Successive business-friendly governments in Chile has allowed it to become one of the most stable and prosperous countries in Latin America. Its economy has experienced strong compound annual growth rates over recent years, demonstrated by its GDP increase of 4% in 2018. Experts believe this growth is likely to continue in 2019 and 2020, with successive increases of 3.4% and 3.2% alike, making setting up a business in Chile an accommodating experience.
Learn how to set up a business in Chile as a foreign investor
A large portion of the nation’s success has been down to Chile’s welcoming approach to foreign investment, allowing anyone from around the world to incorporate a business there. In fact, Chile is the second-highest recipient of FDI in Latin America. According to the 2019 World Investment Report, FDI inflows into Chile in 2018 reached US$ 7.2 billion, an increase of 4.4% from the previous year. Chile is blessed with a strong economy, an educated workforce, expertise in maritime trade as well as the easiest company incorporation system in Latin America.
1. Partner with a local legal representative
The process to set up a business in Chile is the most straightforward in Latin America. However, it must be done with the help of an authorized legal representative. In Chile, a legal representative is the responsible legal authority of the company. The responsibilities, obligations, and rights of the company are all assumed by them, underlining the importance of the role. Choosing the right legal representative is crucial for the success of the company. When incorporating a business, it is important to employ an experienced legal representative and one that has legal expertise in the specific industry. If setting up a mining business, it is wise to employ a legal representative who specializes in mining so as to avoid conflicts with legal compliance rules.
2. Obtain the correct company documentation
To correctly register a company in Chile, company specificities must be enlisted with the relevant authorities. Documents required include:
- Company Name – A Chilean company name must be approved by the Chilean Companies Registry to verify its availability.
- Description of the sector and activities of the company – present a document listing the objectives of the business and the plans for future development.
- Shareholder details – Businesses are required to provide information about their shareholders. Their names must be detailed.
- Corporate Director Details – The corporate director’s details must be filed. It is worth noting they may be of any nationality.
- Address of the head office in Chile.
- Constitution and Statutes – This document must be presented and approved by the Conservador de Comercio.
Once these documents are provided, the company is enlisted.
3. Choose the right legal structure for your business
Chile offers a number of different types of legal structures to accommodate all types of business activities. It is worth considering the future activities and size of the company before choosing a legal structure. The 4 most commonly used for foreign investors are:
Corporation (Sociedad Anónima – ‘SA’)
A public limited company is a legal entity (individuality, company, association) whose capital is divided into shares and often listed on the stock exchange. These are good for large companies wishing to have a lot of shareholders.
This type of company must be created with certain characteristics, such as:
- There is no minimum capital required to form a company.
- There must be at least two shareholders
- Shareholders must register the company in the commercial register.
Simplified Corporation (Sociedad por Acciones – ‘S.p.A’)
A simplified corporation is a structure that involves a simple structure to encourage investment. Only one shareholder is needed to create it and the share structure is private. Here are three of the characteristics of a simplified corporation:
- Natural persons have two possibilities to set up a streamlined corporation: a) by public deed or b) by presenting a private document before the Chilean notary.
- There is no law prescribing the amount of minimum capital.
- Unlike a corporation, a simplified company is not required to publish its financial statements.
Limited Liability Company (Sociedad de Responsabilidad Limitada – ‘SRL’)
The third recommended structure is what is called a limited liability company (Sociedad de Responsabilidad Limitada – SRL). SRLs are considered as an autonomous legal entity. But as a result, this implies the unanimous consent of the shareholders for important decisions, such as the transfer of shares. Here are some of the particularities of limited liability companies:
- At least two shareholders may form a limited liability company.
- The number of partners may not exceed 50.
- There is no minimum capital required to incorporate.
Branch office of a foreign company
A branch office is a structure that is not autonomous. These are convenient for pre-existing companies looking to expand to Chile. Considered as an agency or branch of the parent company, to operate it, a Chilean representative must be appointed. They act on behalf of the business. Outlined are some of the characteristics of a branch office:
- There is no minimum requirement for the amount of capital.
- A local agent must sign a public deed containing a declaration of establishment for the branch.
- The languages of the documents must be Spanish. If the original language is not Spanish, the Chilean Ministry of Foreign Affairs must translate them.
4. Familiarize yourself with the Chilean business culture
Before doing business in Chile, it is essential to familiarize yourself with the local business culture. Though Chile is considered a developed business environment, its traditions that might seem customary to a local can often mystify a foreign investor.
When setting up a business in Chile, there are specific cultural differences that are worth noting:
- Before sitting down to a business meeting, be prepared to engage in small talk. Topics such as football, family, current affairs are typical. This helps to facilitate good relations before the meeting, ensuring business doesn’t get off to a bad start.
- Much of Chile’s business is conducted through contacts and friends. Be sure to develop trustworthy contacts to trade reciprocal favors with.
- Lunch or dinner is often a good way to improve relations with a business partner. However, it is important to note that business is never discussed.
- Foreigners are often confused by punctuality in Latin America. Timings of meetings are often 15-30 minutes after the time set. Do not be offended by a late appearance.
Need assistance to set up a business in Chile? – Biz Latin Hub can help
According to the World Bank, Chile is ranked the easiest Latin American nation for incorporating a business. To compound this, Chile has a strong economy, good infrastructure, educated workforce, and a business-friendly culture. If you’re thinking about Latin American expansion for your business, many consider Chile as a great starting location and a portal to the rest of the region.
Biz Latin Hub offers a range of tailored business services including legal services and accounting/taxation services. Our teams of lawyers and accountants all across Latin America specialize in company incorporation of foreign businesses. Get in touch today here at Biz Latin Hub to see how we can assist you to set up a business in Chile.
Learn more about our team and expert authors.