When is a Legal Representative Required in Chile?

Expanding to new markets does not need to be difficult with the right support at hand from an experienced legal representative. By taking the time to get to know and understand the country’s business and commercial culture as well as a basic, but nevertheless important, grasp of the legal framework, expansion becomes that much easier. A legal representative in Chile is a key element to ensure your company complies with legislation.

Latin America carries a burdensome reputation for being a legally complex destination to carry out business. Certain regulatory complexities do stifle growth in certain countries. However, Chile has the most business-friendly environment in Latin America. Alongside that, Chile has a growing economy, strong infrastructure, and above all, a welcoming approach to foreign investment.

Why engage a legal representative in Chile?

When is a legal representative needed in Chile

The actions of the legal representative create liabilities, obligations, and rights for the company to bear, making them the responsible agent of a company’s legal decisions.

When incorporating a company in a new market, all companies go through the process of navigating the territory of a new legal framework. This process must be done with the aid of a legal representative. A legal representative in Chile, by all effects and purposes, is not only the visible face of the company but the responsible authority of the company itself. 

The actions of the legal representative create liabilities, obligations, and rights for the company to bear, making them the responsible agent of a company’s legal decisions.

Irrespective of the market or industry being entered, or the type of corporate entity you wish to put into place, a trustworthy legal representative can ensure that your company complies with all pertinent legislation and requirements avoiding run-ins with legal compliance regulations.

What does a legal representative do?

A legal representative in Chile must comply with the law

The legal representative must comply with the minimum requirements to act on behalf of someone else in compliance with the Chilean Civil Code.

The term ‘legal representative’ simply means any individual who has been granted the power to act on behalf of a company and thus, has the prerogative and faculty to create liabilities, rights, and obligations for the company. In other words, a legal representative is an instrument by virtue of which companies interact and engage with third parties, public entities, its own employees and government authorities.

For practical purposes such as the process of registering a corporate bank account, the legal representative is required to be someone with a Chilean residence or domicile. In other words, foreigners can act as legal representatives as long as they have a registered address within the country. In either case, the legal representative must comply with the minimum requirements to act on behalf of someone else in compliance with the Chilean Civil Code.

Without prejudice of the above, the national tax authorities, known as the Servicios de Impuestos Internos (SII) has stated that all legal representatives of companies in Chile must comply with the following:

  •         Be at least 18 years of age.
  •         Be an individual (not a legal entity)
  •         Possess a local residence or domicile (within the Country)
  •         Provide proof of a Power of Attorney or legal appointment.

When setting up a company from scratch, it’s crucial to use an expert lawyer with experience in company incorporation to act as legal representative. However, over time, should your business flourish in Chile you can appoint the role of legal representative to a trusted in-house employee.

What can a legal representative do?

What can a legal representative in Chile do

The scope to act on behalf of a company is quite broad, it includes signing binding contracts, purchase, and sale of assets and more.

The scope to act on behalf of a company is quite broad. Below, we outline some of the day-to-day activities most legal representatives can execute for a business. 

  •         Enter into binding contracts.
  •         Execute legal transactions.
  •         Buy and sell assets.
  •         Authorize payments and operate the bank account.
  •         Represent the company before all public entities.
  •         Represent the company’s shareholders.
  •         Act as the company’s signatory.
  •         Personally, be the guarantor for the company.

Do I need a Legal Representative in Chile?

In short, the answer is yes. Both from a legal and a practical perspective, a Chile-based company cannot operate without appointing at least one legal representative. 

Choosing legal representatives for your company’s activities

It is crucial to select a trusted, competent, and professional legal representative who acts with the company’s best interests at mind. In addition, it is advised to appoint someone with a comprehensive knowledge of the legal framework and administrative requirements in play.

The first year of trading in a new country or region is without a doubt the most important. A strong and experienced legal representative will enable the company to stand up to the pressures of the various market entry, employment, and corporate compliance requirements. Setting a strong legal base from the outset will allow the company to grow unhindered by non-compliance or misunderstanding.

In the same sense, a weak or inexperienced legal representative could delay the incorporation process and cause major setbacks. The entire company’s liability resting on the shoulders of an inexperienced legal representative could spell disaster for future activity.

Determine what your legal representative can and can´t do

Either in the company bylaws or articles of company incorporation, shareholders have the ability to custom and specifically define the extend and reaches of the legal representative’s powers.

Depending on the level of trust involved, it is possible for your legal representative to have a full set of powers: executing transactions, employing personnel and making deals with no limit. However, it is highly advised, that these powers are limited to a specified set of tasks and therefore protecting the company’s interests in the event of mistrust.

The above can be drawn up with the statute of specific prohibitions. For example, companies can enforce a requirement that their legal representative must seek prior written consent from shareholders to enter into operations where the amounts involved exceed USD$50,000.

Partner with a Legal Representative at Biz Latin Hub

Since the year 2000, Chile has seen a massive rise in foreign company incorporation and foreign investment generally. However, though Chile is arguably the most business-friendly market in Latin America with the easiest company incorporation process, doing business abroad inevitably poses some challenges, whether that be culturally, financially or legally.

Biz Latin Hub’s team of lawyers and accounts specialize in foreign company incorporation, providing all forms of business services ranging from tax compliance to acting power of attorney. Our local knowledge and expertise can provide your company with diverse and effective business solutions, helping you focus on the road ahead.

Take your company to new territories by contacting us today here and we’ll connect you with our industry-specialized legal representatives.

Learn more about our team of expert authors. 

What is a Legal Representative?

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