CHILE LAW AND PRACTICE Contributed by: Fernando Lathrop Aubert, Francisco Cárcamo Valdés, Jimena Illanes Diez, Joyce Jankelevich Mayer, Macarena Jaramillo Solís, Michelle Niedbalski Ramírez, Nicolás Maldonado Leyton and María Fernanda Heusser Errázuriz, Lathrop Mujica Herrera & Diez Abogado
Regarding FDI regulation, Chile adopted a strategy in March 2022 to promote and develop this type of investment. This includes an action plan for InvestCh - ile to attract foreign capital and co-ordinate with relevant services and ministries. The strategy also focuses on promoting renewable energy and green infrastructure to align with global sustainability goals. Recent litigation in the mining sector – such as the Dominga project halted by the Environmental Court due to insufficient environmental impact assessments – highlights regulatory challenges. Although the 2022 attempt at constitutional reform was rejected, discussions about potential changes remain significant, particularly regarding the manage - ment of natural resources such as water and lithium, which could affect FDI regulation. Transaction structures in Chile depend on the type of business and the parties’ objectives. Common struc - tures include: • share purchases – transfer of ownership through equity acquisition; • asset purchases – transfer of specific business assets; and • mergers – integration of two entities into one. These transactions are primarily governed by the Commercial Code and Law No 18,046 (the “Corpora - tions Law”). 3. Mergers and Acquisitions 3.1 Transaction Structures For public company acquisitions, stricter regulations apply under Law No 18,045 (the “Securities Market Law”), which requires tender offers to protect minority shareholders and ensure transparency. Tender offers are required in the following four scenarios: • when a person gains control of a public company; • when a controller seeks to acquire two thirds or more of the voting shares; • when acquiring control of a company that controls another public company representing 75% or more of its consolidated assets; and
• when a person or group reaches or exceeds two thirds of the issued voting shares, requiring a ten - der offer for the remaining shares within 30 days. In private transactions, share purchase agreements are generally preferred due to their simplicity, adapt - ability and efficiency. Foreign investors must consider factors such as tax implications, regulatory approvals and industry specifics. Tax obligations are governed by Law Decree No 824 of 1974 (the “Income Tax Law”), and bilateral tax treaties can reduce withholding tax rates, making certain structures more attractive. Transaction agreements often include governance provisions, profit-sharing arrangements and exit strat - egies, regulated under the Civil Code. In regulated industries like banking and telecommu - nications, additional approvals from authorities such as the CMF may be required. This framework ensures transactions align with local law and international business practices. 3.2 Regulation of Domestic M&A Transactions Domestic M&A in Chile are regulated to ensure com - pliance with competition, labour, environmental and tax laws. Antitrust and Competition Review Transactions surpassing specific market thresholds must be reviewed by the National Economic Pros - ecutor’s Office ( Fiscalía Nacional Económica or FNE) under Law Decree No 211 of 1973 (the “Competi - tion Law”). This review ensures that the transaction does not lead to excessive market concentration or anti-competitive practices. Failing to notify qualifying transactions can result in fines or the reversal of the deal. Securities Regulation For public companies, transactions are governed by the Securities Market Law, which emphasises trans - parency and shareholder protection. Requirements include disclosures, equal treatment for minority shareholders and adherence to procedures such as tender offers.
112 CHAMBERS.COM
Powered by FlippingBook