Legal Alert Covid-19: New Law Facilitates Access to Medicines during Pandemics

30 July, 2020

September 23, 2020 / By Tomás Muñoz On September 22th, 2020, Act N° 21.267 was officially published. The purpose of the Act is to facilitate access to medicine by extending the validity of medical prescriptions that were given before or during a pandemic officially decreed by the Chilean Government. In particular, this is achieved by extending the prescription validity, which correspond normally to 6 months since the physician has granted it. As so, the Act has established the following: All authorized establishments must permit access to medicines upon the presentation of a valid prescription´s copy, regardless of its physical or digital support. Prescriptions granted 6 month before a pandemic decree by the Government and those prescribed during it, will be considered valid during the pandemic and 6 months after. Regarding any other mandatory norms that authorized establishment must abide, they will still be mandatory regardless of an official pandemic decree. Misuse of prescriptions will be sanctioned according to the Sanitary Code, the Criminal Code and Lay N° 20.000, that sanctions drug trafficking and consumption, if applicable. The Sanitary Code is modified in order to eliminate the mandatory use of an Advanced Electronic Signature to grant a prescription, being replaced with the norms of a decree. Though the Act does not indicate which specific decree, the legislative discussion demonstrates that it was intended to refer to the Pharmacies Regulation, Decree N° 466. En relación a este tema, revise la alerta enviada el 8 de mayo sobre el Decreto que introduce el comercio electrónico de medicamentos. In relation with this matter, please review the legal alert: Ministry of Health introduces e-commerce in medicines. Contacts For more information, please contact: Tomás Muñoz Asociado tmunoz@dlapiper.cl * This report provides general information on certain legal or commercial matters in Chile, and it is not intended to analyze in detail the matters contained in it, nor it is intended to provide a particular legal advice on them. It is suggested to the reader to look for legal assistance before making a decision regarding the matters contained in this report. This report can not be reproduced by any means or in any part, without the prior consent of DLA Piper BAZ | NLD SpA. (c).

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Legal Alert: Keys tu understanding the application of VAT/GST to digital services in Chile

13 July, 2020

July 9, 2020 / By Rodrigo Álvarez, Germán Vargas y Gonzalo Zegers Law Nº 21.210, which Modernized our Tax Legislation, was published in the Official Gazette on February 24th, 2020. This law strengthened the process of technological and digital transformation of the Chilean Tax Authority (hereafter “Servicio de Impuestos Internos” or “SII”). This process is aimed at providing tools that enable the SII to exercise the powers and faculties established by law, especially since the aforementioned Law levied some digital services with VAT. This regulation came into full force on June 1st, 2020. As we mentioned, not all digital services are subject to VAT, some will be subject to Withholding Tax (“WHT”) and exempt from VAT and vice-versa. These are the main questions surrounding the new tax: What digital services are subject to VAT? The following remunerated services rendered in Chile by non-domiciled, non-resident providers, are subject to VAT: The intermediation of services rendered in Chile, of whatever nature, or of sales made in Chile or abroad, if the latter results in an import. The supply or delivery of digital entertainment content, such as videos, music, games or other analogue content, through downloading, streaming or other technologies, texts, magazines, newspapers and books, including for these purposes. The provision of software, storage, computing platforms or digital infrastructure. This category features: Software as a Service (“SaaS”): Rendered mainly to the end user. These services are provided through applications that run on the provider’s cloud infrastructure, which the user can access through various devices such as a web browser or cell phone. Platform as a Service (“PaaS”): Aimed mainly to app developers, who are given the tools (through a platform or cloud infrastructure) to build, compile and run their programs. Infrastructure as a Service (“IaaS”): Similar to PaaS but with fewer resources offered, allows the client to rent separate service components (mainly servers, storage, networking and data centers). Users will be responsible for handling other resources such as runtime, middleware and O/S. 4. Advertising, regardless of the medium or means through which it is delivered, materialized or executed. According to the VAT Law (“VATL”), VAT applies when services are rendered or used in Chile, regardless of whether the payment is made in Chile or abroad. Thus, it is understood that a service is rendered in Chile when the activity that generates the service is developed in Chile, regardless of the place where it is used. Whereas, for the services used in Chile, the VATL establishes a special rule, by which it presumes that a service is used in Chile, when at least two of the following situations concur: i. That the IP address of the user’s device or other geolocation mechanism indicates that they are located in Chile; ii. That the card, bank account or other means of payment used for payment of the service, are issued or registered in Chile; iii. That the billing address of the user or the place of issuance of invoices is located in Chile; or, iv. That the subscriber identity module (SIM) card of the mobile telephone used to receive the service has Chile as its country code. Therefore, if […]

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Legal Alert Covid-19: Regulation on occupational safety and health conditions for remote working or teleworking. 

7 July, 2020

July 7, 2020 / By Luis Parada, Juan Pablo Mesías y Alfonso Bustamante On July 3rd, 2020, the Official Gazette published a Regulation that establishes “Specific Conditions on Occupational Safety and Health at Work” (the “Regulation”), applicable to workers who provide their services via “Telework” or “Remote Work” according to the newly incorporated Labor Code provisions. The Regulation establishes a series of obligations for employers, the most relevant aspects of which are described below: The employer’s duty to manage occupational risks that exist at the worker’s home or in the place where Telework or Remote Work will be carried out. Prohibiting the worker from exposing himself/herself, his/her family or third parties to dangerous or highly harmful substances for their health, as classified by current regulations. An obligation for the employer to prepare a “Hazard Identification and Risk Assessment Matrix” (the “Matrix”), which must be reviewed at least annually, and may require the technical advice of the Mutual Organizations from Law No. 16,744. The Matrix must include a psychosocial risk assessment. For the preparation of the Matrix, the Regulation establishes that the Mutual Organizations must make available to the employers a document called “Self-assessment Risks Instrument”. This document shall be delivered by the employer to its workers once remote or teleworking has begun, and workers must fill it out and return it to the employer within the period indicated in the Regulation. The employer must develop a “Work Program” that contains the preventive and corrective measures to be implemented (e.g. elimination and/or mitigation of risks), as well as measures to promote the use of protective tools and prevention of such risks. Implementation of the “Right to Know” for workers in Telework or Remote Work. Mandatory Training: Employers must train their workers (in person or remotely) at least every two years on the main safety and health measures to be considered. The regulation establishes the obligation to provide personal protection equipment and elements, which must be adequate to mitigate or control the risk, and in no case may workers be charged for their value. Other obligations: Carrying out annual evaluations and laying out control and surveillance measures, to be carried out through face-to-face or remote inspections of the workplace. The Regulation will be in force 90 days after its publication, that is, from October 1, 2020, and the inspections will be carried out by the Labor Authority. Contacts For more information, please contact: Luis Parada Partner lparada@dlapiper.cl * This report provides general information on certain legal or commercial matters in Chile, and it is not intended to analyze in detail the matters contained in it, nor it is intended to provide a particular legal advice on them. It is suggested to the reader to look for legal assistance before making a decision regarding the matters contained in this report. This report cannot be reproduced by any means or in any part, without the prior consent of DLA Piper BAZ | NLD SpA. (c) DLA Piper BAZ | NLD SpA 2020.

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Legal Alert: Financial Portability Act

9 June, 2020

June 9, 2020 / By Mauricio Halpern, Roberta Andreani y Vicente Vergara On 9 June, 2020 was enacted the Financial Portability Act that aims to promote and simplify financial portability for individuals and micro and small companies. To this end, the Law considers portability to be an inalienable right of customers and provides three main mechanisms: 1. Two types of financial portability are regulated. The first, “Portability without Surrogacy”, aims to contract products or services with a new supplier, and to obtain the termination of existing products that the client has with an initial supplier, extinguishing the guarantees that secure them. The second type corresponds to the “Portability with Subrogation” or “Special Credit Subrogation”, by which a financial provider will become, by the sole ministry of the Law, the beneficiary of the existing guarantees associated to a product, at the time of paying the initial financial provider, for which it will not be necessary to raise and constitute a new guarantee, reducing the terms and costs that this currently implies. 2. Standardization, through a Regulation to be issued, of the information provided by financial service providers with respect to their products, facilitating the client to compare them. To this end, the Law refers to the (i) Settlement Certificate regulated in the Consumer Protection Law that contains information on the costs of their products in force, and creates and regulates the content of the (ii) Portability Offers that will contain information on the costs of the new products offered. 3. In addition, the Law regulates the process of portability, specifying the stages, terms, formalities and information to be provided by each of the parties involved, as well as the interests accrued during said process and the charges or rights to which Public Notaries and Real Estate Registry are entitled. Subjects of the Law This law shall apply to financial service providers, understood as any bank, insurance company, or any other entity supervised by the Financial Market Commission. By the other hand, the Act considers customers to be natural or legal persons who hold one or more financial products or services, and who are consumers or micro or small businesses. Portability Procedure a) It starts with the request for portability presented by the client to a new financial supplier. b) The new supplier must request from the initial supplier the certificate of settlement, and the certificate of payment of stamp tax. c) In case the new supplier decides to persevere in the process, he must send the client a portability offer. d) With the acceptance of the offer, the client grants a termination mandate to the new supplier regarding the products to be transferred, which must be fulfilled within a period to be defined by the Regulations, which cannot exceed 6 banking business days. e) The new supplier must make the arrangements to sign the products. f) In the case of guarantees on assets subject to the registration system, the new credit must comply with the legal formalities for its granting, and which are necessary to record the respective special credit subrogation. Thus, registration will be a formality of publicity, necessary to […]

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Legal Alert: Law establishing the limitation of liability for loss, theft or fraud

1 June, 2020

June 1, 2020 / By Paulo Larrain, Ricardo López y Felipe Riedel On May 29, 2020, Law No. 21,234 (hereinafter the ”Law”) was published in the Official Gazette, which amended Law No. 20,009, changing the name of the latter to “Establishment of a regime of limitation of liability for holders or users of payment cards and electronic transactions in case of loss, theft, robbery or fraud” and replacing articles 1 to 5 of the Law. Modifications introduced by the Law are the following: 1. Title I: scope and general rules: This Law regulates the liability regime applicable in cases of loss, theft, robbery or fraud of credit cards, debit cards, payment cards with provision of funds, or any other similar system, hereinafter jointly referred to as “payment cards”, issued and operated by entities subject to the supervision of the Financial Market Commission and the regulation of the Central Bank of Chile. It also regulates the liability regime in cases of loss, theft, robbery or fraud of payment cards issued and operated by entities not subject to the supervision and regulation of the aforementioned entities, unless expressly provided otherwise. It will also apply to fraud in electronic transactions. For the purposes of this Act, payment cards and electronic transaction systems may be designated jointly as “means of payment”. Holders or users of means of payment, as well as holders of other accounts or similar systems enabling electronic transactions (referred to as ”users”) may limit their liability in the event of theft, robbery, loss or fraud, to the extent that timely notice is given to the issuer. The issuer or provider of the financial service (referred to jointly as ”issuers”) must provide qualified and free channels, available 24 hours a day and permanently, that allows the making and recording of notices to users, providing a reception and identification code. Once the notice has been received, the issuer must immediately block the means of payment to carry out transactions. In addition, the user must be sent a communication that includes the number, reception code or tracking identifier, and the date and time of the notice. For operations carried out after the notice: The issuer will be responsible. With respect to operations carried out prior to the notice: Users can claim from the issuer, within a period of 30 days, those operations with respect to which users do not know they had granted his authorization or consent. The claim may include operations carried out in the 120 calendar days prior to the date of the notice given by the user. In relation to unauthorised operations, special consideration will be given to the fact that the issuer has sent a fraud alert to the user, identifying suspicious operations, and that there is proof of receipt by the user, in accordance with the service provision contract. In cases were users do not know that they had authorised an operation, it will be up to the issuer to prove that the operation was authorised by the user and that it is registered under his name. The registration of transactions alone will not necessarily suffice to prove that the […]

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Legal Alert Covid-19: Short Law amending the Employment Protection Law

1 June, 2020

June 1, 2020 / By Luis Parada y Alfonso Bustamante We inform that on June 1, 2020 Law No. 21,232 (hereinafter the “Short Law”), which amends Law No. 21,277 on Employment Protection (hereinafter the “LPE”) was published in the Official Gazette. Please find below the most relevant changes of this new law: 1. The current regime for the payment of social security contributions by employees with suspend contracts (full-fledged or by mutual agreement of the parties), currently calculated at 50% of the value of the las remuneration, is amended by the following one: a) For old age contributions, Pension Fund Administrator (“AFP”) commission and Disability and survivors´ insurance: The contributions to be paid by the employer will be calculated at 100% of the amount of the unemployment benefits granted by the LPE. b) Health and other Social Security contributions: The last monthly salary received must be considered, without prejudice to the current taxable limits. c) It is established that the payment of contributions under this new form of calculation is retroactive for all those persons with suspended contracts under the LPE, prior to the entry into force of the Short Law. 2. Termination of employment contract during the period of suspension: a) Dismissal for company needs and employer eviction is prohibited while the legal or conventional suspension of employment contracts remains in force. b) Notwithstanding the foregoing, the causes for termination by mutual agreement of the parties, voluntary resignation of the worker, death of the worker, expiration of the agreed term and conclusion of the work or service that gave rise to the contract (for contracts for work or labor) are applicable to the suspended workers. c) For workers who are not affected by the law, it is possible to apply the causes of the company´s needs and employer eviction. d) The compensations for the termination of the contract must be calculated in accordance with the last accrued monthly remuneration. e) In the event of termination of the employment contract due to the application of the company´s needs, the employer may not deducted from the severance indemnity, the part of the employer´s contribution to the unemployment insurance destined to the worker´s saving funds. 3. Effects in cases of suspension of the employment relationship, by act or declaration of authority or mutual agreement of the parties; entry into force of agreements on reduction of working hours and remuneration; and alimony: a) Workers from companies excluded from paralysis, whose work is not necessary for the provision of services excluded from the referred measure, may avail themselves to the law through the suspension pact by mutual agreement. b) In cases of suspension of the employment relationship by an agreement between the employer and employee, a presumption of “partial assignment of activity” is incorporated, a necessary condition for the signing of these agreements, consisting of the fact that in the month prior to the signing of the suspension agreement, income from sales or services, without taking into account VAT, has decreased by at least 20%, compared to the same month in the immediately preceding year. c) It is clarified that the agreement to suspend […]

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Merger control: distressed M&A in the time of Covid-19

20 May, 2020

19 May 2020 By: Nicolas Teijeiro / Marcus Vinicius Bitencourt / Bruna B. Rocha / Renata Dalcol de Amorim Ferreira / Carolina Bawlitza / Maria Claudia Martinez Beltran / Isabel Gallástegui / Jorge Benejam / Daniel Flores / Luis Vargas / Rafael Urday Several antitrust issues have taken center stage during the coronavirus disease 2019 (COVID-19) pandemic.  Issues such as price gouging, state aid, and competitor collaborations are top of mind.  But another antitrust issue is likely to share center stage as countries slowly begin to re-open – the failing firm defense.  Most jurisdictions have provisions establishing a failing firm defense in merger control, but the defense often involves a high standard and is rarely triggered.  In the current environment, we are likely to see an increase in the application of the defense. This article provides a brief overview of the main elements of a failing firm defense or exemption focusing on the standards applicable in the United States, Europe, Argentina, Brazil, Chile, Colombia, Mexico and Peru. Failing firms One of the main goals of competition law is to ensure the efficient allocation of resources. In general, struggling companies that cannot keep up with evolving market conditions and consumer trends tend to be replaced by new or better firms. Consumer welfare benefits greatly from companies’ need to be efficient to stay in business and compete, which lowers prices and increases product quality and innovation. However, in certain exceptional cases consumers may benefit more from companies keeping the assets of a failing firm alive than from shutting it down, despite any competition concerns, such as the likelihood of increased consolidation or higher prices. In such cases, the typical antitrust cure (enjoining an anticompetitive merger) may become worse than the disease (allowing a presumably anticompetitive merger go forward), because the assets may exit the market for good. The “failing firm defense” potentially offers some flexibility to companies that wish to merge in the extreme circumstances related to the COVID-19 pandemic.  If the relevant elements are present, financially strained companies (and their buyers) may be able to put forward failing firm arguments to obtain clearance from antitrust agencies around the world. Applicable standards In the United States, the bar set by the failing firm defense is high.  Courts have confirmed that parties face a difficult burden when trying to insulate an otherwise potentially anticompetitive merger based on the failing firm defense.  The failing firm defense not only requires proof that the company is in danger of imminent business failure, but also that it cannot successfully reorganize or be sold to a different buyer.  In practice, each of these factors can be difficult to prove, and establishing all three of them can be close to impossible. Specifically, as stated in Section 11 of the US Horizontal Merger Guidelines of the US Department of Justice and the Federal Trade Comission: “the Agencies do not normally credit claims that the assets of the failing firm would exit the relevant market unless all of the following circumstances are met: the allegedly failing firm would be unable to meet its financial obligations in the near future; it would not […]

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Legal Alert: Ministry of Health introduces e-commerce in medicines

8 May, 2020

May 8, 2020 / By Paulo Larraín y Tomás Muñoz On May 7, 2020, it was published in the Official Gazette Decree No. 58 of 2019 of the Ministry of Health, which entered into inmediate force. This regulation introduces electronic commerce of drugs and allows pharmacies to sell them through electronic means, complying with the requirements established for such purpose, i.e. the provisions that regulates authorization of these activities, home delivery, information to patients, data protection and permitted advertising. Amendments introduced to Decree 466/1984 of the Ministry of Health (Regulations on Pharmacies, Drugstores, Pharmaceutical Stores, First Aid Kits and Authorized Warehouses), please note the following: Sale of drugs by electronic means: The Institute of Public Health must authorize the sale of drugs by electronic means. Authorization requirements: In order to authorize the abovementioned sale, the Institute of Public Health will verify that the applicant: (i) is authorize to operate, (ii) has a website that allows the marketing of the products and, (iii) has a delivery service (direct or by third party). Commercialization conditions: This is related to the prescription some drugs require prior to sale. Direct sale does not require the exhibit of prescription; however, “simple prescription” and “retained prescription” must exhibit the prescription when purchasing, in digital form. At the time of delivery, the prescription will be checked and retained, if applicable. Medications requiring a “receta cheque” cannot be issued by e-commerce. Bioequivalent drugs: All e-commerce of pharmaceutical products must provide alternatives to bioequivalent products. Delivery of drugs: Must fulfill security requirements such as correct sealing and labelling, certain basic information of the customer and, provide certainty that the product will not be damaged or altered. Third parties may provide delivery services to authorized establishments for e-commerce, but all liability will be allocated in the latter. Return: Return of products must be informed according to the Consumer Protection Law. Information of the drugs: The Decree indicates the information that must be available to the public in the website regarding the products it markets (i.e, photograph of the product, international common denomination, price, among others). Additionally, the website must promote the rational use of drugs and other warnings. Data Protection: The prescription, laboratory tests, clinical information and services related to health information will be confidential and considered “sensible data” according to Law No.19,628, of Data Protection. Advertising and presentation of the products: The general rules are maintained in accordance with the provisions of the Health Code and other applicable regulations. Amendments to Decree 405/1983 of the Ministry of Health (Psychotropic Regulations) and Decree 404/1983 of the Ministry of Health (Narcotics Regulations). Sale by electronic means of drugs that require a “retained prescription” are regulated by Title IV bis of Decree No. 466, which introduces the aforementioned regulation. Contacts For more information, please contact: Paulo Larrain Partner plarrain@dlapiper.cl * This report provides general information on certain legal or commercial matters in Chile, and not intended to analyze in detail the matters contained in it, not is it intended to provide a particular legal advice on them. It is suggested to the reader to look for legal assistance before making a decision […]

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Legal Alert Covid-19: Law that increases the capital of the Small Business Guarantee Fund (FOGAPE) and temporarily softens its requirements

5 May, 2020

May 5, 2020 / By Mauricio Halpern y Vicente Vergara On April 24, 2020, Law No. 21,229 (the “Law“) was published in the Official Gazette. Its main purpose is to provide an emergency capitalization to the FOGAPE and to temporarily relax the requirements to qualify for financing, until April 30, 2021. The FOGAPE (an acronym for the initials in Spanish, “Fondo de Garantías para Pequeños Empresarios“) is a fund managed by Banco Estado, the most important public banking institution of the country, which administers resources to provide state guarantees to loans granted by banking entities. The main measures established by the Law are as follows: Contribute state-owned resources to the FOGAPE´s patrimony for an amount of up to US$3,000 million , which may be delivered in one or more transfers within a maximum period of 36 months from the date the Law comes into force. To extend the benefits of the FOGAPE to companies whose annual net sales do not exceed UF 1,000,000 (approximately USD 34,224 million), and to exporters, under certain conditions. It should be noted that, prior to the publication of the Law, only companies whose annual net sales did not exceed 600,000 UF (approximately USD 20,534 million) could apply to the FOGAPE. It establishes maximum percentages to be secured according to the size of the company (amounts in the chart are the approximated value in USD, originally in Unidades de Fomento, 1 UF =US$ 34,22 as of May 5, 2020): Company Size % Guarantees Maximum Secured Amount Annual Sales Prior the Law Law 21,229 Prior the Law Law 21,229 Up to USD 856,000 80% 85% US 171,200 US 214,000 US 856,000 to US 3,424 million 50% 80% US 513,600 US 856,000 US 3,424 million to US 20,534 million 30% 70% US 1,712 million US 5,136 million US 20,534 million to US 34,224 million – 60% – US 8,650 million   The financings guaranteed by the FOGAPE, when granted by institutions that have access to financing from the Central Bank of Chile, must have an annual and nominal interest rate that does not exceed the equivalent of the Policy Interest Rate plus 3%. Although there is no exact information regarding the historical interest rate charged on loans granted with FOGAPE guarantees, this rate would be significantly lower. In order for a bank or financial institution to grant financing with the state guarantee FOGAPE, the respective institution must have guarantee rights awarded in force. The Central Bank, in its capacity as administrator of the Fund, periodically carries out public bids for institutions to join or continue operating with said guarantee and thus, allow access to financing for small and medium enterprises. In this regard, the Law establishes that the rights awarded in bids prior to the entry into force of the Law, as well as those funds available from bids prior to the entry into force of the Law, will remain in force for those who have been awarded them in said bidding, unless they expressly opt to waive the rights awarded, and choose the conditions established in the Law. After 30 days from the publication of the Law […]

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Legal Alert Covid-19: Obligation to wear masks and their infringement as a source of the crime of harming public health

20 April, 2020

April 20, 2020 / By Ignacio Schwerter On April 17, 2020, Resolution No. 282 of the Ministry of Health was published in the Official Gazette. By means of this resolution, the authority established the mandatory use of masks in different places and under different circumstances: 1. To all people using public or private transportation subject to payment. The same obligation applies to those who use lifts or funiculars, regardless of their public or private nature and the number of people using them. Finally, the same measure applies to all operators of the various means of transport covered by this Resolution, as well as to those people working in them. 2. To all people in the places indicated below, when 10 o more occupy the same space: a) Closed spaces in schools and higher education b) Closed spaces in airports and terraports c) Closed spaces in theatres, cinemas, discotheques, casinos and similar venues d) Closed spaces in supermarkets, shopping centres, hotels, pharmacies and other similar establishments open to the public. e) Closed spaces in public and private health establishments. f) Closed spaces in places where products, medicines or food are manufactured, processed, deposited or handled. g) Closed spaces in workplaces. h) Galleries, grandstands and other rooms for the public in sports halls, gyms or stadiums. This is not applicable to sportsmen and women during the practice of sport. i) Pubs, restaurants, coffee shops and similar places, in their public or closed spaces, for those attending or working in them. J) Residences for the elderly. These measures began to apply at 5:00 a.m. of April 17, 2020 and will remain in effect indefinitely, until the epidemiological conditions allow for their suspension. Finally, it is important to bear in mind that the violation of the measures described above will be punished according to the provisions of Book X of the Health Code, and, when applicable, according with the Criminal Code as an attack on public health. The crime in question punishes anyone who endangers public health by violating the rules of hygiene or health, duly published by the authority, in times of disaster, epidemic or contagion, with imprisonment or a fine from six to twenty monthly tax units (unidades tributarias mensuales). Contacts For more information, please contact: Ignacio Schwerter Counsel ischwerter@dlapiper.cl * This report provides general information on certain legal or commercial matters in Chile, and not intended to analyze in detail the matters contained in it, not is it intended to provide a particular legal advice on them. It is suggested to the reader to look for legal assistance before making a decision regarding the matters contained in this report. This report may not be reproduced by any means or in any part, without the prior consent of DLA Piper BAZ | NLD SpA 2020.

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