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Recent amendments to the regulation applicable to local and foreign companies

In brief

During the first months of this year, both national authorities and the Public Registry of the City of Buenos Aires (IGJ) enacted regulations providing for relevant changes applicable to local companies, as well as to foreign companies registered or applying for registration in the jurisdiction of the City of Buenos Aires.


In focus

Regulatory Changes

1. Regulations of National Scope

The following regulations have national scope and apply to Argentine companies, in particular to corporations and limited liability companies, regardless of the jurisdiction in which they are registered:

a) Minimum share capital. The minimum share capital required for the incorporation of local corporations was increased from ARS 100,000 to ARS 30 million (Presidential Decree No. 209/2024).

b) Section 299, Subsection 2 of Law 19,550. The amount of share capital over which corporations are subject to permanent state supervision, and limited liability companies must have a mandatory supervisory board or statutory auditor, was set at ARS 2 billion (Resolution of the Ministry of Justice No. 10/2024). 

2. Regulations applicable in the City of Buenos Aires

The following regulations are applicable to companies registered or to be registered with the IGJ:

I. Local companies

a) Term of duration. The limitation of the maximum term of 30 years for the existence of companies was abrogated. Equity holders are entitled to freely determine such term (General Resolution IGJ No. 1/2024).

b) Company purpose. The possibility of having multiple corporate purposes was re-established, and the requirement that the corporate purpose be closely related to the share capital and the express power of the IGJ to require a higher amount of share capital in case it is considered inadequate for the development of the corporate purpose was repealed (General Resolution IGJ No. 2/2024).

c) Gender diversity in corporate governance bodies. The obligation of certain companies subject to permanent state supervision, as well as civil associations, to comply with certain requirements related to gender diversity in the composition of their administrative and supervisory bodies was repealed (General Resolution IGJ No. 13/2024).

II. Foreign companies

IGJ established certain amendments to the regulation applicable to foreign companies registered or to be registered as branches or any other kind of permanent representation (Section 118 of Law 19.550); and to those registered or to be registered for the purpose of participating as partners or shareholders of a local company (Section 123 of Law 19.550) (General Resolutions IGJ No. 5/2024 and No. 10/2024).

a) Special purpose vehicle companieseconomic group; countries with no or low taxation. The requirements for registration and maintenance were made more flexible, as detailed below:

i. The prohibition on registering more than one special purpose Vehicle (SPV) per group and the restriction on SPV being the result of a chain of control between successive sole-member companies were removed.

ii. The possibility of registering foreign companies as part of an international group that meets the criteria of notoriety and public knowledge was re-established, permitting the compliance with the requirement of evidence ownership of assets more flexible, both at the time of original registration and within the framework of the annual information regime.

iii. The status of the SPV shall be indicated following the company name.

iv. The possibility (with restrictive criteria) of registering companies incorporated or registered in countries, domains, jurisdictions, territories, associated states or special tax regimes considered non-cooperative for the purposes of fiscal transparency and/or categorized as non-collaborators in the fight against Money Laundering and Terrorism Financing Risk was reinstated.

b) Validity of registration. The registration of foreign companies as a branch or to participate as an equity holder of local companies carried out in any jurisdiction of the Argentine Republic is deemed valid.

c) Guarantee of legal representatives of branches (Section 118 Law 19.550). The amount of the guarantee to be provided by the representatives was modified, from the fixed amount of ARS 500,000 to the amount equivalent to 60% of the minimum legal capital stock established for corporations (if there is no capital assigned), or 60% of the capital assigned to the branch, with a minimum amount of ARS 300,000 and a maximum of ARS 1 million to be insured.

d) Guarantees of legal representatives of foreign partner or shareholder companies (Section 123 Law 19.550). The obligation to provide a guarantee for the performance of their duties as such was eliminated.

e) Registrable acts or resolutions of investee companies. Certain amendments with respect to registrable acts or resolutions of local companies in which foreign companies have an equity interest have been introduced, including the elimination of the obligation that foreign companies may only participate in shareholders’ or quotaholders’ meetings through their registered legal representative or an attorney-in-fact appointed by such representative.

III. Simplified stock companies

Certain changes — some temporary and some others permanent — were made to the regime for the incorporation and operation of simplified stock companies (sociedades por acciones simplificadas or SAS) in order to encourage their incorporation and eliminate certain restrictions previously imposed on their operation (General Resolutions IGJ 8/2024, 11/2024, and 12/2024).

These include the following: 

a) Model articles of association. The model articles of association established for the incorporation of SAS was modified.

b) Ongoing requirements. The obligation of the SAS to comply with and prove the existence and veracity of the registered office, and the opening of digital books under penalty of: (i) considering them presumptively inactive; (ii) not proceeding with any registration until they are regularized; and (iii) reporting such presumption to the Federal Tax Authority of Argentina was eliminated.

c) Rectification. With respect to the rectification or correction of those SAS incorporated without the digital signature of all its members, the current partners must ratify the incorporation instrument at the time of filing a registration procedure.

d) Transformation. The regulation that provided for a differentiated treatment for the transformation of SAS into any type of company provided for by Law 19.550 was repealed.

Click here to read the Spanish version.

Author

Geraldine Mirelman focuses on Corporate Law and Mergers & Acquisitions. Geraldine is a member of the Buenos Aires Bar Association, author of the book "El deber de lealtad del accionista controlante en la compraventa de acciones" (Fiduciary duties of the controlling shareholder in a share purchase transaction), and has participated in numerous seminars and events related to her practice.

Author

Adriana Paola Caballero is an Attorney at law in Baker McKenzie, Buenos Aires office.

Author

Victoria Holze is an Attorney at law in Baker McKenzie, Buenos Aires office.

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