In accordance with the National Development Plan and taking into account the importance of promoting foreign investment in Colombia for the purpose of reactivating the economy, the CONPES (Council of Economic and Social Politics) recently approved the issuance of a regulation project containing a new foreign investment statute. This statute would adopt a series of adjustments to the foreign investment regulation, in order to provide more reliability to foreign investors, and also simplify and facilitate the understanding of the regulation currently in force, thus maintaining the essential principles of foreign investment in Colombia such as universality, automaticity and equality in treatment.

According to the regulation project, the new statute basically incorporates the following changes in the foreign investment regulation:

  • A new form of direct foreign investment is included, consisting in the acquisition of fiduciary rights that derive from trusts established by fiduciary contracts as a form of developing an enterprise, thus increasing the spectrum of entities that may be subject to foreign investment.

  • Regarding portfolio foreign investments, limitations concerning the acquisition of shares with the voting right by a fund (which corresponded to 40% in omnibus funds and 10% in other funds) were abolished, therefore conceding funds more options in the management of their portfolio investments.

  • With regardsIn relation to portfolio investments, the definition of individual funds was introduced.

  • The requirements needed for investment funds to obtain authorization to operate in Colombia were reduced and simplified, leaving only the automatic authorization as a mechanism of authorization. In addition, an electronic format for the presentation of information required by the Superintendency of Securities was established.

  • The prohibition that existed before, according to which local administrators of investment funds could not perform functions in various funds simultaneously unless they had acquired both the previous consent of the foreign administrator or legal representative and the authorization of the Superintendency of Securities, was abolished.

  • The management of Colombian investments abroad will have a similar structure as that applied to foreign investments in Colombia.

  • Terms used in other legal dispositions related to foreign investment are unified, and unnecessary references to specific dispositions are eliminated in order to facilitate understanding.

Finally, the issuance of the new regulation by the Government that adopts the described changes is currently being expected.

The content of this article is intended to provide a general guide but specialist advice should be sought about your specific circumstances.