EXHIBIT 1.1 

 

**BY-LAWS**

 

**CELULOSA ARAUCO Y CONSTITUCION S. A.**

 

TITLE I 

 

**Name,domicile, duration and purpose**

 

ARTICLE 1. A stock corporation called“Celulosa Arauco y Constitución S.A.” is established, which will be ruled by these by-laws and by the legal and regulatory provisions that may be applicable thereto. 

 

ARTICLE 2. The domicile of the company will be the city of Santiago, Metropolitan Region, without prejudice to the offices, agencies orbranches that may be established in other parts of the country or abroad. 

 

ARTICLE 3. The duration of the company is indefinite and its dissolution will occur in the events provided for in the laws. 

 

ARTICLE 4. The purpose of the company is: 

 

a) To manufacture cellulose, paper and derivates, by-products, derivatives and similar products; acquire, administer, manage and exploit, for its own or thirdparties’ account, forest lands or lands that may be appropriate for forestry; acquire and exploit sawmills and other industries that process raw materials for the production of paper, cellulose and their derivatives and/or lumber in all itsforms; dispose of, export and in general, market in or outside the country, the products referred to, especially lumber, cellulose and paper in all their forms. 

 

b) Acquire, administer, manage and exploit for its own or third parties’ account, agricultural real estate, and transform, industrialize and market agriculturalproducts, as well as produce, process and market food and beverages of any class or origin. 

 

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c) Acquire, administer, manage and exploit for its own or third parties’ account, non-agricultural real estate, aswell as to become involved in the construction industry and develop realty business. 

 

d) Import, export, buy, sell, distribute and, in general market for its own or third parties’ account, motorized vehicles and machinery, elements, equipment and other articles for agricultural, mining, fishing, industrial, electroniccomputers for commercial and domestic use, their accessories and spare parts. 

 

e) Land, air, maritime and river transportation, for its own or third parties’ account, and promotion and development of tourist activities in the country. 

 

f) Manufacture, distribute and market in general, containers of all kinds. 

 

g) Exploit electronic computer equipment, in all its forms, being able to provide in this connection advice in administration andorganization of enterprises, market and feasibility studies and operative research. 

 

h) Also carry out activities and business related with: 

 

1) Mining, including among others, the prospection, reconnaissance, exploration and exploitation of orebodies; and 

 

2) Fishing or catching of beings or species that normally live in the water, being able to market them in any way. 

 

i) Participate, according to the law, in banking enterprises, financial services, insurance,warrants and in general storage and deposit of goods, and in the administration of mutual and security funds. 

 

j) The performance for its own or third parties’ account of port operations, including within them, especially, pier work, lighterage, moving of cargo, storage, stowing goods in vessels and removing them fromstowage. 

 

k) The production, purchase, sale, transportation and distribution ofelectrical energy and water steam. 

 

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TITLE II 

 

**Capital and shares**

 

ARTICLE 5: The capital of the Company is the amount of three hundred forty seven million five hundred and fifty thousand five hundred thirty seven (347,550,537) Dollars of the United States of America, divided intoone hundred thirteen million one hundred and fifty two thousand four hundred and forty six (113,152,446) shares, without nominal value. 

 

ARTICLE 6: The shares will be registered. A register will be kept with a list of all the shareholders indicating their address and the number of shares each one holds.Any transmission or transfer of shares must be noted in such register. 

 

TITLE III 

 

**Administration**

 

ARTICLE 7: The administration of the company corresponds to a board of directors formed bynine members elected by the General Shareholders’ Meeting. 

 

ARTICLE 8: Theboard of the company represents it judicially and extrajudicially and for the fulfillment of the corporate object, which it will not be necessary to evidence before third parties, it is invested with all the authorities of administration anddisposal that the law or the by-laws do not establish as privative of the general shareholders’ meeting, without it being necessary to give it a special power of attorney, even in the case of those acts or contracts with respect to which thelaws require this circumstance. In judicial matters, the board of directors will have all the authorities mentioned in article 7 of the Code of Civil Procedure, especially those of the second paragraph, which are considered expressly reproducedherein one by one. The above is without prejudice to the judicial representation that corresponds to the manager according to the law. In extrajudicial matters, the board of directors may especially collect and receive whatever is owed to thecompany; in any way acquire and dispose of tangible or intangible real or personal property, encumber the company’s assets, real and personal property, with mortgages, easements 

 

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or pledges, regardless of the value of such property or the amount of the respective encumbrances; give and take on lease or commodatum; perform all kinds ofexchange operations, borrow money paying interest, with or without guaranty, in the form of mutuum, overdraft, discounts, advance against acceptance or any other; contract overdrafts and current accounts of deposit or credit; and draw and overdrawon such accounts; draw, accept, endorse, cancel, aval and protest bills of exchange or other mercantile or banking documents; agree to solidarity and indivisibility; form companies and join those that have already been formed, and concur to theadministration, modification, dissolution of such companies, and in general perform all the acts and enter into all the nominate or innominate contracts, being able to stipulate the elements of their essence, natural or merely accidental, regardlessof whether or not they are included in the listing which is merely an example and that does not restrict the authorities of administration and disposal that the law gives to the Board of Directors. 

 

ARTICLE 9:**The following are also authorities and duties of the board of directors:

 

a) Name and remove the general manager of the company; 

 

b) Supervise the behavior of the general manager and the rest of the employees, suspend them,dismiss them and establish their duties and remunerations; 

 

c) Establishagencies or branches in any trade market in or outside the country and suspend them or eliminate them when it is considered advisable; 

 

d) Submit to the regular shareholders’ meeting a balance sheet, inventory and the annual report regarding the corporate results of each year and propose to thegeneral shareholders’ meeting the distribution of the profits and the dividends to be distributed among the shareholders, without prejudice that per se and under the personal liability of the directors who concur to the resolution, it mayresolve to distribute interim dividends according to the law; 

 

e) Issue at theproposal of the general manager the internal regulations that are necessary for the good operation of the company. 

 

f) Inspect the corporate operations and see that all the contracts that are entered into are accurately fulfilled. 

 

g) Take resolutions on calls to regular and special general shareholders’ meetings.

 

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h) All the rest that are conferred on it by the laws and other provisions of the by-laws, and in general, resolve thecases not provided for in them. 

 

ARTICLE 10: The Directors, who will bere-eligible, will remain three years in office and the board of directors will be fully renewed in such periods. If for any reason the general shareholders’ meeting called to elect the directors is not held, their functions will be understoodto be extended until their substitute is named. In the elections made in the general shareholders’ meetings, the latter or whoever may represent them, may accumulate their votes in favor of one person, or distribute them as they deem advisableand those who in the same and only voting receive the highest number of votes will be elected until the number of offices to be elected is completed. The voting can be omitted if the election is proposed by acclamation and none of the shareholderspresent or represented opposes the motion. 

 

ARTICLE 11: The minutes recordingthe election of the board of directors will contain the names of all the shareholders present or represented, specifying the number of shares for which each one has voted, per se, or by proxy, and expressing the general results of the voting.

 

ARTICLE 12: The directors will receive fees for their functions. The amount ofthe fees shall be fixed by the general shareholders’ meeting and will be compatible with other remunerations that they receive for functions or assignments other than the office of director. 

 

ARTICLE 13: The board of directors may only be revoked fully by the regular or specialgeneral shareholders’ meeting, but one or more of its members cannot be individually or collectively be revoked. In any case, any change in the board of directors must be revealed as required by the laws. 

 

ARTICLE 14: At the first meeting held after the general meeting that has appointed it, theBoard will elect from among its midst a Chairman, a First Vicechairman and a Second Vicechairman, who will also be the Chairman, First Vicechairman and Second Vicechairman of the company and of the general shareholders’ meetings. 

 

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ARTICLE 15. The functions of director cannot be delegated and will be collectively exercised in a meeting legally calledto order. The Board of Directors may delegate part of its authorities on the chairman, on one of the vicechairmen, on a director or on a committee of directors, on the managers, assistant managers or lawyers of the company, and for especiallydetermined purposes, on other persons. 

 

ARTICLE 16: The meetings of the boardwill be regular and special. The former will be held on the dates pre-determined by the board itself, and the latter, when called by the chairman, per se or upon indication of two or more directors, for specific purposes that will be mentioned inthe notice. The call will be made by letter sent by the general manager, acting upon the chairman’s instructions, to the address registered by each director in the company. 

 

ARTICLE 17: The meetings of the board of directors will be called to order with the attendance of five directors and resolutions will betaken by the absolute majority of the directors present. In case of a tie, the person chairing the meeting will have the casting vote. 

 

ARTICLE 18: The Board of Directors will appoint a secretary, and the general manager will act as such in the absence of a specific appointment. The deliberations andresolutions of the board will be written into a book of minutes by any means that may be determined by the meeting provided they offer the assurance that there shall be no insertions, eliminations or any other adulteration that could affect theaccuracy of the minutes, that will be signed by the directors who concurred to the meeting. If any of them should die, be absent, or does not sign when required by the secretary, or for any reason should be unable to sign the pertinent minutes,record will be left therein of the respective circumstance or impediment. The minutes will be understood to be approved from the time they are signed according to the preceding sentence, by the Directors who have concurred with their vote to theapproval of the respective resolution, and since that date the resolutions referred to therein can be carried out. The minutes shall also be understood to be approved and the resolutions evidenced therein can be carried out, when approved by theboard of directors at a subsequent meeting. 

 

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The director who wishes to exempt responsibility for any act or resolution of the board of directors, must have hisopposition recorded in the minutes, and an account must be given thereof at the next regular shareholders’ meeting by the person chairing such meeting. 

 

The Director who considers that the minutes of a certain meeting contain inaccuracies or omissions, has the right to record the corresponding exceptions before signingthem. 

 

ARTICLE 19: The company may only enter into acts or contracts in whichone or more directors are interested per se or as representatives of other persons, when such operations are known and approved by the board of Directors and adjust to conditions of equity that are similar to those that customarily prevail in themarket. The resolutions taken in this connection by the Board of directors shall be made known at the next general shareholders’ meeting by the person chairing the meeting, and mention must be made of this matter in the notice of call.

 

ARTICLE 20: The following are among the Chairman’s special duties:

 

a) Chair the meetings of the board of directors and the generalshareholders’ meetings; 

 

b) Call the directors to board meetings when thishas been provided for or when he may consider it necessary or upon the request of two or more directors. 

 

c) Call general shareholders’ meetings when a resolution has been taken in this connection by the Board or if it is requested by a competent number of shareholders; 

 

d) Fulfill and cause to be fulfilled what is provided in the by-laws and the resolutions ofthe Board of Directors and of the general shareholders’ meeting. 

 

In theabsence of the Chairman, he will be replaced, in the first place, by the First Vicechairman, and in the absence of both, the Second Vicechairman will replace the Chairman. 

 

ARTICLE 21. There will be a general manager and the managers and assistant managers that the former may consider it convenient to appoint.The general manager will have the judicial representation of the company according to the law and will be entitled to speak at the board meetings, being liable jointly with the members of such board for all the resolutions that are 

 

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damaging for the company and the shareholders, unless his opinion to the contrary is recorded in the minutes. The following will especially be the duties ofthe general manager: 

 

a) Study any business that may be convenient for thecompany, manage and perform it under the instructions of the board of directors; 

 

b) Carry out all the resolutions of the board of directors within the administrative authorities that correspond to him; 

 

c) Direct the progress of all the activities of the company and see that its rights are enforced in business carried out with third parties in which it participates.

 

d) Take the representation of the company in all extrajudicial acts andcontracts for which he has received powers of attorney from the Board of Directors. 

 

e) Appoint the senior officers and, at their proposal, the rest of the subaltern employees; 

 

f) Dismiss the senior officers referred to in letter (e) of this article and the lower level employees with or without indication of the respective chief. 

 

g) Supervise the behavior of all the employees of the company, inspect all the businesses in and outside the corporate domicile; correct thedefects noted in their operation and propose to the board the most important actions required in the case; 

 

h) If no other person has been appointed therefor, serve as secretary of the board of directors and of the general shareholders’ meetings and keep the corresponding books of minutes of the meetings. 

 

i) Keep the book of shareholders and be careful in order that the issue and transfer ofthe shares will be made properly; 

 

j) See to the correspondence of the company;

 

k) Take under his immediate supervision everything referring to thecompany’s accounting; 

 

1) In general comply, and cause the instructionsreceived from the Board of Directors to be complied with. 

 

ARTICLE 22. Thedirectors will be subject to the inabilities, incompatibilities, obligations, prohibitions and responsibilities indicated in the laws. 

 

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ARTICLE 23: The appointments, vacancies and substitutions that occur with respect to the office of chairman/president andgeneral manager, shall be revealed as provided for in the laws and regulations. 

 

TITLE IV 

 

**General shareholders’meetings.**

 

ARTICLE 24. The shareholders will meet at regular or specialshareholders’ meetings. The former shall be held once a year within the first four months, to take resolutions with respect to the matters that correspond to them without it being necessary to mention them in the respective notice of call. Thelatter may be held at any time, when required by corporate needs, to take resolutions in any matter that the law or by-laws provide must be submitted to the general shareholders’ meetings, and so long as such matters are mentioned in thepertinent notice of call. When a special general meeting must take a resolution on matters that correspond to a regular general meeting, its operation and resolution will be subject, in so far as pertinent, to the quorums and majorities applicableto the latter kind of general meetings. 

 

ARTICLE 25. The following matters mustbe transacted at regular general shareholders’ meetings: 

 

a) Theexamination of the company’s situation and of the reports of the external auditors and the approval or rejection of the annual report, of the balance sheet, of the financial statements and demonstrations submitted by the administrators orliquidators of the company; 

 

b) The distribution of the profits of eachfinancial period and especially the distribution of dividends; 

 

c) The electionor revocation of the members of the board of directors and of the liquidators; 

 

d) In general any matter of corporate interest that does not correspond to the special general shareholders’ meeting. 

 

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ARTICLE 26: The following are matters that must be transacted at special general shareholders’ meetings: 

 

a) The dissolution of the company; 

 

b) The transformation, merger or division of the company, and the amendment of its by-laws;

 

c) The issue of bonds or debentures convertible into shares; 

 

d) The disposal of the fixed assets and liabilities of the company or of all its assets;

 

e) The granting of real or personal guarantees to secure obligations of thirdparties, unless they are affiliated companies, in which case the approval of the board of directors will be sufficient; and 

 

f) The rest of the matters that by law or by the by-laws correspond to the resolution or the competence of the general shareholders’ meetings. 

 

The matters referred to in letters a), b), c) and d) may only be resolved at general meetingheld before a notary public, who must certify that the minutes are the true expression of what occurred and was resolved at the meeting. 

 

ARTICLE 27. The general meetings will be called by the Board of Directors of the company in all the cases provided for by the laws. 

 

ARTICLE 28. The call to general shareholders’ meetings will be made through a prominentnotice that will be published at least three times on different days in the newspaper of one of the corporate domiciles determined by the general shareholders’ meeting, determination that will be maintained until such time as another resolutionis taken at a future general shareholders’ meeting. In the absence of a determination, the call will be made by the Official Gazette. 

 

ARTICLE 29: The general shareholders’ meetings will be called to order at first call with the absolute majority of the voting shares issued, and in second call, withthose that are present or represented regardless of their number, and the resolutions will be taken with the absolute majority of the voting shares present or represented, with the exception of the cases indicated in the following article. Thenotices of the second call may only be published when the General 

 

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Meeting to be held at first call has failed, and in any event, the new General Shareholders’ Meeting must be called to be held within the forty fivedays following the date established for the general meeting that was not held. The general meetings shall be chaired by the chairman of the Board or by whoever acts in his stead, and the person appointed as secretary, if any, will act as such,otherwise the general manager will act in his stead. 

 

ARTICLE 30: Theresolutions of the special general shareholders’ meetings that imply an amendment of the corporate by-laws, must be taken with the absolute majority of the voting shares issued. Resolutions with regard to the following matters will require theaffirmative vote of two thirds of the voting shares issued: 

 

a) Thetransformation of the company, its division and its merger with another company. 

 

b) The advanced dissolution of the company; 

 

c) The change ofcorporate domicile; 

 

d) The reduction of the equity capital; 

 

e) The approval of contributions and estimate of property not consisting in cash; 

 

f) The reduction in the number of members of the Board. 

 

g) The alienation of the assets and liabilities of the company or of all its assets;

 

h) The way in which the corporate benefits will be distributed. 

 

ARTICLE 31: Only the titleholders of shares listed in the shareholders’ register fivedays before the date on which the respective general meeting is held may participate in the general meetings and exercise their right to speak and vote. Even if the directors and managers are not shareholders, they can participate in the generalmeetings with the right to speak. 

 

ARTICLE 32: The shareholders may berepresented at the general meetings by another person, even if he is not a shareholder. The authority to represent them must be given in writing, for all the shares to which the principal is entitled as of the date indicated in the precedingarticle. 

 

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ARTICLE 33: Record will be left in a book of minutes that will be kept by the secretary, if any, or otherwise, by thegeneral manager of the company stipulating the attendance, deliberations and resolutions of the general meetings. 

 

The meetings shall be signed by those who acted as chairman and secretary of the general meeting and by three shareholders elected thereat, or by all those present, ifless than three. The minutes will be understood to be approved from the moment they are signed by the persons indicated in the preceding paragraph, and since that date the resolutions referred to therein can be carried out. If any of the personsappointed to sign the minutes considers that it contains inaccuracies or omissions, he will be entitled to set forth, before signing them, the corresponding exceptions. The deliberations and resolutions of the General Meetings will be written intothe book of minutes by any media, provided these offer the safety that there can be no insertions, eliminations or any other adulteration that can affect the accuracy of the minutes. 

 

ARTICLE 34: Every year the regular general shareholders’ meeting will appoint independent external auditors with the purpose ofexamining the accounts, inventory, balance sheet and other financial results of the company, and with the obligation to report in writing to the next regular general shareholders’ meeting on the fulfillment of the assignment. 

 

TITLE V 

 

**Balance and distribution of profits**

 

ARTICLE 35: Every year the company will prepare a general balance sheet as of 31st December. The board of directors must submit to the consideration of the regulargeneral shareholders’ meeting an annual report about the situation of the company in the last financial period, together with the general balance sheet, the profit and loss statement and the report that the external auditors submit in thisconnection. 

 

ARTICLE 36: The general shareholders’ meeting will take aresolution on the annual distribution of the net profits of each financial period, within the limitations and obligations that the law may impose on it, and the opportunity on which they will be paid, within the legal time periods. 

 

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TITLE VI 

 

**Dissolution, liquidation and arbitration**

 

ARTICLE 37: The company will be dissolved in those cases determined by the law and these by-laws. 

 

ARTICLE 38. Upon dissolution of the company, the board of directors will be understood to subsist until the general shareholders’meeting that will appoint the liquidator or liquidators that will carry out the liquidation is held. The general meeting will also establish their fees. Their authorities and those of the existing attorneys-in-fact or that may be appointed, shall beunderstood limited to the legal authorities. During the liquidation process the liquidator or liquidators will be obliged to make an annual call to general shareholders’ meetings for the purposes provided for in the law. Otherwise theshareholders that represent, at least, ten per cent of the shares issued may request the ordinary justice to make the call. 

 

ARTICLE 39. The differences that occur among the shareholders in their capacity of such, or between these and the company, or their administrators, either during the lifeof the company or during its liquidation, shall be subject to the decision of a mixed arbitrator, who will resolve in only instance and without any form of judicial proceeding, and against whose resolutions there will be no remedy, with theexception of cassation in form by ultra petita and complaint appeal. The parties will appoint the arbitrator by mutual agreement, and if this appointment is not made, the ordinary justice will be called upon to make the appointment from among thosepersons that are performing or have performed the office of alternate justice of the Supreme Court of Justice. 

 

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TRANSITORY PROVISIONS 

 

TRANSITORY ARTICLE. Notwithstanding what is established in the new article 14 of this by-laws and until the Shareholders’Meeting in which it shall correspond to renovate the Board of Directors is held, it is appointed Mr. José Tomás Guzmán Dumas in the position of First Vicechairman of the company, and Mr. Roberto Angelini Rossi in the position ofSecond Vicechairman of the same. 

 

**The undersigned, in his quality ofPresident and Chief Executive Officer of Celulosa Arauco y Constitución S.A., herein certifies that the above document contains the complete text of the by-laws of the Company, including the last amendment effected therein, which is reflectedin the public deed issued by the Notary Public of Santiago Mr. Iván Torrealba Acevedo on January 27, 2005.**

 

Santiago, June 15, 2005. 

 

**Matías Domeyko Cassel**

**Chief Executive Officer**

**Celulosa Arauco y Constitución S.A.**

 

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