The Chilean securities regulator SVS last month accused executives including Julio Ponce - SQM's (>> Sociedad Quimica y Minera de Chile S.A.) (>> Sociedad Quimica y Minera (A Share)) chairman and late dictator Augusto Pinochet's former son-in-law - of buying up shares below market prices and then reselling them at above-market prices through a complex web of holding companies.

Ponce controls SQM, which has the rights to the biggest natural iodine and nitrate reserves in the world, located in Chile's Atacama desert, through a number of holding companies, including Norte Grande (>> Norte Grande S.A.) and Oro Blanco (>> Sociedad de Inversiones Oro Blanco SA).

On Friday at a meeting, shareholders from pension and investor funds voted against an attempt by Oro Blanco and Norte Grande to raise $120 million (75.1 million pounds) and $92 million respectively.

The measures were still approved, since both companies are indirectly controlled by Ponce and SQM.

SQM owns a 67 percent stake in Norte Grande, and Norte Grande holds a 76 percent stake in Oro Blanco, according to Reuters data.

The minority shareholders questioned the motives of the board for the capital hike, which the company says is needed to refinance debt.

"These operations have caused losses estimated at $500 million, which Mr. Ponce expects minority shareholders to pay for with the planned capital increases," said Vicente Bertrand of Moneda Asset Management, referring to the accusations of market manipulation.

"The enormous asymmetry of information between the controllers and minority shareholders, which has led to shareholders' being made aware of unknown or partially revealed transactions only because of the SVS charges, raises questions over the real reason for the capital hike," he added.

AFP Provida, the powerful Chilean pension fund administrator, voted against the capital increases, having previously asked that the meeting be suspended until more was known about the financial situation of the companies.

"This rejection is based on an absence of certain necessary background that would allow us to evaluate the need and suitability of the proposed capital increase," said Andres Vezpremy, AFP Provida's representative.

Ponce himself was not present at the meeting, but his brother Luis Eugenio Ponce, vice-chairman at Oro Blanco and Norte Grande, was there. He declined a request by Reuters for comment.

Aldo Motta, Norte Grande's chief executive and one of Ponce's co-defendants, sat stony-faced through the shareholder comments and left quickly at the end of the meeting without speaking to the media.

(Writing by Rosalba O'Brien and Anthony Esposito, Additional reporting by Fabian Cambero; Editing by Prudence Crowther)

By Anthony Esposito and Felipe Iturrieta