CHILE Law and Practice Contributed by: Cristián Eyzaguirre Fontaine, Daniela Del Solar Nielsen and Gonzalo Eyzaguirre Alvarado, Eyzaguirre & Cía
with the authority to uphold, reverse, or amend the FNE’s resolution. 2.5 Labour Law Regulations M&A transactions require careful labour analy - sis due to the legal principle of continuity of the employment relationship and the automatic transfer of labour and social security obliga - tions to the acquiring party for all the seller’s labour and social security obligations, whether recorded or not. Any change in the ownership, possession, or mere tenancy of the business – including, but not limited to, a transfer of con - trol – is legally regarded as a substitution of the employer, which implies that the acquirer may be held jointly or subsidiarily liable for existing obligations. A comprehensive labour due diligence process should be conducted, focusing first on identify - ing unpaid social security contributions, ongoing labour lawsuits, and hidden contingencies asso - ciated with subcontracting, temporary services, or the use of civil law arrangements that may conceal actual employment relationships. Any of these breaches – particularly in the case of unpaid social security contributions – may result in significant sanctions under Chilean law. Due diligence should also take into account the prevailing interpretation by Chilean courts. These courts frequently consider that virtually any form of personal service provision implies subordination and dependency, thereby consti - tuting an employment relationship governed by the Labour Code, regardless of how the arrange - ment is contractually framed. Consequently, reviewing the number and nature of independ - ent service contracts maintained by the target company is crucial.
Additionally, it is important to assess labour mat - ters beyond the individual employment level. This includes the existence of unions, collective bargaining agreements, and informal benefits granted on a regular basis by the seller, all of which may be construed as acquired rights and trigger post-acquisition liabilities if unilaterally altered or terminated by the buyer. Finally, compliance aspects must also be reviewed in depth. These include obligations under Law No 21,643, which requires proto - cols to address workplace harassment, includ - ing sexual harassment and violence, as well as data protection rules applicable to employee or customer databases. During due diligence, the buyer should review these areas carefully and evaluate any breaches or compliance gaps that may be identified, especially in light of the antici - pated modernisation of the data protection legal framework, which is expected to enter into force in the coming months. 2.6 National Security Review Consistent with the fact that foreign investors are subject to the same legal regime as national investors, there is currently no general foreign investment screening mechanism in Chile based on national security concerns. However, in very exceptional cases, certain laws and regulations may apply to specific acquisitions where nation - al security considerations are indirectly relevant. For example, restrictions exist regarding the acquisition of land near the country’s borders by foreign nationals from bordering countries, and ownership of vessels under the Chilean flag is limited to Chilean nationals, among other requirements. Additionally, Chilean regulations include anti- money laundering and anti-terrorism financing provisions that apply equally to Chilean and
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