Pioneering Practices for Annual General Meetings You Need to Know in Chile

Annual General Meetings (AGMs) and corporate governance are fundamental aspects of company operations in Chile. These processes vary depending on the type of entity, such as Limited Liability Companies (Sociedades de Responsabilidad Limitada or SRL), Corporations (Sociedades Anónimas or S.A.), and Simplified Corporations (Sociedades por Acciones or SpA). Let’s explore their key requirements and governance structures.

Annual General Meetings: Legal Requirements and Deadlines

For Corporations (S.A.), the AGM must approve financial statements within four months following the end of the financial year, as stated in Article 4(7) of the Corporations Act. These meetings are called by the Board of Directors and must include matters like financial review, profit distribution, and director elections. Notices must be published at least ten days in advance. 

For Limited Liability Companies (SRL), annual meetings of members or managers are not mandatory. Governance is determined by the operating agreement or the Articles of Association (AoA).

Failure to meet the AGM deadline has no severe legal consequences, though timely compliance ensures well-organized corporate records.

Governance Structures Across Entity Types

1. Corporations (S.A.)

• • Managed by a Board of Directors elected by shareholders.
  • Directors serve terms up to three years, with re-election permitted.
  • The board can delegate certain responsibilities to executives, officers, or committees.
  • A Chief Executive Officer (CEO) is required, who holds judicial representation of the corporation.
  • Public corporations must meet stricter requirements, such as appointing independent directors and convening monthly board meetings.

2. Limited Liability Companies (SRL)

• • Governance depends on the AoA. If unspecified, partners manage the company directly or appoint representatives.
  • Flexibility exists in appointing managers or creating boards for decision-making.

3. Simplified Corporations (SpA)

• • Management is highly flexible and defined by the AoA.
  • Typically managed by administrators, who may act directly or through appointed agents.
  • Minimum of three directors is customary.

Convening and Conducting Meetings

According to Article 58 of the Corporations Act, the Board of Directors is responsible for calling shareholder meetings. Notices must include the meeting agenda, date, and details on accessing supporting documents. For public corporations, these notices are published online and in print media.

If formalities are missed, meetings may still be valid if attended by all voting shareholders, as outlined in Article 60.

Approving Financial Statements and Distributing Dividends

Boards must present financial statements and auditor reports transparently. Open corporations must also share these documents on their website. Dividend distribution rules depend on the company type:

• Open corporations must distribute at least 30% of net profits as cash dividends.
• Closed corporations follow their bylaws or, if silent, the 30% rule applies.

Flexibility in Governance and Representation

Under Chilean law, shareholders may be represented in meetings by proxies, which can be signed digitally via platforms like DocuSign. Articles like Article 64 of the Corporations Act ensure broad flexibility in representation and participation.

Document Filing and Public Records

Non-public corporations are not required to file AGM minutes or financial documents with authorities. However, the commercial register contains abstracts of AoA and amendments, along with certificates of good standing and existing Powers of Attorney.

Conclusion

Chilean corporate law provides a structured yet adaptable framework for managing AGMs and governance. Whether you operate an S.A., SRL, or SpA, understanding these nuances ensures compliance while leveraging governance flexibility to align with your company’s unique needs.

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