CHILE Law and Practice Contributed by: Felipe Díaz Toro, Victor Riadi and Ignacio Ruiz Rodríguez, EDN Abogados
Investments made in Chilean investment funds are materialised in “units”, which are the equiva - lent of participating shares in a typical limited partnership/general partnership structure. These units represent the investor’s participation in the fund. The investor’s liability is limited to the amount of their contribution. 2.1.2 Common Process for Setting Up Investment Funds The incorporation time for an alternative invest - ment fund can vary significantly depending on whether it is structured as an FI or an FIP. The set-up process of an alternative investment fund is directed by the fund manager, which must be legally structured as outlined in 2.2.2 Legal Structures Used by Fund Managers . Once the fund manager has finalised the draft of the respective fund’s by-laws, its board of direc - tors must pass a resolution approving them. • For FIs, there is an additional requirement whereby the fund manager must deposit the approved by-laws, along with a dossier of supplementary documents concerning the newly created fund, in the Public Registry of Funds administered by the CMF. The CMF has the authority to raise objections to the supporting documentation or specific aspects of the by-laws. • Pursuant to Article 46 of the LUF, the fund manager must deposit the by-laws of the investment fund and all additional documents as specified in NCG No 365 of 2014 of the CMF (NCG 365), following the instructions and specific forms available on the CMF’s online portal. • The incorporation process for an FIP is relatively straightforward and expeditious. Conversely, for FIs, the drafting of by-laws requires extensive analysis and adjustment to
comply with the provisions established in the LUF and NCG 365. The drafting of the neces - sary documents for the CMF deposit can require several hours of professional work, and may require the intervention of third par - ties to produce documentation (custodians, independent valuators, external auditors, etc). The fund manager must also submit a simi - lar set of documents to Chile’s Internal Tax Revenue Service web portal to obtain a tax identification number for the investment fund, which adds between three and five working days to the set-up process. • It is particularly relevant to note that the documents to be deposited with the CMF for each FI must include a guarantee in favour of each investment fund for an initial amount equivalent to 10,000 Unidades de Fomento (a common inflation index unit widely used in various provisions of the LUF), which current - ly amounts to approximately USD400,000. 2.1.3 Limited Liability As mentioned in 2.1.1 Fund Structures , invest- ments in any fund domiciled in Chile are repre - sented by units of the respective fund, thereby limiting the liability of investors for the fund’s obligations up to the amount they have contrib - uted for their respective units. Accordingly, the fund manager is not liable for the obligations of the fund with its own assets. The LUF does not contain provisions allowing for the lifting of the corporate veil. General rules permitting the piercing of the corporate veil have been applied judicially in a restrictive and excep - tional manner. 2.1.4 Disclosure Requirements Regarding the nature of the assets in which they invest, there are no specific disclosure require - ments for alternative investment funds.
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