Corporate renewal in private surveillance companies

In a recent informal survey, conducted on the Twitter social network of the “Instituto de Análisis Societario” (@IAsocietario), its followers were asked whether they considered it reasonable that private security companies should necessarily be incorporated as limited liability companies (hereinafter "Ltda.") in order to operate in Colombia.

Some 82% of the respondents considered this requirement to be unreasonable. This requirement, established in Article 8 of Decree 356 of 1994 (Private Security Statute), was intended to provide transparency to companies engaged in this type of activities. The Constitutional Court, in Ruling C-123/2011, analyzed the constitutionality of this provision and declined to rule on the matter.

Public policies must be evaluated in the context in which they were issued. The Private Security Statute was issued 26 years ago, when Colombia was going through a serious national security crisis. At that time there were only the classic types of companies in the Code of Commerce and each one had its own purpose: limited partnerships were companies for the reorganization of family estates where usually the managers were the parents and the limited partners were the children; partnerships were very personal companies to carry out certain activities closely linked to the quality of its members; the S. A. was the large capital stock company with the purpose of creating a private security company. A. was the large capital company where capital prevailed over the quality of its members; and the Ltda. was a partnership whose partners' composition was public, and whose liability - as a general rule - was limited to the amount of their contributions. In this sense, it was logical that - at that time - private security companies were constituted under this type of company.

Then, cracks began to appear in the axiom of the limitation of liability in the Ltdas. In tax matters, article 794 of the Tax Statute ("E.T.") established that the partners of partnerships (including the Ltda.) will be jointly and severally liable "for the taxes, updating and interests of the legal entity" pro rata to their contributions and the time of possession of the quotas or part of the interest. In labor matters, Article 36 of the Substantive Labor Code indicated that "partnerships and their members" are jointly and severally liable for all obligations arising from the employment contract. Finally, and in a subtle manner, Article 13 of Law 1066 of 2006 established a solidarity in customs and exchange matters, under the same terms as those established in the E.T. (Tax Code). The unforgettable expression of Professor Ignacio Sanín Bernal, according to which "the Ltdas. are not constituted; they are committed", makes sense.

Today the corporate and tax panorama has changed. On the one hand, the simplified joint stock company (S.A.S.) contains an unequivocal provision limiting the liability of the shareholders, which exempts them -except for fraud- from being liable for any type of obligation of the company.

On the other hand, there is the unique registry of beneficial owners -RUB- (in charge of the DIAN and created by Law 2010/2019) which contains the detailed information of the beneficial owners of the companies. Therefore, the time has come to make a corporate renewal to the private security companies allowing them to be incorporated as S.A.S.