Although Chile is significantly smaller in size, it is currently attracting a level of Foreign Direct Investment (FDI) comparable to Mexico, which is one of the most robust economies in Latin America.
Understanding company formation in Chile is essential for foreign investors to thrive in this booming market. Chile’s impressive year-on-year GDP growth of 2.4% in 2022 is a testament to its strong legal system, macroeconomic stability, abundant natural resources, and high-quality infrastructure. Its total GDP is $317 billion (USD), and its GDP per capita is above the regional average, at over $16,000, which has helped its middle class expand. In 2022, foreign investors contributed about US$17.10 billion to the economy.
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The Chilean government is pushing to diversify investment sources and make the country an attractive investment destination for multinationals, start-ups, and other investors. Now is the perfect time to start the process of company formation in Chile.
Since May 2013, Chile has made it extremely convenient to start a business, with new laws allowing for online company formation within a day. However, corporate laws may differ in Chile from those in other countries. Therefore, it’s recommended to seek guidance from a local legal expert before you incorporate a company in Chile.
Starting a business in Chile: Types of Chilean companies
When forming a company in Chile, you must choose the right type of company structure for your business. Below we have identified and provided a summary of the different types of companies in Chile.
Individual Limited Liability Company (EIRL)
An EIRL is a good choice when you are the sole business owner. An EIRL is a legal entity that can conduct most business activities, except for a select few reserved for corporations. As the owner, you are only liable for the amount you invest in the company, and the company is liable for all its assets. The company name should reflect the goods or services it offers, or incorporate the owner’s name.
Limited Liability Company (LLC)
You can form an LLC with anything between 2 to 50 shareholders, and the company name must illustrate the goods or services it provides or include the name of one or more partners. There is no minimum capital requirement, and the partners can decide on the company’s activities and choose its management. Forming an LLC is a popular option.
A corporation is another option for company formation. A corporation requires a group of shareholders that establish a common fund and a board of directors that administer the company and make decisions via a majority vote. Each shareholder is liable to the extent of their capital contribution. The starting capital of a corporation must be fully subscribed and paid within three years. There are two types of corporations: public corporations and closed corporations.
Stock Company (SpA)
Stock Companies adhere to the same regulations as closed corporations, and their management is handled in a nearly identical manner. Stock Companies can be formed by one or more individuals and their capital participation is represented by shares.
To begin company formation in Chile, it is vital to have an excellent understanding of the various types of legal entities and choose the one that best reflects your business.
What are the minimum requirements to incorporate a SpA in Chile?
The Minimum requirements to incorporate a SpA in Chile are:
- A name for your legal entity.
- (1) shareholder, which can be either natural (i.e. person) or legal person (i.e. entity.)
- Appoint a Legal Representative within the bylaws of the company.
- Register a Fiscal Address which must be within the country and is used for official correspondence.
The founding shareholders do not need to physically travel to the country as the establishment can be completed via a power of attorney.
Although a company can be incorporated with a zero minimum share capital, we would recommend against this as monies must be deposited to activate the company bank account.
How do I set up a company in Chile?
It is vital that you have the necessary documents and information organized before you start the process of setting up your company in Chile. Below we have highlighted the key resources you need to present.
To proceed with incorporating a SpA in Chile, you will need to provide the following:
- A name for your legal entity.
- Shareholder identification document.
- Confirm the business activities, corporate purpose, and primary operations.
- Minimum initial capital to be registered.
Important Tip: We always recommend having a preferred legal name and two alternatives in case the primary legal name is unavailable.
What are the steps for company formation in Chile?
It takes approximately 6 to 8 weeks to complete the process of company formation in Chile once you have all of the required documents:
- Step 1 – Register the company and obtain the authentication number.
- Step 2 – Notarize the company statutes and digitally signed by the notary.
- Step 3 – Obtain a RUT number by registering with the Internal Revenue Service (SII in Spanish).
- Step 4 – Print receipts/invoices at an authorized printing company.
- Step 5 – Seal accounting books and other documents with the Chilean Tax authority.
- Step 6 – Acquire a “patente municipal” working license from the municipality.
- Step 7 – Register for labor-related accident insurance.
Important Note: If the company will be incorporated with foreign shareholders, then a Power of Attorney (POA), apostille process, and translation of documents may be required.
Common FAQs when forming a company in Chile
Answers to some of the most common questions we get asked by our clients.
Yes, a business can be 100% foreign-owned by either legal persons (“legal entities”) or natural persons (“individuals”).
It takes 6 to 8 weeks to register and set up an operating company in Chile, contingent upon the timely submission of all necessary documents.
The SpA in a company name in Chile refers to a “Sociedad por Acciones”, which refers to a Joint Stock Company. This corporate entity allows for shares to be easily bought and sold. One or more individuals or legal entities can establish the structure, which offers flexibility in terms of capital management. Due to its adaptability and capacity for a variety of investments and shareholders, businesses and entrepreneurs frequently choose it.
LTDA in a company name in Chile refers to a “Sociedad de Responsabilidad Limitada,” which refers to a Limited Liability Company. This type of corporate structure is characterized by the partners’ liability being limited to their contributions to the company’s capital. In an LTDA, partners are not personally responsible for the company’s debts beyond their investment, providing a level of protection for individual assets. Small to medium-sized businesses frequently use it in Chile because it combines elements of partnership and corporate structures, providing flexibility and legal protections.
The Sociedad por Acciones (SpA) and Sociedad de Responsabilidad Limitada (SRL) provide Limited Liability protections to their owners in Chile.
A. Number of shareholders: An SpA can have one shareholder, who can be either a natural person or a company that will contribute a certain number of shares.
B. Administration: In a SpA, the Administration is trusted to either one or more individuals or legal entities, or a Board of Directors. In an LTDA, the administration is usually trusted by one or more shareholders.
C. Responsibility of the shareholders: In both legal types, the shareholders are only liable up to the amount of their capital contributions.
D. Social capital: In the SpA, it is divided into shares, while in the LTDA a percentage of rights over the company with no specific allocation to certain assets.
E. Changes of ownership: For new owners to enter into an LTDA, the existing owners need to approve the operation, this does not happen in a SpA where any shareholder can unilaterally sell his/her shares.
How can Biz Latin Hub help with company formation in Chile?
At Biz Latin Hub, our multilingual team of company formation specialists has extensive experience in supporting foreign executives when starting a business in Chile. We offer a complete set of services for your business needs, such as legal, accounting, and recruitment support. You can rely on us as your main contact for entering and doing business in Chile or any of the other 17 markets in Latin America and the Caribbean where we operate.
Contact us now for personalized assistance or a free quote on company formation in Chile.
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