A Sociedad Anonima (SA) is a corporation similar to that of a proprietary limited company in Australia. It is governed by Act 18,046/1981 and formed by way of a public deed executed by its shareholders. It may be publicly traded or closely held. An SA is publicly traded if, amongst other things, its shares are listed on a stock exchange. An SA is formed by the pooling of capital by a minimum of two shareholders who are only liable for their respective contributions. Foreign corporations can hold 100% of an SA’s shares. An SA is administered by a board of directors with at least one Chilean representative, whose powers are revocable at any time. If publicly traded, the entity will be subject to the regulatory control of the Superintendency of Securities and Insurance or Superintendencia de Valores y Seguros (“SII”, similar to the Australian Taxation Office).
Sociedad por Acciones
A Sociedad por Acciones (SpA) is a relatively new type of entity to Chile, which is similar to an SA but can be established with just one shareholder, including a trustee company and/or its unit holders (in their own right). The SpA was created in response to a need for a corporate vehicle to encourage the establishment and growth of small and mid-sized businesses. It seeks to combine the flexibility in management with the structure of rights and obligations prevailing in a S.A. SpAs have greater autonomy as to what their by-laws may provide as compared with the S.A. (the SpA Constitution is much simpler). Many of our bigger corporate clients are now electing to set up an SpA and, depending on the proposed make-up of the Chilean entity, we generally now recommend this as a good and practical option.
Tax wise, SpAs are treated equally to SAs. While untested due to its novelty, the SpA follows the general guidelines of Act 18,046/1981 (like the SA) but provides greater flexibility with fewer formalities than the SA. Notable differences are that a SpA may re-purchase shares of its own capital more flexibly than an SA, sell its shares without the formalities of an SA and does not need to have a Board of Directors (it may instead have a sole Director known as an “Administrator”). If the SpA does have a Board of Directors, there is no obligation to hold any Board of Director meetings, as long as the bylaws permit this. An SA requires that the Board of Directors meet annually.
The SpA’s obligations are basically two: to appoint a general manager and to hold ordinary shareholder meetings. All others matters are subject to the norms applicable to the SA (as stated above – Act 18,046/1981), including the liability of the shareholders which is limited to the size of their shareholdings.
Sociedad de Responsibilidad Limitada
Another entity in Chile is the Limited Liability Partnership or Company (Sociedad de Responsabilidad Limitada) (SRL). Similar to a corporation, the liability of an SRL’s members is limited and the entity is legally distinct from the partners. A minimum of two partners is required and a maximum of 50 partners is allowed. All partners may be foreigners. Generally speaking, the partnership is automatically dissolved if there is only one partner. Administration may be carried out by the partners or representatives, of which at least one must be domiciled in Chile. SRLs are not subject to the control of a regulatory authority and have no obligation to publish or file accounts.