A branch may undertake all activities pursued by a company’s head office (HO) on behalf of the HO through the person appointed as the company’s representative. The assets of the entire foreign business, that is, the total value of the HO’s capital, not only the capital the HO assigns to its Argentine branch, is subject to liability. The branch’s accounts must be kept separately from the HO’s operations and its financial statements filed periodically with the Registry of Companies.
The branch must be managed by a legal representative vested with broad administrative and judicial authority—which may be limited in certain circumstances—to ensure that all of the branch’s affairs and business transactions are conducted efficiently.
Branch offices are subject to Registry of Companies’ supervision and must comply with the same requirements as corporations.BRANCH OFFICE REGISTRATION REQUIREMENTS
In order to establish a branch office in Argentina, the following documentation is required:
1— A prequalification report issued by a local notary public or lawyer, as applicable. Their signatures must be certified by the Argentine notaries public or bar association, as the case may be. This report must include the following information:
(a)Quorum and majorities: the opinion of the notary public or lawyer regarding the observance of the quorum and majority rules applicable to the meeting and to the company’s management body that called said meeting.
(b) Principal place of business: location of the branch’s principal place of business, along with an express indication of whether the company’s management and governance take place at that location.
(c) Good standing: a statement from the notary public or lawyer as to whether the company has been dissolved by operation of law or after the expiry of the term, or if the company’s books contain any dissolution agreement or statement of the occurrence of any of the grounds for dissolution, or if the company’s books contain notices of meetings, the agenda of which includes the company’s dissolution.
(d) Chain of entries: the professional must review the “chain of entries” of every act subject to registration,
when applicable, as provided in sections 39, 53, 111 and 126(5) of Annex “A” to IGJ General Resolution
7/05. A chain of entries means that each entry authenticates all previous ones.
Furthermore, an accountant’s prequalification report is required if capital contributions are made in some form other than cash.
2— HO’s documentation, including:
(a)The articles of formation or incorporation, the bylaws and their amendments.
(b) A certificate of good standing, registration and authorization to do business (issued in its home country) that proves the company is not undergoing liquidation or any other process that may prevent it from doing business or disposing of its assets. If these certificates are not available, a report signed by an attorney or notary public from the HO’s home country can be filed.
(c) The resolution of the company’s governing body that resolved to create the branch in Argentina, including:
— The fiscal year end.
— The exact location of the company’s principal place of business in Argentina (the representative may be vested with sufficient authority to establish it).
— The capital assigned to the branch, if any.
— The appointment of a legal representative, i.e., an individual (the appointment may include the authority vested in the representative).
3— Additional documentation to prove that:
(a) The company is not prevented from carrying out any of its businesses in its home country.
(b) The company has already established or holds outside of Argentina:
— One or more operational agencies, branches or representations; and/or
— Non-current fixed assets or exploitation rights over third-party assets of this nature; and/or
— Ownership interests in other companies that do not offer their shares to the public; and/or
— Regular investment operations in stock markets, as included in the company’s purpose.
(c) A list of the partners, members and/or shareholders at the time of the decision to apply for registration, including at least their names and surnames or company name, address or company’s principal place of business, ID or passport number or information regarding the company’s registration, authorization and formation or incorporation data,
as the case may be, and the number of shares, units and votes held and their percentage in the capital stock
4— An original or certified copy of the publication of the notice in the Official Gazette, in the case of a corporation, a limited liability company or another business association structure which is not provided for under Argentina law, including:
(a) In regard to the branch: the principal place of business; the capital assigned to it if any; the date of closing of the fiscal year.
(b) In regard to the appointed representative: personal information; registered address; term of representation
(if any); any limitation or restrictions in terms of his/her authority and, if more than one representative, the capacity in which each one of them will act.
(c) In regard to the HO: the information required in section 10 of Law 19550 about the company’s certificates of formation or incorporation, as the case may be, and any amendments.
5— A document signed by the representative, certified by a notary public or personally ratified prior to registration, or certified by the corresponding association, as applicable, if the representative is a lawyer or accountant, in which the representative must:
(a) Accept his/her appointment and provide his/her personal information;
(b) Establish the principal place of business in Argentina, if so authorized.
(c) Establish his/her registered address within the relevant jurisdiction.
6— Proof of payment of the registration fee.
Creation of a new company or acquisition of ownership interests in an existing one
The Business Associations Law (No. 19550) establishes a wide range of business association forms. The forms most widely used by foreign investors are corporations (sociedades anónimas or SAs as regulated under Argentine law) and limited liability companies (sociedades de responsabilidad limitada or SRLs as regulated under Argentine law). In these cases, unlike branch offices, liability is limited to the amount invested in the business.
Unlike local companies, before foreign companies can set up a company or acquire ownership interests in an existing one, they must submit proof of their formation or incorporation in their countries of origin to the Registry of Companies. They must also file their articles of formation or incorporation, bylaws, their amendments and any other document relating to their legal representatives that may be required to do business.
A corporation (sociedad anónima or SA in Spanish) has a legal existence separate and distinct from its owners. Its shareholders are limited in liability in terms of the amount they have invested in the corporation.
At least two shareholders are required to form a corporation. Ownership interests are represented by shares of stock, which may or may not be offered to the public.
The operation of these companies is regulated by the corporate bylaws. The general business affairs of the corporation are managed by a board of directors, which is made up of one or more members, who may be shareholders or not. The majority of the board members must be Argentine residents. There are no restrictions regarding shareholders’ residency or nationality; however, if the shareholder is a foreign commercial company, it should register first with the Registry of Companies.
The board members are jointly and severally liable, without limitations, to the company, its shareholders and third parties for poor performance; breaking the law and/or bylaws; and any other damage arising from fraud, acting ultra vires (beyond the scope of their authorities) and gross negligence.
Corporations must be incorporated through a notarially recorded instrument. In the City of Buenos Aires they must be registered with the Superintendence of Corporations (IGJ for its acronym in Spanish). Since October 2012, the minimum amount of capital required to establish a corporation is AR$ 100,000 (Decree No. 1331/2012, amending section 186 of Law No. 19550).
In Argentina, corporations are subject to internal and external audits. External audits are undertaken by the company’s authority for the relevant jurisdiction. There are also regulatory organizations to review specific activities.
For example, listed corporations are controlled by the National Securities Commission (CNV for its acronym in Spanish), financial institutions are controlled by the Central Bank of Argentina (BCRA for its acronym in Spanish); and insurance companies are controlled by the Insurance Superintendence (SSN for its acronym in Spanish).
Internal audits are usually carried out by one or more company auditors who are appointed by the shareholders at the annual meeting. Those companies not under the control of a governmental entity are not obliged to appoint company auditors. The bylaws may also establish the creation of a surveillance committee, consisting of 3-15 shareholders, to monitor corporate management.
LIMITED LIABILITY COMPANY
While a limited liability company (sociedad de responsabilidad limitada or SRL as regulated by Argentine law) shares many characteristics with an SA, there are important differences to highlight:
— An SRL must have at least two members and no more than 50;
— An SA cannot be a member;
— SRLs are not eligible to list on the stock exchange;
— A change in one of the members requires an amendment to the articles of formation;
CHAPTER 3— SETTING UP A BUSINESS IN ARGENTINA
— The steps to establish an SRL are simpler than an SA; and
— The bylaws are more flexible than an SA.
Ownership interests are represented by membership units (cuotas under Argentine law). As with a corporation, the members’ liability is limited to the number of units to which they subscribe. A member may acquire one or more units. There are no statutory restrictions on the transfer of units, but the bylaws may contain imposed by law, although they may be imposed by the bylaws.
An SRL is administered and represented by one or more managers, who may or may not be members.
The managers’ liability may be several, but not joint, or joint and several, depending on the management’s organization and the provisions of the bylaws or articles of formation.
An SRL may be created through either a public deed (i.e., certified by a notary) or private (i.e., contract) instrument which must be filed with the Registry of Companies corresponding to its domicile.
No minimum capital is required, but the capital should be in line with the company’s purpose.
COMMON ASPECTS ABOUT REGISTERING A COMPANY IN ARGENTINA
In Argentina, commercial companies register with the Registry of Companies corresponding to their domicile or jurisdiction. The government body that regulates the business associations and branch offices in the City of Buenos Aires is the IGJ.
The process for registering a company with the IGJ includes the option for a “fast track” formation process, allowing registration on the same day that the documentation is filed, along with the payment of an administrative fee of AR$ 1,000. If the applicant elects to follow the ordinary process, registration takes around 30 days. In either case, the following requirements must be met:
1— Application for reservation of a name
A name is reserved by completing Form “B,” which can be downloaded from the IGJ website. The applicant will be given three options when he/she clicks on “Formularios de presentación de trámites.” The applicant must complete all the information required, print out the form and pay the relevant fee. The form must be submitted to the IGJ’s Dispatch and Distribution Desk. The name will be reserved for 30 days, which means that, during that period, nobody else can make use of it.
2— Submission of the organization, incorporation and changes form (Form “H”)
The applicant must submit “Form H,” along with the following documentation:
(a) A professional prequalification report issued by a notary public or lawyer, as appropriate. The signatures of said professionals must bear the certification of the corresponding professional association, as applicable.
This report must include the professional’s opinion on quorum and majorities, as well as on the company’s head office and good standing. Furthermore, prequalification report from a certified accountant is required if capital contributions are made in any form other than cash.
(b) A non-certified and a notarized copy of the articles of organization, formation or incorporation, as the case may be. All signatures on such documents must be certified by a notary public, or ratified before the IGJ.
(c) An instrument certifying the location of the company’s head office if the head office location is not stated in the articles of formation or incorporation.
(d) A non-certified copy and a notarized copy of a document certifying the acceptance by the members of the company’s managing and surveillance bodies if their signatures do not appear in the articles of formation or incorporation.
(e) Evidence of the posting of a bond by the regular directors or managers, as the case may be. A copy of the policy signed by the attorney or notary public if the company has taken out surety insurance.
DOING BUSINESS IN ARGENTINA — AN INVESTOR’S GUIDE
3— Payment of the incorporation or formation fee and proof of payment. These fees must be paid at the National Bank of Argentina (BNA for its acronym in Spanish).
4— Publication of a notice and submission of the proof of publication (original or certified copy).
Section 10(a) of the Business Associations Law establishes that limited liability companies and corporations must make a one-day publication in the official gazette.
The notice must contain the following information:
— Name, age, marital status, nationality, occupation, address and ID number for the SRL members or shareholders;
— Date of the articles of formation or incorporation;
— Company name;
— Members of the managing and surveillance bodies, including their names and respective term of office, where relevant;
— Legal representatives;
— Date of closing of the fiscal year.
5— Make an initial deposit of 25% of the capital with the BNA. The deposit may be done at the time of
Proof of the contributions must be presented by submitting the original deposit slip, in the case of cash
contributions, of any other relevant documentation, in the case of non-cash contributions
FOREIGN COMPANIES WITH OWNERSHIP INTERESTS IN AN ARGENTINE COMPANY
A foreign company that wishes to purchase ownership interests in a new or existing company must
also meet the requirements mentioned above, but first register the company with the Registry of
Companies. This procedure involves the following steps:
— Prove that it has been formed or incorporated in accordance with the laws in force in its home
— File the company’s original articles of formation or incorporation, their amendments and any
other qualifying documents, amendments and documents related to its legal representatives with
the relevant Registry of Companies (if a corporation, these documents must also be filed with the
Registry of Corporations).
— Submit the resolution whereby it was decided to register the foreign company in Argentina in order
to establish the local company or purchase ownership interest in a local company, which must include
the closing date of the fiscal year, the principal place of business in Argentina and the designated
— Notify the existence of any legal prohibition or restriction in the company’s home country to carry
out any of its activities, demonstrated by the company’s articles of formation or incorporation and
their amendments, if any.
— Provide evidence that the company meets at least one of the following requirements outside
Argentina on the date of application for registration:
— Existence of one or more branches or representative offices, proven by the relevant good standing
certificates issued by the appropriate authorities in their respective locations.
CHAPTER 3— SETTING UP A BUSINESS IN ARGENTINA
— Ownership interests in other companies consisting of non-current assets, as defined by generally
accepted accounting principles.
— Ownership of fixed assets in its home country; the existence and value of which must be evidenced
as defined in generally accepted accounting principles.
The last two requirements must be evidenced by the company’s financial statements and/or certificates
signed by its officers, as taken from the records on the company’s books.
— Individualize the partners, members or shareholders at the time of the application.
DOCUMENTS ISSUED ABROAD
Documents issued abroad must be filed according to the requirements established by the legislation in
force in the country of issuance, certified by the respective Argentine Consulate with jurisdiction over
the company’s place of origin, or bear The Hague Convention Apostille, if applicable. The documents
must be filed along with their Spanish translation done by a sworn translator licensed in Argentina
whose signature must be certified by the professional translators association.
All documents issued abroad may be registered by an Argentine notary public, along with the
corresponding sworn translation into Spanish.
If a foreign company wishes to participate indirectly in a local company through an investment vehicle,
it must meet all the requirements mentioned above, submitting all the information regarding the
company controlling that vehicle as well.
The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires lawyer in Argentina.