Discretionality in setting the share premium in the placement of shares

The additional paid-in capital represents, according to Article 84 of Decree 2649 of 1993 (still partially in force), "the greater amount paid on the nominal value or on the cost of the contributions, which must be accounted for separately within equity". Although, for tax purposes, this concept had considerable changes as a result of the enactment of Law 1607 of 2012 (such as that it is considered an integral part of the contribution and therefore follows the rules applicable to capital), its financial and accounting content remains unchanged.

In the book Injerencia reciproca societaria y tributaria (CETA, Second Edition, 2012, p. 102), Professor Ignacio Sanín Bernal stated that "it cannot be forgotten that the premium is not a merely legal concept, but rather an economic and financial one, since, in essence, it is a leveling factor between the associate who is joining the company after its incorporation, having to recognize a "premium", since in many cases it would not be equitable for the associate who intends to join a successful company late to aspire to cancel the shares or quotas for their nominal value, as if he were doing so from the very moment of incorporation. Whoever arrives late must assume an additional cost, from which the company and the original associates benefit".

Although there is clarity regarding the concept (legal and financial) of premium in placement of shares, it is common for the control authorities to question to what extent the parties (issuer and acceptor of the offer), by virtue of the autonomy of the will, can define this value, or question such control entities which was the parameter or financial model used to do so. This is because, according to the commercial law (article 386-4 of the Code of Commerce), the only imperative order regarding the issue value of the shares in a share placement regulation is that it cannot be lower than the nominal value of the shares, unless the company is immersed in a corporate reorganization process (law 1116 of 2006, article 42).

Through Official Letter 220-039068 of March 13, 2018, the Superintendence of Companies clarified this point indicating that "the respective corporate body may freely determine the price at which the shares will be offered, when approving the regulations for the placement of shares, with the only limitation established in article 386 of the Code of Commerce (.... ) consequently, it is clear that it is the corporate body competent to approve the placement regulation, the one called to determine at its discretion the price at which the shares will be offered, in such a way that if a value higher than the nominal value is set, that higher value or difference with respect to which there is no legal limit, is considered as a premium in the placement of shares". By "discretionality" we should understand, according to the Royal Academy of the Spanish Language, "(...) that which is not subject to a rule, but to the criterion of a person or authority".

In conclusion, according to the institutional position of the Superintendence of Corporations reviewed above, it is clear that, except for the minimum legal limit established in the commercial law, there should be no questioning by the control entities regarding the value of the premium in placement of shares set by the competent body in the respective placement regulation, since this is set in a discretionary manner, that is, subject only and exclusively to the issuer's criterion.