Taking your business idea to the formal level requires you to legally incorporate a company. In Chile, there are several legal types: Sociedad por Acciones (SpA), Empresa Individual de Responsabilidad Limitada (EIRL), Sociedad de Responsabilidad Limitada, Sociedad en Comandita, and Sociedad Anónima (SA).
Sociedad por Acciones (SpA): (articles 424 and following of the Code of Commerce) is a type of company that may be formed by one or several individuals or legal entities and its participation is determined by the capital contribution made by each one. It is flexible for the entry or exit of new partners and capital increase without having to change the bylaws, and it does not require the establishment of a board of directors and a shareholders’ meeting, as is the case of Corporations in which there are also shares.
Individual Limited Liability Company (EIRL): (Law 19857) this type of company has only one partner or owner. It can carry out all kinds of civil and commercial operations, except those reserved by law for corporations, according to Article 2 of Law 19857. The partner is liable only up to the part of his contributions and not with personal assets.
Limited Liability Company (SRL): (Law No. 3.918) in this type of company the personal element prevails over the capital contribution, to protect the personal assets of its members. There is no minimum capital requirement and the partners, who must be between 2 and 50, respond with their contributions. In its administrative aspect, it requires the agreement of the partners but does not require a board of directors.
Corporation (Sociedad Anónima): (Law No. 18.046). It is defined in the law as a legal entity formed by the assembly of a common fund, provided by shareholders liable only for their respective contributions, and administered by a board of directors composed of essentially revocable members.
One aspect that distinguishes the Sociedad Anónima from other types of corporations is that the rights of the partners are represented by shares that appear in a title. Management is carried out by two collegiate bodies: the shareholders’ meeting and the board of directors. The latter appoints the manager, who is in charge of the administration of the company. The rights of the partners are represented by freely transferable shares. These companies are always commercial, even when formed for civil purposes, and may be open or closed.
If open, they may offer their shares publicly and must be registered in the Securities Registry. Open corporations and special corporations will be subject to the supervision of the Financial Market Commission (according to article 2, paragraph 5).
There are also General Partnerships (articles 349 to 423 of the Commercial Code) and Limited Partnerships by Shares (articles 470 and following of the Commercial Code) which, because they involve the personal assets of the partners, are less used.