Key Steps To Company Formations in Chile

Choosing the Right Legal Entity: The 3 Most Common Company Types in Chile

Chile provides a business-friendly environment with several legal structures for incorporating your company. Selecting the best option depends on your company's size, goals, and future plans. Here's a look at the three most common company types in Chile:

1. Sociedad por Acciones (SpA) - Simplified Stock Company:

Similar to an LLC in the US, SpAs offer a balance between flexibility and structure.

• Requirements:
  • Minimum of one shareholder (individual or corporation).
  • No minimum capital requirement.
  • One or more directors, with no nationality or residency restrictions.
• Pros:
  • Simpler and faster to set up compared to other options.
  • Offers limited liability protection for shareholders.
  • Flexible management structure.
  • Suitable for most small and medium-sized businesses.
• Cons:
  • Shares may have some transferability restrictions depending on bylaws.
  • Less attractive for large-scale fundraising compared to an SA.

2. Sociedad Anónima (S.A.) - Corporation:

Similar to a corporation in the US, SAs offer a traditional company structure with greater potential for growth.

• Requirements:
  • Minimum of two shareholders (individuals or corporations).
  • No minimum capital requirement, but some may be imposed by the company itself.
  • One or more directors, with no nationality or residency restrictions.
  • Requires a statutory inspector to oversee management, who may or may not be a shareholder.
• Pros:
  • Well-suited for large companies or those planning to raise capital publicly.
  • Easier transferability of shares.
  • Clear separation of ownership and management.
• Cons:
  • More complex and expensive to set up and maintain than an SpA.
  • Subject to greater regulatory requirements and ongoing compliance obligations.

3. Empresa Individual de Responsabilidad Limitada (EIRL) - Sole Proprietorship with Limited Liability:

For smaller, individual-run businesses, an EIRL provides a simple structure with limited liability protection.

• Requirements:
  • One owner (individual).
  • Minimum capital requirement of 4 Unidades de Fomento (UF), which is an inflation-adjusted unit.
• Pros:
  • Simplest and fastest option to establish.
  • Offers limited liability protection for the owner's personal assets.
• Cons:
  • Owner has unlimited personal liability for business debts exceeding the initial capital.
  • Limited growth potential and difficulty raising capital.

By considering your company's needs and objectives, you can choose the most suitable legal entity for a successful incorporation in Chile.

The 7 Key Steps for Company Formation in Chile

Here's a breakdown of the steps involved in forming a company in Chile:

1. Choose Your Business Structure: In Chile, the most common option for new businesses is the Simplified Stock Company (Sociedad por Acciones Simplificada - SpA). This offers a simpler setup process compared to other structures.
2. Pick a Company Name: Select a unique and available name for your SpA. It's recommended to brainstorm a few options to present to the Commercial Registry.
3. Prepare Company Bylaws: Draft the bylaws (estatutos) outlining your company's purpose, structure, management roles, and shareholder rights.
4. Obtain a Tax ID (RUT): Register with the Internal Revenue Service (SII) to acquire a Unique Taxpayer Roll Number (RUT) for your company.
5. Secure a Tax Address: Establish a physical address in Chile to serve as your official tax domicile. You can use a lease agreement to verify this address.
6. Print Invoices and Seal Accounting Books: Authorize a printing company to produce official invoices (boletas) and have your accounting books stamped by the SII for record-keeping purposes.
7. Register for Business Activities: Declare your company's intended business activities with the SII to finalize the registration process.

How long will it take to successfully incorporate a company in Chile?