Bylaws Amendment for Companies Incorporated Throughout the Electronic Registry System

Because of a diversity of reasons, it often becomes necessary the amendment of the Company bylaws. In the traditional system said reforms have to be carried out throughout the registration of an extract of the bylaws in the Registry of Commerce and its subsequent publishing in the official journal.

Nevertheless, the Electronic Registry System of the Ministry of Economy, which is in force in parallel along with the “old” system, allows to do such amendments throughout a different mechanism which may or may not be more efficient than the traditional one.

In the case of Stock Companies (Sociedad por Acciones or SpA) the amendments or reform ought to be agreed upon the shareholders in the first place. This has to be done in a “previous agreement” or a shareholders meeting, of which an act has to be draft. The agreements of the amendment have to be taken in the proportions established in the Company bylaws (for instance, simple majority, absolute majority, 2/3 or any other established beforehand in the bylaws, it is worth mentioning that there are some minimum quora mandated by the Law). Each subject matter of a reform may require a different amount of votes, depending on what is stated in the bylaws. In order to avoid the summoning to the meeting, which is a legal obligation, the amendment has to be approved by the 100% of the shares with the right to vote.

In the draft of the act it has to be thoroughly established each and every agreement of the amendment: what are they about and the number of votes that agree on said reform. Finally, it has to be stated how and which specific clauses of the bylaws are going to be subject of modification (replacing, adding or reducing)

Once the shareholders that concur to the agreement or meeting, that are  in possession of the necessary shares with the right to vote needed for the approval of the amendment, they will provide their signature on the act, which in turn has to be reduced to a public deed or, as we are talking about an SpA, it may also be protocolled as a private document before a notary public.

Then, at the “empresa en un día” online platform, the bylaws will be modified in the same terms established in the act of the meeting or previous agreement. The online system allows to modify the domicile, commercial activity, company name, management, equity, profit distribution, etc. Once this is done, the system will request the previous agreement act information: date, city and notary in the case of a public deed, and protocol number as well, in the case of a private document.

In the next step, the system will request the upload of the act of the previous agreement or meeting as well as a current shareholders certificate, which has to be drafted and also authorized by a notary public by previously exhibiting the shareholders registry, in which appears the up-to-date shares distribution among the shareholders.

Finally, if the shareholders that concur to the amendment have an advanced electronic signature they may be able to sign the document online. If this is not the case, they will have to concur to a notary public with the attention number issued by the system. In there, the amended document will be generated, which will have to be signed by every single shareholder that concurred to the previous agreement or shareholders meeting that agreed upon the terms of the reform. Later on, the notary will attest the procedure, signing electronically. It is important to mention that it also has to be requested the signature by the notary of the other documents: the previous agreement or meeting act, as well as the current shareholders certificate.

This way, the bylaws will be modified without the need of any further registration in the Commerce Registry or Official Journal publication.

The previous procedure will apply each time that any part of the bylaws has to be changed, nevertheless there is a situation that often causes confusion to the users of this new system. The issue is that the Servicio de Impuestos Internos (Chilean IRS, SII for short) and other institutions demand that any modification regarding share participation has to appear as an amendment in the system, not being enough the annotation procedure in respect thereof. This obligation is devoid of any legal basis and goes against the spirit behind the constitution of capital companies (S.A. and SpA), which is supposed to ensure the free trade of shares.

This is to say that what in the old system, and in accordance with the law, was a simple buy/sell of shares between persons is now turned into a bureaucratic procedure. The previous should be easy and without any major administrative obstacles. The same issue occurs with any change in the management of the company (General Manager, legal representative before the SII, administrator, etc) in which the SII requests the amendment of the company in order for this to appear in their systems, not being enough a public deed designation with a margin annotation, procedure that in our opinion should be the maximum requirement possible.

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