CHILE Law and Practice Contributed by: Franco Acchiardo, Francisca Castro, Hugo Prieto and Manuel Diumenjo, Clyde & Co Chile
1. Introductory 1.1 Forms of Corporate/Business Organisations
• Listed corporations: these must register their shares with the Financial Market Commis - sion ( Comisión para el Mercado Financiero , or CMF) either by legal mandate or because they meet specific criteria (eg, a large number of shareholders). They are publicly traded and subject to intense regulatory scrutiny. • Closed corporations: these are privately held, with simpler rules for share transfer and lower reporting burdens. They must convert into listed corporations if they meet legal thresh - olds for public offering. • Special corporations: certain industries - such as banking, insurance, and pensions - require specific corporate forms. These entities are subject to sector-specific regulation and CMF oversight. By-stock companies (sociedad por acciones or SpA) SpAs are a flexible, modern vehicle for business incorporation in Chile. They combine limited lia - bility with simplified corporate governance and are often chosen for their adaptability. Key fea - tures include: • capital divided into shares; • freedom to define governance structures in the by-laws, including whether to appoint a board or another managing body; • simplified procedures for issuing new shares or bringing in new investors; and • those incorporated by a single shareholder, unlike corporations (S.A.) and limited liability companies (Ltdas), which require at least two founding members. Law No. 18,046 on Corporations applies on a supplementary basis to SpAs in areas not expressly governed by their by-laws and the Code of Commerce, particularly regarding direc -
Under Chilean law, business entities fall broadly into two categories: capital companies and part - nerships. Partnerships have minimal regulatory requirements, which is why this overview focus - es on capital companies - such as Corporations ( Sociedades Anónimas or S.A.s) and By-Stock Companies ( Sociedades por Acciones or SpAs) - which are subject to more extensive legal and compliance obligations. Where relevant, part - nerships, including Limited Liability Companies (Ltdas), which remain in use despite their more rigid structure, will also be addressed. Capital Companies In capital companies, the central element is the capital contribution of the shareholders. These entities are formed primarily to pool resources, rather than based on the identity of their mem- bers. Shareholders are interchangeable and their liability is limited to the capital they contribute. The main types of capital companies include the following. Corporation (Sociedad Anónima, or S.A.) Corporations are the most regulated form of legal entity in Chile. Their key features include: • a strict governance structure, often requiring a board of directors; • mandatory annual shareholder meetings and minimum dividend distributions; and • detailed reporting and operational obligations, especially for those under regulatory over - sight. There are three types of corporations:
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