Decree 1378 of October 28, 2021
New criteria of the dissolution event for not complying with the going concern hypothesis
The Ministry of Commerce, Industry and Tourism (the “Ministry”) enacted Decree 1378 of October 28, 2021 (the “Decree”) by means of which “it is modified article 126.96.36.199.2 of Decree 1074, 2015, Sole Regulatory Decree of the Tourism, Industry and Commerce Sector”.
The Decree establishes, among other things, the following:
- Regarding the dissolution event for not complying with the going concern hypothesis, the managers must be continuously monitoring the financial statements and when identifying an equity deterioration and bankruptcy risk must immediately informed and provide the support documents to the highest corporate body for the corresponding decisions to be taken.
- The managers must establish the existence of equity deterioration and bankruptcy risk pursuant to the financial reasons according to their business model and sector in which the corporate purpose is developed. Notwithstanding the aforementioned, the following criteria should be implemented by the managers, if they are applicable to the commercial company:
In the following link you will find the Decree 1378 of October 28, 2021.
Author: Raúl Vargas I [email protected] I Corporate Law