Under Chilean law, business entities fall broadly into two categories: capital companies and partnerships. Partnerships have minimal regulatory requirements, which is why this overview focuses on capital companies - such as Corporations (Sociedades Anónimas or S.A.s) and By-Stock Companies (Sociedades por Acciones or SpAs) - which are subject to more extensive legal and compliance obligations. Where relevant, partnerships, including Limited Liability Companies (Ltdas), which remain in use despite their more rigid structure, will also be addressed.

Capital Companies

In capital companies, the central element is the capital contribution of the shareholders. These entities are formed primarily to pool resources, rather than based on the identity of their members. Shareholders are interchangeable and their liability is limited to the capital they contribute. The main types of capital companies include the following.

Corporation (Sociedad Anónima, or S.A.)

Corporations are the most regulated form of legal entity in Chile. Their key features include:

• a strict governance structure, often requiring a board of directors;
• mandatory annual shareholder meetings and minimum dividend distributions; and
• detailed reporting and operational obligations, especially for those under regulatory oversight.

There are three types of corporations:

• Listed corporations: these must register their shares with the Financial Market Commission (Comisión para el Mercado Financiero, or CMF) either by legal mandate or because they meet specific criteria (eg, a large number of shareholders). They are publicly traded and subject to intense regulatory scrutiny.
• Closed corporations: these are privately held, with simpler rules for share transfer and lower reporting burdens. They must convert into listed corporations if they meet legal thresholds for public offering.
• Special corporations: certain industries - such as banking, insurance, and pensions - require specific corporate forms. These entities are subject to sector-specific regulation and CMF oversight.

By-stock companies (sociedad por acciones or SpA)

SpAs are a flexible, modern vehicle for business incorporation in Chile. They combine limited liability with simplified corporate governance and are often chosen for their adaptability. Key features include:

• capital divided into shares;
• freedom to define governance structures in the by-laws, including whether to appoint a board or another managing body;
• simplified procedures for issuing new shares or bringing in new investors; and
• those incorporated by a single shareholder, unlike corporations (S.A.) and limited liability companies (Ltdas), which require at least two founding members.

Law No. 18,046 on Corporations applies on a supplementary basis to SpAs in areas not expressly governed by their by-laws and the Code of Commerce, particularly regarding directors’ duties, shareholder rights, and governance standards.

SpAs have largely replaced limited liability companies for new businesses, due to their flexibility and investor-friendly design.

Partnerships

In partnerships, the emphasis is on personal identity and trust among partners (the affectio societatis). Capital contributions matter less than the personal bond between partners. These entities typically involve limited transferability of interest, meaning new partners can only be admitted with unanimous consent, and liability is often limited to capital contributions, although rules can vary. Additionally, they exhibit a strong dependence on the ongoing participation of the founding partners.

The most common form is the Limited Liability Company. Traditionally favoured before the rise of SpAs, Ltdas require unanimous partner consent for changes and may dissolve upon a partner’s exit, unless otherwise agreed in the by-laws.

Corporate governance in Chile is structured by a mix of statutory laws, administrative regulations, and voluntary frameworks. The main sources of legal requirements for capital companies include:

• Law No. 18,046 (Corporations Law or LSA), which regulates the structure, management, and shareholders’ rights in corporations.
• Law No. 18,045 (Securities Market Law or LMV), which sets standards for listed companies and securities markets, including disclosure and transparency obligations.
• Decree Law No. 211 of 1973 (Free Competition Law or LPLC), overseen by the National Economic Prosecutor’s Office (FNE): this law promotes market transparency and prevents anti-competitive conduct.
• Law No. 19,913, which establishes the Financial Analysis Unit (Unidad de Análisis Financiero, or UAF) and introduces anti-money laundering and counter-terrorism financing controls.
• Law No. 21,000, which creates the Financial Market Commission (Comisión para el Mercado Financiero, or CMF), supervising market conduct and compliance.
• Administrative regulations issued by the CMF and UAF, which include detailed rules on corporate governance, reporting, and compliance systems.

Sector-specific regulations apply to industries such as banking, insurance and pensions, which must meet heightened corporate governance standards under their own legal regimes.

Additionally, Law No. 20,393 introduces corporate criminal liability and mandates companies to adopt compliance programs, including crime prevention models and environmental risk controls.

Beyond statutory requirements, companies may adopt non-governmental standards, such as ESG guidelines, stock exchange listing rules, or self-regulatory codes. These frameworks aim to enhance transparency, ethical conduct and sustainability in corporate governance.

Listed companies with publicly traded shares are subject to heightened regulatory standards aimed at ensuring transparency, accountability and investor protection. These standards are mandatory and primarily regulated by the Chilean Corporations Law (Law No. 18,046) and overseen by the CMF.

Publicly traded shares must be registered with the CMF and listed on a stock exchange. Listed companies are under continuous CMF supervision and must comply with stringent reporting and disclosure obligations.

Key governance requirements include:

• Board structure: Listed corporations must have a board of at least five directors, versus three for closed corporations. Independence and oversight capacity are essential features of the board.
• Disclosure obligations: Companies must publish key corporate governance documents, including financial statements, shareholder meeting minutes, and policies, which must be accessible on their websites.
• Annual reporting: Companies must prepare and submit a detailed annual report covering financial results, governance practices, and strategic direction.
• Operational restrictions: Certain activities require regulatory pre-approval or are subject to sector-specific limitations to safeguard market integrity.

Although these requirements are mandatory for publicly traded entities, many private companies voluntarily adopt similar standards to build trust and attract capital.

Companies in regulated industries such as banking, insurance, and pensions face additional obligations under sector-specific laws and CMF oversight, reflecting the need for enhanced data privacy, consumer protection and financial system stability.

Chile is advancing key developments in corporate governance, with a particular focus on ESG reporting, compliance, board diversity, and cybersecurity.

ESG and Sustainability Reporting

The CMF continues to expand ESG disclosure requirements. Under General Rule No. 461, publicly traded companies must report on climate-related risks in line with international standards, such as those from the TCFD. As a result, companies are expected to embed carbon neutrality goals, environmental risk management, and supply chain sustainability into their corporate governance frameworks.

White-Collar Crime and Environmental Accountability

The enactment of Law No. 21,595, fully effective since 2024, significantly reformed Law No. 20,393 on the criminal liability of legal entities. The updated framework broadens the scope of crimes attributable to companies and their representatives, increases penalties, and emphasises environmental crimes and corporate responsibility in governance and compliance structures.

Gender Diversity on Boards

A bill entitled “More Women on Boards” has been approved by the Chamber of Deputies and is currently under discussion in the Senate. This bill proposes a suggested maximum quota of 60% for the gender with greater representation on company boards. The CMF will assess the adoption of this policy every four years, starting from the sixth year after the law’s enactment, using objective indicators to ensure that at least 80% of companies adopt the suggested quota and that less than 5% have no women on their boards.

Chile is advancing key developments in corporate governance, with a particular focus on ESG reporting, compliance, board diversity, and cybersecurity.

ESG and Sustainability Reporting

The CMF continues to expand ESG disclosure requirements. Under General Rule No. 461, publicly traded companies must report on climate-related risks in line with international standards, such as those from the Task Force on Climate-Related Financial Disclosures (TCFD). As a result, companies are expected to embed carbon neutrality goals, environmental risk management, and supply chain sustainability into their corporate governance frameworks.

White-Collar Crime and Environmental Accountability

The enactment of Law No. 21,595, fully effective since 2024, significantly reformed Law No. 20,393 on the criminal liability of legal entities. The updated framework broadens the scope of crimes attributable to companies and their representatives, increases penalties, and emphasises environmental crimes and corporate responsibility in governance and compliance structures.

Gender Diversity on Boards

A bill entitled “More Women on Boards” has been approved by the Chamber of Deputies and is currently under discussion in the Senate. This bill proposes a suggested maximum quota of 60% for the gender with greater representation on company boards. The CMF will assess the adoption of this policy every four years, starting from the sixth year after the law’s enactment, using objective indicators to ensure that at least 80% of companies adopt the suggested quota and that less than 5% have no women on their boards.

Cybersecurity and Data Protection

Boards are increasingly expected to address cybersecurity and data protection governance, as digital threats to the financial and corporate sectors intensify. Chile enacted Law No. 21.719, a new Personal Data Protection Law aligning with international standards (like the GDPR). It establishes a Personal Data Protection Agency, expands individual rights (eg, access, deletion, portability), mandates data protection officers, and requires breach notifications. It comes into force on 1 December 2026. Under Law No. 21.663, in effect since 1 January 2025, Chile created the National Cybersecurity Agency (ANCI) and established strict obligations for critical infrastructure operators (OVIs), including mandatory reporting and implementation of cybersecurity management systems.

Greenwashing Regulation

A bill to prevent and punish greenwashing is currently under discussion in the Chamber of Deputies. The proposed legislation mandates that companies advertising their products or services with a focus on sustainability must provide complete, truthful, verifiable and accurate information. Failure to do so would result in penalties.

Additionally, practices carried out merely in compliance with legal and regulatory provisions or mitigation, repair, compensation or voluntary commitments may not be advertised as sustainable.

In Chile, ESG reporting requirements have become more robust, particularly for publicly listed companies, following the issuance of General Rule No. 461 by the CMF. This regulation requires that ESG-related disclosures be integrated into the Annual Report (Memoria Anual).

Key ESG reporting components include:

Corporate Governance Practices

Companies must disclose how they evaluate and ensure compliance with internal governance practices, highlighting mechanisms for transparency, board composition, executive compensation and internal control systems.

Environmental Sustainability

Disclosures must address environmental risk management strategies, climate-related risks and opportunities, carbon neutrality goals and sustainability practices along the supply chain. These align with TCFD recommendations and international best practices.

Social and Human Rights Policies

The report must detail how the company addresses social impact, labour practices, community engagement and respect for human rights within its operations and business relationships.

Conflict of Interest Policies

Entities must explain how they identify and manage potential conflicts of interest across their operations, particularly in decision-making processes.

Research and Development

Companies are required to disclose their investments in innovation and technology, showcasing their commitment to long-term value creation and competitiveness.

Diversity and Inclusion

ESG disclosures must include the company’s diversity and inclusion policies, gender representation on boards and in management, and actions taken to promote inclusive workplace practices.

CMF’s General Rule No. 461 requires companies to align their ESG disclosures with the Sustainability Accounting Standards Board (SASB) standards. These are industry-specific, identifying sustainability-related issues most relevant to investor decision-making across 77 industries. Each standard includes disclosure topics and associated metrics tailored to the specific sustainability risks and opportunities of that industry.

In Chile, corporate governance and management are typically structured around three core bodies, each with distinct responsibilities to ensure effective oversight and operational control.

Shareholders’ Meeting

This is the highest decision-making authority within a company. Shareholders vote on key corporate matters, such as the appointment or removal of board members, approval of financial statements, profit distribution, mergers or spin-offs, and amendments to the company’s by-laws.

Board of Directors

The board is responsible for setting the company’s strategic direction, supervising executive management and overseeing the company’s general performance and compliance with legal obligations. Listed corporations are required to have a minimum of five board members, while closed corporations need only three.

Notably, under Law No. 18,046, certain publicly listed companies are mandated to form a Directors’ Committee (Comité de Directores) with most independent directors. This requirement only applies to companies that meet specific criteria.

Executive Management

Led by the Chief Executive Officer (CEO) or General Manager (Gerente General), this team is tasked with the day-to-day management of the company. They implement the strategies defined by the board and ensure operational efficiency.

In addition to these core bodies, companies, especially those with publicly traded shares - may establish specialised committees, such as audit and risk and human resources.

In Chile, corporate decision-making is structured under a defined hierarchy, with specific powers and responsibilities reserved to each governing body. The primary decision-making bodies operate as follows.

Shareholders’ Meeting

As the supreme corporate body, the Shareholders’ Meeting is responsible for the most critical decisions affecting the company’s structure and overall direction. Matters exclusively reserved to this body include:

• Corporate structure and governance: Approval of by-law amendments, capital increases or reductions, mergers, spin-offs, transformations, and company dissolution.
• Financial matters: Approval of annual financial statements, the annual report (memoria anual), and appointment external auditors.
• Board composition and compensation: Appointment or removal of board members and determination of their remuneration.
• Profit distribution: Approval of dividend distribution, including setting minimum mandatory dividends as established by law or by-laws.

These decisions generally require qualified quorums depending on the nature of the resolution (eg, extraordinary versus ordinary shareholders’ meetings).

Board of Directors

The board is tasked with the strategic and supervisory role over corporate affairs. Key powers include:

• proposing matters to be submitted to the shareholders’ meeting;
• reviewing financial statements and proposing dividend distribution;
• appointing and removing the general manager (CEO) and, in some cases, other top executives;
• approving interim dividends, for which directors are personally liable if paid based on inaccurate data; and
• defining the company’s business strategy, approving internal policies, and overseeing compliance and risk management.

Certain decisions - such as appointing executives, approving internal control systems, and defining general operational guidelines - fall strictly within the board’s remit.

Executive Management

Led by the general manager (CEO), executive management is responsible for the daily operation and execution of the business strategy set by the board. Key decisions and responsibilities include:

• implementing corporate strategy and managing the company’s commercial and administrative activities;
• hiring and managing personnel, negotiating contracts, and dealing with suppliers and clients, all within the limits set by the board; and
• reporting to the board on performance, operational risks, and compliance matters.

While executive management enjoys autonomy in day-to-day decisions, it must act within the strategic framework defined by the board and cannot unilaterally undertake actions reserved to the board or shareholders’ meeting.

The process for decision-making in Chilean companies varies depending on the corporate body.

Executive Management

Executive management operates under internal delegation and guidelines established by the board of directors. Decision-making is typically carried out informally and continuously, in accordance with the company’s internal policies and governance structure. The general manager (CEO) and other executives make decisions autonomously within their designated authority, without requiring formal sessions or resolutions, except where board approval is expressly required by law or the by-laws.

Board of Directors

The board of directors must meet formally to deliberate and resolve corporate matters. The process includes:

• Convening meetings in accordance with the company’s by-laws or board regulations, usually monthly or as needed.
• Quorum requirements: Most directors must be present to constitute a valid quorum.
• Decision-making: Resolutions are adopted by the majority vote of those present, unless the by-laws or law require a higher quorum for specific matters.
• Record-keeping: All resolutions must be recorded in official board meeting minutes, signed by all attending directors and maintained in a formal minute book.

Shareholders’ Meeting

Shareholders make decisions in duly convened ordinary or extraordinary meetings, depending on the nature of the matters to be resolved. The process is as follows:

• Notice of meeting: Must be issued in accordance with legal and by-law requirements, typically through three publications in the Official Gazette.
• Quorum: The required quorum varies depending on the type of meeting and the matters to be discussed. Extraordinary meetings and certain resolutions (eg, mergers) require higher quorum thresholds.
• Voting: Resolutions are adopted by the majority of shares present or represented, subject to any special voting thresholds under Law No. 18,046 (Ley sobre Sociedades Anónimas) or the company’s by-laws.
• Documentation: Decisions must be recorded in the shareholders’ meeting minutes, signed by the chair and secretary of the meeting, and often notarised or registered.

The structure of board of directors in Chile is governed by the Law on Corporations (Law No. 18,046) and varies depending on whether the company is publicly or privately held.

Composition

• Listed corporations (Sociedades Anónimas Abiertas) must have at least five directors.
• Closed corporations (Sociedades Anónimas Cerradas) require a minimum of three directors, unless the bylaws provide otherwise.

Term and Re-election

Directors may serve for a maximum three-year term, after which they may be re-elected indefinitely. The term begins at their election by the shareholders’ meeting and ends once their successors are appointed.

Election Process

Directors are elected by the shareholders’ meeting using a cumulative voting system, where each shareholder may distribute their votes among one or more candidates, based on the number of shares held. This system allows minority shareholders to concentrate votes and potentially elect a representative.

Chairman of the Board

Once constituted, the board elects a Chairman (Presidente del Directorio) from among its members by a majority vote. The chairman represents the board and presides over its meetings.

Independent Directors

Publicly traded companies meeting certain thresholds - such as having high market capitalisation or dispersed ownership - are required to appoint independent directors, as defined by law and CMF regulations.

Board Committees

Some companies are required by law to establish a directors’ committee (Comité de Directores) - especially when they have significant asset size or a large shareholder base. This committee must be led by an independent director and is responsible for overseeing internal controls, related-party transactions, and external audits.

In addition, many corporations voluntarily establish other specialised committees (eg, audit & risk and human resources).

These bodies support the board by providing deeper oversight into complex areas and are considered good governance practice.

The roles of board members in Chile are defined primarily by the Law on Corporations (Law No. 18,046) and the corporate governance standards issued by the CMF. The board is collectively responsible for the strategic oversight and governance of the company, while individual members may hold specific functions.

Chairman of the Board (Presidente del Directorio)

Elected by most of the board, the chairman:

• leads board meetings, ensuring orderly deliberation and timely decision-making;
• co-ordinates the board’s work and serves as a liaison between the board and executive management; and
• represents the board, including before regulators and in shareholder meetings.

Directors (General Members)

All directors, whether independent or not, share core responsibilities. These include:

• participating in strategic planning and approving key corporate policies;
• overseeing financial performance, including reviewing and approving financial statements;
• supervising risk management and internal controls;
• fulfilling fiduciary duties of loyalty and diligence, acting in the best interests of the company and all shareholders; and
• ensuring compliance with legal, regulatory and ethical standards.

Independent Directors

Under specific conditions (eg, market capitalisation, ownership dispersion, or certain related party transactions) publicly traded companies must appoint independent directors as defined by Law No. 18,046 and CMF rules.

These directors:

• enhance objectivity and independence in board discussions;
• mitigate conflicts of interest, particularly in transactions with related parties; and
• often chair or participate in the Directors’ Committee, which has specific legal duties in oversight and audit review.

Board Committees

Companies, particularly large or listed entities, may establish specialised committees, either by law or voluntarily. The Directors’ Committee (mandatory under certain thresholds) must include at least one independent director, and oversees:

• related-party transactions;
• external audit selection and review; and
• financial reporting integrity.

Other common committees include:

• The Audit a d Risk Committee;
• Human Resources Committee; and
• Corporate Governance or Sustainability Committee.

Under Chilean corporate law (Law No. 18,046), board composition is subject to the following formal requirements:

• Directors must be natural persons, not legal entities.
• Publicly traded corporations must have at least five directors, while closely held corporations require a minimum of three (as outlined in Section 4.1 Board Structure).

Beyond these baseline legal requirements, there are no mandatory rules concerning the diversity, background, or independence of board members — except in a limited number of specific scenarios.

• Independent directors: Required under certain conditions for publicly traded companies, such as exceeding UF1.5 million (Unidades de Fomento) in equity or having a significant shareholder dispersion. These companies must also form a Directors’ Committee, which must include at least one independent director.
• Gender diversity (in progress): As of 2025, Chile does not yet mandate gender quotas, but a bill currently under discussion in Congress seeks to introduce mandatory female representation on boards of listed companies. The bill proposes a 40% gender balance quota, with a phased implementation period. This aligns with growing international ESG standards and CMF’s increasing focus on board diversity.
• CMF Recommendations: While not legally binding, the Financial Market Commission encourages companies to disclose voluntary policies regarding board diversity, including gender, age, nationality, and professional background, as part of their ESG reporting under General Rule No. 461.

In practice, many Chilean corporations are proactively addressing board diversity and independence as part of broader ESG and governance best practices, even in the absence of rigid legal mandates.

The board of directors is appointed and removed as a whole by the company shareholders, during general shareholders meetings. If a director vacates their position before the expiration of their term, the board may appoint a temporary director to assume their position until the shareholders’ meeting, where the board of directors must be renewed.

The independence of directors and regulation of conflicts of interest in Chile are primarily governed by the following legal frameworks:

• Law No. 18,046 on Corporations (LSA);
• Law No. 18,045 on the LMV;
• CMF General Rule No. 533, on independent directors and the policy for electing directors for subsidiary companies;
• Decree Law No. 211 of 1973 (Free Competition Law or LPLC).

Under these frameworks directors must act in the best interests of the company, rather than in pursuit of personal or third-party interests. They are bound by fiduciary duties, including duties of loyalty, diligence and disclosure.

Certain publicly traded companies are required to appoint at least one independent director when they exceed UF1.5 million in equity or have significant shareholder dispersion. These directors must meet strict independence criteria, including:

• no recent employment ties to the company or its affiliates;
• no close family or business ties with major shareholders or executives;
• not holding significant share ownership in the company.

These companies must also establish a Directors’ Committee, which must include at least one independent director. This committee oversees internal controls, risk management, related-party transactions, and executive compensation.

Directors are required to disclose any personal, familial, or financial interests that might compromise their independence or lead to conflicts of interest. Additionally, related-party transactions must be thoroughly reviewed and approved by the board in accordance with established procedures.

The interested director must:

• disclose their interest to the board;
• abstain from voting on the transaction;
• ensure the transaction is submitted to the shareholders for ratification in certain cases (eg, if material or not carried out at arm’s length).

LPLC interlocking prohibits individuals from serving simultaneously as directors or executives of competing companies when each company (or its business group) has annual revenues exceeding UF100,000. This restriction is aimed at preventing anti-competitive coordination and collusion risks.

The National Economic Prosecutor’s Office (FNE) has actively enforced this provision, and in 2025 the Competition Tribunal (TDLC) issued its first decision applying the interlocking prohibition, confirming its enforceability and establishing jurisprudence on its scope and application.

In Chile, the main legal duties of directors and officers are established by the LSA and the LMV, as well as other relevant statutes such as the Criminal Liability of Legal Entities Law (Law No. 20,393).

The principal duties include:

Duty of Care (Diligencia y Cuidado)

Directors and officers must act with the diligence and care that a reasonably prudent person would exercise in similar circumstances. This includes being properly informed before making decisions, supervising corporate affairs, and participating actively in board and committee meetings.

Duty of Loyalty (Lealtad)

Directors must always act in the best interests of the company, not in their personal interest or on behalf of third parties. This fiduciary obligation includes:

• avoiding conflicts of interest;
• refraining from using their position for personal gain;
• not disclosing or using confidential company information improperly.

Duty of Information and Oversight

Directors and officers must:

• review and oversee the company’s financial statements, internal controls, and risk management;
• ensure that adequate corporate governance and compliance frameworks are in place.

Duty of Transparency

Directors must ensure that the company complies with its disclosure obligations, including timely, accurate, and complete reporting to shareholders and regulators (such as the CMF), particularly with respect to:

• financial statements;
• material events (hechos esenciales);
• related party transactions.

Legal and Regulatory Compliance

Directors and officers are responsible for ensuring that the company:

• complies with tax, labour, environmental, and financial regulations;
• implements crime prevention models as required under Law No. 20,393, which may hold the company criminally liable for certain offences (eg, bribery, money laundering).

Personal Liability

Directors may be held personally liable for damages caused to the company, shareholders, or third parties if they breach their legal duties or act with gross negligence, wilful misconduct, or bad faith.

It is important to note that Chilean corporate law does not explicitly establish a “business judgement rule” as found in some other jurisdictions. Consequently, directors do not have a formal legal presumption protecting their decisions made in good faith and with reasonable care. This means that directors’ actions may be scrutinised more strictly by courts or regulators, and they must be especially diligent in documenting and justify their decision-making processes to avoid liability.

In Chile, directors owe their legal and fiduciary duties primarily to the company itself, as a separate legal entity. This principle is established under the LSA and reinforced by case law and regulatory guidance.

Key elements of this obligation include:

Duty to the Company (not to individual shareholders)

Directors must act in the best interests of the company, regardless of which shareholders appointed them or the ownership structure. They must act with the diligence and care of a good businessman.

Accountability to Shareholders as a Group

While the primary duty is owed to the company, directors are accountable to shareholders collectively, not individually. Directors may be held personally liable for damages caused to the company or its shareholders due to wilful misconduct, gross negligence, or breaches of legal duties.

Stakeholder Considerations

Chilean law does not impose a formal requirement to consider stakeholders such as employees, creditors, or the environment in the discharge of directors’ duties. However, to the extent these factors impact the long-term interests of the company, they may be considered under the duty to protect the company’s sustainability and reputation.

In Chile, directors who breach their legal or fiduciary duties may face civil, administrative and criminal consequences, depending on the nature and severity of the breach. The enforcement mechanisms are grounded in the LSA, the LMV, and Law No. 20,393 on corporate criminal liability.

Civil Liability

Directors may be held personally liable for damages caused to the company, shareholders or third parties if they act with gross negligence, wilful misconduct or breach of fiduciary duties. Shareholders can initiate derivative lawsuits on behalf of the company to seek compensation.

Administrative Sanctions

The CMF has authority to:

• impose fines and penalties;
• disqualify directors from holding office; and
• suspend or restrict the company’s operations or trading of its securities.

These sanctions are typically applied in cases of non-compliance with disclosure obligations, related-party transactions, or failure to implement adequate governance and risk controls.

Criminal Liability

Under Law No. 20,393, directors may face criminal prosecution for offences such as:

• bribery;
• money laundering;
• environmental crimes; and
• fraud or misrepresentation.

If found guilty, directors can face fines, imprisonment, and reputational damage. The Public Prosecutor (Ministerio Público) is responsible for criminal investigations and prosecutions.

ESG and Reporting Failures

With the rise of ESG regulations (eg, CMF Rule No. 461), failure to provide accurate or complete ESG disclosures can also lead to regulatory sanctions and potential shareholder litigation, especially if such omissions mislead investors or affect share value.

Enforcement Trends

Recent enforcement trends show increased scrutiny from the CMF and courts, particularly regarding:

• conflicts of interest;
• board independence;
• cybersecurity and data protection; and
• environmental accountability.

Directors are expected to document their decision-making processes thoroughly to mitigate liability risks, especially in the absence of a formal business judgment rule in Chilean law.

Breaches of directors’ duties can be enforced by several parties, each within their respective jurisdictions.

Shareholders

Shareholders may bring derivative lawsuits on behalf of the company to seek compensation for damages caused by directors’ negligence, fraud, or breaches of fiduciary duties.

Regulatory and Criminal Authorities

The CMF supervises compliance with corporate governance laws and regulations. It can investigate violations and impose administrative sanctions such as fines, suspensions, or other penalties.

In cases involving criminal liability, such as corporate fraud, bribery, environmental crimes, or other illegal activities, the Public Prosecutor of Chile (Ministerio Público) is responsible for investigating and prosecuting directors under Law No. 20,393 on criminal liability of legal entities and other applicable criminal statutes.

Consequences of Breach

Civil liability: Directors can be held liable for damages caused to the company or third parties, potentially resulting in compensation payments.

Administrative sanctions: The CMF can impose fines, prohibit directors from holding office, or suspend trading of the company’s securities.

Criminal penalties: Directors may face fines, imprisonment, or other criminal penalties depending on the severity and nature of the offence, following public prosecution by the Ministerio Público.

The remuneration and fees payable to directors must be approved by the shareholders at the annual ordinary shareholders’ meeting. This includes any fixed fees, attendance fees, or other benefits granted to directors. In contrast, the remuneration and benefits for senior executives and officers (such as the CEO and other top management) are typically determined and approved by the board of directors.

Compensation policies must adhere to applicable corporate governance best practices and align with market standards. Directors and senior executives are prohibited from approving their own compensation to avoid conflicts of interest. Any remuneration or benefits that create conflicts or are inconsistent with approved policies may be deemed unlawful.

Directors who approve unlawful or unauthorised compensation may be subject to personal liability, including fines and potential removal from office. The CMF oversees compliance with these rules and can impose administrative sanctions such as fines, penalties, or other corrective measures on both individuals and the company. Failure to comply with remuneration approval requirements may also expose the company to reputational damage and shareholder disputes.

Remuneration of directors must be approved by the shareholders in the annual ordinary shareholders’ meeting.

Although shareholders’ meetings are private, in publicly traded corporations, they must be informed to the CMF and may be subject to disclosure obligations, making them much more susceptible to public knowledge.

The relationship between a company and its shareholders is primarily governed by the LSA and, for publicly traded companies, by the LMV and related regulations issued by the CMF.

Shareholders are the owners of the company’s equity and exercise their rights mainly through participation in shareholders’ meetings. They are entitled to:

• vote on key matters such as the election of directors, approval of financial statements, profit distribution, mergers, and amendments to the by-laws;
• receive dividends, if declared; and
• access certain corporate information, including meeting minutes and audited financial statements.

Every corporation must maintain a shareholders’ registry, which records the ownership of shares and related changes. This registry is private and managed by the company or a designated administrator (eg, a stock registry agency).

In the case of publicly traded companies, the CMF requires disclosure of:

• the identity of controlling or major shareholders (typically defined as those owning 10% or more of the shares or voting rights);
• certain changes in ownership thresholds.

However, full shareholder lists are not publicly available, except when required in specific regulatory filings, investigations, or judicial proceedings.

Under Chilean law, shareholders do not participate in the day-to-day management of a company, which is entrusted to the board of directors and executive officers. This separation of ownership and management is a fundamental principle of corporate governance in Chile.

However, shareholders have significant rights and influence through shareholders’ meetings, where they may vote on key corporate matters, including:

•       appointment and removal of directors;

•       approval of the company’s annual financial statements;

•       distribution of dividends;

•       major corporate actions such as mergers, spin-offs, or amendments to the by-laws;

•       director and auditor compensation (in the case of directors, mandatory for publicly traded companies).

While shareholders cannot issue binding instructions to the board or management regarding operational matters, they may challenge decisions that infringe upon their rights or breach corporate governance principles. In some cases, shareholders can bring legal actions (eg, nullity or liability claims) or request the intervention of the CMF if public market rules are violated.

Shareholder meetings are required under the Ley sobre Sociedades Anónimas (LSA). The LSA distinguishes between ordinary and extraordinary shareholders’ meetings, each governed by specific rules.

Ordinary Shareholders’ Meetings

Corporations must hold an ordinary shareholders’ meeting annually, within the first four months of each year, to address the following matters:

• reviewal of the company’s general situation, including the reports of account inspectors and external auditors, and the approval of the annual report, balance sheet, and other financial statements presented by management;
• the distribution of profits;
• the appointment or removal of board members and external auditors.

Extraordinary Shareholders’ Meetings

These must be convened for matters not covered in ordinary meetings, particularly those that may involve amendments to the company’s by-laws. Examples include:

• capital increases or reductions;
• mergers, spin-offs, or dissolutions;
• changes to the company’s corporate purpose; and
• other matters that, by law or by-laws, require an extraordinary meeting.

Quorum and Approval Requirements

A valid meeting requires a legal call (citation) and the presence (in person or by proxy) of shareholders representing at least 50%+1 of the issued voting shares. Resolutions at ordinary meetings are adopted by majority vote of the shares present or represented. Extraordinary meetings may require higher quorums and voting thresholds, depending on the nature of the decision.

Meetings must comply with notice periods and formalities established in the company’s by-laws and the LSA, including the method and timing of the call. Failure to follow these requirements may invalidate resolutions and expose directors or officers to liability or regulatory sanctions.

Under the LSA and the LMV, shareholders may pursue civil, administrative, or even criminal remedies against the company, its directors, or controlling shareholders in cases of misconduct or breaches of legal duties.

The principal bases of claim available to shareholders include:

• breach of fiduciary duties by directors, such as acting in self-interest, engaging in negligent management, or failing to act with due diligence and care;
• abuse of controlling position or majority rights, where controlling shareholders exercises their influence in a manner that harms minority shareholders or the company itself;
• violation of shareholders’ rights, such as the right to receive dividends, access corporate information, or participate in decision-making processes;
• contraventions of market conduct or disclosure obligations, including insider trading or market manipulation, which may give rise to administrative sanctions by the Comisión para el Mercado Financiero (CMF) or criminal charges by the Ministerio Público.

In addition, dissenting shareholders have appraisal rights (derecho a retiro) in certain fundamental corporate decisions - such as mergers, transformations, or the sale of substantial assets - enabling them to request that the company repurchase their shares at fair market value.

Shareholders can bring individual or derivative actions depending on whether the harm is personal or affects the company. Directors may be held personally liable if their actions breach statutory or fiduciary duties, subject to standards of wilful or negligent conduct.

Shareholders of publicly traded companies in Chile are subject to several disclosure obligations under the LMV and regulations issued by the CMF:

Threshold Disclosures

Shareholders who acquire a 10% or greater interest in a publicly traded company must notify the CMF. Any subsequent increase or decrease of 5% or more in their holdings must also be disclosed. These reports must include information about the purpose of the acquisition, sources of funding, and any plans to acquire control of the company.

Disclosure of Control intentions

Individuals or entities seeking to gain control of a company - whether through a public tender offer (OPA) or otherwise - must disclose their intentions to the CMF and the market. This includes reporting coordinated actions among shareholders that may affect control or governance.

Ultimate Beneficial Ownership (UBO)

Although publicly traded companies are not currently required to disclose a full list of all shareholders, regulations enforced by the CMF and the UAF require companies - especially financial institutions and entities subject to AML/CTF regulations - to identify and report their ultimate beneficial owners.

Institutional Investors and Stewardship

Institutional investors such as pension funds (AFPs) must follow investment regulations issued by the Superintendencia de Pensiones and may be subject to additional reporting requirements on their voting behaviour and stewardship policies, ensuring alignment with responsible investment practices.

In Chile, companies are subject to annual and periodic financial reporting requirements that vary depending on whether they are publicly traded or closely held, as regulated primarily by the LSA, the LMV, and applicable regulations issued by the CMF. These reports must comply with International Financial Reporting Standards (IFRS).

Annual Financial Reporting

Publicly traded companies must submit their audited annual financial statements to the CMF within 90 days following the end of the fiscal year. These must include the balance sheet, income statement, cash flow statement, statement of changes in equity, and explanatory notes, along with the report of the external auditor.

Quarterly Reporting

Issuers must also submit unaudited quarterly financial statements within 60 days following the end of each quarter. These updates allow the market and regulators to monitor the company’s financial position, performance, and material changes.

Integrated Reporting and ESG Disclosures

Under Norma de Carácter General (NCG) No. 461, publicly traded companies are required to include disclosures on corporate governance, climate-related risks, and sustainability practices as part of their annual reporting. These ESG disclosures are aligned with international standards and seek to promote transparency on non-financial risks.

Sector-Specific Reporting

Companies operating in regulated sectors - such as banks, insurance companies, and pension fund administrators - must also comply with industry-specific reporting obligations, including periodic risk assessments, capital adequacy reports, and liquidity metrics, as established by the respective regulators and CMF rules.

Closed corporations are not subject to public reporting requirements before the CMF. However, they must prepare and submit their annual financial statements and reports for approval by the ordinary shareholders’ meeting, which must be held within the first four months of the year (ie, by 30 April).

In Chile, publicly traded companies are required to disclose their corporate governance arrangements through their annual reports, sustainability disclosures, and other regulatory filings, primarily under the supervision of the CMF.

Annual Corporate Governance Disclosure

Public companies must include in their annual report (Memoria Anual) detailed information on:

• board composition and structure;
• board committees and their functions;
• executive compensation policies;
• internal control and risk management systems;
• compliance and ethics programmes;
• sustainability and ESG practices, pursuant to CMF Rule No. 461.

By-laws and Corporate Policies

Companies must also make publicly available - typically via their corporate websites - key governance documents such as:

• company by-laws (estatutos sociales);
• codes of ethics and conduct;
• corporate governance manuals or frameworks.

Sector-specific Governance Requirements

Companies in regulated sectors such as banking, insurance, and pension fund administration are subject to stricter governance and disclosure standards, including periodic filings on risk oversight, capital requirements, and regulatory compliance.

Ongoing Compliance and Monitoring

The CMF frequently updates its governance and disclosure regulations. As such, companies must continuously monitor regulatory changes to maintain compliance and avoid administrative sanctions.

While closely held corporations (sociedades anónimas cerradas) are not required to make these disclosures publicly, they may still voluntarily adopt governance frameworks aligned with best practices, especially when dealing with institutional investors or preparing for public listing.

In Chile, the incorporation and registration of companies involve multiple steps before different bodies, primarily the Commerce Registry (Registro de Comercio) of the company’s domicile and, in some cases, the Internal Revenue Service (Servicio de Impuestos Internos, or SII) and the CMF for regulated or publicly traded entities.

Registration and Publication Requirements

The company must be formed by public deed (escritura pública) or, in certain cases, through the online platform Registro de Empresas y Sociedades (RES) administered by the Ministry of Economy.

An abstract (abstracto) of the public deed must be:

• registered in the Commerce Registry (Registro de Comercio) corresponding to the company’s domicile; and
• published in the Official Gazette (Diario Oficial) within 60 days of the company’s incorporation.

Supervisory Role of the Commerce Registry

The Commerce Registry reviews the abstract for formal errors before registration.

If the required filings are not registered or published timely, the incorporation or corporate modification has no legal effect and is considered null and void under Chilean law.

Public Availability of Records

Once registered, the abstract becomes part of the public Commerce Registry.

Anyone may request copies or certificates from the Registry for a fee.

Likewise, the original public deed is held by the notary public who authorised it, and archived in the judicial archive, also accessible upon request.

Online Incorporation

Companies may alternatively be created through the Registro de Empresas y Sociedades (www.tuempresaenundia.c).

This system allows standardised electronic by-laws and immediate registration and tax ID assignment (RUT).

While faster, the RES system is only available for companies using pre-approved templates and lacks notarial oversight.

Additional Filings

All companies must register with the SII to obtain a tax ID (RUT) and begin operations.

Publicly traded companies must also register with the CMF, which monitors their corporate structure, financial reporting, and governance practices.

In Chile, publicly traded companies - including listed corporations, financial institutions, and other regulated entities - are required to appoint an external auditor to review and certify their financial statements during the annual ordinary shareholders meeting.

The appointment and relationship between the company and the external auditor are subject to the following key requirements:

Independence of the Auditor

The external auditor must be independent from the company, with no financial, business, or personal relationships that could impair its objectivity and impartiality.

Registration and Compliance

The auditor must be registered with the CMF and perform audits in accordance with IFRS and auditing standards recognised in Chile.

Scope of Work

The auditor is responsible for a thorough review of the company’s financial statements, verifying regulatory compliance, assessing internal controls and risk management systems, and detecting any irregularities or mistakes.

Audit Report and Disclosure

Upon completion, the auditor issues an independent audit report detailing their findings and certifying the accuracy and fairness of the financial statements. This report must be approved by the company’s board of directors and shareholders and subsequently filed with the CMF.

In Chile, directors have specific responsibilities regarding risk management and internal controls, particularly in publicly traded companies. The key requirements include:

Fiduciary Responsibility

Law No. 18,046 establishes that directors must act in good faith and in the best interest of the corporation. Directors have a duty of care and duty of loyalty, meaning they must ensure the corporation operates ethically, responsibly, and transparently. They must avoid conflicts of interest and prioritise shareholder interests, ensuring risk management policies prevent financial harm.

Risk Oversight and Compliance

Directors are responsible for identifying, evaluating, and mitigating risks that may affect the company. To this end, they must implement effective internal controls and ensure compliance with financial and operational regulations. Publicly traded companies are required to establish risk management frameworks, including cybersecurity and financial risk assessments.

CMF Compliance

Law No. 18,045 imposes strict reporting requirements on publicly traded companies, and directors must ensure financial transparency. Directors oversee internal audits and verify compliance with accounting standards.

Liability and Accountability

Directors may be held personally liable for mismanagement of risks or failure to uphold fiduciary duties. Negligence leading to financial harm or regulatory breaches can result in legal consequences, including fines or removal from the board.

Transparency and ESG Considerations

Under newer regulations, directors must ensure companies disclose risk management practices and internal control measures in their annual reports. Additionally, directors in specific sectors such as banking, insurance, and social security face stricter regulatory requirements.