Why it matters

High-impact decisions, such as an acquisition, a significant investment, a reorganization or major borrowing, are taken in a meeting but won or lost in the preparation. In Colombia that preparation now has a direct legal effect. Since 2024, the regulations instruct authorities to respect the business judgment of directors and officers when they decide in good faith, in the company’s best interest and on a sufficiently informed basis, except in cases of bad faith, acting beyond their powers, breach of the law or the bylaws, breach of loyalty, or a manifestly ill-informed decision (Decree 1074 of 2015, article 2.2.2.3.5, introduced by Decree 046 of 2024). For shareholders following a Colombian company from abroad, a well-prepared board decides better and can prove how it decided.

Who is liable, and why

Board members are “administrators” under Colombian corporate law (Law 222 of 1995, article 22). They must act in good faith, with loyalty and with the diligence of a prudent businessperson, in the company’s interest and taking the shareholders’ interests into account (article 23). They are jointly and without limit liable for damage caused by willful misconduct or negligence to the company, its shareholders or third parties; negligence is presumed when they fail to perform or exceed their duties or breach the law or the bylaws; and those who were unaware of the act or voted against it are not liable, provided they do not carry it out (Commercial Code, article 200). Bylaw clauses purporting to exonerate directors or cap their liability are deemed unwritten.

In a Simplified Stock Company (S.A.S.) a board is optional, but if one exists the same liability rules apply, and they also reach anyone who, without being an administrator, interferes in managing the company (Law 1258 of 2008, articles 25 and 27).

Before the meeting: information

Deference to business judgment protects informed decisions. Preparation therefore starts by giving each member, with enough time to read it, a pack that answers five questions:

• What exactly is being decided, with the text of the proposed resolution and its conditions.

• Why now, and what happens if nothing is decided.

• Which alternatives were considered and why they were rejected.

• What the risks are, including legal, tax, financial and reputational risks, and how they are mitigated.

• Which expert input supports it: valuations, legal opinions, due diligence or independent advice where the size of the decision warrants it.

If the information arrives at the meeting itself or is incomplete, the board can and should ask for more time. Approving without adequate information is precisely what the regulations exclude from deference.

Conflicts of interest

An administrator may not take part, directly or through another person, in acts involving a conflict of interest or competition with the company unless the shareholders’ meeting expressly authorizes it (Law 222 of 1995, article 23, number 7). Decree 1074 of 2015 now spells out that duty:

• A conflict exists when the administrator has a direct or indirect interest that may compromise their judgment or independence (article 2.2.2.3.1), and the decree lists, by way of example, situations involving the administrator’s spouse or permanent partner, certain relatives, companies they control or trusts of which they are beneficiaries (article 2.2.2.3.3).

• The administrator must abstain and take the matter to the shareholders, providing all relevant information clearly, truthfully and sufficiently; authorization may be granted only if the act does not harm the company, and the administrator’s vote is excluded if they are a shareholder (article 2.2.2.3.4).

• For recurring, ordinary-course transactions, the shareholders may grant precise general authorizations for a fiscal year, with a record of the transactions presented at the next ordinary meeting.

Note that in Colombia the authorizing body is the shareholders’ meeting, not the board itself. Every relevant agenda should open with an explicit question on conflicts, and the answer should be minuted.

During the meeting: quorum, form and deliberation

Unless the bylaws require more, the board deliberates and decides with the presence and votes of a majority of its members, and may be called by itself, the legal representative, the statutory auditor or two principal members (Commercial Code, article 437). Remote meetings are valid when all members can deliberate and decide by simultaneous or immediately successive communication, as are written resolutions if all members state their vote (Law 222 of 1995, articles 19 and 20). These formats are useful, but high-impact decisions usually deserve a meeting with real discussion. A member who disagrees should vote against and have it recorded: the law exonerates those who vote against and do not carry out the decision.

After the meeting: minutes as evidence

Minutes are the legal memory of the decision. For shareholders’ meetings, article 189 of the Commercial Code makes certified copies of the minutes sufficient evidence and bars administrators from proving facts not recorded in them. For the board, minutes that record the information received, the alternatives considered, the questions asked, the conflict declarations and the reasons for the decision serve the same purpose: they show, years later, that the decision was informed.

A checklist for the next significant decision

• A written proposed resolution with its conditions and limits.

• An information pack sent well in advance, with alternatives and risks.

• Expert or independent input where the size of the decision warrants it.

• Conflict declarations at the outset and, where needed, authorization by the shareholders’ meeting.

• A check of quorum, the board’s powers under the bylaws and matters reserved to the shareholders.

• Minutes recording information, deliberation, votes and reasons.

Conclusion

Preparing a board is not a corporate formality: it is how a better decision is taken and how those who take it are protected. The business judgment rule gives directors ample room, but only for decisions that are informed, loyal and within the law and the bylaws. Our Corporate & M&A team supports boards and shareholders’ meetings through this process. For decisions involving new technology, see AI in the company: three questions before automating.

Sources and legal references

• Commercial Code, articles 189, 200 and 434 to 438.

• Law 222 of 1995, articles 19, 20, 22, 23 and 25.

• Law 1258 of 2008, articles 25 and 27.

• Decree 1074 of 2015, articles 2.2.2.3.1 to 2.2.2.3.5 (chapter substituted by Decree 046 of 2024).

This content is for general information and is not legal advice on any specific matter. Rules verified as of 25 September 2026.