If you’re considering launching a business here, you need to decide which of the types of companies in Chile is best for you. With a plethora of options available, there is a diverse range of legal structures for setting up your business in Chile. For newcomers to this dynamic market, the bureaucracy can be daunting. That’s where Biz Latin Hub can step in to guide you through the process and offer ongoing back office support.
As you embark on your entrepreneurial journey, exploring the various types of companies in Chile can provide valuable insights to ensure a successful business venture. Size matters, as does speed of formation and internal organization. The sector in which you operate is also crucial. The right choice for one business may not suit another.
In this article, we will have a look at the most common types of companies in Chile and try to create a brief overview of what advantages and disadvantages each of the options has to offer. Then it’s down to you to work out the best fit for you. We will also cover the process of establishing a local branch of an existing business in the country.
Chile placed 33rd in the 2017-2018 Global Competitiveness Index Report, making it the most stable and business-friendly economy in Latin America.
The following four options (including a local branch) represent the best and most common types of legal business entities in Chile:
3 types of companies in Chile
The 3 most common types of companies in Chile are:
- Corporation (S.A.).
- Simplified Corporation (S.p.A).
- Limited Liability Company (S.R.L).
1. Corporation (S.A.)
A corporation is a legal entity where the capital is divided into shares which can be either publicly traded or closely held. Publicly traded corporations must fulfill one of the following conditions: a) the shares are publicly traded, b) have at least 500 shareholders or c) 100% of the shares belong to at least 100 shareholders. Nearly all remaining corporations utilize a closely-held system.
See below the general characteristics for a corporation in Chile:
- There must be a minimum of two shareholders (who can be either individuals or legal entities).
- The shareholders must execute a public deed by providing all necessary information to a notary public.
- It is obligatory to publish an extract of the public deed on the website of the Official Gazette.
- The shareholders must register the corporation in a Company Registry Office.
- There are no minimum capital requirements to form a corporation.
- The shareholders are liable only up to their subscribed capital.
- The publicly traded corporations must publish their financial statements on an annual basis.
- They are also subject to the supervision of the Comision para el Mercado Financiero (CMF).
2. Simplified corporation (S.p.A)
In 2007, local authorities in Chile passed a new law introducing a new form of legal company structure called a simplified corporation.
As suggested by the name, the simplified corporation has a less complicated structure that aims to encourage private entrepreneurship, attract new investments and facilitate the entrance of new types of companies in Chile. Like the corporation, its capital is divided into shares.
The biggest difference is that one sole shareholder (i.e. one individual or one company) can establish a simplified corporation. All other legal entities require at least two individuals or legal entities as the shareholders/owners.
See below some characteristics of the simplified corporation.
- There is no legislation prescribing the amount of minimum capital.
- The shareholders are liable only up to the amount of their subscribed shares.
- The individuals have two options on how to incorporate a simplified corporation: a) through a public deed or b) they are presenting a private document before the Chilean notary.
- Opposite to the corporation, the simplified corporation does not have to publish its financial statements.
3. Limited liability company (S.R.L)
The following attributes are typical of a limited liability company:
- A minimum of two partners can establish a limited liability company.
- The number of partners cannot exceed 50.
- Partners have to execute a public deed and register the company in the Registry if Commence.
- Partners must publish the public deed in the Official Gazette.
- There is no minimum capital requirement to incorporate.
- Partners are liable for their contributions.
- There is no requirement to publish the financial statements for a limited liability company, nor is it a subject of supervision of CMF.
Our Recommendation: We recommend the simplified corporation (S.p.A) because it combines the advantages of limited liability with simpler incorporation procedures compared to a traditional corporation (S.A). It offers flexibility in management and ownership structure while still providing limited liability protection to its shareholders.
Another option: A branch of a foreign company
This type of business is not autonomous, but rather a part of a bigger, established operation. A parent company must appoint a local agent in order to establish a branch of a foreign entity. The agent has to present all the necessary documentation to the local notary and act on behalf of the company. The local agent is also responsible for publishing the financial statement annually. Similarly to other types of legal entities, there is no minimum requirement in regard to the capital amount.
The following steps are necessary in order to create a foreign branch office in Chile:
- A local agent must execute a public deed containing a statement of establishment for the branch.
- An agent must present consul-certified and legalized copies of selected documents (e.g. articles of incorporation, by-laws of the foreign entity, certificate of good standing, and a power of attorney.
- The language of the documents must be Spanish. If the original language is not Spanish, the Ministry of Foreign Affairs in Chile must translate it.
- A local agent must publish a summary of the public deed in the Official Gazette website.
FAQs on types of companies in Chile
1. Can a foreigner register a company in Chile?
Yes, foreigners can register a company in Chile. The process involves complying with the country’s registration requirements and immigration laws, but with proper guidance there should be no problem.
2. What type of legal entity is a simplified corporation (S.p.A) in Chile?
As suggested by the name, the simplified corporation has a less complicated structure that aims to encourage private entrepreneurship, attract new investments and facilitate the entrance of new types of companies in Chile. Like the corporation, its capital is divided into shares.
3. How do I create a legal entity in Chile?
To create any of the types of companies in Chile, you need to follow the registration process outlined by regulatory authorities. The process involves adhering to the country’s registration requirements and immigration laws that you can see in our article.
4. What is an LLC in Chile?
In Chile, an LLC refers to a Limited Liability Company, which provides owners with limited liability protection and simplified administrative requirements. This is closest to an S.R.L in Chile.
5. What is the business structure of an S.p.A in Chile?
There is no legislation prescribing the amount of minimum capital and the shareholders are liable only up to the amount of their subscribed shares. Individuals have two options on how to incorporate a simplified corporation: a) through a public deed or b) they are presenting a private document before the Chilean notary. Opposite to the corporation, the simplified corporation does not have to publish its financial statements.
Are you interested in finding out more about the types of companies in Chile?
Chilean authorities are aware of the importance of domestic and foreign investments for the growth of its economy. For this reason, they try to enhance legislation supporting business-friendly practices. One of them is providing a wide variety of types of companies in Chile. Choosing the right form of entering the market is extremely important and provides the fundamental building blocks for further business expansion.
For this reason, we highly recommend cooperating with a local partner when entering the Chilean market. Get in contact with Biz Latin Hub and our team of local experts and professionals will provide you with company formation services and will support you in establishing your business in Chile.
Unsure of your tax and accounting requirements in Chile? Let our team of experts help you. Contact us now.
