Markets
Chile: the opción preferente in Ley 18.046 Article 25, the catch-all that reaches any security over future shares
A conversion price referenced to future market prices is not available to a Chilean listed company. Article 25 of Ley 18.046 requires the options to subscribe shares of a capital increase, including any security conferring future rights over those shares, to be offered first to shareholders for 30 days. A drawdown facility cannot survive that gate.
Key takeaways
- The catch-all is the whole rule. Article 25 reaches the options to subscribe shares of a capital increase, including one resolved for the issue of debentures convertibles en acciones, or of “cualesquiera otros valores que confieran derechos futuros sobre estas acciones”. A convertible, a warrant and a subscription facility are all inside it.
- Thirty days, from publication. The opción preferente must be exercised or transferred within 30 days. It is renounceable and transferable, and renunciation may be given at the meeting itself — but only holder by holder.
- Chile imposes no pricing floor at all. Article 26 lets the shareholders' meeting set the issue price freely. The obstacle is sequence, not economics.
- The leftover is not a private placement either. Article 29 of the Reglamento blocks better terms to third parties for at least 30 days after the option closes, then permits a differently priced offer only on a stock exchange.
What Article 25 actually catches
Most closed markets in this directory are closed on price: a mandatory formula, a par floor, a capped discount. Chile is closed on sequence. Article 25 of Ley 18.046 does not speak about shares alone. It speaks about the options to subscribe shares of a capital increase, expressly including an increase resolved for the issue of debentures convertible into the issuer's shares, and then adds the catch-all.
Read that against the instrument. A convertible priced at each conversion off a trailing VWAP is a security conferring future rights over shares. So is a warrant, and so is a standby undertaking to take newly issued shares whenever the company calls. Each must be offered, at least once, preferentially to shareholders pro rata. Renunciation may be given at the very meeting that resolves the increase — which helps a company with three holders and does nothing for a sociedad anónima abierta, because it is personal and nobody can supply it for the absent.
Why Chile's freedom on price is no help
This is the fact a reader is most likely to have wrong. Article 26 provides that the company may issue shares for payment at the price the shareholders' meeting freely determines. There is no statutory minimum and no nominal value to floor against. A deep discount is lawful here in a way it is not in Colombia, where the subscription rules require a stated price at or above nominal value. What is unlawful is handing that discounted paper to a chosen investor without putting it in front of the shareholders first.
| The structure needs | Chile requires | Result |
|---|---|---|
| Issue to one named investor on demand | A preferential offer to all shareholders, at least once, pro rata | Unavailable |
| Conversion priced near the drawdown date | An option published, then open 30 days before anyone outside can take it | Pricing window cannot be held |
| Repeat drawdowns over 12 to 36 months | A fresh option and a fresh 30 days for each issuance | Commercially dead |
| A discount to market | No pricing rule; the meeting sets the price freely | Permitted — not the obstacle |
| General description of Chilean company law. Not an offer, a quote, or a rate card. | ||
The remainder, and the second thirty days
The obvious answer — let the shareholders decline, then take the remanente — is anticipated. Article 29 of the Reglamento de Sociedades Anónimas (DS 702 de 2011) provides that shares not subscribed by shareholders may not be offered to third parties at lower values or on more advantageous conditions than those offered to them, and in an open corporation that constraint runs for at least the 30 days following expiry of the preferential offer period. Only afterwards may the shares go to third parties at different prices, and then only on a stock exchange. The wait is the option period plus a standstill, and the venue is an auction where an outside investor cannot contract in advance for an allocation.
What a Chilean issuer can raise instead
A rights issue is the native instrument: the junta extraordinaria de accionistas resolves the increase, the option is published, and the price is whatever the meeting decided, discount included. A fixed-price convertible bond also works — terms in the escritura de emisión, the issue registered with the Comisión para el Mercado Financiero, and Article 24 requiring an unsubscribed margin of the increase to stay in force for the shares needed to satisfy the option. Article 24 also caps the runway: the resolution may not set a period longer than three years for issue, subscription and payment.
The third route is not an issuance. An investor wanting Chilean paper at a discount buys the opciones during the 30 days, or bids at the remate en bolsa.
What would change the answer
Nothing at the level of terms: a floor, a cap or a lock-up would not help, because Chile is not objecting to the economics. The statute disapplies the option in one place only, the 10% of an increase that Article 24 permits for compensation plans for the company's own workers. The realistic change is a change of venue — see how the United States handles floating conversion pricing, and note that Peru reaches a different answer on nearly the same architecture.
General information, not legal advice. This page describes Chilean company law and the CMF's regulations in general terms. Whether a particular issuance is caught by Article 25 turns on facts specific to the company and its bylaws. Take advice from qualified Chilean counsel before acting.
Where the group also trades on a venue that permits a market-referenced conversion, that listing is the one the answer turns on, not the Santiago line.
Primary sources
- CMF — Ley N° 18.046 sobre Sociedades Anónimas
- CMF — Reglamento de Sociedades Anónimas, DS 702 de 2011
Chilean listed issuers: frequently asked questions
Does Chilean law forbid a discount to VWAP?
No, and that is the point most readers get wrong. Article 26 of Ley 18.046 says the company may issue shares for payment at the price the shareholders meeting freely determines. There is no statutory minimum, no par floor and no maximum discount. What Chile regulates is the order of offer, and that is what a facility drawn on demand cannot satisfy.
Can shareholders waive the preferential option so the deal can proceed?
Individually, yes. Article 25 says the right is essentially renounceable and transferable, and a shareholder may renounce at the very meeting that approves the capital increase or the issue of convertible securities. But renunciation is personal to each holder, so in an open corporation with dispersed ownership the 30-day option period has to be assumed.
What happens to shares the shareholders do not take up?
Article 29 of the Reglamento provides that shares not subscribed by shareholders may not be offered to third parties at lower values or on more advantageous conditions. In an open corporation that restriction runs for at least the 30 days following expiry of the preferential offer period, and only afterwards may the shares be offered at different prices, and only on a stock exchange.
Chile, Peru and Colombia share the nuam platform. Is the answer the same in all three?
No. nuam integrated the trading layer. It did not touch company law, and company law is where this question is decided. Chile closes the structure with a preferential option catching any security conferring future rights over shares. Colombia closes it with a stated price that may not be below nominal value. Peru leaves the door open for a sociedad anonima abierta.
What is available instead
Chile imposes no pricing floor at all, so what works is a freely priced capital increase that runs the 30-day preferential option first and places what is left on the exchange. Peru is the nearest market in the region where a subscription arrangement is constructible in principle, for the right corporate form.