Corporate Entity Compliance in Chile – What are the Statutory Requirements?

As one of the most robust economies in Latin America, Chile has become a sought-after hub for pioneering business ventures and corporate expansion, drawing the interest of well-established foreign enterprises. Renowned globally for its copper and salmon exports, as well as its exceptional wines, Chile boasts thriving national sectors that present compelling opportunities for discerning investors. A surge in tourism has bolstered Chile’s economic landscape and sparked growth in smaller cities, creating a fertile ground for emerging opportunities. Its resilient markets, and the emergence of new and enticing commercial prospects, make Chile an attractive destination for foreign companies seeking additional revenue streams abroad. Explore corporate compliance in Chile today.

Corporate Compliance in Chile – Legal Entities in Chile 

A conversation on the Chilean market requires an understanding of the different kinds of legal entity that Chile has available. With all Chilean legal structures, there are some statutory requirements that must be adhered too. When setting up a company in Chile, certain procedures must be followed, to ensure your company complies with the local and national authorities. Personalized support and counsel from a local law firm makes it easier to ensure your company remains 100% compliant.

Chile has developed several legal structures for companies, from non-profit organizations to stock corporations. A foreign company may incorporate a legal entity with one of the following structures:

•    Corporation (Sociedad Anónima- ‘S.A‘)
•    Simplified Corporation/Company by Shares (Sociedad por Acciones- ‘S.p.A‘)
•    Limited Liability Company (Sociedad de Responsabilidad Limitada- ‘S.R.L‘)
•    Branch Office of a Foreign Company (‘Sucursal’)

Corporate Statutory Requirements in Chile 

A popular type of corporation is the Simplified Corporation, also known as the Company by Shares. This type of legal entity allows for 100% foreign ownership and can be incorporated with a single shareholder; either a natural or legal person (an individual or a company). This structure is very popular because it allows for the smooth flow of capital in and out of the company. As a result, foreign investors tend to prefer this type of structure.

Once duly incorporated, all legal entities in Chile, must meet some minimum statutory requirements to ensure corporate compliance. They are not very complex nor difficult to adhere to, granted you have a comprehensive understanding of the requirements. It is important that all companies meet the following requirements while engaging in commercial activities in Chile. 

Legal Representative

All companies in Chile must appoint a legal representative; this appointment must be completed during the company incorporation process. The legal representative is usually a local lawyer who has an in-depth understanding of corporate compliance and can be the legal face of the company before governmental authorities. Some examples of the roles and responsibilities of the legal representative include: 

• Opening and managing the corporate bank accounts in Chile
• Managing rent contract negotiations and signings
• Signing commercial contracts on behalf of the company
• Meeting with governmental authorities

Professional Note: In Chile, the Company Legal Representative must be a Chilean citizen, or a foreigner with the legal right to reside/work in Chile. 

Fiscal Address

In order to successfully incorporate a local legal entity in Chile, a fiscal address must be registered. This is the official registered address for the company and is used for all official communication and correspondence. This is required by the tax authorities and necessary to ensure compliance with taxation laws. During the company incorporation process, the fiscal address must be stated in the company bylaws so the company can be legally registered. 

Tax Compliance

All companies in Chile, and in most of Latin America, must prepare and lodge regular tax declarations with the national and/or local tax authorities. Other specific tax requirements Chilean companies need to meet include: 

• Income Tax Payments: These payments are due monthly and are mandatory for all companies. 
• Value-Added Tax (VAT): VAT is a consumption tax incorporated into the value of goods and services whenever value is added at any step of the supply chain. In Chile, this VAT is taxed at 19% on top of the price of a good or service. 

Commerce Custodian

Every Chilean company must register with the Commerce Custodian. The government has made this necessary as part of their commitment to provide more information to potential interested third parties and society at large. By registering with the Commerce Custodian, any person can review and analyze the public records on your company – driving transparency. 

The Commerce Custodian is where third parties can request corporate information on any company formed within Chile. In case of any major corporate changes (Hecho Eventos Essentials), the Commerce Custodian needs to be notified. These changes can include:

• Change of company owners
• Mergers or acquisitions 
• Change of company share capital
• Change of company legal representative
• Change in registered fiscal address 

In case a company does not correctly register before the Commerce Custodian, the company will face legal problems, which can result in the company being de-registered and closed down.  

Annual Shareholders Meeting

In accordance with Chilean corporate governance norms, specific entities are mandated to hold annual shareholder meetings, a practice that is particularly significant for corporations (Sociedades Anónimas – S.A.). Stipulated under the Chilean Corporations Act (Ley de Sociedades Anónimas), these sessions serve as a platform for key corporate deliberations, such as the ratification of financial statements, decisions on profit allocations, and the election of board members (Article 67 of Law No. 18,046 on Corporations). Although Simplified Corporations (Sociedad por Acciones – SpA) and Limited Liability Companies (Sociedades de Responsabilidad Limitada – S.R.L.) may not be under the same statutory mandate for annual general meetings, they are often required to convene periodic assemblies, as outlined in their internal bylaws, or when summoned by partners or shareholders to address major strategic or financial directives. It’s imperative for companies to adhere to these governance requirements to maintain corporate compliance and uphold transparency (Article 58, Law No. 18,046 on Corporations).

Ultimate Beneficial Owner Registration

In light of international standards and regulatory expectations, Chile has been advancing its legislative framework to enhance transparency in the financial and corporate sectors. This includes talk about implementing a registry for Ultimate Beneficial Owners (UBOs), to fortify its stance against money laundering and the financing of terrorism. Such measures align with the recommendations of the Financial Action Task Force (FATF), which advocates for clear identification of UBOs, to prevent misuse of corporate structures for illicit purposes. As of April 2023, a comprehensive public UBO registry was not yet in place, but Chilean companies are expected to maintain accurate information about their ownership and control structures. This is particularly relevant for due diligence processes under Law No. 19,913, which establishes the Anti-Money Laundering and Terrorist Financing Prevention System, and Law No. 20,393, which sets forth corporate criminal liability for money laundering, terrorist financing, and bribery. The enactment of a UBO registry would require companies to declare their beneficial ownership information, making it easier to tackle financial crimes and increasing corporate transparency.

Common Questions on Entity Legal Compliance in Chile

Based on our extensive experience these are the common questions and doubts of our clients on corporate entity compliance in Chile:

Biz Latin Hub Can Help You Start Operations in Chile

Before expanding your operations to Chile, it is vital to have a sound understanding of corporate obligations in the region. While the opportunities are great, so are the risks for those who do not comply with Chilean law. To ensure compliance, you have to fulfill certain tasks, which include the following: 

• Appointing a legal representative for the company 
• Registering a fiscal address for the company 
• Complying with local tax regulations
• Registering with the Commerce Custodian

Working with a trusted legal and accounting firm ensures you will reach full corporate compliance as you do business in Chile. Biz Latin Hub was established in 2014 to assist foreign companies in successfully setting up operations abroad. 

To learn more about the Chilean economy, opportunities for forming a company in Chile, and how to take advantage of political shifts, please contact us today.