Securitisation 2015 8Th Edition

ICLGThe International Comparative Legal Guide to: Securitisation 2015 8th Edition

A practical cross-border insight into securitisation work

Published by Global Legal Group, with contributions from:

A&L Goodbody King & Wood Mallesons Accura Advokatpartnerselskab Latham & Watkins LLP Ali Budiardjo, Nugroho, Reksodiputro LCS & Partners Ashurst LLP Levy & Salomão Advogados Association for Financial Markets in Europe Maples and Calder Bofill Mir & Álvarez Jana Abogados Nishimura & Asahi Brodies LLP Nithya Partners Camilleri Preziosi Advocates Pestalozzi Attorneys at Law Ltd Cass Legal PwC Legal Cervantes Sainz, S.C. Reff & Associates SCA Chiomenti Studio Legale Roschier Advokatbyrå AB Drew & Napier LLC Schulte Roth & Zabel LLP Elvinger, Hoss & Prussen Shearman & Sterling LLP Estudio Beccar Varela Spasić & Partners Fellner Wratzfeld & Partners Torys LLP Freshfields Bruckhaus Deringer LLP Uría Menéndez Abogados, S.L.P. Frost & Fire Consulting Vieira de Almeida & Associados – Gárdos Füredi Mosonyi Tomori Law Office Sociedade de Advogados, R.L. J. D. Sellier + Co. Wadia Ghandy & Co. Keane Vgenopoulou & Associates LLC Weil, Gotshal & Manges King & Spalding LLP The International Comparative Legal Guide to: Securitisation 2015

General Chapters:

1 Documenting Receivables Financings in Leveraged Finance and High Yield Transactions – James Burnett & Mo Nurmohamed, Latham & Watkins LLP 1 2 CLOs and Risk Retention – Craig Stein & Paul N. Watterson, Jr., Schulte Roth & Zabel LLP 8 3 US Taxation, Including FATCA, of Non-US Investors in Securitisation Transactions – Contributing Editor David Z. Nirenberg, Ashurst LLP 15 4 Securitisations in the Shadows of the New Capital Regime – Bjorn Bjerke & Azad Ali, Shearman & Sterling LLP 26 5 Securitisation – A Key Component of Capital Markets Union – Richard Hopkin, Association for Financial Markets in Europe 34 Mark Nicolaides, Latham & Watkins LLP Head of Business Country Question and Answer Chapters: Development Dror Levy 6 Albania Frost & Fire Consulting: Franci Nuri 37 Sales Director 7 Argentina Estudio Beccar Varela: Roberto A. Fortunati & Javier L. Magnasco 47 Florjan Osmani 8 Australia King & Wood Mallesons: Anne-Marie Neagle & Ian Edmonds-Wilson 58 Commercial Director Antony Dine 9 Austria Fellner Wratzfeld & Partners: Markus Fellner 69 Account Directors 10 Brazil Levy & Salomão Advogados: Ana Cecília Giorgi Manente & Oliver Smith, Rory Smith Fernando de Azevedo Peraçoli 79 Senior Account Manager Maria Lopez 11 Canada Torys LLP: Michael K. Feldman & Jim Hong 90 Sales Support Manager 12 Cayman Islands Maples and Calder: Alasdair Robertson & Scott Macdonald 101 Toni Wyatt 13 Chile Bofill Mir & Álvarez Jana Abogados: Octavio Bofill Genzsch & Editor Rachel Williams Daniela Buscaglia Llanos 110 Senior Editor 14 China King & Wood Mallesons: Roy Zhang & Zhou Jie 121 Suzie Levy 15 Cyprus Keane Vgenopoulou & Associates LLC: Thomas Keane & Group Consulting Editor Christina Vgenopoulou 133 Alan Falach 16 Denmark Accura Advokatpartnerselskab: Kim Toftgaard & Christian Sahlertz 143 Group Publisher Richard Firth 17 England & Wales Weil, Gotshal & Manges: Rupert Wall & Jacky Kelly 155 Published by 18 France Freshfields Bruckhaus Deringer LLP: Hervé Touraine & Laura Asbati 168 Global Legal Group Ltd. 59 Tanner Street 19 Germany King & Spalding LLP: Dr. Werner Meier & Dr. Axel J. Schilder 181 London SE1 3PL, UK Tel: +44 20 7367 0720 20 Hong Kong King & Wood Mallesons: Paul McBride & Michael Capsalis 196 Fax: +44 20 7407 5255 Email: [email protected] 21 Hungary Gárdos Füredi Mosonyi Tomori Law Office: Erika Tomori & URL: www.glgroup.co.uk Péter Gárdos 209 GLG Cover Design 22 India Wadia Ghandy & Co.: Shabnum Kajiji & Nihas Basheer 219 F&F Studio Design 23 Indonesia Ali Budiardjo, Nugroho, Reksodiputro: Freddy Karyadi & GLG Cover Image Source iStockphoto Novario Asca Hutagalung 229 Printed by 24 Ireland A&L Goodbody: Peter Walker & Jack Sheehy 239 Ashford Colour Press Ltd April 2015 25 Italy Chiomenti Studio Legale: Francesco Ago & Gregorio Consoli 251 Copyright © 2015 26 Japan Nishimura & Asahi: Hajime Ueno & Koh Ueda 263 Global Legal Group Ltd. 27 Luxembourg Elvinger, Hoss & Prussen: Philippe Prussen & Marie Pirard 277 All rights reserved No photocopying 28 Malta Camilleri Preziosi Advocates: Louis de Gabriele & Nicola Buhagiar 289 ISBN 978-1-910083-41-3 29 Mexico Cervantes Sainz, S.C.: Diego Martínez Rueda-Chapital 301 ISSN 1745-7661 30 Nigeria Cass Legal: Adebajo Odutola 311 Strategic Partners 31 Portugal Vieira de Almeida & Associados – Sociedade de Advogados, R.L.: Paula Gomes Freire & Benedita Aires 321 32 Romania Reff & Associates SCA: Andrei Burz Pinzaru & Daniel Petre 335 33 Russia PwC Legal: Ekaterina Pervova & Maxim Kandyba 346 34 Scotland Brodies LLP: Bruce Stephen & Marion MacInnes 358 35 Serbia Spasić & Partners: Darko Spasić & Vesna Milosavljević-Stevanović 368

Continued Overleaf

Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720

Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

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Country Question and Answer Chapters:

36 Singapore Drew & Napier LLC: Petrus Huang & Ron Cheng 378 37 Spain Uría Menéndez Abogados, S.L.P.: Ramiro Rivera Romero & Pedro Ravina Martín 391 38 Sri Lanka Nithya Partners: Naomal Goonewardena & Ranali Fernando 407 39 Sweden Roschier Advokatbyrå AB: Johan Häger & Dan Hanqvist 416 40 Switzerland Pestalozzi Attorneys at Law Ltd: Oliver Widmer & Urs Klöti 426 41 Taiwan LCS & Partners: David Chuang & Grace Ku 438 42 Trinidad & Tobago J. D. Sellier + Co.: William David Clarke & Donna-Marie Johnson 449 43 USA Latham & Watkins LLP: Lawrence Safran & Kevin T. Fingeret 460

EDITORIAL

Welcome to the eighth edition of The International Comparative Legal Guide to: Securitisation. This guide provides the international practitioner and in-house counsel with a comprehensive worldwide legal analysis of the laws and regulations of securitisation. It is divided into two main sections: Five general chapters. These are designed to provide readers with a comprehensive overview of key securitisation issues, particularly from the perspective of a multi- jurisdictional transaction. Country question and answer chapters. These provide a broad overview of common issues in securitisation laws and regulations in 38 jurisdictions. All chapters are written by leading securitisation lawyers and industry specialists and we are extremely grateful for their excellent contributions. Special thanks are reserved for the contributing editor, Mark Nicolaides of Latham & Watkins LLP, for his invaluable assistance. Global Legal Group hopes that you find this guide practical and interesting. The International Comparative Legal Guide series is also available online at www.iclg.co.uk.

Alan Falach LL.M. Group Consulting Editor Global Legal Group [email protected] Chapter 13

Chile Octavio Bofill Genzsch

Bofill Mir & Álvarez Jana Abogados Daniela Buscaglia Llanos

1 Receivables Contracts 1.2 Consumer Protections. Do Chile’s laws: (a) limit rates of interest on consumer credit, loans or other kinds of receivables; (b) provide a statutory right to 1.1 Formalities. In order to create an enforceable interest on late payments; (c) permit consumers to debt obligation of the obligor to the seller: (a) is it cancel receivables for a specified period of time; or necessary that the sales of goods or services are (d) provide other noteworthy rights to consumers with evidenced by a formal receivables contract; (b) are respect to receivables owing by them? invoices alone sufficient; and (c) can a receivable “contract” be deemed to exist as a result of the (a) In the context of cash credit transactions (among which behaviour of the parties? we include discounts transactions of cash representative documents, since they are considered as cash), gratuity is (a) The general rule in Chile is that contracts are perfected not presumed, and, therefore, unless otherwise established merely by consent of the parties. Exceptionally, Chilean by law or contract, said transactions shall accrue ordinary law requires certain formalities to be fulfilled for publicity, interest, calculated over the principal. Law No. 18,010 on perfection and/or enforceability of certain contracts, the most Cash Credit Operations establishes the maximum interest common of which are to be granted in writing, recorded onto limit that can be agreed, that is, the “maximum conventional private or public deeds, registrations in public records, and/or interest”, corresponding to 50 per cent of the ordinary the payment of certain taxes. Nevertheless, we recommend interest in force at the time of the respective transaction. In recording most contracts onto deeds, as the lack of written turn, ordinary interest is the average interest rate charged evidence of the same can bring forth certain evidentiary by Chilean banks and financial institutions for transactions problems (limitations on witness depositions). In addition, conducted in Chile and it is determined by the Central Bank. Law No. 18,045 on the Securities Market provides that Transactions carried out by the Central Bank with financial securitisation companies, in fulfilling their corporate purpose, institutions are exempted from this limitation. The sanction may acquire, in general, transferable credits and rights that for establishing an interest rate above the legal threshold is are evidenced in writing. that it will be reduced to ordinary interest. The Civil Code (b) Pursuant to Law No. 19,983 on the Enforceability of Invoices, is consistent with these principles in establishing a threshold invoices shall be enforceable by themselves, insofar as they for interest rates in the mutuum or consumption loan contract, meet the requirements established by said law. namely an additional half of the ordinary interest rate in (c) The Chilean Civil Procedure Code expressly lists out the force at the time of perfection of the contract. In the case of forms of evidence that may be used in any civil litigation: simple cash obligations, they shall only accrue interest when (i) instruments or documents; (ii) witness depositions; (iii) the parties have so agreed or if the law expressly so provides ex parte confessions; (iv) personal inspection of the court; (an example of the latter is found in bills of exchange, which and (v) presumptions. Notwithstanding the limitations on accrue interest as of their maturity pursuant to Law No. witness depositions mentioned in letter (a) above, the parties’ 18,092 on Bills of Exchange and Promissory Notes). behaviour may be admitted as a basis for a judicial presumption (b) There is no legal requirement in connection with late payment in connection with the existence of a receivable contract. A interest, unless expressly agreed by the parties in general and receivable contract can exist as a result of the mere consent the natural accrual of interest up to the actual payment in cash of the parties, provided it is granted in writing (plus certain credit transactions, as mentioned in letter (a) above. additional formalities) and it includes a non-challengeable (c) As mentioned in question 1.1(a) above, the general rule is obligation to pay, to provide or to not provide (along with that contracts are consensual, and thus there is no right or other requirements such as in case of payment obligations, the term during which the parties may retract their manifestation amount shall be determined therein or the arithmetic therein of intent for the purposes of rendering said contract without allows to specifically conclude the amount to be paid). effect. As an exception, Law No. 19,496 on Consumer Protection establishes that in contracts delivered by electronic means, or those in which a party accepts an offer made in any remote form of communication, the consumer shall enjoy a term of 10 days during which it may unilaterally terminate the contract with no right to compensation for the other party, and, consistently, the latter shall return all sums paid or disbursed, with the exception of services that were actually rendered by the date of the retraction.

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1.3 Government Receivables. Where the receivables 2.4 CISG. Is the United Nations Convention on the contract has been entered into with the government or International Sale of Goods in effect in Chile? a government agency, are there different requirements and laws that apply to the sale or collection of those Yes, with the express reservation that if any of the parties to a receivables? contract has its establishment in Chile, the CISG rules shall not apply in respect of the perfection, amendment or mutual termination In connection with the disposal of bonds and other public debt of the sale contract or any offer, acceptance or other manifestation securities issued by the State, article 47 bis of Law Decree 1263 of intent, if they are not in writing. of the Ministry of Treasury establishes that said Ministry, in the supreme decree attached to the corresponding issuance of securities, Chile shall indicate the applicable procedure to their transference, which 3 Choice of Law – Receivables Purchase may be specific or subject to the general rules. In this same vein, the Agreement Chilean Code of Commerce provides that the assignment of tradable public securities must be conducted in the manner determined by the laws that created said securities or the decree authorising their 3.1 Base Case. Does Chile’s law generally require the sale enforcement. As regards the judicial collection of securities against of receivables to be governed by the same law as the the state or its organs, we must determine whether the organ has law governing the receivables themselves? If so, does that general rule apply irrespective of which law governs legal personality (if this is the case, then the general procedural the receivables (i.e., Chile’s laws or foreign laws)? rules shall apply; if not, the collection proceedings will be instructed against the state subject to the rules on “State Treasury Litigation”). There is no legal requirement in that regard. General rules will apply. Although, if Chilean law would be the choice of law to rule the 2 Choice of Law – Receivables Contracts sale of receivables, one must take into account that receivables are formal documents defined under Chilean law, hence, the purported “receivable” shall meet such requirements in order to allow the sale 2.1 No Law Specified. If the seller and the obligor do of receivables regulation to be applicable. not specify a choice of law in their receivables contract, what are the main principles in Chile that will determine the governing law of the contract? 3.2 Example 1: If (a) the seller and the obligor are located in Chile, (b) the receivable is governed by Chile is governed by the principle of territoriality of the law, and the law of Chile, (c) the seller sells the receivable to a purchaser located in a third country, (d) the seller thus domestic law governs all legal situations arising within the and the purchaser choose the law of Chile to govern territory of Chile, whether between Chileans or foreigners. Parties’ the receivables purchase agreement, and (e) the sale consent prevails in the choice of law. complies with the requirements of Chile, will a court in Chile recognise that sale as being effective against the seller, the obligor and other third parties (such as 2.2 Base Case. If the seller and the obligor are both creditors or insolvency administrators of the seller resident in Chile, and the transactions giving rise to and the obligor)? the receivables and the payment of the receivables take place in Chile, and the seller and the obligor choose the law of Chile to govern the receivables Yes, the Chilean court would recognise the sale as being effective. contract, is there any reason why a court in Chile would not give effect to their choice of law? 3.3 Example 2: Assuming that the facts are the same as Example 1, but either the obligor or the purchaser or No, there is not. both are located outside Chile, will a court in Chile recognise that sale as being effective against the seller and other third parties (such as creditors or 2.3 Freedom to Choose Foreign Law of Non-Resident insolvency administrators of the seller), or must the Seller or Obligor. If the seller is resident in Chile but foreign law requirements of the obligor’s country or the the obligor is not, or if the obligor is resident in Chile purchaser’s country (or both) be taken into account? but the seller is not, and the seller and the obligor choose the foreign law of the obligor/seller to govern their receivables contract, will a court in Chile give The Chilean court will apply Chilean law, disregarding the foreign law. effect to the choice of foreign law? Are there any limitations to the recognition of foreign law (such 3.4 Example 3: If (a) the seller is located in Chile but as public policy or mandatory principles of law) that the obligor is located in another country, (b) the would typically apply in commercial relationships receivable is governed by the law of the obligor’s such as that between the seller and the obligor under country, (c) the seller sells the receivable to a the receivables contract? purchaser located in a third country, (d) the seller and the purchaser choose the law of the obligor’s country In light of the principle of autonomy of intent, parties may choose to govern the receivables purchase agreement, and a foreign law to govern their contractual relationship. The above (e) the sale complies with the requirements of the notwithstanding, a Chilean court may set aside this contractual obligor’s country, will a court in Chile recognise provision if it entails an affectation of national sovereignty, public that sale as being effective against the seller and other third parties (such as creditors or insolvency order provisions and morality standards (which we do not foresee in administrators of the seller) without the need to the simple form of the case provided in this question). comply with Chile’s own sale requirements?

Yes, the court in Chile will recognise that sale as being effective

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against the seller and other third parties without the need to comply The assignment of nominative credits requires the material with Chile’s own sale requirements. Insolvency rules can be conveyance of the title in which the credit is recorded and a applicable (such as revocation of the sale when fraud damaging notice sent to the obligor in connection with the assignment or its creditors would have occurred) since they are considered public acceptance. In certain cases the debtor is reserved with the right order rules. to reserve its arguments of defence against the latter creditor (the assignor).

3.5 Example 4: If (a) the obligor is located in Chile The Code of Commerce and other specific statutes govern the but the seller is located in another country, (b) the assignment of credits issued “to the order of the creditor” (as an receivable is governed by the law of the seller’s opposite concept of “nominative credits”), and it is perfected via

Chile country, (c) the seller and the purchaser choose the the endorsement of the title. The assignment of credits issued to the law of the seller’s country to govern the receivables bearer does not require formalities other than the conveyance of the purchase agreement, and (d) the sale complies title between seller and purchaser. with the requirements of the seller’s country, will a court in Chile recognise that sale as being effective Similarly, there are specific statutes (inter alia, Laws No. 18,045, against the obligor and other third parties (such as No. 18,092, No. 19,281 on Housing Leases with Promises of creditors or insolvency administrators of the obligor) Purchase) that establish particular mechanisms for the perfection of without the need to comply with Chile’s own sale the assignment. requirements? Finally, Law No. 18,045 establishes, in connection with the creation of separate patrimonies, that the assignment or transference of See the answer to question 3.4. contracts, credits and rights, or their respective titles, will be enforceable vis-à-vis their corresponding obligors, as of the date of 3.6 Example 5: If (a) the seller is located in Chile the deed containing the issuance of the securitised bond(s). As of (irrespective of the obligor’s location), (b) the that date, the obligors may not invoke defences but for their personal receivable is governed by the law of Chile, (c) the defences against the creditor. seller sells the receivable to a purchaser located in a third country, (d) the seller and the purchaser choose the law of the purchaser’s country to 4.3 Perfection for Promissory Notes, etc. What additional govern the receivables purchase agreement, and or different requirements for sale and perfection (e) the sale complies with the requirements of the apply to sales of promissory notes, mortgage loans, purchaser’s country, will a court in Chile recognise consumer loans or marketable debt securities? that sale as being effective against the seller and other third parties (such as creditors or insolvency administrators of the seller, any obligor located Pursuant to Law No. 18,092 the assignment of a promissory note, in Chile and any third party creditor or insolvency bill of exchange or cheque is carried out through the endorsement of administrator of any such obligor)? the respective document in favour of the purchaser. In the context of consumption loans and mortgage loans, the obligor must be See the answer to question 3.4. notified, with the exception of endorsable mortgage loans, in which case a written endorsement made in the margin, or on the back of a certified, endorsable copy of the respective public deed, will 4 Asset Sales suffice. Finally, sales of tradable securities in the securities market shall also require the fulfilment of certain disclosure and registration obligations before the Superintendence of Securities and Insurance 4.1 Sale Methods Generally. In Chile what are the (“SVS”). customary methods for a seller to sell receivables to a purchaser? What is the customary terminology – is it called a sale, transfer, assignment or something else? 4.4 Obligor Notification or Consent. Must the seller or the purchaser notify obligors of the sale of receivables in Sales of receivables are typically conducted through the so-called order for the sale to be effective against the obligors assignment of credits. and/or creditors of the seller? Must the seller or the purchaser obtain the obligors’ consent to the sale of receivables in order for the sale to be an effective 4.2 Perfection Generally. What formalities are required sale against the obligors? Whether or not notice is generally for perfecting a sale of receivables? Are required to perfect a sale, are there any benefits to there any additional or other formalities required for giving notice – such as cutting off obligor set-off the sale of receivables to be perfected against any rights and other obligor defences? subsequent good faith purchasers for value of the same receivables from the seller? As mentioned in question 4.2 above, the assignment of nominative credits requires a notice to or the acceptance by the obligor, which In spite of the fact that the memorialisation of a contract is sufficient notice is generally sent by the purchaser, since it has greater interest for its validity vis-à-vis the seller and purchaser, the perfection of the in holding a valid and enforceable title. However, the seller may assignment of credits in respect of the obligor and third parties shall also notify the obligor. depend on the nature of the credits. Once the assignment has been perfected, whether it required a notice, acceptance, endorsement or the mere conveyance of the title, the assignment shall be binding upon the obligor and third parties, and the purchaser acquires the rights of the seller against the obligor.

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retains its right to validly pay the original creditor and to base its 4.5 Notice Mechanics. If notice is to be delivered to non-payment arguments based on the legal liaison with the original obligors, whether at the time of sale or later, are creditor). Nonetheless, and in respect of certain receivables or there any requirements regarding the form the notice “seller’s rights”, these prohibitions have no standing in the Chilean must take or how it must be delivered? Is there any time limit beyond which notice is ineffective – for legal system (i.e., in accordance to Law No. 19,983, it is forbidden example, can a notice of sale be delivered after the that any agreement, provision or action of any nature limits, restricts sale, and can notice be delivered after insolvency or prohibits the free transaction of the credits included on invoices). proceedings against the obligor or the seller have commenced? Does the notice apply only to specific receivables or can it apply to any and all (including 4.8 Identification. Must the sale document specifically Chile future) receivables? Are there any other limitations or identify each of the receivables to be sold? If so, what considerations? specific information is required (e.g., obligor name, invoice number, invoice date, payment date, etc.)? Do the receivables being sold have to share objective When referred to nominative credits and no expressed acceptance characteristics? Alternatively, if the seller sells all by the obligor is granted, the notice has to be given through the of its receivables to the purchaser, is this sufficient courts. That is why certain special rules have created other means identification of receivables? Finally, if the seller sells in order to facilitate perfection of the assignment such as with the all of its receivables other than receivables owing by case of Law No. 19,983. one or more specifically identified obligors, is this sufficient identification of receivables? Generally speaking, there is no time limit associated with the notice or acceptance of a credit assignment, and, in fact, notice is In order for an agreement to be valid it is necessary for its object to usually carried out after the corresponding assignment. However, be determined or susceptible of determination. Although there is no and despite having perfected the assignment between seller and general provision that requires the complete identification of each of the purchaser, as long as the obligor has not been notified, it shall be sold receivables or the type of information that is required in this regard, authorised to pay the credit to the seller, the credit may be subject minimum information to allow the due identification of the assigned to seizures by the seller’s creditors, and the purchaser shall have no receivables is necessary. Particularly, Law No. 18,045 requires that direct collection claim against the obligor. the issuance agreement or the placement deeds, as applicable, include Notice applies to the assignment of specific nominative receivables. the identification or specification of the assets, agreements, credits and (Save for Law No. 18,045 in connection with the creation of rights that shall comprise the separate patrimony, in attention to their separate patrimonies, where the assignment can be applicable to nature. Furthermore, if the aforementioned deeds do not allow for future receivables to be listed with the separate patrimonies deed.) their identification or specification, it shall be necessary to detail their main characteristics, degree of homogeneity, their number, the term 4.6 Restrictions on Assignment – General Interpretation. in which they shall be acquired and any other references that the SVS Will a restriction in a receivables contract to the requires, postponing their identification for future complementary effect that “None of the [seller’s] rights or obligations deeds. In domestic securitisations a discussion has been held as to under this Agreement may be transferred or assigned the degree of specification that needs to be included in the assignment without the consent of the [obligor]” be interpreted as deed. In certain cases deals have included only serial numbers which prohibiting a transfer of receivables by the seller to are backing further information that remains undisclosed to the public. the purchaser? Is the result the same if the restriction says “This Agreement may not be transferred or Such criteria has not been challenged at the courts. assigned by the [seller] without the consent of There is no general provision that requires assigned receivables to the [obligor]” (i.e., the restriction does not refer to share objective characteristics among each other; however, Law No. rights or obligations)? Is the result the same if the 18,045 imposes a degree of homogeneity between the assets that restriction says “The obligations of the [seller] under shall form part of the separate patrimony and even in the event of this Agreement may not be transferred or assigned by the [seller] without the consent of the [obligor]” (i.e., substitution of assets, demanding that such substitute assets comply the restriction does not refer to rights)? with similar characteristics as the assets that are replaced. A declaration in connection to the assignment of all receivables, Yes to all questions, except regarding certain receivables, as detailed regardless of their nature (whether the same are nominative, to the in answers 4.4 and 4.7. Also, please note that regarding certain order or to the bearer), without at least specifying the elements that receivables (i.e., invoices) these prohibitions have no standing in allow for their determination, would not be considered sufficient and the Chilean legal system. its validity may be challenged with sufficient grounds in our opinion.

4.7 Restrictions on Assignment; Liability to Obligor. If 4.9 Respect for Intent of Parties; Economic Effects on any of the restrictions in question 4.6 are binding, Sale. If the parties describe their transaction in the or if the receivables contract explicitly prohibits relevant documents as an outright sale and explicitly an assignment of receivables or “seller’s rights” state their intention that it be treated as an outright under the receivables contract, are such restrictions sale, will this description and statement of intent generally enforceable in Chile? Are there exceptions automatically be respected or will a court enquire into to this rule (e.g., for contracts between commercial the economic characteristics of the transaction? If the entities)? If Chile recognises restrictions on sale or latter, what economic characteristics of a sale, if any, assignment of receivables and the seller nevertheless might prevent the sale from being perfected? Among sells receivables to the purchaser, will either the seller other things, to what extent may the seller retain: or the purchaser be liable to the obligor for breach of (a) credit risk; (b) interest rate risk; (c) control of contract or tort, or on any other basis? collections of receivables; or (d) a right of repurchase/ redemption without jeopardising perfection? In case of nominative credits if there is an explicit prohibition on the assignment, the prohibition prevails (in the sense that the obligor The mere fact that the parties describe their transaction in the

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relevant documents as an outright sale and state their intention that it be a sale will not automatically be respected; a court could 4.12 Related Security. Must any additional formalities enquire into the economic characteristics of the transaction. Such be fulfilled in order for the related security to be transferred concurrently with the sale of receivables? could be contested before a court if the economic characteristics If not all related security can be enforceably of the operation evidence the execution of a simulated agreement. transferred, what methods are customarily adopted Basically the economic characteristic of a sale that determines the to provide the purchaser the benefits of such related presence of a sale is the price. In addition, such sale has to conduct security? to the right to transfer ownership over the receivables sold. Further, in order to challenge a purported sale not being such but in presence The assignment of credits also entails the assignment of the related

Chile of a different agreement (for example, collateral or security securities that were executed to secure their compliance. The agreement) the presence or absence of the elements of both type methods customarily adopted depend upon the nature of the related of agreements have to be considered. Although contractually the security. Personal guarantees attached are typically confirmed by parties may alter the general rules and agree on special provisions the guarantor. (i.e., generally the seller is liable for the existence of the credit at the time of the assignment, as well as with regards to the present and future solvency of the debtor only if it agrees on one or the 4.13 Set-Off; Liability to Obligor. Assuming that a receivables contract does not contain a provision other; the establishment of re-purchase rights under specific cases), whereby the obligor waives its right to set-off against the economic characteristics of the operations may reveal a declared amounts it owes to the seller, do the obligor’s set-off intention that is far from the real intention of the parties. We are rights terminate upon its receipt of notice of a sale? of the opinion that the seller may retain full credit risk, control At any other time? If a receivables contract does of collections of receivables, and a right (as long as it is a right not waive set-off but the obligor’s set-off rights are in its full control) of repurchase/redemption without jeopardising terminated due to notice or some other action, will perfection of the sale. If it were to retain the interest rate risk one either the seller or the purchaser be liable to the obligor for damages caused by such termination? would assume there is no intent to transfer ownership.

Set-off rights depends on the existence of enforceable obligations 4.10 Continuous Sales of Receivables. Can the seller between the parties, thus it is a legal requirement that both parties agree in an enforceable manner to continuous sales shall have pending debts or amounts vis-à-vis the other, therefore of receivables (i.e., sales of receivables as and when general set-off rights do not depend on the sale of one or more they arise)? Would such an agreement survive and continue to transfer receivables to the purchaser receivables and in the event of a sale where the new holder of the following the seller’s insolvency? receivable is the purchaser, specific obligor’s set-off rights against the seller do not apply to the sold receivable, but specific obligor’s Yes it can, through a promise agreement which can be enforceable set-off rights against the purchaser. The seller or the purchaser shall in nature. only be liable in general terms. If the seller’s insolvency is declared, he will no longer be able to execute the promised sale, and therefore the insolvency official 5 Security Issues would have to sell the receivable on his behalf. If the insolvency official does not execute the sale, the promise agreement canbe enforceable in a civil court, by means of which the future purchaser 5.1 Back-up Security. Is it customary in Chile to take would eventually be able to have a credit to verify in the insolvency a “back-up” security interest over the seller’s ownership interest in the receivables and the related procedure, entering the creditors mass. Note that upon an insolvency security, in the event that an outright sale is deemed declaration, some transactions could be subject to annulment; in this by a court (for whatever reason) not to have occurred regard please see question 6.3. and have been perfected?

4.11 Future Receivables. Can the seller commit in an In Chile it is not customary to take on a “back-up” security interest, enforceable manner to sell receivables to the even when it could be perfectly agreed by the seller and purchaser. purchaser that come into existence after the date of Nevertheless, every seller has the obligation of protecting the receivables purchase agreement (e.g., “future (compensating) the purchaser with regard to the ownership and flow” securitisation)? If so, how must the sale of peaceful possession of the sold asset when a court ruling orders its future receivables be structured to be valid and complete or partial confiscation (warranty of title). It is relevant enforceable? Is there a distinction between future receivables that arise prior to or after the seller’s to mention that the seller may contractually waive this obligation. insolvency? 5.2 Seller Security. If it is customary to take back-up Under common terms the sale of future goods is subject to the security, what are the formalities for the seller condition precedent of the existence of the goods. Once in granting a security interest in receivables and related existence, the creditor can claim the enforcement of the sale, but security under the laws of Chile, and for such security does not prevail vis-à-vis third parties. interest to be perfected? In domestic securitisation the sale of future flows is accepted as In the warranty of title mentioned in question 5.1: (i) the cause of an asset class, and we have given the opinion that such creates a the deprivation of property must be dated prior to the sale, although preference, although such criteria has not been challenged in the the parties may agree that such cause be prior or subsequent to the courts. sale; and (ii) the purchaser must summon the seller for the latter to Regarding bankruptcy, see section 6. defend the former.

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See question 5.4 regarding the acknowledgment in Chile of a 5.3 Purchaser Security. If the purchaser grants security granted under foreign law. security over all of its assets (including purchased receivables) in favour of the providers of its funding, what formalities must the purchaser comply with 5.8 Enforcement over Bank Accounts. If security over in Chile to grant and perfect a security interest in a bank account is possible and the secured party purchased receivables governed by the laws of Chile enforces that security, does the secured party and the related security? control all cash flowing into the bank account from enforcement forward until the secured party is repaid Such security can be provided through a pledge with non in full, or are there limitations? If there are limitations, what are they? conveyance. A public deed or equivalent must be granted and Chile registration with the pledge registration must be executed in order to perfect the security right. Such enforcement is possible and the sole limitation would be the general rights of creditors based on insolvency laws (preferred creditors would prevail). 5.4 Recognition. If the purchaser grants a security interest in receivables governed by the laws of Chile, and that security interest is valid and perfected under 5.9 Use of Cash Bank Accounts. If security over a bank the laws of the purchaser’s country, will it be treated account is possible, can the owner of the account as valid and perfected in Chile or must additional have access to the funds in the account prior to steps be taken in Chile? enforcement without affecting the security?

No. The validity and perfection of the acts and agreements granted The pledge does not prevent, in itself, the free use and disposal and executed abroad is generally acknowledged in Chile, although, of the funds in the account, however, it is customary to set forth for them to be executed in our country they must comply with the a ban applicable to the encumbrance, disposition, uses and limited requirements that would have been observed should they have been investments as well as minimum balance amounts that shall be perfected in Chile. The additional steps to be taken in Chile would observed in specific dates, in order to prevent the deterioration of be to perfect such security (such as those referred to in the previous the security. answer). 6 Insolvency Laws 5.5 Additional Formalities. What additional or different requirements apply to security interests in or connected to insurance policies, promissory notes, mortgage 6.1 Stay of Action. If, after a sale of receivables that is loans, consumer loans or marketable debt securities? otherwise perfected, the seller becomes subject to an insolvency proceeding, will Chile’s insolvency laws In addition to question 4.3 above, there are drafting, notice and automatically prohibit the purchaser from collecting, transferring or otherwise exercising ownership rights registration requirements that must be complied with before public over the purchased receivables (a “stay of action”)? If registries, within specific terms, depending on the nature or type of so, what generally is the length of that stay of action? guarantee. Does the insolvency official have the ability to stay collection and enforcement actions until he determines that the sale is perfected? Would the answer be 5.6 Trusts. Does Chile recognise trusts? If not, is there different if the purchaser is deemed to only be a a mechanism whereby collections received by the secured party rather than the owner of the receivables? seller in respect of sold receivables can be held or be deemed to be held separate and apart from the seller’s own assets until turned over to the In case a sale is perfected and the seller’s bankruptcy is declared, the purchaser? seller is not automatically prevented from exercising its ownership over the validly acquired receivables. Other than for securitisation purposes (as explained in question The only way in which the receivables could return to the 7.1 below) or in case of private or public funds, there is no general seller’s patrimony and, subsequently, to the administration of the statute for trusts in Chile whereby assets are considered to be apart insolvency official is through revocation actions exercised by the from the remaining patrimony of the owner. insolvency official or any creditor in connection to the assignment of the receivables, in the event that such assignment was performed 5.7 Bank Accounts. Does Chile recognise escrow damaging or defrauding the seller’s creditors, provided as well that accounts? Can security be taken over a bank account said assignment took place within the period of two years prior to located in Chile? If so, what is the typical method? the beginning of the insolvency procedure. Would courts in Chile recognise a foreign law grant In case the purchaser is a secured creditor and not the holder of of security (for example, an English law debenture) the receivables, and in the event of the seller’s bankruptcy, said taken over a bank account located in Chile? receivables shall be managed by the insolvency official.

No, Chilean legislation does not recognise escrow accounts. Although contractually they are used, allowing, therefore, for 6.2 Insolvency Official’s Powers. If there is no stay the execution of a security, typically a pledge, over the banking of action under what circumstances, if any, does accounts and the funds that are deposited in the same. The way it is the insolvency official have the power to prohibit the purchaser’s exercise of rights (by means of structured it is to open the account in the name of creditors or agents injunction, stay order or other action)? who are mandated to conduct the flows in a certain manner. In turn, the security granted above such funds is a pledge. See question 6.1.

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directors, key executives, managers or liquidators and the entities 6.3 Suspect Period (Clawback). Under what facts or they control; and (5) every person, or persons if they act jointly, that circumstances could the insolvency official rescind can designate a board member or controls at least 10% of the debtor) or reverse transactions that took place during or if any transaction was performed gratuitously, the term of one a “suspect” or “preference” period before the commencement of the insolvency proceeding? What year shall be extended to two years. are the lengths of the “suspect” or “preference” Also, for the debtor person, every other lucrative act or agreement periods in Chile for (a) transactions between unrelated entered into by the debtor previous to the commencement of the parties, and (b) transactions between related parties? insolvency procedure is subject to be revoked. Regarding the debtor company, every act or agreement entered Chile Regarding the common debtor, the following shall be subject to into by the debtor is subject to be revoked if performed in the two annulment: (i) gratuitous acts or agreements executed between years prior to the commencement of the insolvency procedure, if the 10 days prior to suspension of payments and up to the date of the following conditions are met: (i) the other party is aware of the poor bankruptcy declaration (term that may be extended up to 120 days state of the debtor’s business; and (ii) said act or agreement causes if the act was executed with a relative); and (ii) lucrative acts or patrimonial damage to the creditors or alters the equal position all of agreements executed at any time in which both parties are in bad them had vis-à-vis the debtor. Also, regarding the debtor company, faith, that is, having known the poor financial state of the bankrupt every amendment to the debtor’s bylaws is subject to be revoked party (fraud). For these purposes, the law establishes that bad faith if performed in the six months previous to the commencement of shall be presumed regarding the acts that are performed within the the insolvency procedure if said amendment diminishes the debtor’s term elapsing between 10 days prior to the date of suspension of patrimony. Also, if said amendment reduces the patrimony of payments and the date of the bankruptcy declaration. the debtor’s affiliates or subsidiaries, and if they are personally Regarding the qualified debtor (one that performs a commercial, securing debtor’s obligations, they shall not be enforceable against industrial, agricultural or mining activity), the following acts third parties that have entered into previous agreements with said shall not be enforceable against its creditors: (i) early payments, affiliates or subsidiaries. payment in kind or the execution of real guarantees to secure prior The actions to dispute the acts shall be subject to the statute obligations, performed during the term elapsed between 10 days of limitation within a term of one year, as of the date of the prior to the date of suspension of payments and up to the date of commencement of the insolvency procedure. the bankruptcy declaration; (ii) lucrative acts executed between the date of suspension of payments up to the date of declaration of bankruptcy, when both parties have performed the same in bad 6.4 Substantive Consolidation. Under what facts or faith; (iii) compensations performed as of the date of suspension of circumstances, if any, could the insolvency official payments and up to the date of declaration of bankruptcy, regarding consolidate the assets and liabilities of the purchaser with those of the seller or its affiliates in the the receivables that have been acquired against the bankrupt party insolvency proceeding? via assignment or endorsement; and (iv) mortgages which were registered subsequent to the date of suspension of payments and prior Such possibility is not considered by Chilean legislation. Revocation to the declaration of bankruptcy, with more than 15 days elapsing is the sole available remedy. between the day of execution of the security and its registration, with the insolvency official having declared its unenforceability. The actions to dispute the acts shall be subject to the statute of 6.5 Effect of Insolvency on Receivables Sales. If limitation within a term of two years, as of the date of execution of insolvency proceedings are commenced against the seller in Chile, what effect do those proceedings have the corresponding act or agreement, and shall be suspended for up to on (a) sales of receivables that would otherwise occur two years as of the date of declaration of bankruptcy. after the commencement of such proceedings, or (b) There is no specific rule regarding operations between related on sales of receivables that only come into existence parties. after the commencement of such proceedings? Please note that as of 9 October 2014, a new insolvency law, Law In bankruptcy proceedings the bankrupt defendant loses the No. 20,720, has been in force in Chile, and pursuant to it the suspect management of its assets, entrusting the same to the insolvency period and effects of transactions performed therein are subject to official. Insolvency proceedings do not automatically trigger early said new legal framework, described hereafter. termination of binding agreements; hence, if a sale of receivables Regarding the qualified debtor, now referred to as “debtor company” was enforceable against the debtor prior to insolvency, it remains the (all legal entities and individuals that are subject to first category same after becoming insolvent. tax or that are independent professionals), and also the common debtor (individuals and legal entities that do not qualify as debtor company), now referred to as “debtor person”, the following acts 6.6 Effect of Limited Recourse Provisions. If a debtor’s are subject to revocation if performed in the year previous to the contract contains a limited recourse provision (see question 7.3 below), can the debtor nevertheless be commencement of the insolvency procedure: (i) early payments; (ii) declared insolvent on the grounds that it cannot pay payments of matured debts in a manner different than previously its debts as they become due? set forth by the parties (considering payment in kind of securities as cash); and (iii) all mortgages, liens and encumbrances given over the For a debtor to be declared bankrupt under Chilean law objective debtor’s assets to secure previous obligations. If said transactions criteria shall be met, therefore, if the failure to comply with its debts, were entered into with related parties (which are defined in the new even under a Limited Recourse Provision, is enclosed in one of the insolvency law as: (1) relatives up until the sixth degree and the hypothesis set forth by law, either the currently in force law or the entities in which they participate, unless said entities are registered soon to be in force new insolvency law, a debtor could be declared in the SVS; (2) entities of the debtor’s corporate group; (3) the as insolvent. debtor’s controllers, affiliates and subsidiaries; (4) the debtor’s

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is not exclusive to one creditor, hence, one could argue that such 7 Special Rules prohibition restricts the mere right of the prohibited creditor.

7.1 Securitisation Law. Is there a special securitisation 7.5 Priority of Payments “Waterfall”. Will a court in Chile law (and/or special provisions in other laws) in Chile give effect to a contractual provision in an agreement establishing a legal framework for securitisation (even if that agreement’s governing law is the law of transactions? If so, what are the basics? another country) distributing payments to parties in a certain order specified in the contract? Title XVIII “On Securitisation companies and the Issuance of Securitisation Debt Titles” of Law No. 18,045, establishes Yes, contractual subordination is accepted in Chilean law (Civil Chile a regulatory framework for securitisation in Chile. It consists Code), although such law does not specify the applicability of the of a finance mechanism through which the creditor of a group of contractual subordination in case of insolvency proceedings. receivables, for financing reasons, assigns such receivables ata specific price to a securitisation company, which acquires them for 7.6 Independent Director. Will a court in Chile give effect itself in order to form a separate patrimony, different from its common to a contractual provision in an agreement (even if patrimony. To finance the purchase, the securitisation company that agreement’s governing law is the law of another issues a securitised bond in the stock exchange, in consideration to country) or a provision in a party’s organisational the assets of the separated patrimony that has been formed. documents prohibiting the directors from taking Also, private funds law is a vehicle used to structure domestic specified actions (including commencing an insolvency proceeding) without the affirmative vote of securitisation programmes. an independent director?

7.2 Securitisation Entities. Does Chile have laws specifically No, attributions of directors are public order rules. providing for establishment of special purpose entities for securitisation? If so, what does the law provide as to: (a) requirements for establishment and management 8 Regulatory Issues of such an entity; (b) legal attributes and benefits of the entity; and (c) any specific requirements as to the status of directors or shareholders? 8.1 Required Authorisations, etc. Assuming that the purchaser does no other business in Chile, will (a) They must be incorporated as special share corporations its purchase and ownership or its collection and with a capital that may not be inferior to 10,000 Unidades enforcement of receivables result in its being required de Fomento (approximately USD 395,000), and its exclusive to qualify to do business or to obtain any licence or corporate purpose must be the acquisition of financial assets, its being subject to regulation as a financial institution rights over payment flows, the issuance of debt short or long in Chile? Does the answer to the preceding question term debt titles, and any other activity that is authorised by change if the purchaser does business with other the SVS. They are subject to the existence authorisation and sellers in Chile? operational supervision of the SVS. (b) The bankruptcy of securitisation companies only affects their Generally, no. Certain securities intermediation activities require common patrimony and shall not trigger the bankruptcy of incorporation and operation pursuant to law, as well as registration the separated patrimonies that they have incorporated, only before, and prior authorisation from, the SVS or the Superintendence causing the liquidation of the latter. of Banks and Financial Institutions. In any event tax Chilean laws (c) Their directors and shareholders are subject to the information will be applicable since the source of income remains in Chile. duties with regards to the SVS, and in all matters that are not addressed by Law No. 18,045, securitisation companies are ruled by the general provisions applicable to share corporations. 8.2 Servicing. Does the seller require any licences, etc., in order to continue to enforce and collect receivables following their sale to the purchaser, including to 7.3 Limited-Recourse Clause. Will a court in Chile give appear before a court? Does a third party replacement effect to a contractual provision in an agreement servicer require any licences, etc., in order to enforce (even if that agreement’s governing law is the law of and collect sold receivables? another country) limiting the recourse of parties to that agreement to the available assets of the relevant Such will follow the same principles explained in question 8.1, if debtor, and providing that to the extent of any shortfall the entity has to be licensed, such licence entitles to follow with the debt of the relevant debtor is extinguished? the collection procedures, if not, such party will follow collection procedures with no additional requirement, which also counts for Yes, it will. the replacement servicer.

7.4 Non-Petition Clause. Will a court in Chile give effect 8.3 Data Protection. Does Chile have laws restricting the to a contractual provision in an agreement (even if use or dissemination of data about or provided by that agreement’s governing law is the law of another obligors? If so, do these laws apply only to consumer country) prohibiting the parties from: (a) taking legal obligors or also to enterprises? action against the purchaser or another person; or (b) commencing an insolvency proceeding against the purchaser or another person? Yes, Law No. 19,628 on the Protection of Private Life, only applicable to personal data of individuals and not of any kind of legal entities, For (a) no, since it is a public order issue. For (b), it would be sets out that the treatment of private data can only take place when debatable since the commencing of an insolvency proceeding said treatment is authorised by law or the holder of the respective data.

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Regarding the sale of trade receivables, where a portion of the 8.4 Consumer Protection. If the obligors are consumers, purchase price is payable upon the collection of the receivable, no will the purchaser (including a bank acting as specific legal disposition nor administrative ruling considers such purchaser) be required to comply with any consumer as greater interest. However, this condition shall affect the market protection law of Chile? Briefly, what is required? price of the transaction, which reasonably could be higher (our tax authority has the power to assess the prices when they are not at In the event that the obligors fall within the meaning of consumers market level). This is under the understanding that no services of pursuant to Law No. 19,496, there may be ascribed certain rights and assignment collection or recovery will be provided. If this is not the obligations to both parties. As regards the supplier’s obligations, it case, such service received from abroad and its associated fee will is possible to highlight those regarding its duty to make available to

Chile be subject to a 35 per cent withholding tax rate. However, for more the consumer truthful, correct, clear and appropriate information in precise information an IRS ruling could be obtained. respect of the respective good or service, even before the execution of the relevant legal act and up to the termination of the obligation assumed. As regards obligations assumed in connection with 9.2 Seller Tax Accounting. Does Chile require that borrowings, the supplier shall send to the consumer on a quarterly a specific accounting policy is adopted for tax basis all information pertaining said obligation, and it shall also purposes by the seller or purchaser in the context of a securitisation? be bound to deliver that information every time the consumer so requires. From an accounting point of view, the securitisation transactions’ recording is based upon the IFRS accounting principles. Pursuant 8.5 Currency Restrictions. Does Chile have laws to tax law, the general provisions set out in the Income Tax Law restricting the exchange of Chile’s currency for other govern purchases of credits in the context of a securitisation currencies or the making of payments in Chile’s process. However, if the credit is acquired by a Chilean company currency to persons outside the country? which engages in securitisation transactions, the difference between the securitised credit’s acquisition value and par value is not deemed No restriction applies for such purposes. as income, but only the result obtained when comparing the duly corrected credit’s acquisition cost with the cost of its partial or 9 Taxation complete recovery charged when said credit is collected, or its sale place if the same is sold. Furthermore, when within the context of a securitisation process a 9.1 Withholding Taxes. Will any part of payments on Chilean taxpayer levied with the corporate tax assigns or promises receivables by the obligors to the seller or the to assign all or a part of the “payment flows” generated after the purchaser be subject to withholding taxes in Chile? Does the answer depend on the nature of the assignment date, covering more than one fiscal year in connection receivables, whether they bear interest, their term with sales or services, the special provisions of Chilean Income Tax to maturity, or where the seller or the purchaser is law shall apply. located? In the case of a sale of trade receivables at a discount, is there a risk that the discount will be recharacterised in whole or in part as interest? In the 9.3 Stamp Duty, etc. Does Chile impose stamp duty or case of a sale of trade receivables where a portion of other documentary taxes on sales of receivables? the purchase price is payable upon collection of the receivable, is there a risk that the deferred purchase The Chilean stamp tax levies all documents containing a credit price will be recharacterised in whole or in part as transaction. In case the seller’s purchase or assignment of accounts interest? receivable falls within the meaning of “discount transaction”, the stamp tax shall levy upon the respective contract. In case of other Payments abroad may be subject to withholding taxes in Chile, credits, an assessment of the foregoing must be carried out (the depending on the nature of the payments and the purchaser’s and assignment of invoices does not constitute a credit transaction). As seller’s place of residence. The withholding rate ranges between 0 regards credit transactions coming from abroad, the documentary per cent and 35 per cent, depending on the payment cause and the nature of the taxable event is not required. existence of an agreement to avoid double taxation with the country of residence. In light of the complexity of the Chilean legislation’s withholding tax, each transaction must be thoroughly analysed from 9.4 Value Added Taxes. Does Chile impose value added a tax perspective. tax, sales tax or other similar taxes on sales of goods or services, on sales of receivables or on fees for Regarding the sale of the trade receivables (invoice) at a discount collection agent services? rate, a greater value is immediately generated for the purchaser and since invoices are issued in Chile, the Chilean tax authority The value added tax (“VAT”) does not levy the sale of intangible could consider difference as Chilean source income, subject to assets; therefore, the assignment of credits is exempted from this withholding taxes in Chile. If the trade receivable is a document duty. Nor are collection fees levied with VAT, unless the service is representative of a monetary obligation (with or without liability rendered by a bank (in Chile, banking services are levied with VAT). for the assignor) any discount would be deemed as an interest in Fees charged for administration and custody of assets comprising accordance with Section 2 of Law No. 18,010 and withholding tax a separate group of assets, paid by Chilean companies engaged in would apply over the interest. securitisation transactions, are exempted from VAT.

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9.5 Purchaser Liability. If the seller is required to pay 9.6 Doing Business. Assuming that the purchaser value added tax, stamp duty or other taxes upon conducts no other business in Chile, would the the sale of receivables (or on the sale of goods or purchaser’s purchase of the receivables, its services that give rise to the receivables) and the appointment of the seller as its servicer and collection seller does not pay, then will the taxing authority agent, or its enforcement of the receivables against be able to make claims for the unpaid tax against the obligors, make it liable to tax in Chile? the purchaser or against the sold receivables or collections? No, provided that the purchaser does not have domicile or reside in Chile, and does not constitute a permanent establishment therein. With respect to VAT, the “service provider” is the person liable Treaties to avoid double taxation subscribed by Chile broaden the Chile for VAT, having the obligation to levy VAT upon the respective concept even to encompass cases in which foreign personnel is transaction amount and pay the levied duty to the state taxing transferred to Chile to render professional or similar services for authority within the first 12 days of the month following that on a specific period of time, or to act through a dependant agent, who which the transaction took place. does not act within the ordinary scope of his activity, and with As regards the stamp tax, the law provides for different scenarios whom conditions other than those agreed by an independent agent depending on the person liable for said tax in each case, but said are agreed upon or imposed. condition is not transferred with the assignment of the credit. If a person intervenes in the taxable event in the capacity of agent or representative of someone, said agent or representative shall be joint and severally responsible for the payment of this tax.

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Octavio Bofill Genzsch Daniela Buscaglia Llanos Bofill Mir & Álvarez Jana Abogados Bofill Mir & Álvarez Jana Abogados 2711 Andrés Bello Av. 2711 Andrés Bello Av. 8th Floor, Costanera Tower 8th Floor, Costanera Tower Las Condes, Santiago Las Condes, Santiago Chile Chile

Tel: +56 227 577 600 Tel: +56 227 577 600 Fax: +56 227 577 601 Fax: +56 227 577 601 Email: [email protected] Email: [email protected]

Chile URL: www.bmaj.cl URL: www.bmaj.cl

Mr. Bofill is a senior partner of BMAJ, admitted to practice inChile Ms. Buscaglia is a senior associate of BMAJ, admitted to practice since 1990, member of the Chilean Bar Association and the Chilean in Chile since 2006, and a member of the Chilean Bar Association. Institute of Trade Law, Professor of Corporate Law at the Universidad She received her J.D. degree from the Universidad de Chile, is a de Chile since 1992, and an arbitrator of the Chilean Chamber of candidate for the LL.M. degree in Law and New Technologies from the Commerce. He received his J.D. degree from the Universidad Universidad de Chile and candidate for the LL.M degree in Intellectual Católica de Valparaíso, and previously worked at Jorge Bofill Vergara Property and Information Law from King’s College London. She (1983-1987), the Chilean Army (1985-1987) and the firms Magasich previously worked at Grasty, Quintana, Majlis & Cía., Chile (2002- & Cía. (1987-1990), Slaughter & May, London (1994), Allgemeines 2006). Her practice focuses on Commercial and Corporate Law, Treuunternehmen, Liechtenstein (1994) and Grasty Quintana Majlis Mergers and Acquisitions, Finance and Securities and Intellectual & Cía., Chile (1990-2006). Mr. Bofill is a member of the Panel of Property Law and has extensive experience on national transactions Arbitration of Concessions Agreements of the Ministry of Public Works including general corporate matters and domestic securitisation. Ms. since 2010. His practice focuses on Commercial and Corporate Buscaglia is recognised by the rankings of Chambers Global and Law, Mergers and Acquisitions, Banking, Finance and Securities, Chambers Latin America, and was awarded Best Pro Bono Work Regulated Markets and Competition Law. He has vast experience Coordinator 2013 by the Chilean Pro Bono Foundation. She is co- dealing with and providing advice to financial institutions and private author of the Chilean chapter of “Getting the Deal Through - Corporate clients, leading significant transactions in Chile and abroad on a wide Governance 2010”, published by Law Business Research Ltd. (June, range of matters, including structured project finance, bond issuances 2010) and of the Chilean chapter for “The International Comparative and other operations in the Chilean capital market, being a pioneer Legal Guide to: Securitisation 2013”, published by Global Legal on domestic securitisation and continues to be a specialist in said Group Ltd. (2013) and “The International Comparative Legal Guide area. Mr. Bofill’s work and experience is permanently recognised to: Securitisation 2014”, published by Global Legal Group Ltd. (2014). by the rankings of Chambers Global, Chambers Latin America, Latin Lawyer and Best Lawyers International. He is co-author of the Chilean chapter for “The International Comparative Legal Guide to: Securitisation 2013”, published by Global Legal Group Ltd. (2013) and “The International Comparative Legal Guide to: Securitisation 2014”, published by Global Legal Group Ltd. (2014).

Bofill Mir & Álvarez Jana Abogados (BMAJ) is one of the fastest growing firms in recent years in Chile. It has over 75 lawyers, professionals with the highest academic backgrounds and specialists in all areas of law. The quality, creativity and efficiency of the firm’s professionals has established BMAJ as a full service firm and trusted legal counsel in complex Chilean and international transactions and disputes. BMAJ’s attorneys have a solid and diverse international legal background that distinguishes from other Chilean law firms. BMAJ’s attorneys have graduated from the most prestigious Chilean universities, and many have post-graduate degrees awarded by first class universities in the United States, Great Britain, Canada, France, Germany, The Netherlands, Spain and Chile. Some of BMAJ´s lawyers are qualified to practice law in the United States, France and Canada. The firm has a strong commitment in matters of public interest and our attorneys have rendered professional services as members of the staff of the Chilean Central Bank, the negotiation teams of International Free Trade Agreements, the advisory staff of the Ministry of Justice for the Criminal Procedural Reform, the Ministry of Energy, the European Commission at Brussels and the WTO in Geneva, among others. Many of BMAJ’s professionals have teaching positions at Universidad de Chile, Pontificia Universidad Católica and other major Chilean universities. Likewise, BMAJ actively promotes participation of its members in Pro Bono activities, particularly in conjunction with Chile’s Fundación Pro Bono. BMAJ is continuously listed on the most important world legal rankings (IFLR 1000, The Legal 500, Chambers Global, Chambers Latin America, Latin Lawyer, Who´s Who Legal and Best Lawyers International).

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