The acquisition of public companies requires the buyer to offer a public acquisition of shares (“Tender Offers”). Tender Offers are mandatory in the following cases:
Other than that, any acquisition of shares in a public companies with which a participation that exceeds 10% of the subscribed capital is reached must be reported to both the Financial Market Commission and the relevant stock exchanges; and all subsequent acquisitions and sales of shares in the Company while that threshold participation is maintained must be also informed. This communication should be completed the day after the operation was carried out. In it, shareholders should inform if the goal is to obtain control of the entity or just financial investment.
Both public and private M&A transactions in Chile typically involve a similar set of fundamental documents, such as: (a) Non-disclosure agreements (NDAs), Letters of Intent (LOIs), or Memorandums of Understanding (MOUs) to set forth preliminary terms and confidentiality obligations; (b) Share Purchase Agreements; (c) FNE (Antitrust) authorizations (please see section 2.3.1); (d) closing memorandums; and (e) share transfer records in the target company’s shareholders’ registry.
In public deals, the acquiror should also publicly disclose its intent, and launch a Tender Offer, for which an “offer prospectus” shall be produced, with information of the corporate entity identity, the purpose of the offer, price, terms, guarantees, and procedure. Each member of the Board of Directors of the target company shall issue a technical opinion on the convenience of the operation. Three days after the Tender Offer expiration, the offeror shall publicly disclose the offer results (number of shares received, number of shared acquired, pro rata factor, and control percentage acquired). All this information should be reported to both the Financial Market Commission and the relevant stock exchanges at the same time when communicating the acceptance notice.
When acquiring 10% or more of the subscribed capital of publicly traded companies, any shareholder must report this to the CMF and the relevant stock exchanges; and all subsequent acquisitions and sales of shares in the Company while that threshold participation is maintained must be also informed. This communication should be completed the day after the operation was carried out. In it, shareholders should inform if the goal is to obtain control of the entity or just financial investment.
In contrast, disclosure in the acquisition of control of private companies only arise when the transaction meets the thresholds for mandatory merger control review by the National Economic Prosecutor’s Office (“FNE”) (please see section 2.3.1) . Unless the deal affects a regulated industry or raises competition concerns, there is no requirement to inform regulators or the public.
There are few cases when Tender Offers should be issued for non-selling shareholders, apart from the mandatory Tender Offer necessary to take control of a publicly traded company referenced in 1.1 above:
(i) Whenever a controller acquires two-thirds or more of the voting shares, they must launch a mandatory Tender Offer for the remaining shares within 30 days. The offer must be made at no less than the statutory withdrawal rights value, and if not carried out in time, minority shareholders automatically obtain withdrawal rights.
(ii) Additionally, Chilean law provides specific protections for minority shareholders when a controlling shareholder exceeds 95% of the voting shares of a listed company. In such case, minority shareholders have a statutory right to withdraw and sell their shares to the company at fair value, which must be exercised within 30 days from the acquisition.
Furthermore, if the 95% threshold is reached through a tender offer for all outstanding shares where at least 15% of shares held by non-related parties were acquired, the controlling shareholder may also exercise a squeeze-out right if the Companies’ bylaws allow for it. This allows the controller to compel remaining shareholders who did not exercise withdrawal rights to sell their shares at the tender offer price (adjusted with interest). The transfer is perfected automatically without the need for additional agreements, and the company must register the shares under the controller’s name and distribute the proceeds accordingly.
M&A transactions in Chile typically take one of the following forms: share acquisitions, asset deals, or mergers. SPACs are not used in Chile.
Share Acquisitions are the most frequent structure, through a purchase agreement or via a capital increase. There could be restrictions on share transfers, established in the company’s bylaws or shareholders’ agreements.
Alternatively, capital increases allow buyers to subscribe to newly issued shares, injecting fresh capital into the target. This requires shareholder approval under corporate law and often necessitates the waiver or assignment of pre-emptive rights, to be granted in the same shareholders’ meeting.
Asset deals are also common, usually for business units, tax implications or in distressed scenarios such as bankruptcy reorganizations. If the transaction involves selling more than 50% of a company’s assets, it must be approved at an extraordinary shareholders’ meeting by a supermajority of 2/3 of issued shares.
Mergers are also utilized. They can be structured either as a merger by absorption, where one company survives, or as a merger by creation, where a new company is formed. In either case, all assets, liabilities, and shareholders are consolidated by law.
In Chilean M&A transactions, the purchase price is commonly paid in cash. However, in large-scale deals shares may also be used, either fully or partially.
Parties frequently implement price adjustment mechanisms. Commonly, Chilean deals prefer true-up arrangements, comparing pre-fixed estimation and actual value on the closing date. If there is a difference, it is factored in price adjustment (based on working capital, debt, or cash variations between signing and closing).
Locked-box structures are preferred when transactions are time sensitive and require price certainty. Usually, the price will be fixed based on historical financial statements as of a specified date.
Earn-outs provisions may also be used in particular deals, but are less common.
The most relevant regulatory requirement is the mandatory preemptive notice to FNE when the acquisition qualifies as a concentration operation and when the following sales revenue thresholds are met or exceeded, based on the previous fiscal year: (i) The combined annual sales in Chile of the merging parties (including entities of the same Business Group) reaches or exceeds UF 2,500,000, and (ii) at least two of the parties involved individually exceed UF 450,000 in annual Chilean sales revenues.
Additional Regulatory Bodies
Beyond the FNE, other regulatory agencies may be involved depending on the nature of the business:
MAC clauses are typically included to give the buyer a contractual exit route if there is a significant negative change in the target company’s situation. These clauses usually focus on events that disproportionately impact the target relative to its peers. The scope and applicability of a MAC clause are often subject to intense negotiation, as it can materially affect deal certainty.
Although break-up fees—payments triggered when one party withdraws from a deal under specified conditions—are widely used in international M&A practice, they remain relatively rare in Chile. More commonly, Chilean contracts include penalty clauses tied to a party’s refusal to close after signing. These provisions must be clearly defined in the agreement, with justifiable criteria for determining the amount payable.
Representations and warranties are widely used in M&A transactions in Chile, despite being a contractual structure imported from foreign legislation, which does not have express recognition in Chilean law and jurisprudence. The institution is widely accepted as valid under under the principle of freedom of contract, but careful consideration of the wording of these clauses is strongly recommended, as the obligations assumed when giving representations and warranties, as well as the contractual and indemnification effects of breaches and misrepresentations, are not recognized in statutory law, so that any silence or ambiguity in the contract with regards to these matters may render the clauses inapplicable or lead to disputes.
Recent high profile arbitral rulings have not provided clarity on the matter.
Legal definitions of materiality or knowledge are not provided and should be properly defined by the parties. Materiality as a concept should specially be defined as there is no similar equivalent in contract statutory law, where “substantial” or “essential” would be better qualifier terms.
Often, bring-down provisions are limited to only those inaccuracies that would result in a material adverse effect.
Regarding representation and warranties, bring down provisions would be associated to misalignments that would have caused the buyer to accept a different price or not to contract at all.
Sandbagging is permitted; however, it will mostly depend on how the parties address it in the purchase agreement. Given the absence of statutory guidance, clarity in drafting is essential. If the agreement is silent on the issue, the enforceability of a sandbagging claim will likely depend on general principles of good faith and contractual interpretation under Chilean civil law, including appropriate standards of duty and/or negligence, which may not favor claims based on known breaches.
For the payment of price, the most extended used security in Chilean transactions is the pledge of acquired shares, in favor of the seller or any financing parties, as well as other in-rem guarantees of any special high value key asset (mortgages, pledges). Also, parties could accept parent company guarantees, depending on the financial security of the company’s group.
Indemnification is usually guaranteed through price retention or escrow accounts whenever there is a particular risk or issue that parties may want to cover. Otherwise, many deals do not stipulate specific guarantees for indemnification under the agreement.
As explained in 2.4, indemnification clauses based on breaches of R&W and covenants are a standard tool used to allocate post-closing risk. It is common practice that the parties waive and renounce all other legal remedies and actions, except in cases of fraud or gross negligence.
While Chilean law does not impose a mandatory indemnity structure, market practice tends to favor a “seller-watch” model, where the seller bears liability for past events unless the buyer expressly assumed certain risks through the agreement or due diligence process.
In Chilean M&A practice, parties have broad flexibility to define the scope and limits of indemnification obligations in the transaction documents. These limitations are typically structured around timeframes, financial thresholds, and payment mechanisms designed to manage exposure and reduce post-closing risk.
Caps are very common stating indemnity limits, based on the due diligence findings, the industry risk and liability incidence. It can be expressed as a percentage of the purchase price. Baskets, de minimis claims and other deductible structures are also commonly used.
Indemnity of losses arising from fraud, gross negligence and bad faith cannot be preemptively waived and would be unenforceable, even if parties mutually agreed on the carve out.
Time limits to make a claim tend to be of around 1 year after closing, but there is variation from deal to deal and depending on industry risk, due diligence findings, etc.
In Chilean M&A transactions, certain categories of liability consistently appear as key areas of risk and are often subject to specific indemnification protections. These include (i) tax liabilities, such as unpaid taxes, incorrect filings, or ongoing audits (three to six years); (ii) labor-related obligations, including social security contributions, severance payments, and potential claims from current or former employees (up to five years); (iii) environmental risks, especially in transactions involving industrial, mining, or energy assets, where environmental compliance is highly regulated (up to five years); (iv) property of assets free of encumbrances, and compliance and enforceability of all key material contracts; (v) Absence of current or potential litigation. The general rule of ordinary actions related to third party claims states a statute of limitations of 5 years.
Where the target operates in a regulated industry, such as financial services, energy, healthcare, or telecommunications, regulatory compliance becomes a particularly sensitive issue. In these sectors, non-compliance can result in serious consequences, ranging from fines and sanctions to suspension of licenses or business interruption. For this reason, buyers often demand targeted representations and enhanced indemnity coverage in these areas.
In general terms, standard clauses stating that a contract will be subject to foreign law are valid. However, if the contract is meant to produce its effects in Chile, those effects will be governed by Chilean Law. In M&A, the acquisition of shares or assets implies the transference of those shares or assets in Chile, therefore, the transference itself will be governed by Chilean Law.
Moreover, all goods situated in Chile are subject to Chilean Law, regardless of nationality or residence of the owners.
In order for a foreign court decision to be enforceable in Chile, it must first undergo a formal recognition process—known as exequatur—before the Chilean Supreme Court. This procedure does not involve a re-examination of the case’s substance but focuses on verifying compliance with specific legal requirements.
For the Supreme Court to grant recognition, the judgment must have been rendered by a competent Court of Law according to international standards; parties involved must have been properly notified, or lawfully declared in default; the decision must be final and enforceable in the jurisdiction of origin; it must not contradict Chilean Law, nor infringe Chilean public policy or sovereignty, and the judgement must be submitted with a certified Spanish translation, if issued in another language.
Once recognized through this process, the foreign judgment acquires the same legal force as a Chilean court ruling and may be enforced accordingly through local judicial procedures.
In Chile, it is common for parties to prefer arbitration over litigation when resolving disputes arising from M&A transactions. This preference is largely driven by the greater speed and expertise that arbitration typically offers, as well as the ability to appoint arbitrators with specific legal or industry knowledge.
In cross-border or high-value transactions, international arbitration is also widely accepted, and parties frequently adopt procedural rules from institutions such as the ICC, AAA, or LCIA. Within Chile, well-established institutions like the Santiago Chamber of Commerce Arbitration and Mediation Center (CAM Santiago) and the National Arbitration Center (CNA) are often designated to administer the proceedings and appoint arbitrators.
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Chile
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Cristián Carpentier A.
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Email: ccarpentier@agycia.cl
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