In Colombia, entrepreneurs have several options when it comes to forming a company. Two of the most popular structures are the Simplified Joint Stock Company (S.A.S.) and the Public Limited Company (S.A.). Each has specific characteristics that make them suitable depending on the size and needs of the company. This article outlines the key differences between the S.A.S. and the S.A., helping you decide which option is best for your business.
What is a Simplified Joint Stock Company (S.A.S.)?
The Simplified Joint Stock Company (S.A.S.) was created by Law 1258 of 2008. This legal structure aims to simplify the creation of companies, offering flexibility in its structure and operation. The S.A.S. allows shareholders to define their own statutes, making decision-making more agile. Additionally, it does not require a minimum number of shareholders, allowing it to be established with just one.
What is a Public Limited Company (S.A.)?
The Public Limited Company (S.A.) is regulated by the Commercial Code and is the traditional structure for large companies in Colombia. It requires at least five shareholders and follows a formal hierarchical structure with a board of directors and a general assembly of shareholders. This structure is ideal for companies looking to attract investment through the issuance of shares and that need greater regulation.
Key Differences Between S.A.S. and S.A.
1. Management Flexibility
The S.A.S. allows shareholders to freely decide how the company will be managed, without the restrictions of the Commercial Code that govern the S.A. In an S.A., the existence of a board of directors is mandatory, while in the S.A.S., it is optional, reducing administrative burden.
2. Number of Shareholders
The S.A. requires at least five shareholders for its establishment, making it more suitable for large companies. On the other hand, the S.A.S. can be constituted by a single shareholder, ideal for small businesses or family-owned companies.
3. Share Capital
The S.A. requires a minimum capital for its creation, which can be a barrier for some entrepreneurs. In contrast, the S.A.S. does not have a minimum capital requirement, making it easier for entrepreneurs with limited resources.
4. Issuance of Shares
In the S.A., shares must be nominative, and their transfer is regulated by specific rules. The S.A.S. offers greater flexibility in the issuance and trading of shares, facilitating the entry of new partners without complex procedures.
5. Decision Making
Decisions in the S.A.S. are based on agreements set forth in the statutes. In contrast, in the S.A., decisions must be approved by the general assembly of shareholders, following the rules of the Commercial Code, which can make the process slower and more bureaucratic.
6. Shareholder Liability
In both types of companies, shareholders' liability is limited to the amount of their contributions. However, the S.A.S. offers greater flexibility in protecting shareholders by allowing personalized internal rules that benefit its members.
Advantages and Disadvantages
Advantages of the S.A.S.
- Quick incorporation: No complex notarial procedures required.
- Flexibility in management: Partners are free to establish their own rules.
- Minimum number of shareholders: It can be established with only one shareholder.
- No minimum capital requirement: Ideal for small ventures.
Disadvantages of the S.A.S.
- Less formality: The lack of structure may be seen as a risk by more conservative investors.
Advantages of the S.A.
- More formality: Ideal structure for large companies and organizations.
- Ease of attracting investors: The formality and regulation can attract institutional investors.
Disadvantages of the S.A.
- Complexity in formation: Requires at least five shareholders and more complex procedures.
- Rigid management: The structure is more rigid and requires greater formality in decision-making.
Conclusion
The choice between an S.A.S. and an S.A. depends on the size, needs, and objectives of your company. The S.A.S. is ideal for small and medium-sized enterprises looking for flexibility and quick incorporation. On the other hand, the S.A. is more suitable for large companies that require a hierarchical and formal structure. In either case, it is essential to have proper advice to make the best decision for your business.
Call to Action
If you are interested in incorporating your company in Colombia, at Servicio Legal, we offer expert advice on corporate law. We help you choose the most suitable legal structure for your needs and accompany you throughout the incorporation process.