/ Special Corporations-Fund Management Companies -AGFs CMF existence authorization – start of operations New proposed regulations

Nicole Cartier
Senior Associate Alessandri
Capital Markets

From January 3 to 28, 2022, the Financial Market Commission (CMF) has put out for consultation two draft General Applicability Rules (NCG), the first one aimed at governing the procedure and background information necessary to obtain the existence authorization of Special Corporations (SAEs) and the second one at establishing the background information that the General Fund Managers (AGFs) must accompany to request the authorization to start operations.

I. Procedure and background information necessary for the SAEs to obtain the existence authorization.

The draft NCG seeks to provide certainty to all those SAEs[1] that, to date, did not have a regulatory framework that indicates precisely what information was required to be submitted to the CMF in order to obtain the pertinent authorization of existence and how to make such submission.

Although Article 126 of the Corporations Law (LSA) establishes that SAEs are formed, exist and are evidenced by public deed, obtaining a resolution from the CMF authorizing their existence and registration and publication of the special certificate granted by the CMF, the same article adds that such authorization will be granted by the CMF to the extent that the companies comply with the required legal and economic requirements. Such requirements had not been clarified until now and only the nature and line of business of the company to be authorized was guiding the regulator’s requirements.

In order to provide certainty to all those interested in forming an SAE, the CMF proposes this draft regulation that requires the submission of the following information and/or documentation:

1. Public deed of incorporation. Containing the bylaws of the company whose authorization of existence is requested.
2. Information on the company’s shareholders. A distinction is made between shareholders who are natural persons and shareholders who are legal entities, whether their participation in the incorporation is direct or indirect. Likewise, with respect to natural persons, information is required only for those who directly or indirectly contribute 10% or more of the capital stock, thus reflecting the concept of majority shareholder used by the CMF.
3. Affidavit. For those who will be appointed as directors, managers or senior executives, a statement is required that they are not subject to certain disqualifications.
4. Information on past conduct. Both natural person shareholders and those who will be directors, managers or senior executives of the company must inform if they have been charged or convicted in Chile or abroad for certain crimes and if they have been subject to bankruptcy liquidation proceedings in Chile or declared bankrupt abroad.
5. Company and corporate group. Description of the history of the originating company and ownership structure of the business group to which it belongs.
6. Strategic plan, business plan and main functions. Accompanying a summary.
7. Proof of liquid resources. Available to the partners to comply with the capital contributions and the minimum initial capital required.
8. Statement of truthfulness. About all the documents submitted.

Once the information has been analyzed and the observations made by the CMF have been corrected, the resolution authorizing the existence of the entity and the corresponding special certificate will be issued.

Obtaining the authorization of existence is not synonymous with starting operations. This is because there are SAEs that, together with the existence authorization, require the authorization of the CMF to start operations[2].

II. Background information to be submitted by the AGFs to request authorization to start operations.

In order to obtain such authorization, the AGFs must submit the following documentation:

1. Organizational and functional structure. Description of functions, identification of Committees that support management, as well as the persons or units in charge of risk management, internal audit and compliance.
2. Security and information management policies.
3. Crime prevention manual.
4. Information or process support systems. Description of the main information or support systems for the manager’s processes, with emphasis on those related to information security.
5. Entity’s risk matrix.
6. Identification of areas or services to be outsourced.
7. Business continuity plan.

Once the background information has been reviewed and the observations made by the CMF have been corrected, the CMF will issue the resolution authorizing the start of operations of the AGF.

Since the rules are still in the consultation process, we can expect that the final versions will be issued with some changes incorporated as a result of the comments made by the market.

[1] Stock Exchange, Commodities Exchanges, Securities Deposit Companies, Securitization Companies, Companies that manage third party resources for the acquisition of goods, General Fund Managers and other companies that are expressly subject to this requirement by law.

[2] Such as stock exchanges, commodity exchanges and general fund managers.