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Chile: New rules force re-shuffling at top companies

By  |  October 25, 2016

Chile’s economic legislation will, from February 2017, take a major step towards stopping the prevalent practice of ‘interlocking’ – whereby the top management of major companies often have a seat at their competitor’s own board of directors. This practice, says Economic Prosecutor Felipe Irarrázaval, “subtract from the competitive pressure and create risks for free competition.”

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    Under the new rules, companies which have cross-ownership of over 10% in shares with a competitor is bound to notify the National Economic Prosecutors (FNE), which will be launching an online format to do so. Most of the country’s major business groups have already begun adapting to the incoming legislation.

    Several businesses have admitted that interlocking in Chile is more common than they would like. “There are considerations of scale, such as Chile having a small population as well as large business groups that deal in several areas, with well defined identities. Because of this they choose to appoint directors they can trust to handle several firms at once”, reveals one source. “We can’t just appoint a bunch of “E.T’s””.

    Full Content: Economía y Negocios

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