Markets
Colombia: the reglamento that must state the price
A conversion or subscription price referenced to a future VWAP cannot be written into a Colombian share issuance, and a standby equity facility fails at the same document, because Article 386 of the Código de Comercio requires the reglamento de suscripción de acciones to state the price at which the shares are offered, and that price may not be below nominal value.
Key takeaways
- The price is a term of the authorising document. Article 386 numeral 4 requires the reglamento to set out “el precio a que sean ofrecidas, que no será inferior al nominal”. A price computed after issuance is not a stated price.
- The offer window is bounded at both ends. Numeral 3 fixes the term of the offer at “no será menor de quince días ni excederá de tres meses”, so no authorisation can be left standing for a facility to draw against.
- Preemption is measured at the reglamento, not at closing. Article 388 gives each shareholder a right to subscribe in proportion to the shares held on the date the reglamento is approved.
- Lifting preemption takes 70% and a supervisory check. Article 420 numeral 5 requires the favourable vote of not less than 70% of the shares present, and the faculty may not be exercised until the Superintendencia has verified the reglamento.
Everything runs through the reglamento de suscripción
Colombia does not regulate this structure with a listing rule or a discount cap. It regulates it with a piece of corporate paperwork that has no direct equivalent in common-law markets. Before a Colombian company can place newly issued shares with anyone, a reglamento de suscripción de acciones is approved, and Article 386 of the Código de Comercio prescribes its contents: the quantity offered, the proportion and manner of subscription, the term of the offer, the price at which the shares are offered, and the payment terms.
Four of those five are compatible with a market-referenced deal. The fourth is not. The reglamento is approved, and for a public offering authorised, before the offer opens. A conversion price struck against a VWAP measured around a future drawdown does not exist when the document is signed, so there is nothing for the assembly to approve and nothing for the Superintendencia Financiera to check. That is a documentary impossibility rather than a policy objection, which is why structuring around the discount does not help.
Two floors, and only one of them is nominal value
Numeral 4 also sets a hard minimum at nominal value. That is the floor everyone notices, and it behaves differently for every issuer: a company trading well above nominal has room, one trading near it has none — the same asymmetry that shapes the German par-value analysis, reached through a different statute. But the floor that decides the question is the requirement that there be a stated price at all. Colombia is unusual in carrying both constraints at once, and a company can clear nominal value comfortably and still be unable to do the deal.
| Unavailable | Because | Available instead |
|---|---|---|
| Conversion priced off a future VWAP | The reglamento must state the price | A fixed conversion price set in the prospecto de emisión |
| Standby facility drawn on demand | Each issuance needs its own reglamento and offer term | Discrete, separately authorised capital increases |
| A price below nominal value | Numeral 4 floors the offer price at nominal | A nominal-value reduction, done first and separately |
| A negotiated allocation to one investor | Preemption runs unless lifted by 70% of shares present | An assembly resolution disapplying preemption for that issue |
| General description of Colombian company law. Not an offer, a quote, or a rate card. | ||
Lifting preemption: 70%, then a supervisory step
Article 388 is the default: shareholders subscribe preferentially, in proportion to their holdings as at the date the reglamento is approved. It can be displaced by the bylaws or by a decision of the general assembly, and Article 420 numeral 5 prices that decision at the favourable vote of not less than 70% of the shares present. Then comes the step foreign counsel tends to miss: the faculty may not be exercised without the Superintendencia having verified compliance with the reglamento. Assembly resolution, reglamento, supervisory verification, offer — repeat that at every drawdown and the arithmetic answers itself.
What a BVC issuer raises instead
The workhorse equity-linked instrument is the BOCEAS — bonos obligatoriamente convertibles en acciones, bonds that must convert rather than may convert. Ordinary bonos convertibles en acciones also exist. Both carry their conversion conditions in the prospecto de emisión, and for a public offering the securities are inscribed in the Registro Nacional de Valores y Emisores before the offer opens. The terms are fixed in advance; that is the trade Colombia makes. Beyond that the routes are a rights offering with the preferential right intact, or a registered public offering — priced once, never on the issuer's call.
Resale is not the constraint here
Unusually for a closed market, Colombia does not immobilise the investor's stock. Shares issued under an approved reglamento and inscribed in the RNVE trade on the Bolsa de Valores de Colombia with no statutory holding period. The gate is authorisation, not time — the opposite of markets where issuance is easy and the resale schedule binds. What limits an outside investor here is liquidity, and the foreign-exchange regime a non-resident must use to repatriate capital and returns.
General information, not legal advice. This page describes Colombian company law in general terms and reaches a negative conclusion about a specific structure. The texts cited are private consolidations of Decreto 410 de 1971, and the securities rules in Decreto 2555 de 2010 add requirements not set out here. Take advice from qualified Colombian counsel before acting.
Where the group also trades on a venue that permits a market-referenced conversion, that second listing is the one that decides what is possible.
Sources
- Código de Comercio, Article 386 — the reglamento de suscripción
- Código de Comercio, Article 388 — derecho de preferencia
- Código de Comercio, Article 420 — the general assembly
- Superintendencia Financiera de Colombia
Colombian listed issuers: frequently asked questions
Could a formula count as the price the reglamento has to state?
No Colombian guidance resolving it either way could be found. Article 386 requires the reglamento to set out the price at which the shares are offered, and says it may not be below nominal value. A price computed after issuance from a trading window is not a figure the assembly can approve or the Superintendencia can check. Until it is tested, treat a formula as outside the article.
What is a BOCEAS, and does it get around the problem?
A BOCEAS is a bono obligatoriamente convertible en acciones, a bond that must convert rather than may convert. It is the standard Colombian equity-linked instrument, but it does not change the pricing analysis: the conversion terms sit in the prospecto de emision approved before the offer, so the number is fixed in advance rather than struck against a later market window.
Can a Colombian issuer disapply preemptive rights for one investor?
It can disapply them for an issuance, not for a person. Article 420 numeral 5 lets the general assembly resolve that a particular issue of ordinary shares be placed without the preferential right, on the favourable vote of not less than 70% of the shares present. Article 388 then adds a step that surprises foreign counsel: the faculty may not be exercised until the Superintendencia has verified compliance with the reglamento.
Is the nominal value floor a real constraint for a listed company?
It depends entirely on the issuer, which is why no general answer is possible. The floor is the company's own nominal value per share, so a company trading far above nominal has headroom and one that has fallen close to it has none. That second case is the profile that reaches for a discounted convertible, so the floor bites hardest where capital is scarcest.
What is available instead
A Colombian issuer's instrument is a reglamento de suscripción with the price stated in it, open for between fifteen days and three months, with preemption lifted by 70% of the shares present. Mexico is the nearest market in the region where a board delegation can carry a standing arrangement.