COMMERCIAL COMPANIES AND BRANCHES
There are basically three kinds of legal entities through which commercial activities are carried out in Argentina: corporations (sociedades anónimas), limited liability companies (sociedades de responsabilidad limitada) and branches of foreign companies (sucursales de sociedades extranjeras). The regime applicable to such legal entities is regulated by Partnerships and Corporations Act (Ley de Sociedades Comerciales) No. 19550.
CORPORATIONS
Corporations in Argentina have the following main characteristics:
+ Shareholders
A minimum of two shareholders is required. Partnerships and Corporations Act does not establish minimum or maximum amounts of capital or percentages that a person should own in a corporation in order to be considered a shareholder. However, the current criteria of the Office of Corporations is that the maximum participation allowed to be owned by one shareholder is 95% of the capital stock. Shareholders can be domestic or foreign companies, or individuals of any nationality or residence.
+ Shares
Capital stock is represented by shares. Shares must be nominative, non-endorsable and may or may not be represented by certificates.
+ Capital
A minimum capital of at least Pesos 12,000 (approximately US$ 4,000) is required. However, due to Resolution No. 9/2004 of the Office of Corporations, corporate capital stock must be appropriate for the development of the corporate purpose.
+ Shareholders’ meetings
They are the governing body of the corporation. Unless the shareholders’ meetings are unanimously held, meetings should be notified by means of publications. Shareholders may authorize another person who is not a director, employee or surveillance officer to act on their behalf at the meetings through a power of attorney.
+ Board of Directors
The Board is in charge of the management of the corporation’s business. There is no requirement for a minimum number of members, consequently, the Board may be only one director, with the exception of certain corporations. However, the absolute majority of directors must reside in Argentina.
+ Surveillance Officer
The surveillance officer is an officer of the corporation entrusted with the task of supervising that the corporation’s acts are in accordance with the law and the by-laws. The surveillance officer is required to be an attorney or accountant. Appointment of the surveillance officer is not mandatory, except in certain corporations.
LIMITED LIABILITY COMPANIES
The limited liability company is one of the most commonly used legal structures after the corporation. Its main characteristics are:
+ Partners
There must be a minimum of two (2) and a maximum of fifty (50). The same criteria explained for the corporations regarding the maximum percentage of capital to be owned by each partner is applied by the Office of Corporations to the limited liability company (i.e.: the maximum participation allowed to be owned by one quota holder is 95% of the capital). Partners can also be domestic (except corporations) or foreign companies, or individuals, and no nationality or residency requirements apply. From a US check the –box rules perspective, limited liability companies are disregarded entities.
+ Capital
It is represented by quotas. There is no minimum capital requirement as in the case of the corporation. However, due to Resolution No. 9/2004 of the Office of Corporations, corporate capital stock must be appropriate for the development of the corporate purpose.
+ Management
Management of the limited liability company is performed by one or more managers, acting individually or jointly as set forth in the articles of incorporation. As with the directors of the corporation, a manager is not subject to any nationality requirement. The absolute majority of all managers appointed by the partners must reside in Argentina, in case the managers act jointly or if there is only one manager.
+ Surveillance Officer
Although it is not common, a surveillance officer may be appointed. Should the limited liability company have a certain minimum capital –currently Pesos 10,000,000– the appointment of a surveillance officer is mandatory.
PARTICIPATION IN THE CAPITAL STOCK OF A CORPORATION OR LIMITED LIABILITY COMPANY: REGISTRATION AS A FORIGN COMPANY
Foreign companies interested in incorporating local companies or in having interests in local companies must, in accordance with Section 123 Partnerships and Corporations Act, be registered with the Office of Corporations (Registro Público de Comercio). For such purpose, they must file with the Office of Corporations several documents (by-laws, articles of incorporation, corporate resolution appointing a legal representative in Argentina).
In accordance with Resolution No. 7/2003 of the Office of Corporations, foreign companies shall also inform whether the company is subject to prohibitions or legal restrictions to develop the activities related to its corporate purpose in its place of origin; and demonstrate that the foreign company complies with any of the following conditions outside Argentina:
(i) the existence of one or more agencies, branches or permanent representations.
(ii) the ownership of participation in companies which qualify as non-current assets; or
(iii) the ownership of fixed assets in its country of origin.
BRANCHES
Foreign companies may use a branch to perform businesses or activities in Argentina.
+ Capital
There is no need for the branch to have a specific amount of capital, with the exception of branches acting in certain industries such as banking.
+ Management
At least one legal representative duly authorized to operate the branch must be appointed.
+ Accounting
The branch must have separate accounting from its head office, and must file annual financial statements with the Office of Corporations.
Branches must also comply with Resolution No. 7/03 issued by the Office of Corporations. Consequently, the same documentation mentioned in the case of corporations and limited liability companies, must be filed with such Office by the time of its registration and on an annual basis.
