Chile is one of the most developed countries in South America. It has a stable political environment, an open market economy, a qualified workforce, and advanced infrastructure. In addition, solid economic growth and richness in natural resources, such as copper or lithium, make the region an attractive place to invest for both local and foreign business. The Chilean government for many years has created policies encouraging foreign investment, enhancing an open market economy and entrepreneurship.
Company Incorporation Process in Chile
National legislation enables the establishment of various types of legal companies in Chile. The most common legal entity types include the Corporation, Company by shares, Limited Liability Company or the Foreign Branch Office. Another business-friendly policy was enacting the law to establish the ‘Company by Shares’ (SpA) in 2007. The Company by shares is also called a ‘Simplified Corporation’ and it is designed to make the entire company incorporation process simpler, as the same suggests. It is the first legal entity which allows only one shareholder, either a legal or natural person. The shareholder/s which can be either an individual or legal entity (natural or legal person) is only liable up to the amount of capital they have invested in the company.
The company incorporation process by shares (‘SpA’) encompasses the following steps.
– Obtain local tax IDs for the company shareholder
– Create and sign the company bylaws
– Incorporate Local Company Chile
– In 2007, Chile enacted a law establishing a Company by shares (SpA) with the aim to simplify the company formation process.
– Register the company
– Obtain the company ID number (RUT)
– Open a corporate bank account
– Deposit the minimum capital to active the bank account
A shareholder is a natural or legal person (an individual or a company) that owns part of a company through the purchasing of shares, also known as stocks. A company by shares (SpA) is the only legal entity which requires a minimum of one shareholder, which can be either a natural or legal person. Shareholders are liable up to their capital contribution (i.e the amount of money they have invested in the company). In the case that you decide to register a legal entity as the company shareholder/s, local banks may require additional documentation identifying who are the beneficiaries. This is something that should be taken into account before moving ahead with the company incorporation.
Company Share Capital
The company share capital is the amount of capital subscribed by the shareholders during the company incorporation process. The share capital should be taken seriously by the company shareholders as it can have effect certain company operations such as applying for loans, being involved in joint ventures or bidding on contracts.
The value of this share capital can impact the ability of a local Chilean business to be granted loans from financial institutions. As an example, a local company with a high share capital will have a better chance of being granted a loan than a company with a low share capital. The company shareholder/s can increase or decrease the company share capital as they please, however, they must understand that the share capital should reflect the company´s size and business activities (i.e a large mining company should have a larger share capital than a small IT company). Chilean law does not require any minimum amount of company capital to establish a SpA, however, it is strongly recommended that the initial capital be at least USD$500 to facilitate smoothly the bank account opening process.
Company Legal Representative
All companies in Chile are required to appoint a company legal representative. The Company Legal Representative acts as the legal face of the corporation and is the signatory for all operational activities of the company i.e the opening of a company bank account. Consequently, the legal representative has the legal responsibility to ensure the good standing of the company and smooth flow of operational processes. The legal representative must be either a Chilean national or a foreigner who legally resides in Chile.
A fiscal address, also known as a ‘domicilio fiscal’ is a minimum statutory requirement for all legal entities in Chile and is registered with the Chilean tax authorities. The fiscal address, for all intents and purposes, will be the registered address of the company, and as such, will be used for all official communication.
How we can help you
If you are considering forming a business or you need expert help with company registration in Chile, LegalGenius™ is ready to assist you with its skilled team of lawyers, consultants and tax experts. We are committed to making the process as stress-free and streamlined as possible for you, and we will take care of all your document preparation and administrative tasks regarding the registration forms, payment of government fees, local address registration, banking support, etc., whilst always keeping your exact objectives and unique vision in mind throughout the process.
Please use our Company Formation Wizard if you would like to set up your registered company in Chile or if you would like to know the costs involved prior to proceeding with our exceptional services. For other queries and special requests for complex or customised company formation services, please contact us at firstname.lastname@example.org