The Company

Legal and Regulatory Framework

Legal and Regulatory Framework

Empresa Nacional del Petróleo (ENAP) is a company owned by the State, created by Law N° 9,618, dated June 19, 1950.

Legal and Regulatory Framework

The basic regulations that apply to ENAP are contained in the Law Nº 9,618 mentioned above, which consolidated text, coordinated and systemized, was established by Statutory Decree (DFL) Nº 1, of the Ministry of Mining, published in the Official Gazette dated April 24, 1987. The text was modified by Law Nº 18,888, published in the Official Gazette dated January 6, 1990; by Law Nº 19.031, published in the Official Gazette dated January 19, 1991; and by Law Nº 19,657, published in the Official Gazette dated January 7, 2000.

ENAP's bylaws were approved by Decree Law N° 1,208, dated October 10, 1950, by the then Ministry of Economy and Commerce.

Pursuant to the provisions of Article 19 Nº 21 of the Political Constitution of the Republic of Chile, the business activities conducted by ENAP are subject to common law applicable to individuals, notwithstanding the exceptions established by law on substantiated grounds.

As a State Company created by law, ENAP is ruled by the provisions of Title I of the Organic Constitutional Law 18,575 on the General Rules of the State's Administration (Ley N° 18.575 Orgánica Constitucional de Bases Generales de la Administración del Estado). Pursuant the above, the principles of lawfulness, continuity and permanence, responsibility, efficiency and unity of action, hierarchy and discipline, and the rules on administrative probity contained in such legal body apply to the Company.

In addition, ENAP is subject to a series of public law standards that apply to the State’s companies, and to the companies in which the State, its institutions', agencies' or companies' participation is equal to or higher than 50%.

Thus, for example, ENAP is subject to the financial, accounting, administrative and disciplinary control of the General Comptroller of the Republic. Regarding its budgetary and financial regime, ENAP is ruled by the provisions of Article 11 of Law N°18,196. Also apply to ENAP the provisions of Articles 29 and 44, letter a) of Decree Law N°1,263 of 1975 on the State’s Financial Administration, which refers to the powers of the Ministry of Finance to instruct profit transfers and advances of the same, and to the requirement of obtaining a previous authorization by such Ministry to engage public credit, either through direct indebtedness, guarantees or other kind, respectively. According to the provisions of Article 3 of Decree Law N°1,056 of 1975, ENAP is only entitled to make capital contributions to companies, to make deposits or to acquire capitals market instruments previously authorized by the Ministry of Finance.

Since October 4, 2002, ENAP is voluntarily registered with number 783 in the Securities Register of the Securities and Insurances Superintendence, and therefore, is subject to the control and supervision of such entity. For this reason, the provisions of Law N°18,045 on Securities Market, and DL N°3,538 that created such Superintendence, apply to the Company in their relevant aspects.

According to the provisions of the Company’s Organic Law, the labor relationship between ENAP and its employees is regulated by the Labor Code.