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Corporate Governance Standards Rising in Colombia

May 11, 2009

A model code of corporate governance, the Codigo del Pais, has been promulgated by the Superintendency of Companies and under the auspices of a Chamber of Commerce program.  The process is speeding the adoption of and adherence to modern corporate norms. 

Modern corporate governance standards promote efficient and transparent investment by ensuring predictable, efficient, and fair corporate conduct.  They are important to attract and reward passive or minority investors.  Colombia’s history of conditions of violence and reported corruption, and of insular family and syndicate corporate operations, make it especially beneficial to demonstrate this kind of transparency in order to attract foreign capital for growth and development. 

The new Colombian Model Code is not compulsory.  Rather, each exchange-listed company or public securities issuer must adopt its own code of corporate governance, and disclose it, and explain its divergence from the Model Code.  This approach differs from previous post-Sarbanes Oxley attempts to imposes a compulsory, one-size-fits-all, rules-based approach.  Listed companies and securities issuers are required to adopt a code and disclose or explain the code and how it departs from the model.  Different standards apply to listed companies than non-listed issuers and family companies as well as SMEs or PyMEs.  Nevertheless, through IDB and IFC financing, and other means, corporate governance codes are being adopted increasingly throughout all types of firms.

The IFC has gathered several resources on Corporate Governance. 

Among them is the Program for Corporate Governance for Colombia of CONFECAMARAS and CIPE (Colombian Confederation of Chambers of Commerce, and the International Center for Free Enterprise of the U.S. Chamber of Commerce) which issued their Report on Growth, Financing, and Corporate Governance.  This is a (Spanish-language) white paper and the model national code, produced in the “Principles and Point of Reference for the Development of a Code of Good Corporate Governance.”    The white paper was developed by a committee whose members were: Asofondos (the Colombian Association of Pension and Retirement Fund Administrators), the Colombia Stock Exchange,  Bogota Chamber of Commerce, Cartagena Chamber of Commerce, Confecámaras, KPMG, Dinero Magazine, Spencer Stuart, and Juan Carlos Varón. 

The white-paper report version of the code [English Translation Needed] consists of the following major sections: 

  1. Rights and equitable treatment of shareholders;
  2. Roles and responsibilities of the Board;
  3. Transparency, fluidity and integrity of information;
  4. Interest groups in society and social responsibility;
  5. The chief executive;
  6. Conflicts of interest; and
  7. Administration and dispute resolution.

In addition to IFC, IDB unit Inter-American Investment Corporation (the IIC)  has funded lender BBVA (as reported on this site) for corporate governance improvements in Small and Medium-sized Enterprises, or SMEs in Latin America and in particularSMEs/PyMEs, .

 The Corporate Governance Website  established by Confecamaras and CIPE publishes valuable information, including the model corporate governance code [English translation needed] as issued by the Superintendencia Financiera (Circular Externa 028 of 2007 – Annex 3), which contains the following major sections:


  1. General Assembly of Shareholders
  2. Board
  3. Disclosure of financial and non financial information
  4. Dispute resolution
  5. Glossary of Terms

Annex 1. Country Code survey. Code of Best Corporate Practice, Colombia

Annex 3. Mandatory questions by type of issuer

The Corporate Governance Website also provides some English-language explanation of the corporate governance code and development process and the “comply or explain” approach of these rules.  For example, there is a helpful write-up of The VI International Corporate Governance Forum in Colombia  in a report entitled “The Corporate Governance in the International Agenda: A Glance to the Latin American Advances and Challenges.”  The site also links to a good overview from the 2007 Meeting of the Latin American Corporate Governance Roundtable, in Medellin, in a report entitled “Country Report: Voluntary Corporate Governance Code in Colombia.”   The Corporate Governance Website also mentions the following book-form publications available [English translations needed]:

Among the companies that have adopted the code based on the model national code are:

  1. Cementos Argos
  2. Bancolombia
  3. Empresas Publicas de Medellin
  4. Inversura
  5. Titularizadora
  6. Ecopetrol — which has its own chapter/case study in the book: Estudio de Casos de Buenas Prácticas de Gobierno Corporativo — has a Code of Ethics to which it refers in its SEC Form 20F (annual report) description of corporate governance.
  7.  Bavaria as discussed in a 2007 IFC Report 
  8. Finandina (Financiera Andina) S.A.

“Growth, Financing and Corporate Governance: The Growth Process of Bavaria, a Company with a Global Vocation”

There are two slightly older Reports on the Observance of Standards and Codes on Corporate Governance and the related topic of Accounting and Auditing.

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