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[ESTABLISHING A BUSINESS ENTITY IN CHILE]
ESTABLISHING A BUSINESS ENTITY IN CHILE
I. Types of Business Entities 1. Description of the types of entities available In Chile, there are different types of entities available to establish a business. The most common entities for foreign investment are: (i) Limited Liability Partnership or Company ( Sociedad de Responsabilidad Limitada , “SRL ” ); (ii) Corporation ( Sociedad Anonima , “SA”); and (iii) Stock Company ( Sociedad por Acciones , “SpA”). a) Sociedad de Responsabilidad Limitada The SRL has a minimum of two partners and a maximum of fifty. There is no restriction on foreign partners. There cannot be less than two partners, as the partnership is automatically dissolved if there is only one partner. Each partner’s liability is limited either to the amount they contributed to the capital, or an upper amount specified in the partnership deed. This company differs from the next two (SA’s and SpA’s) in its character as “persons corporation”, where the identity of the partners and the relation between them is essential to the validity of the company, in such length that the names of the partners are included in the bylaws. The deed must contain certain minimum requirements established by law in order to be valid, such as the company’s name, domicile, corporate purpose, capital, etc. and any other relevant terms agreed to by the partners. Capital and Partnership Rights. There are no minimum capital requirements for the incorporation or the operation of an SRL. The partners may pay the stock capital in cash, assets, or by their work or activity. There are no restrictions regarding the distribution of profits, so the partner may freely agree on any
percentage in the bylaws. If the bylaws do not regulate the distribution of the profits, the law mandates to distribute them in the same proportion of their contribution to the stock capital. Given that the transfer of partnership rights requires the amend of the SRL´s bylaws, the partner willing to sell its rights needs to obtain the prior consent of the others. Management. The partners have the freedom to choose how to manage the SRL. Usually, the partners will manage the partnership by their own, or through one or more representatives, elected by unanimity, of which at least one must be domiciled in Chile. The partners may also entrust the management to a board of directors or a single director, both to be chosen by unanimous agreement. An SRL is not subject to the control of a regulatory authority and there is no obligation to publish or file accounts. b) Sociedad Anónima An SA is a company formed by a common fund provided by two or more shareholders who are responsible only for their respective capital contributions. There cannot be less than two shareholders. In opposition to what was mentioned regarding SRL´s being persons corporations, SA’s (and SpA´s) are “capital corporations”, being the contribution of capital the main interest in this type of entities. The deed must contain certain minimum requirements established by law in order to be valid, such as the company’s name, domicile, corporate purpose, capital, etc. and any other relevant terms agreed to by the shareholders. It must also contain the bylaws of the company. Capital and Shares. In general, there are no minimum capital requirements for the
ILN Corporate Group – Establishing a Business Entity Series
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