Senior Associate
Associate
On July 23, 2025, the Chilean National Congress passed bill 15516-34 which introduces key amendments to Law No. 18,046 on Corporations (“LSA”), specifically amending Article 31 and incorporating new Articles 31 bis and 31 ter.
This new law (“Law”) seeks to increase the participation of women on the boards of directors of publicly traded corporations and certain “special corporations” – i.e. those whose existence is subject to authorization from the Chilean securities, banking and insurance regulator (Comisión para el Mercado Financiero – “CMF”) – including insurance companies, registered asset management firms (AGFs), non-bank credit and payment card issuers, among certain others. The bill is pending enactment and publication to enter into force.
The most relevant aspects of this new Law are presented below:
1. General Principle: Maximum representation of 60% of the same sex
The Law establishes as a general rule that, on the boards of directors of public and special corporations, persons of the same sex may not exceed 60% of the total number of members. The bylaws of these corporations must provide for mechanisms to achieve compliance with this proportion at the time of the election of the board of directors at the shareholders’ meeting.
2. Implementation in two phases: “comply or explain” and “conditional mandatory” (Articles 31 and 31 bis of the LSA)
The implementation of this same-sex representation quota will be carried out gradually, in two phases:
- Phase 1 (comply or explain): Initially, the 60% ratio will operate as a recommendation. Corporations that do not reach this threshold in the first election of their board of directors must inform the CMF, no later than the fifth business day following the election of the board of directors, of the reasons and grounds for this situation.
This information will be public and must be made available to the public on the CMF’s institutional website. In addition, this information must also be published by the respective corporation in its annual reports and on its own institutional website, if it has one.
The CMF shall list on its website the information of those corporations that have reached the suggested percentage and shall indicate the evolution of the representation ratio.
- Phase 2 (conditional mandatory): The quota will become mandatory if, following an assessment carried out by the CMF every four years, it is determined that at least one of the following conditions is not met:
- At least 80% of corporations comply with the 60% quota.
- Less than 5% of corporations have boards composed exclusively of persons of the same sex.
If the CMF verifies non-compliance with any of these conditions, corporations that, on the date of said calculation, exceed the maximum percentage of representation of persons of the same sex on their boards of directors must comply with mandatory rules for a period of four years. These rules include:
- Mandatory compliance: Compliance with the maximum representation percentage will be mandatory. If, in the election or renewal of the board of directors, the shareholders’ meeting contravenes this percentage, the election must be repeated at the same shareholders’ meeting until compliance is achieved. If the election is not repeated, the CMF will exercise its powers to ensure compliance, including calling an ordinary or extraordinary meeting and applying sanctions such as censure, fines, or revocation of authorization to exist (e.g. dissolution of the relevant AGF or insurance company) in the event of non-compliance.
- Continuous reporting: The obligation to report to the CMF the identification and sex of each member of the board of directors shall be maintained.
- Sex of alternates and replacements: Alternate and replacement directors must be of the same sex as the respective incumbent or replaced directors.
- Transitional provisions for elected directors: The mandatory rules shall not prevent directors elected prior to the CMF’s calculation from completing the term for which they were elected.
The first calculation to be made by the CMF shall be made in July of the sixth year following the entry into force of the Law.
3. Incentives for compliant corporations
In addition, an incentive is created for corporations that comply with the maximum percentage: they may be considered, under the public procurement statute, as organizations that promote sex equality and women’s leadership.
4. Creation of the “Advisory Committee for Equality on Boards of Directors”
The Law creates a public-private committee whose function will be to advise the Ministries of Economy, Finance, and Women and Gender Equality on the implementation of the Law. This Committee will be composed of representatives from these ministries, the CMF, business associations, and the non-governmental sector. Its functions include:
- Evaluating the gradual implementation of the Law.
- Coordinating the collection of information and the preparation of reports.
- Proposing complementary measures to strengthen sex equality.
- Promoting training and the development of networks.
5. Considerations for corporations
Public and special corporations must prepare for these changes, which involves:
- Reviewing their bylaws: adapting corporate bylaws to incorporate mechanisms that ensure compliance with proportional representation of the same sex in the election of directors.
- New reporting obligations: report to the CMF the identity and sex of each member of the board of directors and, where applicable, the reasons and grounds for not complying with the “suggested” quota. This information must be sent to the CMF no later than the fifth business day following the election of the board of directors.
- Disclosure of information: the reasons and grounds for not complying with the representation ratio shall be made available to the general public on the CMF’s website. In addition, the corporation must publish this information in its annual report and on its own institutional website.
- Succession planning: consider the new rules in the nomination and election processes for boards of directors to ensure an orderly transition in accordance with the law.
6. Effective date
The Law will enter into force on January 1 of the year following its publication in the Official Gazette. A gradual implementation of the maximum representation percentages is envisaged:
- Years 1 to 3: The maximum representation percentage for the same sex will be 80%.
- Years 4 to 6: The maximum percentage will be reduced to 70%.
- From the seventh year onwards: The definitive percentage (i.e. 60%) will apply.
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