire holding as a sale.
A spin off of loose assets that are not a business unit is taxed as an asset sale.
In acquisitive reorganizations, selling the transferred assets within two years blocks loss offsets.
Cross border mergers into a foreign entity are not neutral for Colombian assets unless the 20 percent group test applies.

Sources

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