shareholder-structure-and-ownership

Shareholder Structure and Ownership

SQM Shares:

SQM shares are traded on the three Chilean Stock Exchanges under the ticker symbols SQM-A (Series A shares) and SQM-B (Series B shares). In addition, the Company’s Series B shares trade on the NYSE as American Depositary Receipts (ADRs) under the ticker symbol SQM.

One Series B ADR is equal to one ordinary Series B Share

Both Series have the same economic rights (i.e. both Series are entitled to share equally in any dividends declared on the outstanding stock) and at any shareholders meeting, be it ordinary or extraordinary, one share equals one vote, with the sole exception being the election of the Board of Directors, in which the Series A shareholders elect seven members and the Series B shareholders elect one member.

Additionally, Series B shares cannot exceed 50% of the Company’s issued and outstanding stock. Shareholders of at least 5% of this Series may call an ordinary or extraordinary shareholders meeting, and the Director elected by this Series may request an extraordinary Board session without authorization of the Chairman of the Board. On the other hand, the Director elected by the Series B shares cannot vote in the election of the Chairman of the Board after a tie vote has occurred in the preceding voting process.

Total issued and outstanding stock amounts:

  • Series A: 142.819.552
  • Series B: 120.376.972

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SQM Shareholders:

As of December 31, 2015, Sociedad de Inversiones Pampa Calichera S.A., Inversiones Global Mining (Chile) Ltda., and Potasios de Chile S.A. – collectively, the Pampa Group – controlled 29.97% of the total shares of SQM. As of December 31, 2015, Kowa Company Ltd., Inversiones La Esperanza (Chile) Limitada, Kochi S.A. and La Esperanza Delaware Corporation – collectively, the Kowa Group – owned 2.11% of the total shares of SQM. On December 31, 2006, the Pampa Group and the Kowa Group entered into a Joint Operation Agreement which, together, allows them to control 32% of all shares in SQM. Thereofre, the Pampa Group indirectly controls 32% of all shares in SQM, giving them the status of “controlling group” of the Company.

Potash Corporation of Saskatchewan, Inc. (“PCS”) owns 100% of Inversiones El Boldo Limitada, 100% of Inversiones RAC Chile Limitada, and 100% of Inversiones PCS Chile Limitada, and, accordingly, controlled 32% of the total shares of SQM S.A. as of December 31, 2015.

Additionally, during the year 2015 some of the Company’s main shareholders have decreased or fully disposed of their shareholdings, and others have acquired or increased their shareholdings in SQM S.A.

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Share Concentration and Take-Over:

Article 31 of the Company’s By-Laws state that no holder of Series A or Series B shares will have the right to exercise for himself or on behalf of other shareholders of the same Series A or Series B shares, the right to vote for more than 37.5% of the said Series. Additionally, in accordance with article 31 Bis of the Company’s By-Laws, no person may represent shareholders that collectively have more than 32% of the subscribed shares of the Company.

Chilean Law N°18,045 established certain mechanisms to protect minority shareholders during operations involving a change in control. The referred Law requires the new potential controller to purchase the shares owned by the remaining shareholders either in total or at pro rata in those cases in which the controlling party would receive a premium price for its stock.

These mechanisms to protect minority shareholders during operations would be activated under three conditions:

  1. When an investor wants to take control of the Company’s stock
  2. When a controlling shareholder has reached two thirds of the Company’s stock, the controlling party is required to make a tender offer to acquire the rest of the outstanding stock within 30 days of passing the mentioned threshold.
  3. When an investor wants to take control of a corporation which, in turn, controls an open stock corporation -such as the Company- that represents 75% or more of the consolidated assets of the former corporation.

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Changes in the Corporate By-laws:

The Company By-laws can only be modified during an extraordinary shareholders’ meeting expressly convened for the purpose. The percentage needed to modify the By-laws ranges from (i) the majority of the shares represented at the meeting to (ii) 75% of the total issued shares, depending on the items being modified.

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SQM Dividend Policy:

The Dividend Policy for the 2015 business year was informed at the Annual Shareholders’ Meeting held on April 24, 2015. The 2015 Dividend Policy provides for the payment of a dividend equal to 50% of the distributable net income for the 2015 business year. The 2015 Dividend Policy also provides for an interim dividend to be paid during the final quarter of 2015, to be deducted from the final dividend amount to be paid during 2016.

Chilean regulations establish that a company -such as SQM- must distribute a cash dividend in an amount equal to at least 30% of its consolidated net income for a year, unless it has a deficit in retained earnings.

Cash dividends paid by the Company with respect to its shares are subject to a 35% Chilean withholding tax, which is withheld and paid by the Company. If the Company has paid corporate income tax (First Category Tax) on the income from which the dividend is paid, a credit for the First Category Tax effectively reduces the withholding tax rate.

Upon request, the Company will provide to foreign holders appropriate documentation verifying the payment of Chilean withholding taxes.

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