Doing Business In Chile.

INTRODUCTION

Company formation in Chile is a multi-step process, and one of the initial and most crucial decisions you’ll make is selecting the right type of company structure.

Here are the 4 types of Chilean companies:

• Individual Limited Liability Company (EIRL)
  A Individual Limited Liability Company (Empresa Individual de Responsabilidad Limitada EIRL) is a idol option for the sole business owners. An EIRL is a legal entity that can conduct most business activities, except for a select few reserved for corporations.

• Limited Liability Company (LLC)
  Formation of an LLC with anything between 2 to 50 shareholders, and the company name must illustrate the goods or services it provides or include the name of one or more partners. There is no minimum capital requirement, and the partners can decide on the company’s activities and choose its management.

• Public Limited Corporation (SA)
  A public limited company (Sociedad Anónima or SA) is another option for company formation. A corporation requires a group of shareholders that establish a common fund and a board of directors that administer the company and make decisions via a majority vote. Each shareholder is liable to the extent of their capital contribution.

• Stock Company (SpA)
  A stock company (Sociedad por Acciones or SpA) adhere to the same regulations as closed corporations, and their management is handled in a nearly identical manner. Stock companies can be formed by one or more individuals and their capital participation is represented by shares. In our experience, this is one of the easiest companies to start and always a strong recommendation.

SETTING UP OF A BUSINESS

A Limited Liability Company (Sociedad de Responsabilidad Limitada or SRL) is a legal entity or company formed by a minimum of two and a maximum of fifty partners, who limit their liability to the amount contributed as capital. Partners may be natural persons or legal entities.

Limited liability is incorporated mainly because the partners are responsible up to the amount of their contributions, they do not require a minimum amount for their incorporation and they are simpler in their administration, since as a general rule the partners themselves take charge of them. It is a type of company that is characterized by the fact that its members are people who trust each other.

• The minimum capital is $3,000 pesos. It is necessary and obligatory that the partners make an initial contribution, the amount of which must be established in the articles of incorporation. Each partner must initially contribute at least 50 percent of his or her total participation. 
• This company can be operated by one manager or several managers, whether they are partners or persons outside the company. 
• The liability of partners to third parties is only up to the amount of their contributions to the company.
• There is no income limit, but 5% of net profits must be set aside annually for the reserve fund.

7 STEPS FOR COMPANY FORMATION IN CHILE

It takes approximately 6 to 8 weeks to complete the process of company formation in Chile once you have all of the required documents. Here are the 7 steps you will need to follow:

• Step 1 – Register the company.
• Step 2 – Notarize the company statutes.
• Step 3 – Obtain a RUT number.
• Step 4 – Print receipts/invoices.
• Step 5 – Seal accounting books and other documents.
• Step 6 – Acquire a patente municipal.
• Step 7 – Register for labour-related accident insurance.

FOREIGN COMPANIES REPRESENTATIVE UNDER ARTICLE 447

To establish a foreign company’s agency in Chile, specific legal requirements must be met according to Article 447 of Chilean Law. The process involves notarizing and legalizing documents at a notary’s office in Chile, translated into Spanish if necessary. The required documents include:

1. Proof that the company is legally constituted in its home country, along with a certificate of its current legal status.
2. A certified copy of the company’s statutes.
3. A general power of attorney for the agent representing the company in Chile, granting broad powers to act on the company’s behalf.

These steps ensure the legitimacy of the foreign company and give the agent legal authority to manage its affairs in Chile.

CONCLUSION

To conduct business in Chile, Foreign Companies must select a company structures: EIRL, LLC, SA, or SpA. They must also comply with legal regulations to establish an agency in the country. Understanding these requirements is essential for successful business operations in Chile. Foreign companies can set up agencies by fulfilling the legal requirements outlined in Article 447.