News
Academic literature focuses on the direct relationship between economic growth, the development of financial markets and, the more transparent and accountable, corporate governance which recognizes that it is to the best interest of a corporation to respect the rights and interests of its shareholders. Higher standards of corporate governance are also good growth predictors of the value of a company and the increase of dividend payments. They can also predict surges in stock exchange openings and more cost-efficient capital markets.
The main objective of corporate governance is based on the decision of regulating all relationships within a corporation. In fact, it focuses on increasing the information that corporations must provide to their shareholders and the regulators in charge of monitoring them. Furthermore, it aims to ensure adequate oversight of the market which allows for more fluid operations, and directs and controls corporations in order to ensure their transparency and demonstrate how boards of directors manage company assets. It also provides conflict solution tools when interests collide among stakeholders and protects all shareholders’ interests. However, corporate governance gives special consideration to the interests of minority shareholders, which prevents majority shareholders from taking opportunistic control over a corporation’s assets at the expense of its general investors. This situation tends to occur when a corporation is controlled by a single majority shareholder, a family or an economic group. Conflict also tends to arise between administrators in charge of management and investors, who own corporate assets. On one hand investors need the specialized human capital possessed by administrators to obtain revenue while the latter needs the resources of investors in order to materialize their projects.
Even though Chile has been a prime example in areas such as corporate management and corporate law in South America, international practices on matters such as these are continuously evolving. Since Chile is completely active in the international economic community, it has been essential for its legislation to adapt to new international standards regarding corporate governance. This was rendered concrete through “Law 20.382” which seeks to elevate Chile’s Corporate Governance to meet the highest of international standards. To achieve this, a number of modifications were made to the Securities Market Act, Corporate Law and the Commercial Code. These modifications are focused on increasing the information which corporations must deliver to both, their own shareholders, and to the regulator in charge of supervising them. Among these modifications include: ensuring adequate oversight of markets that allow for more fluid operations; modifying the legal presumptions of access to privileged information; protecting minority shareholders by increasing their control, which as a result, reduces the asymmetry in system information management through improved communication and informative transparency; and specifying the responsibilities of the board of directors by promoting the designation of independent directors and an increased demand in finalizing transactions with related parties. The objective of this is to raise market transparency levels, as well as, investors’ trust. Overall, this law aims to improve companies’ trust, investment, financing and value with the objectives of improving performance and moving towards a more modern and globalized economy.
There are many tasks and challenges this country has to face in regards to corporate governance, especially in matters relating to information asymmetry, on how company boards are directed, the treatment of shareholders (both minority and majority), and inner control systems, among others. These matters are not solely resolved through a legal framework, but through cultural changes in a corporation’s inner practices.
María Fernanda Russi
Associate, Bussines Group
Our Intellectual Property Group has been enhanced by the return of Ariela Agosin, Master of Laws in the U.S., with a concentration in matters of Intellectual Property and Brand Protection. Ariela has been a part of AlbagliZaliasnik since 1998 and has served as Of Counsel, leading our office in Miami since 2005. With the reinstatement of Ariela we will be strengthening our practice areas of Intellectual Property, Advertising Law, Patents, Copyrights, Information Technology, Licensing and Litigation.
With her vast experience, she will lead the IP Group along with Rodrigo Albagli of AlbagliZaliasnik.
Consequent to the internationalization of our customers’ business and the extensive presence of foreign clients in our portfolio, we also continue to enrich our International Group led by Jesse Smith.
Similarly, we are proud to announce that Andres Grunewaldt has been awarded the “Bicentennial Scholarship” and admitted to Duke University in the United States for a Masters in International Law and Intellectual Property. As of July 2010, Andres will lead the operations of AZ in the U.S., as our new Of Counsel there.
Finally, we thank you for your trust and want to reiterate our commitment to continue growing in all areas as well as to give the absolute best service.
Contacts:
Rodrigo Albaglo
Ariela Agosin
Andres Grunewaldt
Jesse Smith
After a long and intense congressional debate that began in 2007, the Chilean government has announced the promulgation of a law amending important and sensitive subjects covered in our current Intellectual Property Law No. 17,336.
The changes that will soon go into effect can be divided into three groups: the establishment of a new framework of exceptions and limitations to copyright and related rights, the incorporation of new offences, increased penalties and the consecration of new tools intended to prosecute crimes against intellectual property, and an extensive chapter on the liability of Internet Service Providers (ISP).
With regards to the first group, the amendment seeks to find a balance between the rights of the owners of the works and the right of public access to them, increasing the range of exceptions. For example, extending the framework of action for libraries and nonprofit archives in terms of the reproduction, translation and digitization of a particular work allows for it to be used for criticism, illustration, teaching or research purposes and also expands the use of works that aim to benefit a person with visual or hearing impairment.
Regarding IP crimes, it establishes a new framework of civil and criminal penalties for copyright violations by introducing new mechanisms and tools of procedure for cases of use outside the legal framework, especially in cases of piracy, increasing prison sentences and fines, which in the case of repetition can reach up to US 140,000.
Lastly, an extremely important chapter is concerned with regulating the liability of internet service providers, where content is present in a web page that infringes on intellectual property. In this case, after many discussions, the system that was opted for was one in which only under a court order will it be possible to block a website. In addition, the ISP must meet certain requirements in order to be exempted from liability for illegal content that customers are able to put on to the Internet.
In short, this is the most serious reform that Intellectual Property Law has undergone since its publication in 1970; creating a completely new scenario from hereon out in terms of copyright protection.
Importance of your ¨.cl¨ Domain
The ¨.cl¨ domain is the extension that groups all domains registered through Nic Chile. To date there are more than 270,000 ¨.cl¨ domains registered, a number which greatly surpasses other countries in the region, which demonstrates that when searching for a service, product or company in Chile, internet users prefer the ¨.cl¨ domain over other global extensions such as ¨.com¨ or ¨.net.¨ Presently, having a ¨.com¨ instead of a ¨.cl¨ domain can be less effective in spreading your content to other internet users, possible consumers or clients in Chile.
Registering your ¨.cl¨ Domain
Anyone can file an application for a domain name that is available at that time at Nic Chile. There is a 30 day deadline after every new application in which a third party can apply for the same domain name, which begins an assignment dispute proceeding which can ultimately result in arbitration. Nic Chile does not carry out any sort of examination to verify if new applications conflict with an existing trademark or another party’s rights; therefore it is important to have a good monitoring service for your trademarks and domain names in order to know when conflicting applications arise.
If there are no third party applications filed during the next 30 days of the first application, then the domain is registered to that solicitor. The first registration is valid for two years and can be renewed for registration periods of two to ten years.
Assignment Disputes
In case there is more than one application for the same domain name, a domain assignment dispute arises. The first step is the mediation hearing held before Nic Chile, in which both parties are requested to appear in the presence of a mediator. The hearing is not binding but helps the parties understand each others intentions and is an important step to start negotiating a friendly agreement to settle the case before arbitration.
Any agreement reached by the parties has to clearly state who will be the sole owner of the domain name. In order to obtain dismissal on behalf of one of the parties, the agreements can vary and are by no means restrictive, as an example the agreements can include financial compensation or limitation of the use of the domain in regards to the business sector, line of products or services of the other party.
If no agreement is reached, an arbitrator is named, who will finally decide who the owner of the domain will be; in doing so he will have to hear the arguments of both parties and decide who has a better right over the domain. An arbitration proceeding always includes arbitration fees which can range between CLP 500.000 and CLP 1.100.000. Payment of arbitration fees fall exclusively on the party who has subsequently presented their application, also known as the second applicant, or between all parties if there are multiple applications competing for the same domain. Initially, the first applicant of the domain should not be charged with any fees, notwithstanding that the arbitrator may include payment of costs to the first applicant in his ruling if he so deems.
The arbitrator is free to rule in the manner which he considers to be fair in connection to the arguments and evidence that were brought to his consideration during the case. This is where trademark registrations are important, because they are highly recognized as an important piece of evidence in case the domain name is identical or similar to a registered trademark in Chile or abroad. Being the owner of a trademark and the solicitor of that same domain name in dispute does not in any case assure a successful ruling in the arbitration, but it is considered crucial information in the moment the arbitrator renders a ruling.
Cancellation Actions
The last form to protect your acquired rights in the area of domains is through a cancellation action. A cancellation action of a domain is given when a third party who claims his rights are being violated by a registered domain, initiates a cancellation action with the intention of annulling the domain’s ownership. In contrast to the previous disputes in assigning a domain name, here we are confronted by an existing registered domain where the deadline to present new applications has expired. The process of a cancellation action is very similar to domain disputes, since a developed mediation before Nic Chile already exists and subsequently an arbitrator will be assigned in case an agreement was not previously reached. The important difference between the two is cancellation actions require the revoking party to prove that the actual owner of the domain had initially registered this domain in the past acting upon bad faith which caused damage to their rights.
Due Protection of Your Rights
In today’s society, it can be concluded that the existence of a web domain equivalent of its products, services or company can be damaging to other owners of similar domains. Currently, more people have access to the internet which is an important tool when researching, searching for businesses, buying products or contracting services. In this arena, the extension ¨.cl¨ has proved to be a leader in Chile over other global extensions when searching for Chilean companies or other information about Chile. Because of this, it is recommended to file and register all names linked to your trademarks and your services in order to prevent potential harm to them. Apart from filing our clients’ domain names, Albagli Zaliasnik provides a strict monitoring service of trademarks and domain names in order to protect against new or damaging applications. Do not hesitate to contact us for more information regarding the proper protection of your domains or your rights online.
On October 20, 2009 Law No. 20.382 was published, amending the Commercial Code, the Corporations Act and the Securities Act, perfecting the corporate governance regulations. The Law will take effect beginning January 1st, 2010 and it is a very important part of the commitments of our country for its admission to the OECD.
In essence, the new law is aimed at improving levels of transparency and information that companies must provide to their shareholders, to the Securities Commission and to the market in general, so as to allow better and greater control and to protect minority shareholders interest.
The main contributions of this new legislation are highlighted in the following:
1- Information and Transparency:
It is set upon the board of the company, the obligation to define the procedures, accountability mechanisms and responsibilities to ensure the market a quick and opportune information, so as to reduce any information asymmetry.
Shareholders, as far as they control 10% or more of the company, as well as chief executives, are obliged to inform the Securities Commission and the stock market, not only of the transactions of their stocks, but also operations on contracts or other securities whose price or outcome is dependent or conditioned upon its stock price.
The law also incorporates a special section for transactions of public offering securities, which allows the imposition of restrictions, absolute or temporary, to the acquisition or disposal of such securities, an issue that must be regulated by the Board and informed to the Securities Commission.
In a similar vein, stockbrokers and security dealers must define and communicate their own monitoring procedures for the proper handling of information to which they have access and which might affect supply or demand of securities transactions in which they participate.
The chief executives are also incorporated in the list of related parties and are required to report their position in securities of entities of the corporate group to which they belong.
2- Inside Information:
Directly related to promoting transparency and symmetry of information available to the market, the new law includes an explicit ban on selling securities while in possession of inside information, making an explicit distinction between the presumption of possession of information (applicable to those who are part of the administration) and the presumption of access to information (applicable to outsiders).
Provision is also an aggravating offense to Article 61 of the Securities Act, in terms of increased punishment for the crime of disseminating false or misleading information, even if advantages or benefits are not pursued, when the perpetrator of the crime might possess or have access to inside information, in which case the penalty of inability to serve as director, manager, liquidator or administrator of companies under the control of the Securities Commission also applies.
3- Public Offer of Stocks (OPA):
The mechanism of public offer of stocks is perfected, incorporating the obligation of the controller, who because of a takeover bid has acquired over 95% of the stocks of the company, to acquire the shares of the remaining 5%, if they so require, by exercising their right of withdrawal.
In contrast, the figure of the squeeze – out, of wide application in more developed financial markets, is now incorporated and the Controller who, product of a takeover bid acquires over 95% of the stocks of the company, may force the remaining 5% to sell their shares, provided that this provision was laid out in the bylaws.
4- Supervision and Control of the Administration:
(a) Creation the figure of the Independent Director, mandatory for any corporation that trades their shares and complies with the requirements to have a Directors Committee (UF 1.5 million of market capitalization and over 12.5% of its shares held by minority shareholders). In order to define the concept of the independent director, the factors that make them lose such quality and disable a person for this position are detailed.
(b) Restate the role of the Directors Committee, which shall consist of a majority of independent directors and increase their powers of supervision and control within the company.
(c) Raise the requirements, restrictions and incompatibilities for the Auditing Companies and higher technical standards imposed on their reports, so that they are obligated to attend shareholders’ meetings to explain the content of their opinions. Particular emphasis is placed on the need for auditing firms, their partners and teams to have full independence from the audited entity, establishing also a lack of independence assumptions that make them unsuitable to perform their duties.
5- Shareholders’ meeting:
Finally, the law provides a set of rules that empowers shareholders, improving their levels of information and facilitating the exercise of voting rights, even allowing, with the permission of the Securities Commission, electronic devices to remote voting.
There are, however, certain restrictions imposed on the exercise of voting rights to security dealers or brokers that hold securities in custody, in terms that they can only vote if they have been specifically authorized by the stock owner and they can only do so through their representatives or lawyers, but without the possibility of delegating to third parties.
The new law incorporates the possibility of establishing a formal stock options or compensation plans for employees of closed corporations for up to 10% of the amount of capital increases that are agreed upon and establishes the requirement to obtain board approval for transactions with persons related to or in an apparent conflict of interest.
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The new law clearly represents an important step forward in the line of revealing relations between issuers and the general public, seeking to avoid the recurrence of certain situations seen in recent times, so as to avoid adverse affects in the trust in the market within the system.
Alvaro Rosenblut
Partner AlbagliZaliasnik Attonrneys
We would like to share with you the important recognition given by the prestigious firm Chambers & Partners, which has distinguished our Firm and its partners in its 2009 Ranking of Leading Lawyers for doing business in Latin America.
AlbagliZaliasnik has been named among the top firms in the country in the areas of Litigation, Competition & Antitrust, Mergers & Acquisitions and Intellectual Property.
According to Chambers & Partners, AlbagliZaliasnik “maintains a strong presence in the corporate sector and in intellectual property, being particularly active in commercial litigation, primarily in the telecommunications sector”, highlighting the recognition gained by the firm and its higher profile compared to previous years.
In this year’s ranking, Chambers & Partners distinguishes partners Gabriel Zaliasnik and Francisco Velozo among the top 10 leading litigators in the country, saying that our Firm “has become a fixture on the litigation circuit for some time, so it is no surprise to see its talented lawyers making impact” in the fields of antitrust and criminal proceedings, including economic crimes and extradition.
Chambers & Partners also acknowledged partner Alvaro Rosenblut among the top lawyers in the country on Corporate Mergers and Acquisitions, identified for leading the corporate team in Albagli Zaliasnik’s biggest deals and commended by the clients for his transactional expertise.
Finally, our Firm is recognized as having cultivated a strong profile in intellectual property, in which “Rodrigo Albagli is the key contact, especially for trademark issues, while Gabriel Zaliasnik deals with litigation related to intellectual property.” We describe our team as a great asset in patent, trademark protection strategies, plant varieties, industrial designs and domain names, among others.
For AlbagliZaliasnik, recognition from Chambers & Partners – for the fourth consecutive year - is a recognition for 18 years of hard work and innovation, which renew our energies to maintain and strengthen our commitment with the goals of our clients.
Advertising is not governed in Chile under the rules of one specific Act or Law. They are scattered around various statutes that generate a dispersion of rules and norms that attorneys must know well enough to grant valuable advice.
Some of these regulatory statutes refer to advertising in a general manner. For instance, the National Television Council that is mandated to ensure “the respect of the nation’s moral and cultural standards”, can fine a television network that broadcasts inappropriate forms of advertising, provided that they are offensive to certain groups or individuals.
Law Nº 19.496 also lays down rules on protection of Consumer Rights, setting minimum legal standards in regards to the scope and content of advertising. Another statute regulates advertising in reference to certain products, like tobacco or alcoholic beverages. It bears prohibitions regarding special time slots for advertising on radio or television, as well as restrictions in reference to commercial locations where advertising for such products can be put in place.
But advertising guidelines are mostly self-provided by the advertising industry through the Chilean Code of Advertising Ethics, which is almost completely based upon the Advertising and Marketing Communication Practice Code of the International Chamber of Commerce. This Chilean Code of Advertising Ethics is enforced by the CONAR (Council for Self-regulating and Ethical Advertising), a non-profit organization which essentially resolves disputes or complaints regarding breaches of advertising ethical standards. According to the Code, advertising must not disregard the values, rights, and principles stated in the Chile’s Political Constitution, but most also ensure freedom of speech as advertisings main foundation.
Advertising is also regulated by Chile’s Unfair Competition Law that bans any act that diverts a competitor’s clientele by unlawful means. The use of misleading advertising in relation to the quality or characteristics of products or services is listed as an act of unfair competition, as well as using comparative advertising based on false and non verifiable facts.
Albagli Zaliasnik has well rounded team of lawyers who have ample experience when it comes to advertising law and other related areas of practice. Our team has over ten years in counseling our clients on advertising clearance, sweepstakes and litigation, as well as on all intellectual property matter. AZ is the sole Chilean member of the Global Advertising Lawyers Alliance (GALA), and thus conducts regional and worldwide advertising clearances regularly, through this prestigious international network of advertising law firms.
On January 22, 2008, the Cyrus R. Vance for International Justice will host the North American launch the Pro Bono Declaration for the Americas (PBDA) in an event co-sponsored by the Americas Society/Council of the Americas. The event will be held at the Council of the Americas building in Manhattan and will gather members of the New York legal community, including: New York City Bar Association; managing partners and Latin American practice partners from major New York law firms as well as in house lawyers of major companies and investment banks. The event will also be attended by partners of several law firms throughout the Americas which have also signed the Declaration.
The PBDA is the first collaborative effort among private lawyers in the Americas to articulate the lawyer’s professional responsibility to promote access to justice and provide pro bono legal asssitance on behalf of the poor. It is the culmination off initiatives that have been developing in Latin America since 2001.
To view the list of signatories,