CHILE Law and Practice Contributed by: Macarena Ravinet and Federico Espinosa, Cuatrecasas
• in cases where the benefit is indirect or less evi- dent, seek shareholder approval at a general meet- ing, especially if the transaction could be consid- ered outside the ordinary course of business or the company’s corporate purpose; and • amend the company’s bylaws, if necessary, to expressly authorise the granting of guarantees or security for group or acquisition financing. Related Party Transactions If the acquirer is a related party to the target, the trans- action may be subject to the related party transac- tion rules under the Chilean Corporations Law ( Ley de Sociedades Anónimas ). This would require additional approvals, enhanced disclosure, and, in some cases, fairness opinions or independent director review. 5.5 Other Restrictions Regulatory and Statutory Restrictions Certain Chilean entities, including banks, insurance companies, pension funds, and other financial insti- tutions, are subject to sector-specific regulations that may restrict or require prior regulatory approval for granting security or guarantees. When security or guarantees involve related parties under the Chilean Corporations Law, a more rigorous approval process is required. This may necessitate approval from the board, independent directors, and shareholders, along with additional disclosures and fairness opin- ions. All transactions of this nature must align with the company’s corporate purpose and interests. Directors are responsible for ensuring proper authorisation to avoid potential liability. Consents and Approvals Depending on the company’s bylaws and the nature of the transaction, board or shareholder approval may be necessary. Existing contractual arrangements, such as negative pledge clauses or joint venture agree- ments, may also require third-party consent before granting new security or guarantees. Costs and Taxes Establishing security interests typically incurs notarial and registration fees, which are generally modest but can rise for high-value transactions. Credit opera- tions may trigger a stamp tax, currently at 0.066% per month (capped at 0.8% of the principal), with possible
exemptions for refinancing. Involving foreign parties may require document legalisation, an apostille and translation into Spanish, which increases time and costs. Central Bank Reporting For cross-border financings exceeding USD10,000, reporting to the Central Bank is mandatory under the Compendium of Financial Regulations; however, this does not restrict the granting of security. The reporting obligation usually falls on the Chilean borrower or local financial institution. 5.6 Release of Typical Forms of Security General Principles and Procedures for Releasing Security Interests in Chile The release of security interests in Chile is a formal process that must follow the same legal and registra- tion requirements as their creation. The process varies by security type, but all releases must be document- ed and, where applicable, registered to be effective against third parties. Mortgages A mortgage is released through a public deed of can- cellation executed by the creditor (and sometimes the debtor), which must be registered with the rel- evant Real Estate Registry. The release is only effec- tive against third parties once registered. The process may take several days to weeks, depending on the efficiency of the notary and registry. Pledges • For civil and commercial pledges requiring asset delivery, release occurs by returning the asset and, if needed, executing a cancellation document. • For pledges without conveyance, release is for- malised by a public deed or notarised private instrument, followed by cancellation in the Registry of Pledges Without Conveyance and, for certain assets, in other relevant registries. • For pledges over shares or securities, release involves written notice to the issuer, return or can- cellation of certificates, and recording the cancella- tion in the shareholders’ ledger. For bank account pledges, the debtor or institution must be notified.
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