CHILE Law and Practice Contributed by: Alvaro Moraga Fritz and Sebastián Moraga Nazar, Moraga & Cía.
4. Governance 4.1 Corporate Governance Requirements The legal and regulatory corporate governance requirements for Chilean banks focus on the structure and functioning of: • the board of directors; • the general manager ( gerente general ); • board-established committees; and • external auditors. The board of directors is responsible for the administration of the bank, alongside senior management. Its duties include: • approving institutional values; • defining strategic guidelines; and • overseeing activities aimed at achieving these objectives. Additionally, the board establishes necessary control mechanisms to ensure compliance with internal and external regulations, with their implementation being entrusted to the general manager and other key executives. Bank boards must consist of a minimum of five and a maximum of 11 directors, with the total number being odd. They may also appoint up to two alternate directors. In banks with a market equity equal to or exceeding the equivalent of 1.5 million unidades de fomento (UF) and where at least 12.5% of the voting shares are held by shareholders individually owning or controlling less than 10% of such shares, one director must be independent, as required under Article 50 bis of the LSA. Directors serve a term of three years, with the possibility of re-election. To reduce the number of directors specified in the by-laws, the bank
must obtain prior authorisation from the CMF. The CMF evaluates such requests considering the entity’s shareholding structure and the pro - tection of minority shareholders’ rights. The board must hold regular meetings at least once a month and may convene extraordinary sessions at the request of the chairperson or one or more directors. In such cases, the chairper - son will determine the necessity of the meeting unless requested by an absolute majority of the directors, in which case the meeting must be held without prior justification. The board is required to adopt measures and to issue instructions to remain fully and prompt - ly informed, with appropriate documentation, about the management, operations and overall situation of the bank under its oversight. The audit committee is responsible for over - seeing internal controls, regulatory compliance and risk management, covering both the par - ent company and its subsidiaries. This com - mittee reports directly to the board of directors, of which at least two members must join and maintain conditions of independence. Its func - tions include: • co-ordinating internal and external audits; • reinforcing the independence of internal con - trollers; and • acting as a link with the board of directors. The audit committees and directors’ committees have distinct roles; however, in some cases, with prior authorisation from the board, the directors’ committee may assume the responsibilities of the audit committee. The committee must include professionals with relevant experience, avoiding conflicts with
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