Corporate and Commercial Law

It depends on the number of partners, the line of business, the level of risk, and how you want to distribute profits and management. The most common options are the stock company (sociedad por acciones, SpA), very flexible and the usual vehicle for startups and incoming investors; the limited liability company (sociedad de responsabilidad limitada), traditional and simple to manage; the individual limited liability enterprise (empresa individual de responsabilidad limitada, EIRL), for a single owner; and the corporation (sociedad anónima) under Law No. 18,046 (Ley N° 18.046), designed for larger structures or companies with many shareholders. The choice affects taxes, liability, and future investment rounds, so it is best to settle it before incorporating.

There are two routes. The simplified regime of Law No. 20,659 (Ley N° 20.659) (the so-called “company in a day”) allows most company types to be incorporated, amended, and dissolved through an electronic form signed in the Registry of Companies and Societies (Registro de Empresas y Sociedades), without a public deed, quickly and at low cost. The traditional regime, through a public deed, registration in the Commerce Registry (Registro de Comercio), and publication in the Official Gazette (Diario Oficial), remains necessary or advisable in certain cases, such as corporations (sociedades anónimas) or complex structures. Which route to take depends on the type of company and on the agreements you want to include.

It is an agreement among the partners or shareholders that governs their relationship beyond what the bylaws provide. It typically establishes rules on management and decision-making, quorums for key matters, the entry and exit of partners, restrictions on the transfer of equity (such as preemptive rights or drag-along and tag-along rights), the distribution of profits, and dispute resolution mechanisms. A good agreement prevents deadlocks and future disputes, especially when investors come on board or partners with different roles coexist. It is best drafted at the outset, while the relationship between the parties is good.

The first step is to review what was agreed: the bylaws and the shareholders’ agreement usually contain rules on quorums, majorities, and mechanisms for breaking deadlocks. When those mechanisms are not enough, many corporate disputes are resolved through arbitration, which many bylaws make mandatory, and otherwise before the ordinary courts. Depending on the case, the dispute may involve the liability of the managers, the challenge of corporate resolutions, the exclusion or exit of a partner, or even the dissolution of the company. Early intervention, with the facts well documented, usually keeps the conflict from paralyzing the company.

Before closing the deal, it is advisable to conduct a legal review (due diligence) that confirms what you are buying and what risks you are taking on. It covers, among other things, the company’s incorporation and good standing, ownership of the equity interests, key contracts, debts and security interests, the labor and social security situation, permits and tax and regulatory compliance, as well as pending lawsuits or contingencies. The findings make it possible to adjust the price, require guarantees or representations from the seller, or even walk away. This review, together with a well-drafted purchase agreement, is the buyer’s best protection.

Beyond incorporation, a company must keep its operations in good legal standing. This includes keeping the accounts and books required by law, meeting its tax obligations before Chile’s Internal Revenue Service (SII), keeping its employees’ labor and social security obligations up to date, and complying with the rules specific to its line of business and with consumer protection law. Corporations under Law No. 18,046 (Ley N° 18.046) also have corporate governance duties, such as shareholders’ meetings and directors’ duties. Keeping this compliance current, ideally with ongoing counsel, reduces fines and disputes and eases access to financing and new business.