In Chile, the following six main types of partnerships and corporations can be formed:
Corporation (sociedad anónima)
The “sociedad anónima” (corporation) is a corporate body that results from the establishment of a single equity to which shareholders contribute. The liability of the shareholder is limited to his/her individual contribution. The corporation can be publicly traded or closely held, and its affairs are managed by a board of directors whose members can be changed at any time.
Chilean law identifies a corporation’s activities as commercial, despite its purpose being to carry out acts that would otherwise be considered to be civil.
The following conditions determine whether a corporation is publicly traded:
- The corporation’s shares or other securities feature on a Stock Exchange or are publicly offered to investors.
- The corporation has a record of over 500 shareholders.
- At least 10% of the subscribed capital is owned by more than 100 shareholders (excluding any shareholder that individually owns, either directly or through others, more than 10% of the corporation’s capital)
- The corporation has voluntarily chosen to be governed by the regulations and standards of a publicly traded corporation
All other corporations are considered to be closely held.
Publicly traded organisations are regulated by the Superintendencia de Valores y Seguros (Superintendency of Securities and Insurance) and must be listed in the Register of Securities.
Creating a corporation
A corporation is created by means of a notarised deed that must contain at least the following:
- The names, professions and addresses of the shareholders (at least two of which are required) who are starting the corporation
- The name of the corporation and the location of its main office.
- The specific purposes for which the corporation has been created.
- The life of the corporation, which can be indefinite; if nothing is declared, it is presumed to be indefinite.
- The corporation’s capital and the number of shares, outlining and preferred series of shares and privileges, and whether the shares have a par value or not; the manner and terms to which shareholders must abide by when paying contributions, and the indication and value of all non-monetary contributions.
- How the corporation is managed and how the administration will be monitored by the supervisors.
- The corporation’s financial year-end (the date at which financial statements must be drawn up) and when the general shareholders meeting is held.
- How the corporation will distribute its profits.
- How the corporation will be liquidated.
- How any differences amongst shareholders or between shareholders and the corporation will be arbitrated; if nothing is declared, it is understood that the differences will be submitted for resolution by an arbitrator according to the right and good.
- The names of the first directors and external auditors or comptrollers.
A summary of these statutes, duly notarised, must be filed with the Register of Commerce relevant to the corporation’s domicile. The summary must also be published in the Official Gazette. Both the filing and the publication must be completed within sixty days of the date on which the deed is signed.
General partnership (sociedad colectiva)
In a general partnership, all partners manage the company individually or through an elected representative. Each partner is responsible for all legal liabilities.
To form a general partnership the partners, or their legal representative, must sign a duly notarised deed, which must contain, as a minimum, the following:
- The names, professions and addresses of the partners.
- The partnership’s name, which must include the names of one or more of the partners, followed by the words “y compañía” (and company).
- The partner or partners who will manage the general partnership and who are entitled to use the company’s name.
- The capital contributed by each partner in cash or otherwise; if the contribution is not in cash, the value assigned to it must be noted, as well as how this value is to be determined.
- The partnership’s line of business.
- The partnership’s residence.
- How the profits or losses are assigned to the partners.
- When the partnership will start and end its legal existence.
- The amount each partner is entitled to withdraw for personal expenses each year.
- How the partnership is to be liquidated, and how its assets will given to each partner.
- How differences among partners are to be settled, whether or not an arbitrator will appointed, and if so, the conditions of his/her appointment.
A summary of the partnership must be filed with the appropriate Register of Commerce within sixty days.
Limited liability partnership (sociedad de responsabilidad limitada)
A limited liability partnership is similar to a general partnership. The main difference is that each partner’s liability is limited either to his/her amount of contributed capital or to a greater amount specified in the partnership deed.
A limited liability partnership also relies on the same notarised deed as the general partnership - i.e. it must contain the same items.
The name of a limited liability partnership should include the name of one or more partners or a reference to the partnership’s object or purpose. However, the name must end in the word “limitada” (limited); otherwise, each partner is unlimitedly responsible for all the partnership’s liabilities.
A summary must also be filed with the Register of Commerce in this case within sixty days. This summary must also be published in the Official Gazette within the same period.
Limited partnership (sociedad limitada)
In a limited partnership some partners are not entitled to manage its affairs, but provide all or part of the partnership’s capital. These partners are limited in their liability.
In addition, one or more other partners are nominated as managing or general partners and have unlimited liability for the partnership’s debt and losses.
If shares represent the limited partner’s capital, the partnership is deemed a limited partnership with share capital (sociedad en comandita por acciones). Otherwise, it is a simple limited partnership (sociedad en comandita simple).
The requirements for creating a limited partnership are similar to those required for a general partnership.
Association (associación, or cuentas en participación)
An association is a contract between two or more business persons or entities to share in one or more commercial transactions. These transactions are carried out by one of the entities in his/her own name.This partner must give an account to the other partners and share with them any profit or loss that might result.
The association only creates rights among the partners. Only the partner with his/her name on the transaction is responsible for third parties.
There are no legal requirements for forming an association.
Share company (sociedad por acciones)
A share company is a newly created legal entity that can be established with only one shareholder.
It is very flexible and its bylaws can set different series of shares that can participate separately in the results of different business ventures, among others. As specific stipulations are absent in the entity’s bylaws, the rules governing corporations apply in this case.