Chile: Debate About The Creation Of A State Run Infrastructure Fund Starts In Chilean Congress

Last Updated: 29 June 2016
Article by Felipe Moro and Juan Pablo Loyola

On June 8, discussion started in the Public Works Commission of the Senate over the law project which creates the state company, "Fondo de Infraestructura S.A.". The Project shall be approved by a special quorum (quórum calificado) as indicated in article 19 No. 21 of the Political Constitution of the Republic of Chile.

The Project was presented by the government on May 3, 2016 with the purpose of resolving the infrastructure deficit that currently exists in the country through the reactivation of the concessions program. Through the newly fortified concessions program they hope to complete the ambitious portfolio of projects that were presented in the 2014 plan entitled, "Infrastructure Agenda, Development and Inclusion, Chile 30.30".

In general terms, the Project creates a corporation owned by the state entitled "Fondo de Infraestructura S.A.", the purpose of which shall be construction, extension, repair, conservation, exploitation, development, financing or investment related to infrastructure projects, and associated services. The state's contributions will be administered by two separate entities, with 99% of the funds managed by the Chilean State and the remaining 1% controlled by the Production Encouragement Corporation (CORFO).

The company will be managed by a board of directors composed of five members appointed by the President of Chile, two of them from a list of five proposed by the Minister of Public Works, and the other three, from a list of three proposed by the Counsel of High Public Management (Consejo de Alta Dirección Pública). These three last directors will be considered as independent directors. The directors will serve a term of four years and may be renewed by partialities. In regards to the administration of the company, this will be subject, as may be pertinent, to the norms of Title IV of Law 18,046 and its complementary regulation.

Additionally, the shareholders will meet in ordinary or extraordinary shareholders meetings, according to the case, in which the Chilean State will be represented by the Finance Minister and Public Works Minister and CORFO will be represented by a person appointed by the Directive Council of the System of Public Enterprises.

Likewise, the Project states that the workers of the company will be ruled exclusively by the dispositions contained in the Labor Code and its complementary regulations.

In respect to the regulation of the company, article 27 of the Project states that the company will be controlled by the Superintendency of Insurance and Securities and, notwithstanding, will be also controlled by the General Comptroller of the Republic (Contraloría General de la República) as corresponds to it, according to the second paragraph of article 16 of decree No. 2.421, of the year 1964 from the Finance Ministry.

With the aim of developing its business purpose, the Project grants to the company a series of faculties, among them:

  1. Construct, expand, repair, conserve, exploit or develop, through third parties, infrastructure projects over goods under the supervision of the company;
  2. Finance or invest in said projects, either directly or through third parties;
  3. Execute expenditures or investments for new projects, encouraging their construction and development, in the manner determined by the board of directors, considering the solvency of the company;
  4. Issue debt of financial instruments, guarantees, or others expressly authorized by the board;
  5. Incorporate subsidiary corporations to achieve its objectives upon authorization from the shareholders meeting;
  6. In general, execute all acts and agreements aiming to fulfill the business purpose of the company; and
  7. Execute other activities as may be expressly established in the law.

In order to ensure the coherence of investment decisions, the board of directors shall submit for approval at the shareholders meeting, a "Five-year Business Plan", which shall contain details of the investment projects that will be executed by the company and shall establish the mechanism through which the investment projects will be offered for concession. It should be noted that the message of the project gives special importance to its article 21, which refers to the evaluation process of infrastructure projects which require special authorization, referring to those projects which may require State contributions due to those projects presenting more social than economic benefits. In this sense, article 21 of the Project indicates a series of requirements that this type of project must fulfill in order to be approved.

The Project indicates that the company will only be able to develop its objective through third parties, being able to do this by means of granting concessions or by the execution of agreements, which shall be defined according to a public bidding process which guarantees the competence and equality of all bidders.

Finally, in connection with the capitalization or initial financing of the company, the Chilean Minister of Public Works, Alberto Undurraga, stated in the Commission that the company's capital would total approximately US$9 billion and would not require large State expenditure, since the company would be financed by issuing bonds, which will be paid through cash flow generated by road concessions. Although these roads are currently owned by private companies, many of them are nearing the end of the concession period and will soon revert to State ownership.

The Project is currently being discussed in the Public Works Commission (First Constitutional Step), so it is still subject to possible amendments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions