HTML tags removed:
Company Formation in Chile: Despite its considerably smaller size, Chile is now attracting roughly as much Foreign Direct Investment (FDI) as Mexico, one of the strongest economies in Latin America. Starting a company in Chile is widely recognized as a stable option for growth, attracting investors who seek markets in the region with political and financial transparency. Its impressive year-on-year GDP growth of 2.4% in 2022 is a testament to its strong legal system, macroeconomic stability, abundant natural resources, and high-quality infrastructure. Chile’s total GDP is $317 billion (USD), and its GDP per capita is above the regional average, at over $16,000, which has helped its middle class expand. In 2021, foreign investors contributed about US$12.72 billion to the economy. The graphic above highlights why company formation in Chile is a great option for investors looking to do business in the region. The Chilean government is pushing to diversify investment sources and make the country an attractive investment destination for multinationals, start-ups, and other investors. Now is the perfect time to start the process of company formation in Chile. Since May 2013, Chile has made it extremely convenient to start a business, with new laws allowing for online company formation within a day. However, corporate laws may differ in Chile to those in other countries. Therefore, it’s recommended to seek guidance from a local legal expert before you incorporate a company in Chile.
What are the steps for company formation in Chile? This graphic lays out the 7 steps. It takes approximately 7 weeks to have a fully operational business in Chile. These are the steps to follow:
1. Register the company online and obtain the authentication number.
2. Notarize company statutes and have them signed digitally by the notary.
3. Obtain a RUT number by registering with the Internal Revenue Service (SII in Spanish).
4. Print receipts/invoices at an authorized printing company.
5. Seal accounting books and other documents with the Chilean Tax authority.
6. Acquire a “patente municipal” working license from the municipality.
7. Register for labor-related accident insurance.
Starting a Business in Chile: Types Of Chilean Companies When forming a company in Chile, you must choose the right type of company structure for your business. Below we have identified and provided a brief summary of the different types of companies in Chile.
Individual Limited Liability Company: An EIRL is a good choice when you are the sole business owner. An EIRL is a type of legal entity that can conduct most business activities, except for a select few that are reserved for corporations. As the owner, you are only liable for the amount you invest in the company, and the company is liable for all its assets. The company name must illustrate the goods or services it provides or include the owner’s name.
Limited Liability Company: You can form a Limited Liability Company (LLC) with anything between 2 to 50 shareholders, and the company name must illustrate the goods or services it provides or include the name of one or more partners. There is no minimum capital requirement, and the partners are free to decide on the company’s activities and choose its management. Forming an LLC is a popular option.
Corporation (SA): A corporation is another option for company formation. A corporation requires a group of shareholders that establish a common fund and a board of directors that administer the company and take decisions via a majority vote. Each shareholder is liable to the extent of their individual capital contribution. The starting capital of a corporation must be fully subscribed and paid within 3 years. There are two types of corporations: public corporations and closed corporations.
Stock Company (SpA): The same norms that govern closed corporations apply to Stock Companies and they are managed in a nearly identical way. Stock Companies can be formed by one or more individuals and their capital participation is represented by shares.
FAQs when forming a company in Chile:
Answers to some of the most common questions we get asked by our clients.
1. Can a foreigner own a business in Chile?
Yes, a business can be 100% foreign owned by either legal persons (“legal entities”) or natural persons (“individuals”).
2. How long does it take to register a company in Chile?
It takes 7 weeks to register and set up an operating company in Chile.
3. What does an SpA company name mean in Chile?
The SpA in a company name in Chile refers to a “Sociedad por Acciones”, which refers to a Joint Stock Company. This type of corporate entity allows for shares to be easily bought and sold. One or more individuals or legal entities can establish the structure, which offers flexibility in terms of capital management. Due to its adaptability and capacity for a variety of investments and shareholders, businesses and entrepreneurs frequently choose it.
4. What does an LTDA company name mean in Chile?
LTDA in a company name in Chile refers to a “Sociedad de Responsabilidad Limitada,” which refers to a Limited Liability Company. This type of corporate structure is characterized by the partners’ liability being limited to their contributions to the company’s capital. In an LTDA, partners are not personally responsible for the company’s debts beyond their investment, providing a level of protection for individual assets. Small to medium-sized businesses frequently use it in Chile because it combines elements of partnership and corporate structures, providing flexibility and legal protections.
5. What entity types offer Limited Liability in Chile?
Both the Sociedad por Acciones (SpA) and Sociedad de Responsabilidad Limitada (SRL) provide Limited Liability protections to their owners in Chile.
6. What are the main differences between an SpA and an LTDA in Chile?
A. Number of shareholders: An SpA can have one shareholder, which can be either a natural person or a company that will contribute a certain number of shares.
B. Administration: In an SpA, the Administration is trusted to either one or more individuals or legal entities, or to a Board of Directors. In an LTDA the Administration is usually trusted to one or more of the shareholders.
C. Responsibility of the shareholders: In both legal types, the shareholders are only liable up to the amount of their capital contributions.
D. Social capital: In the SpA, it is divided into shares, while in the LTDA in a percentage of rights over the company with no specific allocation to certain assets.
E. Changes of ownership: In order for new owners to enter into an LTDA, the existing owners need to approve the operation, this does not happen in an SpA where any shareholder can unilaterally sell his/her shares.
How can Biz Latin Hub help you?
At Biz Latin Hub, our multilingual team of company formation specialists has extensive experience in supporting foreign executives when starting a business in Chile. With our comprehensive portfolio of back office solutions, including legal, accounting, and recruitment support, we can be your single point of contact for entering and doing business in the Chilean market or any of the other 17 markets in Latin America and the Caribbean where we have a presence. Contact us now to receive personalized assistance or a free quote on company formation in Chile. Learn more about our team and expert authors.
Company formation in Chile: How to establish a company by shares?
The information provided here should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
