Actualidad Colombia

New Regulations on Secured Transactions

Act 1676/2013

Following in the steps of Peru, Chile and Uruguay, the new regulations overhauling the previous secured transactions system came into force in Colombia in February 2014. This new system streamlines the mechanisms to create, record, and foreclose guarantees on movable assets and thus eliminates some antiquated pieces of Colombian legislation prohibiting creditors from seizing assets directly from their debtors (under the so-called pacto pignoraticio or "pledgee agreement").

The new legislation is based on the OAS Inter-American Model Law on Secured Transactions and the UNCITRAL legislative guidelines. Its benefits include the centralization of information in a single registry administered by the Confederation of Chambers of Commerce, which not only make it possible to file the security or collateral, but also to find out the creditworthiness of persons standing guarantee, thus providing more information to lenders and reducing the cost of access to credit.