Business Transfer / Sale of Commercial Establishment Agreement — Colombia

The Commercial Establishment Transfer Agreement in Colombia is the contract by which the owner of a commercial establishment — defined as the organized set of assets, rights and obligations dedicated to the exercise of a mercantile activity — transfers it to an acquirer by way of sale, assignment or any other title-conveying act, in accordance with Articles 515 to 525 of the Colombian Commercial Code. Article 515 of the Commercial Code defines the commercial establishment as a set of assets organized by the entrepreneur to fulfill the purposes of the enterprise, and Article 516 enumerates its components: the trade name, the entrepreneur's rights over industrial inventions or creations used, goods in storage or in the process of manufacturing, furniture and installations, lease contracts, the right to prevent the diversion of clientele, and indemnities agreed with workers. The transfer of a commercial establishment in Colombia implies the alienation of all these elements as a functional unit, unless expressly excluded by agreement.

Pursuant to Article 525 of the Commercial Code, the transfer of a commercial establishment implies the assignment of employment contracts in force at the time of alienation, with joint and several liability of the transferor and acquirer for labor obligations accrued before the transfer. The Superintendencia de Industria y Comercio (SIC) may intervene if the transaction constitutes a business integration subject to prior merger control under Law 1340 of 2009 and SIC Resolution 30310 of 2017, when the asset or sales thresholds of the parties exceed the established limits.

The transfer contract must be executed by public deed or a private document acknowledged before a notary, and registered in the commercial registry of the Camara de Comercio with jurisdiction over the establishment's domicile, as required by Article 524 of the Commercial Code for enforceability against third parties. The Camara de Comercio must record the transfer within 30 business days of the contract's signing.

For tax purposes, the DIAN requires that the transfer price of the commercial establishment correspond to the market value of the transferred assets, including goodwill, and that the transferor declare the capital gain generated in their income tax return pursuant to Article 300 of the Tax Code (Estatuto Tributario). forms-legal.com makes available this Commercial Establishment Transfer Agreement template, prepared in accordance with the Commercial Code, Decree 410 of 1971, and the jurisprudence of the Corte Suprema de Justicia, Sala de Casacion Civil, to facilitate the structuring of this mercantile transaction between natural and legal persons domiciled in Colombian territory.

The Commercial Establishment Transfer Agreement in Colombia is required in every transaction in which the owning entrepreneur decides to sell, assign or otherwise alienate their business as a unit. The most frequent cases include: the sale of a store, restaurant, pharmacy, workshop or any commercial premises with its operating assets; business succession between family generations when the heirs do not wish to continue the enterprise; the exit of a partner wishing to liquidate their interest in a de facto establishment; the acquisition of a going concern by an investor seeking to avoid the timelines of incorporating and starting a new company; and corporate restructuring involving the spin-off or merger of business units between legal persons.

The agreement is also necessary when the entrepreneur faces financial difficulties and decides to transfer the establishment as an alternative to insolvency proceedings before the Superintendencia de Sociedades under Law 1116 of 2006. The registration obligation at the Camara de Comercio makes this contract a public instrument protecting the seller, the buyer and the establishment's creditors alike.

Family business succession is a common context for this agreement when the founder transfers the operating business to heirs or partners as part of estate planning. Transfer during the founder's lifetime allows supervision of the transition, training of successors and maintenance of client and supplier relationships, avoiding the traumatic liquidation that might occur in judicial succession proceedings.

Franchise networks and business chains frequently structure their expansion through the transfer of model commercial establishments, including all brand elements, operational know-how, contracts with approved suppliers and the business management system. COLFRANQUICIAS estimates that the franchise sector in Colombia generates more than 100,000 direct jobs, with establishment transfers being a key mechanism for network expansion.

Cooperative entities and family compensation funds (cajas de compensacion familiar) such as Compensar, Colsubsidio and Cafam frequently transfer commercial establishment assets — supermarkets, pharmacies, service centers — between entities within the solidarity economy sector, subject to oversight by the Superintendencia de la Economia Solidaria.

The Commercial Establishment Transfer Agreement in Colombia must contain the following elements for its validity and enforceability against third parties:

Full identification of the parties: Transferor and acquirer — name or corporate name, identification document (CC, NIT, passport) and domicile. For corporate entities: corporate name, NIT, and data of the legal representative with Camara de Comercio certificate.

Detailed description of the establishment: Trade name, commercial registry number at the Camara de Comercio, address of the premises, primary economic activity with CIIU code, and DIAN RUT registration number.

Inventory of assets transferred: Fixed assets (furniture, equipment, vehicles with plates and registration numbers), merchandise inventory valued at the transfer date, contracts with clients and suppliers, software licenses, trademarks registered with the SIC and other intangible assets registered with the DNDA.

Total transaction price: Value expressed in Colombian pesos (COP), specifying the payment method (cash, installments, commercial trust under Law 795 of 2003), conditions for deferred payment and guarantees (mortgage, pledge, surety bond).

Employment contracts and labor continuity: List of employment contracts in force and their assignment to the acquirer with joint and several liability for prior labor obligations under Article 525 of the Commercial Code and Article 67 of the CST. The acquirer is subrogated in all labor rights and obligations of the transferor, including accumulated seniority for cesantias, vacaciones and prima de servicios.

Commercial contracts being assigned: Lease of the premises, supply contracts, distribution agreements, franchise contracts — indicating whether the transferor has obtained the required consents from the contracting third parties.

Liabilities included and excluded: Identification of the creditor, amount, maturity and guarantee for each obligation transferred. Article 531 of the Commercial Code establishes joint and several liability of transferor and acquirer toward establishment creditors for one year following registration of the transfer.

Representations and warranties of the transferor: Existence and ownership of the establishment, absence of liens or attachments, current status of tax obligations with DIAN and local tax authorities, compliance with intellectual property law under Andean Decision 486 of 2000.

Non-competition obligation: Clause preventing the transferor from competing in the same geographic market and business sector for a reasonable period (typically 1-3 years) to protect the transferred goodwill. The SIC may intervene if the non-competition clause constitutes an undue restriction of competition under Law 155 of 1959 and Decree 2153 of 1992.

Tax obligations on transfer: Withholding at source on the sale price under Article 398 of the Estatuto Tributario (1% on value above thresholds), registration tax before the departmental government at 0.7% of the declared value under Article 229 of Law 223 of 1995, and Camara de Comercio registration fees calculated on the asset value. forms-legal.com provides this template with guidance on the fiscal obligations applicable under current DIAN criteria.