Corporation (S.A.)

A Corporation is defined in Article 1 of the Chilean Corporations Law No. 18.046 as follows:

“A corporation is a legal entity formed by the contribution of a common fund provided by shareholders, who are liable only for their respective contributions, and managed by a board of directors composed of members who may be removed at any time.”

In a Corporation, decisions are made by a body known as the General Meeting of Shareholders, and then executed by the Board of Directors.
The corporation’s assets consist of both tangible and intangible property that has an economic value. The capital is divided into shares that are freely transferable and entitle shareholders to participate in the company’s profits.

Types of Corporations

Under Chilean law, there are three types of corporations:

Open Corporation

These are corporations that list their shares in the Securities Registry voluntarily or by legal obligation. A corporation required by law to register its shares must request such registration within 60 days of the date on which the obligation arises or the resolution is adopted.

Special Corporations

These are corporations that, whether or not they make a public offering of securities and regardless of their shareholder structure, are subject to the supervision of the Financial Market Commission (formerly SVS) because of their specific corporate purpose. They are governed by Article 126 of the Corporations Law and must be incorporated by public deed, with prior authorization from the Commission.

Closed Corporation

These are corporations that do not qualify as open or special. A closed corporation may choose, by resolution of an extraordinary shareholders’ meeting, to be subject to the same rules governing open corporations or to fall under the supervision of the Financial Market Commission, in which case it must register in the Securities Registry. The decision must be recorded within 60 days from the date of the meeting.

Incorporation of a Corporation (S.A.)

A Corporation must be formed, exist, and evidenced through a public deed, which must then be registered and published in the Official Gazette.

The minutes of shareholders’ meetings that resolve to amend the bylaws or dissolve the company must also be recorded by public deed, following the same formalities.

The public deed of incorporation must contain the following:

– The name, profession or occupation, domicile, and taxpayer ID (RUT) or identification document of each shareholder participating in the incorporation.
– The name and domicile of the corporation.
– A detailed statement of the corporation’s specific purpose(s).
– The duration of the corporation, which shall be indefinite unless otherwise stated.
– The capital of the corporation, the number of shares into which it is divided, and their classes and preferences (if any), indicating whether the shares have a nominal value. It must also specify how and when shareholders must pay their contributions and the valuation of any non-monetary contributions.
– The organization and rules of corporate management and oversight by the shareholders.
– The closing date of the fiscal year, the date for preparing the financial statements, and the time for holding the annual shareholders’ meeting. If not specified, it shall be understood that the fiscal year closes on December 31, and the meeting is held within the first four months of the following year.
– The method of profit distribution.
– The procedure for liquidation.
– The nature of the arbitration process to resolve disputes among shareholders or between shareholders and the company or its managers, either during the company’s operation or liquidation. If not specified, disputes shall be resolved by an arbitrator appointed as “arbitrador.”
– The names of the provisional board members and, in the case of open corporations, the external auditors or inspectors who will oversee the first fiscal year.
– Any other agreements reached by the shareholders.

The summary of the incorporation deed, authorized by the notary, must be registered in the Commercial Registry corresponding to the corporation’s domicile and published once in the Official Gazette within 60 days of execution. The summary must include:

– The name, profession or occupation, domicile, and taxpayer ID (RUT) or identification document of the shareholders participating in the incorporation.
– The name, purpose(s), domicile, and duration of the corporation.
– The subscribed and paid-in capital and the period allowed for full payment.
– The capital and number of shares into which it is divided, indicating their classes, privileges, and nominal value (if any).

Corporations use a company name, not a trade name. According to Article 8 of the Corporations Law, the name must include the words “Sociedad Anónima” or the abbreviation “S.A.”

Dissolution of a Corporation

According to Article 103 of the Corporations Law, a Corporation may be dissolved for the following reasons:

– Expiration of its term, if one has been established.
– When all shares are held by a single person for more than ten consecutive days.
– By resolution of an extraordinary shareholders’ meeting.
– By revocation of its legal authorization, in accordance with the law.
– By a final court ruling, in the case of closed corporations.
– Any other causes established in the bylaws.