Forming a company in Chile
Types of legal entities (company)
Company: In Chile, there are 3 types of legal entities for a foreign company or a foreign individual to consider when forming a company in Chile. These are a limited liability company (sociedad de responsabilidad limitada), a joint stock company (sociedad por acciones) and a corporation (sociedad anónima). In all cases, the shareholders are not personally liable for the company’s debts.
Limited liability companies (sociedad de responsabilidad limitada) are formed by at least 2 shareholders and cannot have more than 50 shareholders. The limited liability company must have one or more managers appointed at the signing of the public deed that constitutes the company. Amendments to the articles of incorporation and bylaws are only possible with the unanimous consent of the shareholders. Unanimous consent is also required to change the company’s manager. Also sale of rights in the company requires unanimous approval of all shareholders, therefore this type of company is preferred by family businesses.
The capital of the corporation (sociedad anónima) is divided by shares and there have to be at least 2 shareholders. It has a Board of Directors, a General Manager, and the General Shareholders’ Meetings. Resolutions are passed by majorities. The Board of Directors needs to have at least 3 Directors and the members of the Board of Directors do not need to be Chilean nationals and meetings can be held via video call. A simple majority is requires to hold a Board meeting and decisions are taken by a simple majority. Balance sheets and bookkeeping must be audited annually by independent accountants or accounting firms.
Joint stock company’s (sociedad por acciones) is divided by shares. It only takes one shareholder to form the company. Resolutions are passed by majorities and there is no need to have a Board of Directors, just a General Manager, and the General Shareholders’ Meetings.
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. 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.
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: 19/02/2021