In the context of ordinary meetings of the General Shareholders’ Meeting or the Shareholders’ Assembly, where administrators are required to submit the management report for approval or rejection, the question arises as to whether a shareholder or partner may challenge the decision that approved such report due to inaccuracies in its content—and whether this could result in the declaration of absolute nullity of the decision.
To begin with, it is important to note that, according to Article 422 of the Colombian Commercial Code, ordinary meetings must be held at least once a year, on the dates set forth in the bylaws, or, if the bylaws are silent, within three (3) months following the end of each fiscal year. During these meetings, among other matters, the company’s situation is reviewed, administrators and other officers are appointed, economic policies are defined, financial statements are examined, and profit distribution is decided.
Furthermore, Article 46 of Law 222 of 1995 establishes that the administrators must submit the following documents to the General Shareholders’ Meeting or Shareholders’ Assembly:
- A management report;
- General-purpose financial statements, along with their notes, as of the end of the relevant fiscal year;
- A proposal for the distribution of distributable profits.
The management report provides an overview of the business performance and the company’s economic, administrative, and legal situation. If it is found that this report does not reflect the actual situation of the company, the question arises: could such inaccuracy invalidate the approval granted by the General Shareholders’ Meeting or the Shareholders’ Assembly?
To address this question, reference must be made to Article 190 of the Colombian Commercial Code, which governs decisions that are ineffective, void, or unenforceable when taken at shareholders’ meetings. The article provides that any decision “adopted without the number of votes required by the bylaws or by law, or that exceeds the limits of the corporate purpose,” is absolutely null and void.
The Superintendence of Companies, in rulings issued in Case No. 2015‑800‑131 (24 February 2016) and Case No. 2017‑800‑00209 (11 December 2018), has confirmed that mere inaccuracies in the documents submitted to the highest corporate body do not by themselves constitute grounds for absolute nullity of the decision approving them. An inaccuracy, omission, or irregularity affects the document itself but does not necessarily vitiate the decision taken by the shareholders’ meeting.
This principle does not absolve administrators of liability for any misconduct, although Decree 046 of 2024 now presumes that administrators act in good faith and in the company’s best interests.
In short, inaccuracies or defects in the administrator’s management report do not, by themselves, invalidate the corporate decision that approves it and therefore do not amount to a cause of absolute nullity. Nevertheless, such inaccuracies may give rise to actions against the administrator who prepared the report—provided the presumption of good faith is rebutted—and could result in fines of up to 200 SMLMV imposed by the Superintendence of Companies.
