Corporations

Forming a company in Chile

Types of legal entities (company)

In Chile, there are three primary legal entities for foreign companies or individuals to consider when establishing a presence in the country: Limited Liability Company (Sociedad de Responsabilidad Limitada), Joint Stock Company (Sociedad por Acciones), and Corporation (Sociedad Anónima). In each case, shareholders enjoy limited liability, shielding their personal assets from the debts of the company.

Of these entities, the Sociedad por Acciones stands out as the most commonly preferred legal structure. It’s worth noting that in Chile, corporate tax rates vary depending on the size and classification of the company. For Small and Medium-sized Enterprises (SMEs), the corporate tax rate is set at 10%, while for other companies, it stands at 25%.

.A Limited Liability Company (Sociedad de Responsabilidad Limitada) requires a minimum of two shareholders and cannot exceed fifty. The company must appoint one or more managers upon the execution of the public deed that formalizes its establishment. Amendments to the articles of incorporation and bylaws necessitate unanimous consent from the shareholders. Similarly, changing the company’s manager and selling rights within the company also require unanimous approval. Consequently, this type of entity is often favored by family-owned businesses.

Corporations (Sociedad Anónima) divide their capital into shares and must have a minimum of two shareholders. They are governed by a Board of Directors, a General Manager, and General Shareholders’ Meetings. Decisions within a corporation are typically made by majority vote. The Board of Directors must consist of at least three members, who are not mandated to be Chilean nationals. Meetings of the Board can be conducted via video conference. Furthermore, a simple majority is sufficient to convene a Board meeting and make decisions. An annual audit of the balance sheets and bookkeeping by independent accountants or accounting firms is mandatory.

Joint Stock Companies (Sociedad por Acciones) also divide their capital into shares. A single shareholder is adequate for its formation. Resolutions are typically passed by majority vote, and there is no requirement for a Board of Directors. Instead, a General Manager and General Shareholders’ Meetings manage the affairs of the company.

General rules applicable to all types of companies

In Chile, no name reservation is needed for companies to be formed. Also, there is no restriction about the minimum amount of the company’s capital. However, it is advisable to form a company with no less than U$2,000 as capital. All the capital does not need to be paid at the time the company is formed, depending on the type of company there are different timing for paying all the company’s capital. There are also no restrictions about foreigners owning a company and no minimum number of shares have to be owned by locals. Though, the legal representative has to be a Chilean national or a foreigner with a valid working or permanent visa.

In both Sociedades por Acciones and Sociedades Anónimas, the presence of a Secretary is requisite for the proper conduct of Board and Shareholders’ meetings. However, it is permissible for the General Manager to assume the role of Secretary in the case of a Sociedad por Acciones, or for a Director to do so in the instance of a Sociedad Anónima.

All companies are obligated to maintain proper bookkeeping records and prepare financial statements. However, Small and Medium-sized Enterprises (SMEs) are granted the option to simplify their bookkeeping and financial reporting processes. Additionally, companies engaged solely in transportation or agricultural activities are exempt from the obligation to maintain formal bookkeeping records and prepare financial statements.

Steps to form a company in Chile

Rut for the foreign shareholders

If a foreigner wants to form a company in Chile, the first step will be obtaining a tax identification number (RUT) for future shareholders. It is mandatory for foreign investors of any kind to obtain the RUT. The identification tax number is to collect the taxes due when the profits are sent abroad to the foreign partner of the company.

If the shareholders are people only their passports, as well as the Tax Identification Number (TIN) abroad, are needed.

If the shareholders are companies, additional information about those companies is required. First of all, the Tax Identification Number (TIN) in the country of origin must be provided. If the shareholder is deemed to be resident in more than one country, then all the TIN must be informed. The SII will also ask to provide a certificate of good standing issued by a public authority, a tax residence certificate and a copy of bylaws and article of incorporation. All documents must be properly legalized and apostilled and an official translation into Spanish is required.

People and companies will need to grant someone a power of attorney to represent them at the Chilean IRS (SII). This person must be a Chilean or a foreigner with a residence visa.

There is no need for a person to come to Chile to form a company, as long he/she grants a person the power of attorney to act on her/his behalf to obtain his/her RUT number as well as to form a company and name its legal representative. If the power of attorney is signed abroad, it has to be duly notarized and apostilled (Chile is part of the Hague Convention).

Signing the incorporation documents

After obtaining the RUT for the shareholders, a public deed containing the Articles of Incorporation and the bylaws of the company is signed. An excerpt from the public deed is submitted to the Register of Commerce and published in the Official Gazette.

Rut for the newly formed company

The next step will be obtaining RUT for the recently formed company at the Chilean IRS. For this purpose, the company needs a valid address and therefore, a lease agreement signed at a Notary Public has to be signed.

Additionally, to the aforementioned document, the legal representative or a person with a power of attorney will need to bring to the Chilean IRS a copy of the bylaws and the excerpt dully recorded at the Register of Commerce and published in the Official Gazette.

The legal representative of the company has to be a Chilean or a foreigner with a valid working visa because the tax authorities need a person in Chile to be notified in case, they need any tax-related information or to notify a lawsuit. If the company does not comply with this requirement, the SII (Chilean IRS) will not grant a RUT number for the newly formed company. The legal representative is also personally liable for unpaid social security payments and if they are not paid by the company, he has to pay them with his own money.

After this point, the company is fully functional.

The process starting from the date signing the public deed incorporating the new company until the identification tax number is obtained should take about 10 to 15 days. However, delays may occur due to Covid-19 restrictions.

Company’s bank account

The following step is obtaining a bank account, which in Chile can be quite difficult. Usually, the bank takes the legal representative’s commercial record into account to open a bank account and he/she will be the one signing at the bank on the company’s behalf. In only some international banks it is useful showing a certificate that the holding company has an account in the same bank abroad. But in most of the international banks located in Chile, there is no flow of information with the branches in other countries.

Last modified: 30/04/2024