CHILE Law and Practice Contributed by: Patrick Humphreys, Daniela Gazmuri Larraín, Paula Lühr, Ian Hinzpeter, Camila Leviante, Beatriz Riveros and José Luis Bravo, Garnham Abogados
Board Structure of an SA An SA has a more formal one-tier board structure. The board of directors manages the company, and the board appoints a general manager to handle day to day operations. Shareholders exercise their pow - ers mainly through shareholders’ meetings, including approval of major corporate matters and, in many cases, election of directors. Chile does not use a classic two-tier board system with a separate supervisory board and management board. Instead, oversight is built into directors’ duties, shareholder rights, external auditors or inspectors of accounts, and regulatory supervision for listed or reg - ulated companies. Public companies are subject to more detailed governance rules and market supervi - sion by the Financial Market Commission. 3.5 Directors’, Officers’ and Shareholders’ Liability Duties of Directors and Officers Directors and officers must act with diligence, loy - alty and in the company’s interest. In an SA, the legal framework is more developed and includes duties relating to conflicts of interest, related-party transac - tions, use of corporate information and responsibility for damage caused by breach of duty. Directors may face civil liability, regulatory sanctions and, in serious cases, criminal exposure depending on the conduct involved. Managers of SpAs and limitadas are also exposed to liability if they exceed their authority, breach the by- laws, act negligently or misuse company assets. In practice, liability risk often arises in areas such as tax compliance, labour obligations, insolvency, environ - mental matters, consumer protection and regulated activities. Foreign investors should ensure that local managers have clear delegated powers, reporting lines and compliance controls. Shareholder Liability and Veil Piercing Shareholders and partners are generally protected by limited liability. This protection is strongest when the company has a real separate existence, proper accounts, documented decisions and arm’s-length dealings with related parties. Routine undercapitali - sation, poor record-keeping or confusion between
company and shareholder assets can create litiga - tion and tax risk. Chilean law recognises the possibility of disregard - ing the corporate form in exceptional cases, often described as piercing the corporate veil. Courts tend to apply this concept cautiously, usually where the company is used for fraud, abuse of rights, simula - tion, evasion of legal obligations or harm to creditors. Limited liability is reliable, but it should not be treated as a shield for sham structures or improper conduct.
4. Employment Law 4.1 Nature of Applicable Regulations Main Sources of Employment Law
Employment relationships in Chile are governed main - ly by the Chilean Labour Code, which sets mandatory minimum standards for contracts, wages, working time, termination, collective bargaining, unions and workplace protections. The Constitution and interna - tional treaties ratified by Chile also form part of the broader framework, especially on non-discrimination, freedom of association, procedural fairness and fun - damental rights at work. Generally, Chilean labour law applies to work per - formed in Chile, regardless of the nationality of the employer or employee. Choice-of-law clauses or for - eign contract templates will not usually override man - datory Chilean labour protections where the work is performed in Chile. Employment agreements, internal workplace regu - lations, company policies and collective bargaining agreements are also relevant, but must operate within mandatory labour law. Recent reforms, including Law No 21,643, known as “ Ley Karin ”, have increased the practical importance of workplace policies, preven - tion protocols, and investigation procedures for sexual harassment, workplace harassment,and workplace violence. Administrative and Judicial Practice The Labour Directorate is central in day-to-day employment matters. It conducts inspections, may impose fines, and issues administrative opinions on
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