Under Decree of the President of 30 January 2024 No. 046 “On Amendments to Chapter 3, Title 2, Part 2, Volume 2 of Decree of 2015 No. 1074 and article 23 of Law of 1996 No. 222 Concerning Conflicts of Interest and Competence of the Persons Fulfilling Managerial Functions in an Organisation, as well as the Application of the Principle of Respect for Their Judgment of the Performance of Organisations” (Por el cual se sustituye el Capítulo 3 del Título 2 de la parte 2 del Libro 2 del Decreto 1074 de 2015 y se reglamenta parcialmente el artículo 23 de la Ley 222 de 1995, en lo relativo al conflicto de intereses y competencia de los administradores, y la aplicación del principio de deferencia al criterio empresarial), conflict of interest in the private sector (hereinafter, conflict of interest) is a situation, where an interest, either direct or indirect, of a person fulfilling managerial functions in an organisation (hereinafter, senior official) in getting a benefit for him/herself or his/her associates can affect the impartial and independent character of his/her decisions taken in the interest of the organisation in the framework of one or several transactions which the company is a party to or a participant of.

The Decree also defines the competition of a senior official with the organisation where he/she holds a position (hereinafter, the competition) as a form of conflict of interest – conduct by the senior official, either directly or through an intermediary, of activities in the same area as those undertaken by the organisation where he/she holds a position, and/or exercise of his/her powers either directly or through an intermediary in his/her favour.

In this context, senior officials are:

• Legal representatives of organisations;
• Bankruptcy trustees;
• Members of boards of directors;
• Persons exercising administrative functions under companies’ charters.

Associates of senior officials are:

• Spouses and regular partners;
• Relatives of senior officials and/or of their spouses/regular partners by blood or by marriage up to the second degree of kinship and/or affinity;
• Companies represented by senior officials;
• Organisations which senior officials and/or their associates are controlling shareholders, founders or beneficiaries of or have the right to use and/or dispose of their assets and profits;
• Persons or their deputies who exercise control of the organisation where the senior official exercises his/her functions.

The Decree obliges senior officials to:

• Refrain from exercising the functions that may result in a conflict of interest and/or competition;
• Notify the board of directors or other high collegial governing body of the organisation of a conflict of interest and/or competition in place; the body must define further measures with regard to the transactions generating the conflict of interest and/or competition of the senior official at a general meeting;
• Provide the governing body of the organisation with all information necessary for taking a decision, including the information indicating that a conflict of interest and/or competition is in place in a clear, accurate and sufficient manner.

The governing body of the organisation, in turn, can either take a decision to suspend the senior official from the functions that result in the conflict of interest and/or competition, or recognise that there is no need to undertake any actions in those circumstances if it does not contradict the interests of the company.

In the event that the senior official was allowed to act in a conflict-of-interest and/or competition situation, which led to the violation of the interests of the organisation, all persons who permitted the respective actions will be held liable thereof. Moreover, the transactions made in the conflict-of-interest and/or competition situation will be recognised as invalid, and the obligation to repair the damage inflicted to the organisation, counterparties and other third parties may be imposed on senior officials.

The Decree also introduces the obligation for internal auditors of the company to inform the governing body of the organisation in writing that the senior official fulfills the functions in a conflict-of-interest and/or competition situation without the authorisation of his/her superiors.