M&A transactions in Chile, as in many other regions globally, were strongly impacted by the COVID-19 pandemic, leading to a decline as economic uncertainty began to unfold. Further, domestic economic conditions and political instability adversely affected the number of transactions in 2023 and 2024.

According to PricewaterhouseCoopers Chile (2025), 97 M&A transactions were completed in Chile in 2024, a 14% decrease from the 113 transactions reported in 2023. Over the same period, total deal value fell from USD 4,637 billion in 2023 to USD 3,985 billion in 2024, reaching a historic low.

However, signs of recovery towards the end of 2024, combined with expectations that a more business-friendly political sector will likely prevail in the presidential election scheduled for late 2025, suggest a more optimistic outlook for the M&A market in 2025, with anticipated growth in activity across key economic sectors.

The outlook for Chile in 2025 is positive, driven by the gradual reduction of political uncertainty, which has strengthened market confidence and encouraged investment activity. Additionally, the easing of inflationary pressures enabled the Chilean Central Bank to implement significant interest‑rate cuts throughout 2024, thereby improving access to financing and stimulating economic growth.

The most active areas over the past year were the consumer, energy, and industrial sectors. In terms of volume, the finance sector was the most prominent, followed by the energy and industrial sectors (PricewaterhouseCoopers Chile, 2025).

The legal means used in Chile for structuring business combinations will depend on the existing structure of the target company and the objectives of the parties involved in the transaction. However, the most common forms of business combinations are:

• purchase of shares of a company, either through the acquisition of outstanding shares or through the subscription of newly issued shares;
• purchase of a company’s underlying business or all of its assets, excluding all or almost all of its liabilities or their contribution to another company’s share capital in consideration of newly issued shares; and
• tender offer for shares in a public company.

As in most other jurisdictions, the primary concern when choosing between a share purchase and an asset purchase in Chile is liabilities. If a company acquires all shares of another company, it effectively acquires the entire equity interest in the target, thereby assuming ownership of all its assets and liabilities. As a result, asset purchases are generally considered more advantageous and common in Chile despite often being more complex and time-consuming to implement. This preference is primarily because an asset purchase allows buyers to exclude substantially all liabilities from the transaction. Nevertheless, certain obligations may still be transferred to the acquirer, particularly tax liabilities, in the event the seller has failed to comply with its tax obligations. It is common practice to mitigate this risk through the use of escrow arrangements, whereby a portion of the purchase price is withheld for a defined period to cover potential contingencies arising post-closing.

Business combinations may also be achieved through the corporate reorganisations outlined below.

• Mergers: whether they are made by absorption, where one or more companies that cease to exist become part of and merge into another pre-existing company, which acquires all the assets and liabilities of those that cease to exist in consideration of the issuance of shares to the shareholders of the latter; or by consolidation, where two or more companies that cease to exist transfer or contribute all their assets and liabilities to a new company, in consideration of shares in the new company. A merger may also be deemed to occur when a single corporate shareholder acquires all shares or ownership interests in a company. In such cases, Chilean law generally requires that the absorbed entity be dissolved and integrated into the acquiring company, given that most corporate forms require at least two shareholders to remain in existence.
• Spin-offs or demergers: these involve the division of an existing company by resolution of its own shareholders, who agree to separate part of its equity capital and transfer specific assets, liabilities, and capital to a newly formed entity. All shares in the new company are allotted to the same shareholders of the original entity as part of the reorganisation.
• Cooperation or joint venture structures: through corporate or unincorporated contractual joint ventures.

Special procedures apply to transfers of business and business combinations by, among others, banks and financial institutions, insurance companies, pension fund managing entities, other third-party fund administrators, and securitisation companies.

The primary regulators for M&A activity in Chile are outlined below.

• National Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE): agency in charge of overseeing antitrust regulations, issuing mandatory general regulation on competition, including M&A transactions, as it is the authority responsible for approving, approving with conditions, or rejecting concentrations that, in its view, may reduce market competition.
• Antitrust Court (Tribunal de Defensa de la Libre Competencia, TDLC): Specialised tribunal entrusted with the prevention, the taking of corrective actions, and the sanctioning of anti-competitive practices and deals, and any other breaches and infringements of the antitrust and free competition law. It also reviews decisions issued by the National Economic Prosecutor’s Office in connection with merger control proceedings.
• Financial Market Commission (Comisión para el Mercado Financiero, CMF): the financial markets regulator, which is relevant when at least one of the entities involved in a transaction is a banking institution, insurance company, or other finance-related entity under its supervision (eg, the target entity is publicly traded).
• Internal Revenue Service (Servicio de Impuestos Internos, SII): agency involved in administering tax laws and enforcing tax compliance.

However, other sectoral government authorities may play a role depending on the industry sector or other transaction characteristics, such as the Chilean Central Bank (eg, if cross-border payments are involved) and the Superintendency of Electricity and Fuel(eg, if power energy assets are transacted).

Chile maintains an open and transparent regulatory framework that actively encourages foreign direct investment, imposing minimal restrictions on foreign investors. In this regard, certain sectors and activities are subject to specific limitations or regulatory conditions, including:

• restrictions on the acquisition of land near Chile’s borders by foreign nationals from neighbouring countries;
• requirements that only Chilean nationals may register vessels under the Chilean flag, among other nationality-related criteria; and
• prior authorisation requirements for foreign investments in specific strategic industries depend on the nature of the activity and the entities involved.

These restrictions are relatively limited in scope and do not generally hinder cross-border M&A transactions. Nevertheless, foreign investors are advised to conduct preliminary regulatory assessments to ensure compliance with applicable limitations in sensitive or regulated sectors.

As outlined in the 2.2 Primary Regulators, the National Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE) and the Antitrust Court (Tribunal de Defensa de la Libre Competencia, TDLC) play a central role in the regulation of mergers and acquisitions from a competition law perspective.

Decree Law No 211 on Defence of Free Competition provides the legal framework not only for identifying and sanctioning anti-competitive conduct but also for regulating concentrations through a mandatory merger control regime. This includes M&A transactions that may give rise to significant changes in market structure. Within this framework, the FNE is the authority empowered to approve, approve with conditions, or reject concentrations that meet specific revenue thresholds. Filing with the FNE initiates a formal review process, which must be completed prior to implementing the transaction.

However, not all concentrations must be submitted to the FNE. Only those that exceed the revenue thresholds set out in the applicable regulation are subject to mandatory review.

• the thresholds for mandatory notification are cumulative. Both of the following conditions must be met:
• the combined turnover of the parties involved must exceed approximately USD101 million in the previous calendar year; and
• at least two of the parties must have generated revenues in Chile of approximately USD18 million or more in the same period.

When a concentration meets both of the thresholds described above, the FNE evaluates whether the transaction may significantly lessen competition. If no competitive concerns are identified, the transaction is approved without conditions. Otherwise, the FNE may approve the transaction subject to structural or behavioural remedies – such as divestitures, conduct commitments, or amendments to contractual terms – or reject it outright. Decisions issued by the FNE in merger control cases may be challenged before the TDLC, which acts as a reviewing body with the authority to uphold, reverse, or amend the FNE’s resolution.

M&A transactions require careful labour analysis due to the legal principle of continuity of the employment relationship and the automatic transfer of labour and social security obligations to the acquiring party for all the seller’s labour and social security obligations, whether recorded or not. Any change in the ownership, possession, or mere tenancy of the business – including, but not limited to, a transfer of control – is legally regarded as a substitution of the employer, which implies that the acquirer may be held jointly or subsidiarily liable for existing obligations.

A comprehensive labour due diligence process should be conducted, focusing first on identifying unpaid social security contributions, ongoing labour lawsuits, and hidden contingencies associated with subcontracting, temporary services, or the use of civil law arrangements that may conceal actual employment relationships. Any of these breaches – particularly in the case of unpaid social security contributions – may result in significant sanctions under Chilean law. 

Due diligence should also take into account the prevailing interpretation by Chilean courts. These courts frequently consider that virtually any form of personal service provision implies subordination and dependency, thereby constituting an employment relationship governed by the Labour Code, regardless of how the arrangement is contractually framed. Consequently, reviewing the number and nature of independent service contracts maintained by the target company is crucial.

Additionally, it is important to assess labour matters beyond the individual employment level. This includes the existence of unions, collective bargaining agreements, and informal benefits granted on a regular basis by the seller, all of which may be construed as acquired rights and trigger post-acquisition liabilities if unilaterally altered or terminated by the buyer.

Finally, compliance aspects must also be reviewed in depth. These include obligations under Law No 21,643, which requires protocols to address workplace harassment, including sexual harassment and violence, as well as data protection rules applicable to employee or customer databases. During due diligence, the buyer should review these areas carefully and evaluate any breaches or compliance gaps that may be identified, especially in light of the anticipated modernisation of the data protection legal framework, which is expected to enter into force in the coming months.

Consistent with the fact that foreign investors are subject to the same legal regime as national investors, there is currently no general foreign investment screening mechanism in Chile based on national security concerns. However, in very exceptional cases, certain laws and regulations may apply to specific acquisitions where national security considerations are indirectly relevant. For example, restrictions exist regarding the acquisition of land near the country’s borders by foreign nationals from bordering countries, and ownership of vessels under the Chilean flag is limited to Chilean nationals, among other requirements.

Additionally, Chilean regulations include anti-money laundering and anti-terrorism financing provisions that apply equally to Chilean and foreign investors in cross-border transactions and corporate acquisitions, especially where the source of funds or the identities of beneficial owners must be verified. These compliance obligations are generally overseen by the Financial Analysis Unit (Unidad de Análisis Financiero, UAF).

Although Chile does not have a centralised national security review body for M&A transactions, both national and foreign investors should consider the potential impact of regulatory restrictions or sector-specific laws. In particular, certain areas of investment (such as defence, critical infrastructure, energy, telecommunications, or natural resources) may require prior authorisation or sectoral licences from the relevant authority, depending on the nature of the target company and its business activities.

In recent years, Chile has experienced a number of legal developments that directly or indirectly affect M&A transactions. One positive area of development has been the growing recognition and enforcement of foreign arbitral awards by Chilean courts, strengthening legal certainty for international investors. This trend has encouraged the use of arbitration clauses in cross-border M&A deals and enhanced predictability in resolving disputes.

Another area of attention involves ongoing tax reform discussions. Proposed changes include modifications to corporate income taxation, the treatment of capital gains, and the deductibility of interest and other transaction costs, all of which could affect the structuring and valuation of deals and should be closely monitored by investors and legal counsel. As of the date of this report, there are no indications that the reform will advance in the short term, particularly in light of the global economic uncertainty triggered by the new tariff policies introduced by the United States government in 2025, which may impact the international M&A landscape.

Additionally, Chile has enacted and strengthened various compliance regulations that increase the complexity of due diligence processes. These include expanded obligations in areas such as anti-bribery, anti-money laundering, data protection, and the entry into force of Law No 21,643, which imposes mandatory internal procedures to address workplace harassment and violence.

These developments reinforce the importance of integrated legal, tax, and compliance due diligence in Chilean M&A transactions.

As of the date of this report, there have been no significant amendments to Chilean takeover law in the past 12 months. Likewise, there are no pending legislative initiatives currently under discussion that would suggest changes to the legal framework governing public tender offers or other takeover procedures.

Chile’s existing regulatory framework continues to govern takeovers through a well-established set of rules contained in the Civil Code, the Commercial Code, Decree Law No. 211 on Defence of Free Competition, the Securities Market Act, and the Corporations Act, as well as regulations issued by sectoral authorities such as the Financial Market Commission (Comisión para el Mercado Financiero, CMF), which may apply in specific cases. Depending on the nature of the transaction, these may include disclosure requirements, mandatory tender offer thresholds, and protections for minority shareholders, all of which remain stable and unchanged.

It is not uncommon for a bidder to begin building a stake – by acquiring shares directly or indirectly – in the target company prior to launching a formal tender offer. This may allow the bidder to gain influence or position itself more favourably for the subsequent acquisition. In Chile, common stakebuilding strategies include the following.

• Open market purchases: Buying shares of a publicly traded company through stock exchanges. Disclosure obligations are triggered under applicable securities regulations if certain thresholds are crossed.
• Private negotiations or block trades: Acquiring significant shareholdings directly from large shareholders through privately negotiated transactions, often involving confidentiality agreements and coordinated timing.
• More sophisticated stakebuilding mechanisms (such as derivatives-based exposure or synthetic positions) commonly seen in other jurisdictions are not often used in Chile and may raise regulatory concerns.

The timing, scale, and form of stakebuilding activities should be carefully reviewed from a regulatory and competition law perspective, particularly when the target is a publicly traded company or operates in a regulated industry.

Under Chilean law, any person or entity that directly or indirectly holds, or acquires, 10% or more of the subscribed capital of a publicly traded company must disclose to the Financial Market Commission (Comisión para el Mercado Financiero, CMF) and the relevant stock exchanges any acquisition or sale of shares in such company. This obligation also applies to directors, managers, and certain key executives regardless of the number of shares they hold.

Additional disclosure obligations may apply in the context of tender offers or when a change of control occurs. This includes the requirement that majority shareholders disclose whether their acquisitions are made with the intention of gaining control or for investment purposes. These rules aim to ensure market transparency and require timely reporting of share transactions by significant shareholders and company insiders to the CMF and stock exchanges, thereby providing relevant information to other shareholders and the general public.

Several important rulings by Chilean courts have strengthened the enforcement of foreign arbitration awards, aligning them with international standards. These decisions have increased legal certainty for cross-border mergers and acquisitions, promoting the inclusion of arbitration clauses and offering greater predictability in resolving disputes in international transactions.

Dealings in derivatives are permitted under Chilean law and may be used in connection with M&A transactions, including as part of a broader stakebuilding strategy. However, such transactions are subject to oversight by the Financial Market Commission (Comisión para el Mercado Financiero, CMF) and must comply with both securities regulations and competition law, particularly when the purpose of the derivative transaction is to acquire control over the issuer of the underlying securities.

Disclosure obligations will arise under Chilean law when derivative instruments are used as part of a strategy to acquire control over a publicly traded company, regardless of whether such control is pursued through direct ownership or economic exposure. These obligations typically depend on the structure and legal effect of the derivative product under analysis, particularly if it enables the holder to influence control over the company or affects market transparency.

The use of derivatives must not distort market conditions, mislead investors, or be employed for anti-competitive purposes. Otherwise, it may trigger investigations or enforcement actions by the CMF or the National Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE).

Under Chilean securities law, publicly traded companies are subject to certain filing and reporting obligations regarding derivatives.

With respect to securities disclosure obligations, companies are required to disclose their derivative positions in their periodic financial reports and other filings. This typically includes annual and quarterly filings, where companies must provide a clear and comprehensive account of their financial activities, including any significant positions held in derivatives. If a derivative transaction may materially affect the company’s financial condition or share price, such transactions must be disclosed promptly to the relevant regulatory authorities and stock exchanges.

In Chile, the obligation to disclose the intention to acquire control applies to shareholders and any person or entity – natural or legal – who, directly or indirectly, seeks to take control of a publicly traded company. This obligation applies regardless of the method used to obtain control, including public or private transactions and derivative arrangements.

Such disclosure must be made to the company, its parent and subsidiaries, the Financial Market Commission (Comisión para el Mercado Financiero, CMF), and the stock exchanges where its securities are listed. The communication must occur at least ten business days prior to the execution of the transaction, or as soon as negotiations are formalised or confidential information has been disclosed.

Furthermore, if the transaction meets both revenue thresholds established under Chilean antitrust regulations for concentrations (see 2.4 Antitrust Regulations), it must also be notified to the National Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE), which will initiate the mandatory antitrust clearance procedure before the transaction can be implemented.

The obligation to disclose a merger or acquisition transaction depends on the actual stage of the negotiations being conducted, the target company’s type and status and the parties involved in the transaction. This is a matter which must be considered on a case-by-case basis. Where the target is a publicly traded company, the parties to the deal, whether as buyer or seller, and even the target company if and at the time it becomes aware of the transaction, are required to disclose material information on the transaction to the Financial Market Commission (Comisión para el Mercado Financiero, CMF) and the general public once a binding or definitive agreement is executed, and this includes any change of control event or event that may significantly affect the company’s financial position or market value and is typically made through a material event filing (hecho esencial). In contrast, privately held companies have fewer obligations to disclose but may still need to notify the National Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE) when both revenue thresholds referred to in 2.4 Antitrust Regulations are met.

In cross-border M&A transactions, if foreign parties are required under the law of their jurisdiction to file with their respective authorities or stock exchanges, such filings will only trigger a reporting obligation in Chile to the extent that both revenue thresholds referred to in 2.4 Antitrust Regulations are met.

Where the target is a publicly traded company, the execution of a non-binding letter of intent generally does not by itself require formal disclosure. The mere commencement of negotiations does not trigger a disclosure requirement unless it creates a reasonable expectation that a binding agreement will soon be executed or if information leaks and materially affects the market. In such cases, the target, and sometimes the buyer and/or seller, may need to disclose to ensure transparency. For privately held companies, no immediate disclosure is typically necessary unless the negotiations have a significant market impact and, thus, require approval by the FNE.

In Chile, market practice generally aligns with the legal framework governing disclosure requirements, with full compliance being the standard approach. However, the depth of the information disclosed may vary depending on the specific stage and complexity of the transaction. This may involve gradual disclosure, particularly in complex deals or when managing sensitive regulatory or confidential matters.

Nevertheless, any attempt to delay or obscure disclosure beyond what is permitted by law may result in regulatory sanctions. Therefore, companies must exercise caution and ensure compliance to avoid legal and reputational risks.

The parties involved determine the scope of legal due diligence in a certain transaction, taking into account factors such as timing, efficiency, industry-specific risks, costs, and the legal risks associated with material non-compliance with Chilean law. The agreed-upon legal scope typically covers corporate, labour, tax, and regulatory matters, material contracts, assets, and liabilities, as well as litigation cases that may give rise to some material contingency.

Standstill agreements are less common in Chile than in other jurisdictions. However, exclusivity agreements are more frequently used in transactions, particularly during negotiations, to prevent parties from engaging with others for a set period.

It is permissible in Chile for the terms and conditions of a tender offer to be documented in a definitive agreement. Although tender offers are usually subject to specific regulatory requirements and are typically detailed in a separate offer document, there is no legal restriction against including the terms within a definitive agreement. This approach may be used in certain circumstances, especially when the offer forms part of a broader transaction agreement. However, the terms still need to comply with Chilean securities regulations.

The timeline for acquiring or selling a business in Chile varies depending on several factors, including the complexity of the transaction, the industry, whether the target company is publicly traded, and whether the transaction qualifies as a concentration operation subject to prior approval by the National Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE) under Chilean antitrust laws.

If the target company is publicly traded, the process usually takes longer due to additional regulatory requirements, such as filings with the Financial Market Commission (Comisión para el Mercado Financiero, CMF). Separately, any transaction involving a publicly traded or privately held company that qualifies as a concentration operation under Chilean antitrust law and meets the thresholds described in section 2.4 Antitrust Regulations must be notified to the National Economic Prosecutor’s Office for prior approval. In these cases, the completion of the proposed transaction may take between six and twelve months or more.

For transactions not involving publicly traded companies, the timeline is typically 3-6 months for simpler cases. However, where the transaction qualifies as a concentration operation, the approval process before the National Economic Prosecutor’s Office may significantly extend this period, especially in complex or cross-border deals.

Additionally, regulatory approvals, including obtaining licences or permits, particularly in industries such as telecommunications or energy, may further lengthen the process.

A tender offer of shares of a publicly traded company is made mandatorily applicable to:

• direct acquisitions that allow any person to take control of a publicly traded company;
• shares tendered by the controller of a traded company whenever it gains control due to an acquisition of two-thirds or more of the voting shares of such company, in which event the acquirer, within 30 days following such acquisition, must tender the remaining shares of the company at a price not lower than the one that would otherwise apply to shareholders exercising withdrawal rights under the Corporations Act; and
• if a person intends to take control of a privately held company which, in turn, controls a publicly traded company that represents 75% or more of its consolidated net worth (a parent company), the acquisition of control of the parent company is only permitted after the completion of a tender offer process over the publicly traded company it controls, for a stake sufficient to confer control.

Please note that certain stock acquisitions are exempt, such as acquisitions of shares issued by a publicly traded company as a result of a capital increase, allowing the acquirer to take control of the issuing entity, and acquisitions as a result of a merger.

In Chile, cash is the typical form of consideration in mergers and acquisitions, although shares also play a significant role in certain particular scenarios concerning large companies and are mostly seen in cross-border transactions. The choice between cash and shares depends on various factors, such as the transaction structure, market conditions, tax regulations, the parties’ financial capacity, and the shareholders’ preferences. Usually, minority shareholders are given the option to choose some portion of the share price.

In an environment characterised by high valuation uncertainty, such as in emerging sectors, technology industries, or volatile markets, the parties may resort to several tools to bridge value gaps and reach a mutually satisfactory agreement. These tools include earn-outs, price adjustment clauses, escrow arrangements, and call/put options. These mechanisms allow for the adjustment of consideration based on future events or specific conditions, thereby mitigating risk and uncertainty for both parties involved in the transaction.

Without prejudice to the minimum content requirements established by the Securities Market Act for any tender offer (as further outlined in section 6.5 Minimum Acceptance Conditions) takeover offers (OPAs) for publicly traded companies in Chile may include certain conditions, which remain subject to regulatory oversight.

Common conditions in OPAs include:

• minimum acceptance thresholds, where the bidder requires a certain percentage of shares (eg, 50% or more) to be tendered for the offer to proceed;
• regulatory approvals, in particular, from the National Economic Prosecutor’s Office (Fiscalía Nacional Económica, FNE) in cases involving potential competition concerns; and
• no material adverse change clauses, allowing the bidder to withdraw or adjust the offer if the target company faces significant negative events such as financial distress or major litigation.

Tender offers shall be addressed to all the shareholders of the target company or all the holders of shares of a given series, provided, however, that a tender offer may be limited to a certain amount of shares, in which case the shares tendered shall be acquired by the offeror on a pro rata basis. The terms and conditions governing a tender offer made with respect to shares of a given series shall be the same for all the holders of shares of such series.

A tender offer process for shares of publicly traded companies in Chile must be publicly announced, and a prospectus must be prepared and made available to all interested parties. In accordance with the Securities Market Act, this prospectus must include, at a minimum:

• full identification of the bidder and its controlling persons;
• details of the shares or securities subject to the offer;
• price and payment terms;
• offer duration and acceptance procedures;
• acquisition history and relationships with other major shareholders;
• method of financing;
• guarantees, if any; revocation conditions;
• identification of representatives or advisors; and
• any other information required by the Financial Market Commission (Comisión para el Mercado Financiero, CMF).

Regarding thresholds for obtaining control, 50% plus one of all issued and outstanding shares of the target company is the threshold commonly used when the bidder aims to acquire simple majority control. This allows such a bidder to influence the board composition and key corporate decisions at shareholder meetings. However, a higher threshold of 66.67% of such shares (control of at least two-thirds) may be preferred, as it enables the bidder to approve certain major strategic corporate changes without the need for minority shareholder approval.

In the event that a shareholder acquires control of the target company through the acquisition of at least two-thirds of all issued and outstanding shares, an obligation is triggered for the controlling shareholder to make a tender offer for the remaining shares of the target company at a price no lower than the price that would apply to shareholders exercising their withdrawal rights. If the controlling shareholder fails to carry out such a tender offer within 30 days of acquiring the requisite percentage of shares, certain minority shareholders are entitled to tender their shares to the target company and withdraw from it, with the company being obligated to purchase their shares.

As noted in section 6.5 Minimum Acceptance Conditions, Chilean law requires that a tender offer prospectus include sufficient detail regarding the bidder’s financing arrangements and ability to meet payment obligations. The prospectus for a tender offer must outline the mechanism by which the bidder will finance the payment for the shares acquired under the offer. If loans or capital contributions are required for financing, the bidder must include sufficient information in the prospectus to demonstrate that the necessary funds will be effectively available. If the offer involves a securities exchange, the prospectus must provide details on how the bidder has acquired or will acquire the securities intended for the exchange.

In Chile, deal security measures, such as match rights, exclusivity clauses, and non-solicitation provisions, are widely negotiated in private transactions pursuant to a merger or acquisition agreement. However, their feasibility or validity in tender offers are subject to the scrutiny of Chile’s Securities Market Act and may not be consistent with Chilean regulations.

However, the Securities Market Act provides that, unless authorised by the Financial Market Commission (Comisión para el Mercado Financiero, CMF), during the term of the tender offer, the target company may not:

• acquire its own shares;
• resolve to create affiliates;
• dispose of assets representing more than 5% of its total assets; or
• increase its leverage by more than 10% of total indebtedness immediately prior to the launching of the offer.

Additionally, competing tender offers are regulated by law and may be launched by publishing the relevant notice no later than ten days before the expiration of the original offer.

Under Chilean law, a bidder seeking to acquire less than 100% ownership of a target company may, through amendments to the bylaws of the company agreed upon in a duly convened shareholders meeting and/or a shareholders agreement, obtain various governance rights to exert influence over key corporate decisions. These rights are typically structured through mechanisms such as board representation, veto rights and special voting rights, enabling the bidder to maintain significant control over the company’s strategic direction despite not holding a 100% ownership stake. These arrangements’ regulatory implications and flexibility may vary depending on whether the target company is publicly traded or privately held.

Governance rights in publicly traded companies are subject to stricter regulatory oversight under Chilean securities laws. Disclosure obligations, minority shareholder protections, and corporate governance rules may limit the extent to which a bidder can negotiate governance or control rights. Any material agreements affecting corporate governance may require disclosure to the Financial Market Commission (Comisión para el Mercado Financiero, CMF) and the market.

In contrast, privately held companies offer greater flexibility for bidders to negotiate governance rights through the target company’s bylaws amendments or shareholder agreements without extensive regulatory constraints. In such cases, parties have broader discretion to establish governance structures, decision-making processes, and protective mechanisms tailored to their interests.

Chilean law allows shareholders to vote by proxy at shareholders’ meetings, even if the proxy holder is not a shareholder, provided that the proxy is granted in writing, covers all of the shares held by the shareholder entitled to participate at the meeting, and includes certain mentions required by law. This rule applies to both privately held and publicly traded corporations.

In Chile, implementing squeeze-out mechanisms like short-form mergers and other methods to acquire minority shareholders’ shares after a successful tender offer is complicated by the legal framework that protects shareholder rights.

Under Chilean law, each shareholder is entitled to one vote per share of common stock, which typically prevents majority shareholders from unilaterally diminishing the voting power of others. However, one means of circumventing such restrictions is the issuance of preferred shares, which may carry limited or no voting rights. These shares may also be endowed with special privileges, such as preferential liquidation rights, though such rights must be expressly set out in the company’s bylaws.

While the issuance of preferred stock may limit voting rights in specific instances, this mechanism is only effective under certain conditions and is typically more applicable to private companies. Furthermore, it is important to note that shareholders retain pre-emptive rights, which allow them to maintain their proportional ownership in the event of new share issuances, thus complicating the process of effecting a squeeze-out of minority shareholders.

It is also important to emphasise that directors are not permitted to circumvent these shareholder protections. In accordance with their fiduciary duties, directors must act in the best interests of all shareholders and are therefore prohibited from using their authority to infringe upon the rights of common or preferred shareholders. Consequently, any attempt to restructure ownership or to enforce a squeeze-out through decisions made at the board level would be subject to these legal constraints.

Additionally, Chilean law provides that minority shareholders are entitled to withdraw from a company if a controlling shareholder acquires more than 95% of the shares in a publicly traded company, provided that this right is exercised within 30 days of the controlling shareholder reaching the 95% threshold. Should the minority shareholders fail to exercise this right, the controlling shareholder may compel the remaining shareholders to sell their shares, subject to certain conditions. Specifically, the controlling shareholder must have acquired at least 15% of the shares from unrelated shareholders via a public tender offer, and other requirements must also be met.

In Chile, obtaining irrevocable commitments from principal shareholders is common in M&A transactions, particularly in friendly takeovers where bidders seek deal certainty before launching a tender offer. These commitments are typically negotiated early in the process, ensuring that key shareholders will tender their shares or vote in favour of the proposed transaction.

While these commitments are generally binding, they often include way-out clauses, allowing shareholders to withdraw if a better offer arises.

The Securities Market Act, as well as the Financial Market Commission (Comisión para el Mercado Financiero, CMF) regulations, contain a comprehensive set of disclosure requirements regarding business combinations involving publicly traded companies. As a general rule, publicly traded companies are subject to a continuing duty to report and disclose certain information to the CMF, the stock exchange, and the general public, which is fully applicable to business combinations.

As noted in section 6.5 Minimum Acceptance Conditions, a tender offer must be announced publicly, and a prospectus must be prepared and made available to all interested parties. Additionally, each of the directors must issue a report, as required under the Securities Market Act.

Tender offers shall be addressed to all the shareholders of the target company or to all the holders of shares of a given series, provided, however, that a tender offer may be limited to a certain amount of shares, in which case the shares tendered shall be acquired by the offeror on a pro-rata basis. The terms and conditions governing a tender offer made with respect to shares of a given series shall be the same for all the holders of shares of such series.

In Chile, the Securities Market Act and the regulations and guidelines of the Financial Market Commission (Comisión para el Mercado Financiero, CMF) set specific disclosure requirements in a tender offer process.

As already described in section 6.5 Minimum Acceptance Conditions, the prospectus for a tender offer must include, among other information, the full identification of the offeror and its controlling persons; details of the shares or securities subject to the offer and minimum acceptance thresholds; price and payment terms; the offer duration and acceptance procedures; the offeror’s current shareholding and relationships with major shareholders; financing arrangements; any guarantees; conditions for revocation; identification of managers and advisors; and any additional information required by the CMF.

The offer shall also mention whether or not the offeror intends to keep the company as a publicly traded corporation.

Additionally, when presented with a tender offer, each of the board members is required to issue a written report outlining their opinion of the tender offer’s desirability from the company’s shareholders’ point of view. In their reports, each director must state their relationship with the company’s controller and the offeror and any interest they may have in the transaction. These reports and the tender offer prospectus must be made available to the general public.

Bidders in M&A transactions are required to include pro forma and historical financial statements in their disclosure documents. These must be prepared in accordance with IFRS standards for publicly traded corporations. Additionally, under applicable Financial Market Commission (Comisión para el Mercado Financiero, CMF) regulations, the offeror must also provide a summary of its financial situation for the last two fiscal years, including balance sheet and income statement figures; key indicators of liquidity, solvency, and profitability; a description of its main business activities; any credit ratings assigned to it or its ultimate controllers, if applicable; and whether its securities are listed on any stock exchange.

In Chile, transaction documents regarding publicly traded companies are not required to be disclosed in full. However, important documentation, such as the tender offer prospectus, must be filed with the Financial Market Commission (Comisión para el Mercado Financiero, CMF) and made publicly available. These documents are disclosed to provide transparency but are not published in their entirety.

In the context of a business combination, directors owe fiduciary duties to the company and its shareholders, primarily the duty of care (deber de diligencia) and the duty of loyalty (deber de lealtad). These duties require directors to act in good faith, with due diligence and confidentiality, and in the best interests of the company as a whole rather than serving the interests of any particular shareholder or group.

The role of directors in a business combination under Chilean law is more limited compared to the one in the United States of America and other jurisdictions. Directors are not directly responsible for negotiating or approving the transaction but are primarily tasked with providing shareholders with the necessary information to allow them to make an informed decision regarding the potential transaction. In this regard, in the context of a public tender offer involving a publicly traded company, each director is also required by law to issue an individual report providing their opinion on the offer from the perspective of shareholders’ interests, all as previously noted in section 7.2 Type of Disclosure Required. Their role is primarily advisory rather than decisional, as the shareholders ultimately approve or reject any business combination.

Moreover, directors elected by any group or class of shareholders, whether controlling or minority, owe the same duties to the company and all its shareholders. They may not prioritise the interests of the shareholders who elected them to the detriment of the corporation or other shareholders.

It is not common in Chile for boards of directors to establish special or ad hoc committees specifically for business combinations. Unlike in other jurisdictions, where independent committees play a significant role in evaluating and negotiating transactions, Chilean corporate governance practices generally do not use such structures, although they are allowed for this purpose.

When some directors have a conflict of interest, they must disclose it to the board and abstain from voting on the matter.

While Chilean law does not mandate the formation of special or ad hoc committees regarding business combinations, some publicly traded corporations meeting certain thresholds must establish an independent directors’ committee (Comité de Directores), which, among other matters, must review all transactions where any related party to the company or any board member is involved. Such transactions would include business combinations.

In Chile, courts do not apply an explicit equivalent to the business judgment rule as developed in the jurisprudence of the United States of America. However, Chilean courts generally defer to the board of directors’ decisions in commercial and strategic matters unless there is evidence of fraud, gross negligence, bad faith, or a violation of legal or fiduciary duties.

Directors in Chile involved in a business combination typically receive independent outside advice from various professional advisors to ensure they fulfil their fiduciary duties and comply with legal requirements.

The most common forms of independent advice include:

• financial advisors who may be engaged to provide valuation reports, market analysis, negotiation support and strategy, deal structuring, and tax optimisation; and
• legal counsel from external firms that may be engaged to lead legal due diligence processes, provide negotiation support and strategy, ensure compliance with regulatory frameworks, and optimise tax structures.

Conflicts of interest involving directors, managers, shareholders, and advisers have been the subject of judicial and regulatory scrutiny in Chile. With respect to directors and managers, conflicts of interest most commonly arise in the context of related-party transactions.

While Chilean law requires directors to act in the best interests of the company as a whole, cases have emerged in which controlling shareholders engaged in tunnelling practices, diverting corporate resources to related entities, or structuring mergers in a manner that disproportionately diluted minority shareholder participation. These cases have increasingly ended in judicial or arbitration proceedings and fines imposed by the Financial Market Commission(Comisión para el Mercado Financiero, CMF).

Hostile tender offers in Chile are not prohibited under the Securities Market Act and can be launched by a bidder without the endorsement of the target company’s board of directors or its controller; regardless of whether a single shareholder or a group of shareholders who, acting in concert, exercise such control.

The characterisation of a tender offer as ‘hostile’ is not determined by its legality but rather by the absence of coordination with the company’s controlling shareholder, who is typically the natural counterpart in friendly transactions. These types of offers are usually addressed directly to the shareholders and are more common when the offer does not seek to acquire control of the target company.

In any case, hostile takeovers are not common, as most M&A activity in Chile tends to be preceded by some level of agreement or coordination with the controlling shareholder (if one exists). Where no controlling shareholder is present, the board of directors’ position can carry particular weight, especially in companies with widely dispersed ownership.

Directors in Chile may not use defensive measures to protect the company from a hostile takeover if their fiduciary duties to the company and its shareholders are breached.

Hostile transactions and the defensive tactics aimed at blocking them are usually seen in more developed capital markets such as the United States of America, as is the case with ‘poison pill’ and ‘shark repellent’ strategies or plans. However, such tactics, such as ‘poison puts’, defensive lawsuits, defensive mergers or acquisitions, ‘golden parachutes’ and the like, are not common in Chile, and certain tactics may not be valid under Chilean law.

However, parties interested in discouraging an acquisition can implement one or more of these measures used in other jurisdictions, especially when the target company is privately held. These measures are always subject to a case-by-case assessment of their legal feasibility.

Under Chilean law, directors have a series of duties to the company and its shareholders, such as duties of loyalty, care, impartiality, oversight, confidentiality and good faith. Directors elected by any group or class of shareholders have the same fiduciary duties that other directors have to the corporation and the other shareholders and cannot under any circumstances disregard their duties to the corporation or to the other shareholders that did not elect them based upon the fact that they are acting in the interests of the electing shareholders. These legal duties cannot be contracted away.

Directors cannot simply refuse and take action that prevents a business combination without observing their fiduciary duties. Under Chilean law, directors must act in the best interests of the company and all its shareholders. Therefore, if they choose to oppose a merger or acquisition, such a decision must be based on a reasonable and well-informed judgment that the transaction would be detrimental to the company’s interests.

In Chile, while litigation is not the general trend in M&A transactions, it is still relatively common, particularly in cases involving disputes over purchase price adjustments, breach of representations and warranties, and indemnification claims. These matters are generally submitted to arbitration in Chile or some international arbitration forum.

Litigation in M&A deals is commonly triggered during the post-closing phase. This phase occurs after the transaction has been completed, and issues such as breaches of warranties, representations, or indemnity provisions arise during this period.

Over the past few years, various disputes have highlighted important lessons in M&A transactions, particularly regarding the risks of misrepresentation and incomplete disclosures. These disputes underscore the critical importance of thorough due diligence, transparency between parties, and accurate financial reporting during negotiations. Ensuring that all relevant information is disclosed and that both parties engage in open communication is essential in mitigating risks and preventing potential litigation in the post-closing phase.

Shareholder activism in Chile remains relatively limited in impact compared to more developed markets such as the United States of America and Europe. Chile’s legal framework does not provide the same level of shareholder rights or activism-friendly mechanisms as other jurisdictions, and the concentrated ownership of Chilean companies further restrains activism forces.

Despite such limitations, pension funds managing entities and other institutional investors have had an active role in corporate governance, focusing on pressuring companies to adopt policies inspired by ESG principles, such as implementing corporate governance policies, including board diversity requirements and conflict of interest policies.

Shareholder activism in Chile has had a limited impact, as discussed in 11.1 Shareholder Activism. The current activism is relatively mild and does not primarily target mergers and acquisitions, spin-offs, or significant divestitures. Instead, it focuses on advocating for the adoption of policies aligned with ESG principles.

This may be partly explained by Chilean law, which tends to emphasise shareholders’ withdrawal rights in certain situations rather than granting them direct veto powers over strategic corporate decisions.

As mentioned in 11.2 Aims of Activists, it is not common in Chile for activists to seek to interfere with the completion of M&A transactions.

However, please note that shareholders have the right to withdraw from a company by redeeming their shares to such company, provided certain requirements are met (eg, a shareholder who voted in the relevant shareholders meeting against a company merger, among other requirements).

As also noted in 11.2 Aims of Activists, this withdrawal mechanism reflects the emphasis of the Chilean legal framework on affording dissenting shareholders an exit option rather than granting them direct veto rights over major corporate decisions.