CHILE Law and Practice Contributed by: Franco Acchiardo, Francisca Castro, Hugo Prieto and Manuel Diumenjo, Clyde & Co Chile
Personal Liability Directors may be held personally liable for dam - ages caused to the company, shareholders, or third parties if they breach their legal duties or act with gross negligence, wilful misconduct, or bad faith. It is important to note that Chilean corporate law does not explicitly establish “business judge- ment rule” as found in some other jurisdictions. Consequently, directors do not have a formal legal presumption protecting their decisions made in good faith and with reasonable care. This means that directors’ actions may be scru - tinised more strictly by courts or regulators, and they must be especially diligent in documenting and justify their decision-making processes to avoid liability. 4.7 Responsibility/Accountability of Directors In Chile, directors owe their legal and fiduciary duties primarily to the company itself, as a sep - arate legal entity. This principle is established under the LSA and reinforced by case law and regulatory guidance. Key elements of this obligation include: Duty to the Company (not to individual shareholders) Directors must act in the best interests of the company, regardless of which shareholders appointed them or the ownership structure. They must act with the diligence and care of a good businessman. Accountability to Shareholders as a Group While the primary duty is owed to the company, directors are accountable to shareholders col - lectively, not individually. Directors may be held personally liable for damages caused to the
company or its shareholders due to wilful mis - conduct, gross negligence, or breaches of legal duties. Stakeholder Considerations Chilean law does not impose a formal require - ment to consider stakeholders such as employ - ees, creditors, or the environment in the dis - charge of directors’ duties. However, to the extent these factors impact the long-term inter - ests of the company, they may be considered under the duty to protect the company’s sustain - ability and reputation. 4.8 Consequences and Enforcement of Breach of Directors’ Duties In Chile, directors who breach their legal or fiduciary duties may face civil, administrative and criminal consequences, depending on the nature and severity of the breach. The enforce - ment mechanisms are grounded in the LSA, the LMV, and Law No. 20,393 on corporate criminal liability. Civil Liability Directors may be held personally liable for dam - ages caused to the company, shareholders or third parties if they act with gross negligence, wilful misconduct or breach of fiduciary duties. Shareholders can initiate derivative lawsuits on behalf of the company to seek compensation.
Administrative Sanctions The CMF has authority to: • impose fines and penalties;
• disqualify directors from holding office; and • suspend or restrict the company’s operations or trading of its securities. These sanctions are typically applied in cases of non-compliance with disclosure obligations,
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