Cross-Border Financing Escapes Central Bank Law

The Council of the Chilean Central Bank has resolved not to renew existing foreign exchange restrictions.

The rules of the new compendium of foreign exchange regulations imply that all new cross-border financing and investing decisions will no longer be subject to the restrictions of Article 49 of the Central Bank Law. In particular, the new rules imply the derogation of the following restrictions:

• the prior authorization requirement for the entry of capital associated to foreign loans, investments, capital contributions, bonds and American depositary receipts;

• the prior authorization requirement for capital remittances associated to returns of capital, dividends and other benefits related to capital contributions, investments and prepayment of foreign loans;

• the prior authorization requirement for the return of capital, profits and other benefits associated to investments made by foreign investors;

• the limitations to the special prepayment and acceleration clauses contained in foreign loans;

• the restrictions of minimum risk classification and the weighted duration for the issuance of bonds;

• the limitations with respect to the currencies in which external debt can be issued or contracted;

• the restrictions to the issue of American depositary receipts; and

• the reserve requirement on funds coming from abroad.

For further information on this topic please contact Roberto Guerrero Valenzuela at Guerrero, Olivos, Novoa y Errázuriz Ltda by telephone (+562 639 0169) or by fax (+562 639 0170) or by e-mail ([email protected]).