Article by Juan Carlos Gómez and Pablo Barraquer
The Superintendency of Companies recently changed a 10 year doctrine pursuant to which companies under liquidation procedures could not become subject to mergers or split-offs, since these transactions would fall outside the scope of the relevant company's corporate purpose which, while the company is being liquidated, is limited to carrying out activities tending to the company's liquidation.
This change of doctrine is contained in the Superintendency's Opinion 220-11760 dated April 4, 2001, where it concluded that since (i) in certain cases mergers and split-offs may lead to the extinction of a company, and (ii) the extinction of the company is the purpose of liquidation procedures, then a merger or a split-off transaction would be within the scope of the corporate purpose of a company under liquidation.
However, such transaction would only be valid if the company subject to liquidation procedures is (i) the absorbed company under the merger or split-off, and (ii) is extinguished after the transaction is completed.
This report was prepared and is copyrighted in 2001 by PARRA, RODRÍGUEZ & CAVELIER, a law firm with offices in Bogotá, Colombia. The general information herein contained does not constitute legal advice. Transcriptions and quotes are permitted citing the source.
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