The Role of the Independent Evaluator under Article 147 of the Chilean Corporations Law: Technical Standards, Practical Dilemmas, and Current Board Expectations

Transactions with related parties governed by Article 147 of the Chilean Corporations Law (Ley de Sociedades Anónimas, LSA) represent one of the most sensitive areas of corporate governance in Chile. These operations require a level of economic justification and transparency that goes far beyond formal compliance: they are a direct credibility test for the board.

In this context, the Independent Evaluator plays a central role: providing a technical and autonomous analysis that allows the board to make informed, defensible, and socially aligned decisions. Their opinion is not a procedural formality — it is a strategic input.

1. What Does Article 147 Actually Require?

Article 147 establishes that, in any related-party transaction, the board must obtain an independent report evaluating:

• The conditions of the transaction.
• Its economic impact on the company.
• The reasonableness of the price and agreed terms.

Although the law does not prescribe a specific methodology, market practice expects reports that:

• Provide a comprehensive economic analysis of the asset or business involved.
• Assess reasonable alternatives available to the company.
• Explicitly disclose assumptions, risks, and limitations.
• Present a reasonable valuation range, not a single figure.
• Are understandable for a board operating under fiduciary responsibility.

Independence is not merely formal, but substantive: no conflicts of interest, methodological autonomy, and verifiable processes.

2. Technical Standards Commonly Applied in Chile

There is now a clear market expectation regarding how independent evaluations should be conducted:

a) Disciplined use of recognized methodologies

The reference standard aligns with IVS, especially in defining bases of value, ensuring consistency of assumptions, and validating results across methods.

b) Scenario and alternatives analysis

The essential question for any board remains:

Is this the best available alternative for the company?

A robust report evaluates realistic scenarios, relevant risks, and prevailing market conditions.

c) Full transparency of critical assumptions

Reports lacking explicit assumptions or verifiable support are insufficient.
Best practices require evidence-based justification of growth, margins, CAPEX, working capital, discount rates, and comparables.

3. Practical Dilemmas Faced by the Evaluator

In reality, evaluators must navigate complex challenges:

a) Information asymmetries

Related-party transactions often involve parties with unequal information or incentives.
Evaluators must document restrictions and validate key assumptions.

b) Implicit pressures in the process

Boards and executives may have prior expectations.
Evaluators must maintain technical discipline and avoid confirmation bias.

c) Value vs. deal structure

A price may be reasonable, yet the structure (timing, conditions, guarantees) may not be.
The report must analyze both dimensions.

d) Providing ranges, not “the number”

Boards require clarity, but best practice demands ranges supported by sensitivity analysis.

4. What Boards Expect from an Independent Evaluator Today

Boards — particularly in regulated sectors or highly visible companies — expect:

• Technical rigor: solid analysis, consistent methods, verifiable evidence.
• True independence: methodological freedom, absence of bias, traceable processes.
• Executive clarity: understandable reports, explicit decisions, actionable conclusions.
• Integrated economic justification: valuation models aligned with business logic.
• Defensibility: ability to withstand audit, legal review, and potential challenges.

5. Traceability as the New Standard in Independent Evaluations

The most important evolution in recent years is not methodological, but procedural.
Boards, auditors, and legal teams now expect full traceability of the evaluation process, including:

• Records of all information requests and submissions.
• Sources and validation of assumptions.
• Detailed justification for each adjustment or update in the analysis.
• Clear documentation of limitations and conditions imposed by the parties.
• Controlled versioning of the work (what changed and why).

Traceability enhances the credibility of the report, protects the board in potential disputes, and demonstrates effective independence. In high-stakes environments, it is as decisive as the valuation result itself.

Conclusion

The Independent Evaluator under Article 147 LSA is no longer a mere regulatory requirement.
Their role is strategic: they provide legitimacy, reduce risk, and strengthen the economic justification behind complex decisions. In an environment where major transactions are increasingly scrutinized by regulators, investors, and other stakeholders, the quality of the process is as important as the price itself.

At SAJOR Consulting, we specialize in independent evaluations, fairness opinions, Article 147 LSA reports, and valuation support for mergers, restructurings, and arbitration processes, with extensive experience advising boards, CFOs, and corporate legal teams on high-impact decisions.

If your organization is facing a sensitive transaction or requires an independent technical opinion:

Contact us for a strategic and confidential discussion about your case.