December 09, 2024
INCORPORATION OF JOINT STOCK COMPANY IN CHILE
INTRODUCTION
A Joint Stock Company (Joint-stock companies in Chile are referred to as sociedades por acciones (“SpA”) is a legal business organization with capital split into shares, enabling ownership by shareholders. It is of two types:
- Closed Joint-Stock Company: Private organizations that do not publicly trade their shares.
- Open Joint-Stock Company: Public firms that have their shares traded on the stock exchange, overseen by the Comision Para el mercado Financiero (“CMF”).
ADVANTAGES OF INCORPORATING A JOINT-STOCK COMPANY
Primarily due to the fact that they can be formed by just one individual, either a natural person or a legal entity, and their capital, divided into shares, can be readily sold to new investors. Furthermore, it features a cost-free administration, enabling straightforward or intricate management.
Benefits of a Joint-stock company (SpA): A joint-stock company offers several advantages, including limited liability that safeguards shareholders’ personal assets from business liabilities. It facilitates easy capital raising by issuing shares to attract investors or partners. The structured corporate entity enhances credibility among stakeholders, such as banks and investors, boosting trust. Additionally, the company’s continuity is assured, as its existence remains unaffected by changes in ownership.
LEGAL FRAMEWORK GOVERNING INCORPORATION
- Main Regulations: Regulated by Chile’s Commercial Code, which includes guidelines for joint-stock companies.
Article 425 of Commercial Code of Chile mentions about the matters its bylaws must express:
- The name of the company, which must end with the expression “SpA;”
- The purpose of the company, which will always be considered commercial;
- The capital of the company and the number of shares into which the capital is divided and represented;
- The way in which the administration of will be exercised the company and its representatives will be appointed; indicating who will exercise it provisionally, if applicable, and
- The duration of the company, which may be indefinite and, unless otherwise stated, will have this character
- Regulation of Public Companies: Open joint-stock firms encounter more rigorous examination by the CMF to safeguard shareholders.
- Corporate Governance: Regulations require distinct frameworks for administration and decision-making, promoting transparency and responsibility.
STEPS TO INCORPORATE
Select a distinctive company name that adheres to Chilean naming standards.
- Create essential documents, such as bylaws that define the company’s goals, organization, and distribution of shares.
- Verify documents through a notary public.
- Release the incorporation extract in the Official Gazette (Diario Oficial).
- Submit the notarized Constitution Deed to the Commercial Registry of the company’s location within 60 days of execution.
- Sign up with the Chilean Internal Revenue Service (“SII”) to acquire a Rol Único Tributario (“RUT”), which is required for all tax-related purposes.
- Establish a bank account under the company’s name to place the starting capital.
- Depending on the sector, adhere to industry-specific regulations and acquire required licenses or permits.
CONCLUSION
Creating a joint-stock company in Chile, whether it is a SpA or Sociedad Anónima (“SA”), offers multiple benefits including structural versatility, limited liability, and the chance to function in a pro-business environment with robust legal and tax frameworks. The process is systematic, including critical steps such as crafting and filing the articles of incorporation, publishing in the Official Gazette, obtaining a tax identification number, and securing permits relevant to the sector.
HOW WE CAN HELP?
- Our experts can provide comprehensive guidance on Chile’s regulations, ensuring full compliance with the Chile’s legal framework for businesses.
- Our specialists can offer expert advice on Chile’s tax regulations and ensure efficient Value-Added Tax (“VAT”) registration and compliance
- Our specialists can assist in drafting and preparing all required documents.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner
