Legal Alert/ Amendment to the rules applicable to bank factoring

Wednesday September 2nd, 2020

On August 28, 2020, the Financial Market Commission issued Circular No. 2.267 which amended Chapter 8-38 of the Updated Compilation of Rules for banks and Circular No. 36 for factoring bank subsidiaries (“Amendment”), allowing banks and their factoring subsidiaries to discount invoices that are assigned by third parties other than the originator of the invoice, considering that the provisions contained in Law No. 19.983 must comply, “Regulates the Transfer and Grants Executive Merit to Copy of the Invoice” (“Invoice Law”) for its assignment, the bank must ensure that the conditions of irrevocability of the acceptance are met. Under the law, an invoice is deemed to be irrevocably accepted if no claim is made against its contents by one of the following procedures: (a) by returning the invoice and the waybill(s), if applicable, at the time of delivery, or (b) by claiming against its contents within eight calendar days of its receipt, or within the period agreed upon by the parties, which shall not exceed thirty calendar days, which shall be effected by registered letter sent to the issuer, or by any other reliable means, together with the return of the invoice and the waybill(s), or together with the request for the issuance of the credit note.

The Amendment is based on the mechanisms contained in the Invoice Law to protect assignees when the requirements for understanding that the invoice has been irrevocably accepted by the debtor, in particular, the unenforceability any personal exceptions which the issuer of the invoice may have made to the issuer of the invoice.

For more information contact Matías Langevin mlangevin@hdycia.cl

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