• Corporation (“sociedad anónima”)
• General partnership (“sociedad colectiva”)
• Limited liability partnership (“sociedad de responsabilidad limitada”)
• Limited partnership (“sociedad en comandita”)
• Association ("asociación" or "cuentas en participación")
• Company by shares (“sociedad por acciones”).
Types of companies that may be set up in Chile
Under Chilean commercial law, the following types of partnerships or corporations can be formed:
Corporation ("sociedad anónima”)
The corporation is a body corporate that results from the forming of a single equity contributed by the shareholders. The shareholders’ liability is limited to the amount of their individual contributions. The corporation can be publicly traded or closely held and a Board of Directors, whose members can be replaced at any time, administrates its affairs.
Chilean law considers that a corporation's activities are always mercantile, even though it is formed to carry out acts that would otherwise be deemed to be civil.
A corporation is considered to be publicly traded if it meets one or more of the following conditions:
• The corporation's shares or other securities are listed on a Stock Exchange or are offered to investors in general through a public offering.
• The corporation has more than 500 shareholders of record.
• At least 10% of the subscribed capital is owned by more than 100 shareholders (excluding any shareholder that individually owns, either directly or through another person or legal entity, more than 10% of the corporation's capital).
• The corporation has elected voluntarily to be ruled by the regulations and standards of a publicly traded corporation.
All other corporations are deemed to be closely-held.
Publicly-traded corporations are subject to the regulatory control of the Superintendency of Securities and Insurance and must be listed in the Register of Securities.
A corporation is created by means of a notarized deed that must contain, as a minimum, the following:
• The names, professions,addresses and Tax ID (if applicable) of the shareholders that are starting the corporation; at least two shareholders are required.
• The name and domicile of the corporation.
• The specific objects for which the corporation is created.
• The life of the corporation, which can be indefinite; if nothing is said, the life is presumed to be indefinite.
• The capital of the corporation and the number of shares, indicating any preferred series of shares and privileges, and whether the shares have a par value or not; the manner and terms in which the shareholders must pay in their contributions, and the indication and value of all non-monetary contributions.
• How the corporation is to be administrated and how the administration will be supervised by the shareholders.
• The corporation's financial year-end (at which date the financial statements must be drawn up) and when the Ordinary Shareholders Meeting must be held. If nothing is said, the year will end on December 31 and the Ordinary Shareholders Meeting will be held during the first four months of the year.
• How the corporation will distribute its profits.
• How the corporation will be liquidated.
• The nature of the arbitration by which any differences between shareholders or between shareholders and the corporation are to be decided; if nothing is said, it is understood that the differences will be submitted for resolution by an arbitrator ex aequo et bono.
• The names of the provisional directors and, in the publicly traded corporations, external auditors or comptrollers.
A summary of these statutes, duly notarized, must be filed with the Register of Commerce that corresponds to the corporation's domicile. The summary must also be published in the Official Gazette web site, for which prupose the Notary Public should send electronically to the Official Gazette a digital copy of the relevant summary. Both the filing and the publishing must be made within sixty days of the date the deed is signed.
General partnership ("sociedad colectiva")
In a general partnership all the partners administrate the company individually or through an elected representative. Each partner is responsible for the legal liabilities of the partnership without limit.
To create a general partnership the partners, or their legal representatives, must sign a duly notarized deed. The partnership deed must contain, as a minimum, the following:
• The names, professions and addresses of the partners.
• The partnership's name, which must be the names of one or more of the partners, followed by the words "y compañía" (and company).
• Partner or partners who will administrate the general partnership and who are allowed 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 or how such value is to be determined.
• The partnership’s line of business.
• The partnership’s domicile.
• How the profits or losses are to be assigned to the partners.
• When the partnership will start and when it will end its legal existence.
• The amount each partner can withdraw annually for personal expenses.
• How the partnership is to be liquidated, and how its assets will be assigned to each partner.
• How differences among the partners are to be settled, whether or not an arbitrator will be used, and, if so, how he or she will be appointed.
A summary of the partnership deed 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 principal difference is that each partner's liability is limited either to the amount of capital he or she contributed or to a greater amount specified in the partnership deed.
A limited liability partnership is formed by means of a notarized deed that should contain the items required for a general partnership deed. The name of a limited liability partnership should contain the name of one or more partners or a reference to the partnership's object. However, the name must end in the word “limitada”; otherwise, each partner is unlimitedly liable for all the partnership's liabilities.
Filing of a summary with the Register of Commerce is also required within 60 days. The summary must also be published in the Official Gazette web site, for which prupose the Notary Public should send electronically to the Official Gazette a digital copy of the relevant summary.within the same 60-day period.
Limited partnership ("sociedad en comandita")
In a limited partnership some partners provide all or a part of the partnership's capital with no right to manage the partnership’s affairs. These partners have limited liability.
In addition, one or more other partners are designated as managing or general partners and have unlimited liability for the partnership's debt and losses.
If shares represent the limited partners’ capital, the partnership is known as a limited partnership with share capital ("sociedad en comandita por acciones"). Otherwise, it is a simple limited partnership ("sociedad en comandita simple").
The requirements to create a limited partnership are similar to those for forming a general partnership.
Association ("asociación" or "cuentas en participación")
An association is a contract between two or more businesspersons or entities to share in one or more commercial transactions, which will be carried out by one of them in his or her own name. Such partner must render 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. As far as third parties are concerned, only the partner in whose name the transaction is carried out is responsible.
There are no legal requirements for forming an association.
Company by shares (“sociedad por acciones”)
A company by shares is a legal entity that can be set up and can exist with only one shareholder. Liability is limited to the amount contributed or agreed to contribute.
It is very flexible and its bylaws can establish different series of shares that can participate separately in the results of different business ventures, amongst others. In the absence of specific stipulations in the entity’s bylaws, the rules governing corporations apply.
The bylaws of a company by shares can be agreed either in a public deed or in a private instrument where the shareholder’s signature is notarized, that must contain, as a minimum, the following:
• The name of the company, that has to include “SpA”.
• The business line of the company, which will always be mercantile.
• The capital of the company and the number of shares.
• How the company has to be administrated and who will provisionally administer the company (if applicable).
• The life of the corporation, which can be indefinite; if nothing is said, the life is presumed to be indefinite.
Within one month from the date of the incorporation of the company, a summary duly notorized must be filed in the Register of Commerce and published in the Official Gazette web site, for which prupose the Notary Public should send electronically to the Official Gazette a digital copy of the relevant summary.