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
Labour Considerations M&A transactions must comply with labour laws under the Código del Trabajo , which safeguards employee rights during acquisitions. These provisions require that employment contracts are honoured and work - ers protected from unjustified termination as a result of corporate restructuring or changes in ownership. Environmental Regulations Certain industries, such as mining, energy and infra - structure, are subject to environmental reviews under Law No 19,300 (the “Environmental Framework Law”). Projects requiring significant modifications or expan - sions may need approval through the environmental impact assessment system (SEIA), overseen by the environmental assessment service (SEA). Tax Considerations Under the Income Tax Law, capital gains from Chil - ean assets are subject to taxation, calculated as the difference between acquisition cost and sale price. Investors must evaluate the tax impact of different transaction structures, such as share purchases, asset acquisitions or mergers. Additionally, bilateral tax treaties may reduce withholding tax rates. Private M&A transactions in Chile, such as the acquisi - tions of private stock corporations, are guided by prin - ciples of autonomy and mutual agreement between parties. These deals are regulated by the Corporations Law, its regulations, and the Commercial Code. Unlike public companies, private transactions generally do not require prior approval by regulatory authorities, allowing for greater flexibility. 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework Corporate governance is the system that provides an appropriate way to manage the administration of the company and decision-making within the company, considering that conflicts of interest may exist and, therefore, mechanisms to resolve them need to be put into place, to achieve a balance in the system and determine the company’s strategy to achieve its objectives.
Corporate governance finds its most complete and detailed form in the Corporations Law, complemented by rules of the Securities Market Act and Commercial Code. The Corporations Law regulates the administra - tion, those who exercise oversight, the rights of minor - ity shareholders in situations that affect their rights, the rights of the controller, etc. The investor will then have to consider which type of company best pro - tects their rights as a shareholder in terms of prop - erty registration, share transfer, right to information, participation, influence in administration, assurance of obtaining dividends, etc. For all these reasons, inves - tors mostly prefer corporations over other types of companies. Regarding the rules that regulate corporate govern - ance, we can add: the rules established in the Securi - ties Market Law such as the relationship rules estab - lished in Article 100. Both public companies (companies created by law, state companies, and companies in which the state has a participation greater than 50% or appoints the majority of the board members) and private compa - nies must comply with the corporate criminal respon - sibility rules contained in Law No 20,393 of 2009 and Law No 19,913 of 2003, which consist of establishing a crime prevention model that includes the following, with their respective controls: • protocols, rules and procedures aimed at ensuring that individuals perform their tasks, avoiding the commission of crimes; • a crime prevention officer with full autonomy and independence; • a risk matrix; and • a permanent audit system. In turn, public companies are required to provide to the CMF, or the Superintendency to which they are subject to oversight, the same information that open corporations subject to the Corporations Law must provide, including, for example, sanitary services companies and railway companies. Public companies are also considered in the prepara - tion of the annual national budget, in which several institutions participate and which is finally approved
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