Set Up a Business Incorporation In Argentina

Set Up a Business Incorporation In Argentina

Set up a Business Incorporation In Argentina

Set up a Business Incorporation In Argentina

 

BUSINESS IN ARGENTINA
CREATION OF A NEW COMPANY OR ACQUISITION OF OWNERSHIP INTERESTS IN AN EXISTING ONE
BRANCH OFFICES
CORPORATION
LIMITED LIABILITY COMPANY
FOREIGN COMPANIES WITH OWNERSHIP INTERESTS IN AN ARGENTINE COMPANY

BUSINESS IN ARGENTINA
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). 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.

BRANCH OFFICES

A branch or representative office, which is created when a foreign company establishes a branch in Argentina, does not imply the creation of a new legal entity. Even though a branch must be registered with the Registry of Companies, the laws governing its existence and validity are primarily the laws of the company’s home country.
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.

Branch Management

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.

 

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) and limited liability companies (sociedades de responsabilidad limitada or SRLs). 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.

Set up a Business Incorporation In Argentina

Set up a Business Incorporation In Argentina

CORPORATION

A corporation (sociedad anónima or SA in Spanish) has a legal existence separate and distinct from its owners. The liability of the shareholders depends on the amount of their investment in the corporation.
Thus, at least two shareholders are necessary to form a corporation. Moreover, stock shares represent the ownership interests, which may or may not be available to the public. A shareholder may not hold more than the 90% shares of a corporation.

Corporate Bylaws

Above all, the corporate bylaws regulate the operation of these companies.  In general, a board of directors manages the general business affairs of the corporation. Usually, it consists 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.

Board Members

Additionally, the board members are jointly and severally liable, without limitations, to the company, its shareholders and third parties for poor performance – there is a mandatory insurance policy to cover for risks concerning 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.

Business Formation in Argentina

Business Formation in Argentina

LIMITED LIABILITY COMPANY

While a limited liability company (sociedad de responsabilidad limitada or SRL) shares many characteristics with a 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;
— The steps to establish an SRL are simpler than a SA; and
— The bylaws are more flexible than a SA.

 

Membership Units

Moreover, membership units (cuotas under Argentine law) represent ownership interests. As with a corporation, the members’ liability depends on the number of units to which they subscribe. For example, a member may acquire one or more units. Additionally, 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.
Also, one or more managers, who may or may not be members, can administer and represent an SRL.

Liabilities in an SRL

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.
There is no need for minimum capital. Nevertheless,  the capital should be in line with the company’s purpose.

FOREIGN COMPANIES WITH OWNERSHIP INTERESTS IN AN ARGENTINE COMPANY

A foreign company wishing to purchase ownership interests in a new or existing company should comply with the previous requirements. However, first, register the company with the Registry of Companies. This procedure involves the following steps:

 

Formation or Incorporation

— Prove that the formation or the incorporation is in accordance with the laws in force in its home country.

Registry of Companies

— File the company’s original articles of formation or incorporation. Also, include their amendments and any other qualifying documents in relation to its legal representatives with the relevant Registry of Companies. In the case of a corporation, these documents should also be filed with the Registry of Corporations.

Registration of the Foreign Company

— Submit the resolution regarding the registration of the foreign company in Argentina. This is to establish a local company or purchase an ownership interest in a local company. In addition, it should include the following data. First, the closing date of the fiscal year. Second, the principal place of business in Argentina. And last, the designated legal representative.

Legal Prohibitions or Restrictions

— Notify the existence of any legal prohibition or restriction in the company’s home country to carry out any of its activities. The company’s articles of formation or incorporation and their amendments, if any, can demonstrate this.

Branches or Representative Offices

— 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.








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