October 6th, 2015 by Juan Sebastian Perez Villarreal
Since Colombia started to develop Private Equity industry in 2005, the sector and its ecosystem have been grown rapidly and have been strengthened by important national and international players. In fact, a funds association called Colcapital has been created. Also, BANCOLDEX, entrepreneurial development bank, has supported the industry development with the objective of being a key investor for local funds by creating an investment instrument called BANCOLDEX CAPITAL. Currently, this entity is under a transformation program to become fund of funds.
The objective of these initiatives have focalized on offering companies access to new financing alternatives and promoting best practices activities in order to facilitate the industry understanding to investors and companies. Colombia has an environment composed by small and medium size companies and most of them have a familiar structure. Some of these enterprises have a difficult banking access and others need resources for internationalization process.
Colombian government has implemented programs to promote entrepreneurs, e.g. Innpulsa, in order to sponsor start –up and issued other laws (Decree 2555 of 2010) which have allowed local pension funds to invest in private equity. Also, Insurance companies and local endowments are in the involving process to become part of domestic ecosystem.
With regard to growth economy, Colombia registered 4,6% by 2014 and according to the last report of the IMF, the forecast is 3,4% for 2015, which is higher than other countries in the region. In terms of Gross Domestic Product, it has increased three times in only one decade, from USD 2.261 by 2003 to USD 8.031 by 2013.
Under this framework, Colombia is still an investment attractive country as long as it has been pointed within the twenty main destinations for direct foreign investment by UNCTAD – World Investment Report 2013 and 2014. Also, it is a country with more than 47 million inhabitants with a middle class under growing process. To date, almost 30% of population is part of the middle class, the forecast, is to get 37% by 2020, according to Fedesarrollo.
Nevertheless, private equity and venture capital industry is still not a mature sector in the economy by reason of most of funds are still under the investment period. Many companies are attractive for investment due their excellent economic performance in spite of there is not much track record to be showed.
In addition, Colombia established legislative tools to attract private equity investors, in this sense, Decree 2555 of 2010, modified by Decree 1242 of 2013 were issued to regulate the incorporation and management of funds. Immediately, it has allowed the growth of this industry, from one fund by 2005 to 57 funds by 2015. Also, Colombia has stablished laws for minority shareholders rights and for corporative government by Law 222 of 1995, Law 275 of 2001, among others.
Regarding the incorporation of a Private Equity fund in Colombia, it requires at least two investors and it does not need approval for existence from the Financial Superintendence of Colombia (“SFC for its acronym in Spanish), it is necessary to notice at least 15 working days prior the Private Equity Fund has been created, by showing the following documents:
- Bylaws model
- Professional Manager profile
- Copy of the minute of the board of directors of the Management Company by which the bylaws model is approved
- Certificate issued by Management Company documenting the compliance with legal requirements
Furthermore, bylaws must contain investments criteria and management policies, characteristics and organic structure of the fund, thus:
- Managers companies: It is an entity that must be brokerage companies, trust firms or assets management companies. This election depends on the General Partner decision at the moment of arranging the business structure. It is a party in charge of managing and administrating the fund.
- Professional Manager: It is individual or entity responsible for administration and management of assets. Also, it is in charge of doing capital calls, approval of investors, and selection of portfolios, among others.
- Investment Committee: It is responsible for analyzing and determining investments quotas. Purchases and liquidation processes must be approval by this board.
- Monitoring and controlling Committee: It is in charge of attending compliance of the duties assigned to the Management Company and Professional Manager. It also check that investments decisions are made in accordance with the investment criteria, among others.
- General Investment Meeting: It is composed by all the investors involved in the business. Most duties are stablished in the bylaws.
Moreover, Financial Superintendence is the entity responsible for controlling and monitoring the Managers Companies which are in charge of preparing reports before this controlling organism.
In reference to taxation, according to Tax Code (Estatuto Tributario in Spanish), Private Equity Funds are considered as a transparent vehicle for tax purposes, it means, these funds are not taxpayers of income tax.
In consequence, Colombia has been ranked in the 4th position among 12 countries in Latam and the Caribbean since 2010 to update, by Latin American Private Equity & Venture Capital Association (LAVCA), because it is a country that has made a lot of legal and economic measures and created good conditions for private equity and venture capital environment. Also, there is a large number of opportunities for worldwide funds to take advantage of companies and to use the country as a hub for internationalizing enterprises in the region.
Juan Sebastian Perez Villarreal
Attoney from Externado University of Colombia, specialized in Contract Law and candidate to ProjectManagement Master at Valecia University in Spain. Currently, Mister Perez -Villarreal is working for Invest in Bogota as Business Developer Officer. In addition, He has worked for Procolombia (Promoation Agency of the Colombian government)as Investment Specialist for Private Equity and Tourism Infrastructure industries and he has performed as a lawyer advisor for other companies, such as, Energy Transmission of Bogotá Company, Fiduciaria Bogota and Suramericana Insurance Company. Email: firstname.lastname@example.org
October 6th, 2015 by Camilo Vicaria
As a booster or a sort of “rubber ring” for multinational companies the Economics Section of BBC news in 2012 referred to Latin America because in this region is possible to earn profits that are not possible elsewhere, not even in their country of origin. An increase in consumption and GDP are just among other reasons to explain this phenomenon.
The article points out that Gilmar Masiero, expert on Internationalization of Companies of the Faculty of Economics and Business Administration of Sao Paolo University, said that in this region there is more economic dynamism than there is in the countries of origin of these companies, that it is more likely to find protection in latin markets and that there is less competition.
This article also highlighted that according to a survey that the PwC, the biggest firm of professional services in the world, conducted to 1.200 CEOs from the five continents showed that Latin America is one of the regions were world multinationals expect to grow this year.
Facts seem to confirm these assertions. According to the Section of Global Perspective of the Strategy+Business Magazine: “Between 1991 and 2001, the ownership of the 500 largest companies in Latin America changed dramatically, with non-Latin multinational ownership growing to 39 percent from 27 percent”.
According to this magazine, this Multinational Boom took place in Latin America, among other reasons, because of the economic integration and trade accords, including the Mercosur and Andean pacts and the North American Free Trade Agreement (NAFTA). These agreements created regional markets that stimulated trade and investment flows and made it feasible for the first time for companies in Latin America to coordinate operations in adjacent countries to achieve economies of scale and scope.
Foreign Multinational Companies had real incentives to grow their subregional and panregional operations. Also, because GDP and per capita income grew rapidly, as did the size of the middle-and low-income consumer groups that are critical to the growth of global and local companies.
Is it desirable to world multinational companies to come to Latin America? The conditions that previously trigger a boom and that largely beneficiated multinational companies once before are now reaching higher and even historical numbers. The World Bank stated that in the past decade the middle class hit historic high in Latin America growing 50%, and now representing 30% of the population.
Also, liberalization in Latin America is reaching a new level. Latin American Bank of Development analyzed that currently there is not only liberalization in an intra regional level, but a number of countries as Colombia, Perú and Chile have agreements with emerging countries as China and industrialized ones as European Union and United States.
There are also negotiations of Free Trade Agreements with Asian countries and initiatives as the Trans-Pacific Partnership Agreement (TPP) that will particularly change the face of trade and opportunities in a dynamic and fast growing market as that of Latin America.
For example in Colombia, the Colombian Newspaper “El Tiempo” noted that in this country the growing demand on the economy has attracted in just three months at least 35 new multinational companies trough franchise contracts, trade associations and acquisitions. The number considered in the rest of months of the year and in the rest of countries in Latin America show that this region currently is and will increase its interest to foreign multinational companies.
- Gerardo Lissardy, “America Latina, un flotador para multinacionales”, 15 Frebraury 2012, Rio de Janeiro. http://www.bbc.com/mundo/noticias/2012/02/120208_america_latina_multinacionales_ganancias_crisis.shtml
- Martinez, Alonso, de Souza Ivan. Liu, Francis. Multinationals vs. Multilatinas: Latin America´s Great Race. Fall 2003 / Issue 32 (originally published by Booz & Company), GLOBAL PERSPECTIVE Section, http://www.strategy-business.com/article/03307?pg=0.
- World Bank Group, News, FEATURE STORY, Latin America: Middle Class hits Historic High, http://www.worldbank.org/en/news/feature/2012/11/13/crecimiento-clase-media-america-latina.
- Miguel Rodriguez Mendoza, Free Trade Agreements in South America. Trends, prospects and challenges. Public Policy and Productive Transformation Series N 7, 2012. http://scioteca.caf.com/bitstream/handle/123456789/365/caf_tomo_7_.pdf?sequence=1&isAllowed=y
- El Tiempo with Agencias y GDA , Las marcas extranjeras que llegarán en el 2015, 25 January 2015, , http://www.eltiempo.com/economia/empresas/empresas-extranjeras-que-llegaran-en-el-2015/15143796.
September 30th, 2015 by Linda Gomez Millan
BR Latin America is keeping you updated on some of the changes applied in the Powers of Attorney in four countries of Latin America. It is our duty to provide a quality service to our clients.
A power of attorney (POA) is a written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter. Every country in Latin America has its own Power of Attorney with different ways to fill out the form. Therefore, there have been some particular changes in four of our countries. Keep them in mind in case you want to proceed in any of these countries.
You do not have to notarize the Power of Attorney for Trademarks and Patents in Bolivia.
You can fill out just ONE Power of Attorney for Trademarks and Patents in Chile.
In Paraguay it is accepted to apostille the Power of Attorney.
These updates will help you in case you need to fill out a Power of Attorney form, if you have further questions about these new updates or about the instructions of Powers of Attorneys from any other country in Latin America, contact us at email@example.com and we will help you with any legal service.
July 4th, 2015 by Juan David Lopez
During the last ten years Colombia has substantially improved its business climate for foreign investments and international business. Nowadays, the country may offer in general terms, a predictable and transparent environment for business and an open regulatory framework for foreign investments.
In fact, the Organization for the Economic Cooperation and Development – OECD – recognized in the Investment Policy Review of Colombia in 2012, that the Colombian government has made great progress improving the country’s business environment over the past years, as reflected in the good rankings in the World Bank’s Doing Business report. Such report suggests that the regulatory restrictiveness index for foreign investment in Colombia is more favorable for foreign investors than the average of OECD countries.
The investment flows in Colombia reflects the result of the efforts of the country in increasing its position as an interesting country for foreign direct investments: while in 2002 and 2003 the country received 4,7 Million Dollars in investments, in 2013 and 2014 the numbers increased to 32 million. Likewise, foreign investors remain active in Colombia, contributing to the regular increase of FDI since 2011. Although the two main destinations of FDI are the hydrocarbon and mining sectors (they represented 50% of the FDI in 2013), a diversification has been observed in recent years, in particular in telecommunication and tourism sector
There are several reasons of why Colombia is an attractive country for foreign investments, as determined by Forbes magazine, which placed the country on the top 7 of new destinies to invest along India, Indonesia and Poland.
Some factors are external, such as the slowdown in global foreign investment, particularly in China, Russia and Brazil, which years ago were called to attract large capital. Today, these countries have lower growth and macroeconomic difficulties that affects the international perception and gives the investors an opportunity to seek to other regions.
Other factors point out to the internal situation of the country, such as the improvement of security conditions in recent years, which has contributed to re-establish investors’ confidence in the country. Likewise, the country offers several incentives to investors in order to make it more attractive, such as Free Trade Zones, Special Economic Zones for Exports and labor and tax incentives.
In Colombia, FDI benefits from a very attractive legislative framework. The country ranks 34 out of 189 economies in the ‘Doing Business’ 2015 of the World Bank. In one year, it moved up by 19 ranks, notably thanks to major improvements in property registration and access to credit.
Nonetheless, one of the most important efforts placed out in the past year is the negotiation set out between the Colombian left wing rebels (“FARC”) and the national government. This will allow the government to deepen rural development and attract investors primarily concerned about safety.
Although the government of Juan Manuel Santos has made efforts in order to promote investment in the country, there are still challenges ahead. The country must keep working not only to improve and maintain a good investment climate in the country but also to maximize the benefits that FDI can give to the country in such a way that it can promote economic growth and development. Two main proposals have been placed on the table: The National Development Plan 2014 – 2018 which is an initiative that incentives FDI through a sustainable development between three primary dimensions: peace, equity and education and the ‘Plan to boost productivity and employment which intends to create more than 350 thousand jobs between 2015 and 2018.
*Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any entity or agency of the Colombian government or any other agency associated with it.
April 9th, 2015 by Linda Gomez Millan
A trademark provides protection to the owner of the mark by ensuring the exclusive right to use it to identify goods or services, or to authorize another to use it in return for payment. The period of protection varies, but a trademark can be renewed indefinitely beyond the time limit on payment of additional fees. Trademarks promote initiative and enterprise worldwide by rewarding the owners of trademarks with recognition and financial profit.
B&R Latin America helps you protect your products and services in 18 countries of Latin America in just one stop solution.
Contact us on firstname.lastname@example.org for more information.
In this Infographic B&R Latin America shows you what is a trademark and what type of trademarks there are:
March 27th, 2015 by Linda Gomez Millan
B&R Latin America IP LLC is always looking forward to grow and be part of successful business networks. Our new CEO Manuel Guerrero Amaya will be traveling to one of the most important places in the world, Asia.
Guerrero, will be attending to a great business networking event in Busan, Korea where he will explore new opportunities to offer B&R Latin America services between Asia, Latin America and the Caribbean. More than 500 businesspeople from Korea, Latin America and the Caribbean will meet on March 26 and 27 in Busan, in an effort to boost trade and investment flows between the two regions.
During the event, our CEO will meet with great agencies, and top level government officials to seek for business opportunities. The Korea-LAC Business Summit is being organized by the IDB, by Korea’s Ministry of Strategy and Finance (MOSF), the Korean Trade and Investment Agency (KOTRA), Korea Exim bank, Korea’s International Trade Association (KITA) and the Korean Chamber of Commerce and Industry (KCCI).
Manuel Guerrero will also be meeting with some associates in Korea, Seul, since this region represents the 60% of gross domestic product and it keeps on growing. Additionally Asia has a great capacity to generate patents and trademarks making them a good market to be in.
Asia has overtaken the European Union as Latin America’s second-biggest trading partner after the United States. According to the UN’s Economic Commission for Latin America and the Caribbean, since 2010 China has been investing about $10 billion a year in the region. Thomson-Reuters, a data firm, says that since 2000 Chinese firms have announced more acquisitions in Latin America than in Africa or South-East Asia.
The main goal of the governments across both regions is to open up markets, cut redundant regulations, boost education and promote cooperation in trade and investment between the two regions.
Our objective is to find new resources in order to provide a quality service to our applicants and associates. The future is full of surprises and we want to be part of them, giving excellent and professional results.