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/ Research identifies regulatory barriers to the growth of Pacific Alliance start-ups

16 December, 2020
The research was sponsored by the IDB and Alessandri Abogados drafted the Chilean chapter on technology and start-ups regulations.

 

Complex processes, government restrictions and high notarial fees are part of the barriers that the research Regulatory Barriers for High Impact Start-ups in the Pacific Alliance Countries identified in the financial environment in which high impact innovative start-ups operate.

The study raises proposals that facilitate the formation of a solid environment that encourages and allows the implementation of start-ups at a trans-border level. Specific topics addressed are: investment and financing, intellectual property, labor and immigration issues, corporate governance, tax regime and health sector.

The study was developed during 2019 and some months of 2020. The data collected covers the member countries of the Pacific Alliance (Mexico, Colombia, Peru and Chile) and the law firms involved were Alessandri Abogados (Chile), Niubox Legal (Peru), Arochi & Lindner (Mexico), and Márquez Barrera Castañeda Ramírez (Colombia).

The Chilean scenario for its entrepreneurs

A team of Alessandri lawyers researched and prepared the chapter on Chile, which included field work (interviews with different actors in the Chilean business environment and government institutions), mapping of Chilean regulations, the creation of a diagnosis and the formulation of recommendations for companies.

According to Rodrigo Velasco, partner of Alessandri Abogados, the team’s mission “was to identify legal rules that are an obstacle to the expansion of Chilean businesses landing in Peru, Colombia and Mexico. Start-ups from these countries also see Chilean regulations when they have to expand”.

Chile has been making significant efforts to facilitate innovation and entrepreneurship for some time. The State promotes these start-ups through Corfo. From the private sector, there are several institutions for entrepreneurial collaboration, among them the Association of Entrepreneurs of Chile (Asech). However, in accordance with the analysis’ outcomes, there are still regulatory barriers in various areas that need to be improved.

The incorporation of new companies, for example, is a complex process that must go through notaries public, the Real Estate Registrar and the Official Gazette. In addition, companies incorporated online are not well regarded by banks. The proposal of common action proposed by the research is to unlock the limitations at the level of each local legislation, simplify costs and processes and adapt at least one type of company in each country to present homogeneous characteristics in the four countries.

Another major obstacle in Chile is related to intellectual property. Unlike Mexico and Colombia, our country has not implemented the Madrid Agreement, which allows the filing of a single trademark application valid in the 120 countries registered. One solution proposed after the research and emphasized by the national director of Inapi, Loreto Bresky, is to adhere to the treaty. “The protocol simplifies the management of trademark rights, is more flexible and cost-effective,” she comments on the Madrid Agreement.

The research, sponsored by the IDB, concludes that the provisions for the promotion of small and medium sized enterprises existing in Chilean legislation should be adjusted to current entrepreneurs’ needs, so that they can be more intensely exploited. Likewise, regulatory simplification should be promoted.

The conclusions on Chile were presented in a seminar organized by Corfo in September 2020, attended by Cecilia Valdés, Corfo’s Corporate Affairs Manager; Loreto Bresky, Inapi’s National Director; María de los Ángeles Romo, Start-Up Chile Manager; Alejandra Mustakis, President of Asech and Jorge Nazer, founder of Grupo Alto. Rodrigo Velasco, partner of Alessandri Abogados, who was in charge of the analysis in Chile, also attended the seminar.

Read article in Diario Financiero