A new opportunity for the “comanditas”?

Limited partnerships were the ideal vehicles for reorganizing family estates. The fact that the manager was for life and could make all the decisions without having to be part of the capital, made the figure attractive for designing succession planning, especially when at that time the occasional gain on inheritances had a rate of 33%. All this changed with the arrival of the S.A.S. With this new corporate form, in which shares with different rights could be issued, the same effect was achieved without entailing the joint and several liability of the manager.

Times have changed, but institutions have not. Today Colombia has a promising future in the area of alternative investments (investments in closed companies in non-traditional sectors), as the Government has made a big bet on the orange economy, the export of technological services and digital development. Our country has the largest number of initiatives in Artificial Intelligence in the region and therefore the OECD, through its Policy Observatory has suggested building a regulatory ecosystem for Colombia to develop as a Start-Up Hub. This will require the implementation of a corporate and fiscal vehicle that facilitates the development of alternative businesses. The purpose of this column is to refer to how existing, albeit seemingly obsolete, institutions can be used to facilitate investment in the alternative investment ecosystem in Colombia.

After the 2008 financial crisis, Europe witnessed a regulatory competition to develop legal and corporate ecosystems compatible with alternative investments. Following the issuance of the Alternative Investment Fund Managers Directive -Aifmd- in 2011, England, Luxembourg and France staged a rally of regulatory changes to adapt their corporate structures in such a way that they could attract investors. The result was the adjustment and updating of limited partnerships, adding different fiscal and corporate components, such as fiscal transparency (not being a direct taxpayer, but having them payable by their constituents), the possibility of legal personification, not requiring capital contributions by the limited partners and having an abbreviated liquidation procedure. Thus, the new English Private Fund Limited Partnership allows to opt for fiscal transparency and for the depersonification of the company. The same is true of the Luxembourg special limited partnership, whose management is particularly flexible and allows the limited partners to make no capital contributions. On the other hand, the French limited partnership, although simplified in its management and liquidation, will always have the effect of legal personification and the absence of fiscal transparency.

By having two types of partners, some with powers to manage and jointly and severally liable with the company (managers) and others as passive investors (limited partners), limited partnerships are used to set up and manage unregulated funds (usually in alternative investments) or to create structures to invest in them. Colombia should rethink the corporate and tax regulation of limited partnerships in order to use them as vehicles to efficiently manage alternative investments.