Chile Forum

Hello All

I'm writing to get some clarification regarding conflicting info that I've gotten from a couple of Chilean lawyers. Myself and a small group of friends are in the process of investing a small amount of money in the country. I myself am Canadian, another friend was born in Chile and holds dual citizenship and the rest involved are also Canadians.

The original plan was to open a limited liability partnership, with myself and my Chilean friend sharing responsibilities as administrators and everyone else basically acting as silent partners. I have a RUT #, but only the type that allows purchase of property, etc.

I'm not sure if the original lawyers misunderstood which type of RUT I have, but they advised that I could be an administrator in the company without issue. Casually speaking to another lawyer, however, I was advised that only a full-fledged Chilean can serve in this role and that I wouldn't be able to assume any legal responsibility in the company, basically making me just another silent partner.

The plan also entailed me moving down to Chile and taking an active role in running the company on behalf of everyone and I was already in discussion with the Consulate here in regards to getting residency. However now my Chilean friend is under the impression that he will basically shoulder all of the burden of legal responsibility alone, he's understandably getting cold feet, as he has no intention of relocating to Chile at this time!!

My questions are as follows:

1) As a foreigner, who is currently a resident of Canada, is it possible for me to at least equally share in the legal responsibility of running a company in Chile?

2) If not, does gaining residency in Chile change this?

3) I've read on other boards here that it is possible to use, for example, an accountant to circumvent the problem of having a Chilean "partner". What are some of the potential risks involved in going that route?

Thanks for your time
Mike

Well a lot of this depends on what you want to do and what type of corporate structure would be best for what you you are planning, but I think a lot of your problems seem to center around the misunderstanding about the nature of the "legal representative" for the company. The legal representative does need to be a legal resident or a Chilean citizen, but they can for the most part just be a figure head with very restricted powers. An accountant or anyone else that would agree to do it on your behalf would likely be fine (e.g. should be someone you can trust and work with). It in no way implies that you are somehow not in control of your company, or alternatively not responsible for criminal acts as an administrator. The articles of incorporation should be drafted to properly place any required limits on your "legal representative".

With that many foreigners involved you will want to make sure your attorney can properly handle the foreign related issues. Among other things handling proper powers of attorneys from outside the country, clear understanding of immigration impact, understanding of common law traditions, and they need to speak English themselves and not just hire a translator. Even the best translators and interpretors will have trouble doing legal translation because of the difference in legal traditions so they can explain things to you properly (e.g. common law vs Chilean law ). Your average Joe blow contract attorney in Chile will likely not be well equipped to handle it.

Also, if you look around the forum I have warned about the consulates before in depth, but they are not reliable sources about Chile including many immigration issues. If you ask 10 Chilean consulates around the World the same question, you will likely get 20 different answers. The people that work there are not attorneys (well, the ones you get to talk to anyway), and at the end of the day it will be the relevant ministry in Santiago that will have the final word about whatever it is the consulate told you to do or not to do. We have seen peoples immigration applications denied because they followed the advice of the Chilean consulate, and we have seen errors made in signing powers of attorneys that where later not accepted on the ground at the notaries, registries, or other government offices where they count.

Your lawyer should be able to oversee and handle any dealings you might have at the consulates such as notarizations or document legalization ( e.g. they all seem to have their own special set of quirks ) and they need to stay on top of the consulates checking the handling and pushing through documents all the way.

Done right, setting up a company is a fairly easy thing to do. Done wrong, with that many foreigners involved you could end up needing a whole lot more lawyers down the line as bad business ventures degenerates in to a whole lot of good court cases.

So, take your time sorting out your legal, tax, and other help getting started.

Thanks for the quick and informative reply!!

Just a bit of clarification if possible. As a figuredhead/"co-administrator", what legal responsibilities/duties would a Chilean have to assume, that I legally could not? What types of responsibilities/duties would I be allowed to at least share in as a foreigner living in Chile? I'm not trying to delegate the risk to others, on the contrary, I prefer to lighten the burden of responsibility placed on my Chilean friend, as we are equal partners I would like to share in as much of the responsibility as possible in order to take some of the pressure off of him.

yea, I think to dig any deeper in to this you would have to post a whole lot more information about your plans on a public forum than you should. We are kind of passing the point of theoretical and hypothetical.

admin wrote:Also, if you look around the forum I have warned about the consulates before in depth, but they are not reliable sources about Chile including many immigration issues. If you ask 10 Chilean consulates around the World the same question, you will likely get 20 different answers. The people that work there are not attorneys (well, the ones you get to talk to anyway), and at the end of the day it will be the relevant ministry in Santiago that will have the final word about whatever it is the consulate told you to do or not to do.

This isn't just Chilean consulates. Many consulates hire local people who are not much more aware of the country in question than you are and they are the ones you talk to when you first call them up on the phone.