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1.1.1. Main Forms of Doing Business

Chilean law provides for a number of forms of business for investors, including:

  • Corporation
  • Partnership
  • Stock Company
  • Association
  • Branch

Corporation

A corporation in Chile can be formed as public or private or public, and provides the protection of limited liability for its shareholders.

Key aspects of a Corporation include:

  • Formed by a minimum of 2 shareholders, whose liability is limited to their contribution to the corporation
  • Require a minimum of 3 directors for a private corporation and 5 for a public corporation
  • Capital of a corporation must be subscribed and paid within 3 years
  • Corporations are formed by notarized public deed that contains the corporation’s by-laws
  • A summary of the by-laws must be filed with the Register of Commerce and published in the Official Gazette
  • When publicly traded, corporations are subject to the regulatory control of the Superintendency of Securities and Insurance, and must be listed in the Register of Securities

Partnerships

Partnerships in Chile can be formed as general partnerships, limited (silent) partnerships and limited liability partnerships.

Key aspects of a General Partnership include:

  • Formed by a minimum of 2 partners
  • General partnerships are formed by the signing of a duly notarized deed
  • A summary of the deed must be filed with the Register of Commerce
  • All partners have unlimited liability for the partnership
  • All partners may engage in the management of the partnership directly or through an elected representative

Key aspects of a Limited (Silent) Partnership include:

  • Formed by a minimum of 1 general partner and 1 limited (silent) partner
  • Limited partnerships are formed by the signing of a duly notarized deed
  • A summary of the deed must be filed with the Register of Commerce
  • General partners allowed to engage in management of the partnership and have unlimited liability
  • Limited partners may not engage in management and their liability is limited to their contribution to the partnership
  • Limited partners' capital may be represented by shares

Key aspects of a Limited Liability Partnership include:

  • Formed by a minimum of 2 partners and a maximum of 50
  • Partners may be natural persons or legal entities
  • Limited liability partnerships are formed by the signing of a duly notarized deed
  • A summary of the deed must be filed with the Register of Commerce and published in the Official Gazette
  • Treated as a distinct entity from the partners
  • Each partner's liability for the partnership is limited to their contribution to the partnership or to a greater amount specified in the partnership deed
  • The partnership may be managed by one or more partners, a board of directors, or a third party
  • The name of the partnership must include the name of one or more partners or a reference to the partnership's purpose

Stock Company

A stock company is a newer business form in Chile and shares aspects of a corporation and a limited liability partnership. It is the only business form that allows for a single shareholder, who may be a natural person or legal entity (including foreign).

Key aspects of a Stock Company include:

  • Formed by 1 or more shareholders
  • Shareholders may be natural persons or legal entities
  • Shareholder's liability is limited to their contribution to the company
  • A stock company is formed by either a public deed or in a private instrument where the shareholder’s signature is notarized
  • A summary duly notarized must be filed in the Register of Commerce and published in the Official Gazette
  • Generally treated as a corporation unless specific stipulations are included in its by-laws
  • The company's bylaws can establish different series of shares that can participate separately in the results of different business ventures

Association

An association in Chile is a contract between 2 or more parties for the participation in one or more commercial transactions.

Key Aspects of an Association include:

  • Formed by contract between 2 or more parties
  • Is not considered a separate legal entity
  • The commercial transaction(s) of the association may be carried out by only 1 of the parties and in their name - such person is referred to as the manager
  • The manager must render an account to the other parties and share with them in agreed proportions any profit or loss that might result
  • The manager is responsible for all dealings with third parties in relation to the commercial transactions of the association

Branch

A foreign company is allowed to establish a branch to conduct business in Chile.

Key aspects of a Branch include:

  • Formed by the appointment of an individual representative in Chile, and the registration and publication of the details of the parent company
  • No minimum capital requirements, but the obligations of the branch must be supported by liquid assets retained in Chile
  • The branch is not treated as a separate legal entity from the parent company, and the parent is fully liable for the obligations of the branch
  • Branches are taxed on locally sourced income only