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Corporate Governance in Chile 2010

image of Corporate Governance in Chile 2010

This review of corporate governance in Chile describes the corporate governance setting including the structure and ownership concentration of listed companies and the structure and operation of the state-owned sector. It then examines the legal and regulatory framework and company practices to assess the degree to which the recommendations of the OECD Principles of Corporate Governance and the OECD Guidelines on Corporate Governance of State-Owned Enterprises have been implemented.

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Assessment and Recommendations

Chile’s Santiago Stock Exchange constitutes the third largest equity market in Latin America, behind the stock exchanges of Brazil and Mexico, with a relatively high market capitalisation of USD 213 billion for 238 listed firms at the end of 2007 – equivalent to 124 percent of GDP. The market is characterised by low liquidity and quite high ownership concentration of individual firms, usually in the hands of conglomerates or business groups that are also concentrated in number. As of 2002, some 50 major conglomerates had ownership control of more than 70 percent of non-financial listed companies, and 91 percent of total equity in the Santiago Stock Exchange. While liquidity is low, it has been improving, with annual trading volume rising from about 10 percent of GDP in 2002 to about 30 percent by 2007. The free float within the 138 largest and most actively traded firms was estimated at 36 percent in 2007, with virtually all companies having a controlling owner or group.

English

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