The Future of Protection Mechanisms for Minority Shareholders in Colombia

Corporate attorney Juan Felipe Arango wrote an article published by the Medellín Chamber of Commerce analyzing the concept of a derivative action in Colombia and its function as a protection mechanism for minority shareholders. He states that a fundamental role of corporate law is serve as a control method for conflicts of interest and highlights the evolution of Colombia's Superintendency of Corporations in this regard, including the historical difficulties of addressing conflicts of interest in cases of abuse by majority shareholders or trustees. Against this context, the Colombian government introduced the derivative action via Decree 046 of 2024 to enable any shareholder, regardless of voting power, to sue administrators for the benefit of the company, without needing board approval. In this article, Mr. Arango examines the scope of this regulation, describes the challenges facing minority shareholders in terms of access to information and costs of litigation, details the judicial standards that limit court intervention in corporate affairs and compares the Colombian regime with that of Delaware in the U.S. He concludes with proposals to resolve the deficiencies in the current regulatory scheme on corporate shareholder responsibilities.

READ: The Future of Protection Mechanisms for Minority Shareholders in Colombia