Chile updates Corporations Law to protect directors' business decisions

A recent modification to the Corporations Law, part of a broader capital markets reform, introduces legal protections for directors of corporations regarding their business decisions. The amendment to Article 44 clarifies the standards for care and diligence required of directors.

Under the new provisions, directors are considered to have met their duty of care if they act in good faith, possess reasonably sufficient information, and act with a reasonable conviction of serving the company's interests, provided they have no personal interest in the decision. Legal experts note that this incorporates the ‘business judgment rule,’ aligning Chilean law with modern legal frameworks such as those in Delaware, Germany, and Spain. This change effectively shifts the burden of proof in legal disputes regarding director diligence, protecting them from liability for business decisions that are judged retrospectively by courts, provided the decision-making process was sound.