 | 2007 | 2006 |
Overall Score: | 47 | 43 |
Regional Ranking: | 7th | 7th |
Colombia is gaining increasing attention from international investors, for reasons including its regional economic strength and educated, entrepreneurial population. There is momentum among policymakers to encourage the growth of a vibrant local VC/PE industry, and fundraising activity is up. Yet the nation ranks just 8th regionally, due in great part to perceptions of corruption, judicial weakness and lack of transparency.
Strengths: Colombia has seen the formation of several new funds under the 2006 Resolution 470, which allows for the establishment of closed private equity funds. Additional reforms are being considered, such as lifting of current restrictions on administrators operating both foreign investment funds and closed funds. While Colombia’s disclosure requirements remain weak, director liability and the ability of minority shareholders to bring suits and force audits have been strengthened, and registration is increasingly streamlined. Colombia shows particular promise in the area of corporate governance. Law 964 of 2005 provides thresholds – albeit with unspecified sanctions – for compliance with good governance standards, and discussions continue on a voluntary national corporate code of conduct.
Challenges: Restricted access to capital markets and resulting difficulty of exits are serious impediments to local industry growth in Colombia. Efforts to transition to international accounting standards have been met with continued delays, and inflation-adjusted accounting for tax purposes persists. Perceived corruption and the weakness of local judicial system remain serious roadblocks.
| Score | Change |
| Overall score | 47 | ▲ 4 |
| Laws on VC/PE fund formation and operation | 3 | ▲ 1 |
| Tax treatment of VC/PE funds & investments | 2 | |
| Protection of minority shareholder rights | 2 | ▲ 1 |
| Restrictions on institutional investors investing in VC/PE | 2 | |
| Protection of intellectual property rights | 2 | |
| Bankruptcy procedures/creditors' rights/partner liability | 2 | |
| Capital markets development and feasibility of exits | 1 | ▼ 1 |
| Registration/reserve requirements on inward investments | 3 | ▲ 1 |
| Corporate governance requirements | 2 | ▲ 1 |
| Strength of the judicial system | 1 | |
| Perceived corruption | 1 | |
| Quality of local accounting/use of international standards | 2 | ▼ 1 |
Indicators are scored from 0-4 where 4=best score.
Overall score ranges from 0-100 where 100=best score. |
