CHILE Law and Practice Contributed by: Macarena Ravinet and Federico Espinosa, Cuatrecasas
porations, meet capital, governance, and risk man- agement standards, and comply with the Compen- dium of Financial Regulations. Non-Bank Lenders Non-bank lenders, including leasing and factoring companies, can provide financing without a bank- ing license, as long as they do not accept deposits. However, they must comply with corporate laws and, when applicable, adhere to the requirements of Fin- tech Law. The Fintech Law also regulates alternative credit providers, requiring registration and oversight by the CMF. 3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans Foreign lenders can freely provide loans to Chilean companies, both cross-border and locally, but cannot conduct deposit-taking or regulated banking activi- ties without a local license. They often participate in syndicated loans, project finance, and direct lending, with transactions typically governed by foreign law and subject to Chilean conflict of law rules. Loans may be in foreign or local currency, with freely negoti- ated terms. Interest payments to foreign lenders are generally subject to withholding tax, while principal repayments are not taxed. Chile has no capital con- trols, although large transactions must be reported to the Central Bank, which retains unused emergency powers. 3.2 Restrictions on Foreign Lenders Receiving Security Foreign lenders may freely receive security interests and guarantees from Chilean obligors. There are no statutory restrictions or additional formalities imposed solely due to the lender’s foreign status. Security doc- uments governed by Chilean law must comply with local perfection requirements, such as registration in the relevant public registries (eg, the Conservador de Bienes Raíces for mortgages, the Registro de Prendas for pledges without conveyance). The enforcement of security by foreign lenders is carried out under the same procedures that apply to
domestic creditors, whether judicial or extrajudicial. In practice, foreign lenders can obtain and enforce security in Chile without facing additional restrictions compared to local financial institutions. 3.3 Restrictions and Controls on Foreign Currency Exchange Chile maintains a free foreign exchange regime, which means no capital controls limit the entry or repatriation of funds. Companies and individuals are free to agree on the currency of their financing and repayment obli- gations, whether in Chilean pesos or in foreign curren- cy. Exchange rates are determined by market forces without intervention from the government, except in exceptional cases of macroeconomic instability. The Central Bank’s Compendium of Foreign Exchange Regulations ( Compendio de Normas de Cambios Internacionales ) allows residents and non-residents to freely contract, pay, and transfer foreign currency for most transactions, including loan disbursements and repayments. However, certain transactions – such as cross-border loans exceeding USD10,000 – must be reported to the Central Bank for statistical moni- toring (Chapter XIV). There are no exchange controls or restrictions on the remittance of principal, interest, or enforcement proceeds, provided reporting require- ments are met. Overall, foreign currency exchange in Chile operates on the basis of transparency and reporting, rather than control or limitation. This has provided investors and lenders with confidence that their capital and repay- ments can be freely transferred in and out of the coun- try. 3.4 Restrictions on the Borrower’s Use of Proceeds Chilean law does not impose restrictions on how a borrower may use the proceeds from loans or debt securities. The use of funds is typically determined by the contractual terms agreed upon between the borrower and the lender. It is common for financing documents to include covenants that limit the appli- cation of proceeds to specific corporate purposes, project development, or the refinancing of existing obligations.
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