Lifting of the corporate veil for environmental liabilities

By means of Official Communication 220-282131 of December 6, 2017, the Superintendence of Corporations made known to the Ministry of Commerce, Industry and Tourism its official position on the corporate component of the Environmental Liabilities Bill, which is currently pending in the Congress of the Republic.

This Bill, in its article 3, defines an Environmental Liability as a "negative environmental impact that is geographically located and delimited and that persists after the end of the project or the anthropic activities that caused it, generating risks for human health, life or the environment". Article 4 establishes the liability regime for the generation of environmental liabilities, indicating that "those actors that participated directly or indirectly in the generation of the environmental impact" will be responsible for the same, among which are the owners of the project that generated the impact, the owners of the land where the impact was generated and the directors and administrators that have been determinant for the occurrence of the same.

Article 17 of the Project also indicates that commercial companies must carry out due diligence studies aimed at identifying environmental risks when carrying out projects potentially generating environmental liabilities, or when carrying out merger, liquidation, acquisition or sale processes of companies related to mining, oil, electric power transmission, infrastructure concession, final disposal of solid and hazardous waste and reversion of assets in favor of the State.

Finally, in its articles 8 and 18, the Project indicates that, in the case of the generators of environmental liabilities, a special regime of strict liability and extended liability will be applied, and that the Superintendence of Corporations, at the request of the environmental authorities, may "dismiss the legal personality of the companies subject to its supervision, when the company is used to evade the liability of these, or of their administrators, directors or shareholders with respect to the intervention of environmental liabilities".

With respect to this last point, the Superintendence of Corporations, in a courageous and noteworthy attitude, and after a logical legal analysis based on constitutional precedents, expressed "its firmest opposition" to the fact that it would have the administrative power to unilaterally remove the corporate veil of a company that generates environmental liabilities, since this would imply "annulling the foundational legal act of the company; the corporate contract".

The Superintendency also indicated that, since it is an extreme measure that affects the sphere of rights and obligations of the legal entity and its associates, the removal of the corporate veil is a competence exclusively reserved for the jurisdictional function.

Finally, the Superintendence of Corporations proposes a modification to the text of the Project according to which the environmental authorities may demand, before the Superintendence of Corporations, the dismissal of the legal personality of the companies subject to its supervision when these are used to evade the responsibility of their controllers or of their administrators, directors or shareholders for the generation of environmental liabilities.

This position of the Superintendence of Corporations allows questioning, from a constitutional perspective, the prerogatives that certain entities currently have to unilaterally remove the corporate veil of the companies. Such is the case, for example, of the power established in Article 869-2 of the Tax Statute, which allows the DIAN to unilaterally remove the corporate veil of entities that have been used or have participated in alleged tax abuse conducts.

Therefore, within the framework of a forthcoming tax reform, in order to safeguard the rights of taxpayers and third parties related to a company, the referred article should be amended to establish -in turn- that if the DIAN considers that certain companies have been used exclusively for tax abuse purposes, such entity may sue for the removal of the corporate veil before the Superintendence of Companies which, under a jurisdictional function, and acting as an independent and neutral judge, will have to define whether or not such action is appropriate.