Immigration Impact on Mergers & Acquisitions Transactions in Colombia

The immigration impact that mergers & acquisitions (M&A) transactions can have on companies operating in Colombia with foreign personnel within their payrolls has not been widely addressed or studied in Colombia, but it is potentially very significant. This will lead to the necessity of completing certain procedures before immigration authorities to ensure compliance with the obligations established by local regulations.

That said, when referring to the initial stages of M&A transactions, such as valuations/assessment, preliminary agreements, and due diligence, it is important to review the company’s immigration compliance status to determine the possibility of any related contingencies and the impact this may have on the final purchase price. Furthermore, when structuring the transaction, during negotiations and closing stages, it is important to determine, in the case of acquisitions through stock purchases, whether any of the buyers is a foreign shareholder or individual and could apply for a visa as an owner of the surviving company in Colombia. In the case of mergers, it is important to ascertain if there is a change in the corporate name of any of the companies involved and/or employer replacement for the foreign employees of any of the companies involved.

Finally, in the post-closure or implementation stage, it will be important to determine whether the surviving company meets the conditions to maintain the visas of its foreign employees or if it will be necessary to apply for new visas for existing foreign employees. In the case of new employees who need to be relocated to Colombia in order to implement a soft landing on the surviving company, it will be necessary to apply for new visas as well.

Hence, depending on the effect that an M&A transaction has on the surviving company, it will be necessary to take the following actions or complete the following procedures.

Consequently, failure to comply with these obligations arising from M&A transactions could have significant implications, primarily the following.

Immigration regulations provide for economic sanctions (fines) for the particular company between USD1,300 and USD32,000 per violation, in 2025.

In addition, there are possible sanctions for foreign individuals (fines, deportation or expulsion).

Generally, companies that come under the radar of Colombian Immigration for non-compliance with immigration obligations are frequently questioned and subject to immigration verification.

Employers with a record of non-compliance with immigration obligations may have difficulty sponsoring work visas or face excessive questioning from the authorities.