The Chilean equivalent of the limited liability company (LLC) is the sociedad de responsabilidad limitada (SRL). It is very common for small companies, subsidiaries of foreign companies, and, in some cases, large companies to incorporate as an SRL, as it gives them more structure, legitimacy, and liability protection than they would have as a branch or partnership.
SRL vs. SA
The SRL differs from the SA (sociedad anónima, or corporation, discussed in the next chapter) mostly in terms of governance and structure. There are more elaborate rules dictating the governing structure of SAs. For example, it is mandatory that an SA have a board of directors (directorio) that meets every 6 months, as well as shareholder meetings (juntas accionistas) once a year; these are not required for SRLs.
Another important differences is that SA revenues go to shareholders strictly in proportion to the percentage of shares they own, while for SRLs, revenues can be shared in any way, according to what’s agreed on in the company’s bylaws.
SRL partners/owners can reinvest their revenue from one company into a second SRL company and thereby avoid paying a personal tax, while SA shareholders do not have this option.
On the other hand, to sell or transfer rights, SRL partner/owners, by law, need approval from all partners/owners in the company, while SA shareholders, by law, do not. SA shareholders can, however, create a shareholders agreement whereby share transfers are limited.
How to Incorporate as an SRL
To register as an SRL, you will eventually need to hire a lawyer (abogado), notary (notario), or accountant (contador) to help you prepare the paperwork, but getting the right documentation ahead will help you speed up the process (and pay lower fees!).
You can also hire and authorize a lawyer or accountant to file your papers for you; it is not necessary that you be present for the registration itself.
After completing and signing bylaws with the notario, you will have to publish certain information in an official bulletin and register the information with the Registro de Comercio, announcing that you have incorporated. Your lawyer or accountant can help you do this.
The announcement must include
- Your company name
- Your company’s “social objective” (see below)
- The projected lifespan of the company (see below)
- The names of all shareholders
Documents to Submit:
You and/or your representative must submit the following documents (each is elaborated on immediately below):
- Bylaws (or deed) (escritura) notarized by a local notary (elaborated below)
The SRL is formed by a notarized contract (also referred to as the company bylaws). It must be done as a formal escritura, printed on special notary paper).
The following information must be included in the contract:
- Name of company: You must provide a name. Your name must end with the word “Limitada” and the must contain the name of one or more partners or the social objective.
- Social objective: This is your company’s basic task and scope. Your company must engage only in business operations within the scope of your declared task.
- Legal address of your company: This can be your legal address or your lawyer’s (or the address of whoever is representing you). You do not need to present a proof of address.
- The total capital and how it will be submitted. For whatever capital is not in cash, you must state its form, its estimated value, and how it will be delivered. The recommended minimum amount of capital that an SRL should have to incorporate is 1 million Chilean pesos; there is no maximum.
- The proportions according to which profits and losses will be shared among the partners
- Lifespan of the company
- Means of liquidating the SRL dividing assets
- Means of governing the SRL.
- Name of Manager: You must declare who will be your company’s manager, or representante legal. The representante legal will be the only authorized representative of the company. (For SAs, this representative is called the gerente general.)
Personal Information and Documentation
For each partner/owner in your SRL, you must provide the following:
- Name and last name
- Passport or photocopy of Chilean cedula de identidad
- Marital status
The total costs of incorporating as an SRL run to about US$1,500, including legal fees. The costs of actually incorporating run from US$200 to US$600, depending on amount of capital.