The law penalizes those who, in their majority position on the board of directors of a corporation, adopt an abusive agreement to benefit themselves without the agreement bringing a benefit to the corporation.
With the entry into force of the Economic Crimes Law, a new article has been added to Law No. 18,046 on Corporations.
The article in question is article 134 bis, which contains the criminal offense of “abusive agreements”, which seeks to punish with imprisonment those who “taking advantage of their majority position on the board of directors of a corporation adopt an abusive agreement, to benefit or economically benefit another, to the detriment of the other partners and without the agreement bringing a benefit to the company“.
It is important to point out that such sanction is extended to controllers who induce an abusive agreement of the board of directors.
On the other hand, the incorporation of this new rule into our legal system has been highly questioned. The broad wording of said article, and, in particular, what is understood by the concept of “abusive agreement“, has left a multiplicity of doubts as to how the interpretation of this regulation will be applied and how it could be interpreted in the courts.
It is clear that the legislator’s final intention was to broaden the protection of minority shareholders through the imposition of criminal sanctions on those who hold a majority position within the board of directors, even going so far as to sanction the controller of the company that induces the agreement or concurs in its execution. However, some lawyers have expressed their disagreement with this new rule and view it with suspicion, while others are more hopeful and see it as a step forward.
There are those who point out that this new rule will increase the judicialization of conflicts between shareholders, which could naturally have an impact on the decision-making process of a company and its agility, due to the greater risk that controllers and those who have a majority position in a company will face, and the fear of generating a problem with minority shareholders that could end in an eventual criminal investigation.
On the contrary, other experts have pointed out that this rule was necessary to give protection and greater guarantees to those investors who do not have control of a company, which had already been incorporated for example in the Spanish legislation in a very similar way through article 291 of its criminal code, but in which case it requires a profit motive.
Likewise, those who are inclined to this position point out that the importance of incorporating this type of guarantee is vital taking into account that Chile is a country in which control is highly concentrated in large economic groups, whose dominant positions favor abusive agreements. From the above, it could be concluded that after incorporating these guarantees for minority shareholders, Chile could become more attractive when it comes to attracting investors.
The aforementioned regulation is already fully in force in our country and the real effects of its application are yet to be seen and, for the time being, all those directors and controllers of companies in Chile must be sufficiently cautious, take the necessary measures in the exercise of their functions and prepare themselves while waiting for the effects and pronouncement of the courts regarding this new regulation to be made public.
For more information, please contact our Corporate – Business & Compliance team:
Stephanie Cruz | Legal & Business Director | scruz@az.cl
Francisca Franzani | Director Compliance Group | ffranzani@az.cl
Vicente Martinez | Senior Associate – Corporate & Business group | vmartinezw@az.cl
