10 Sep 2014
Differences between Lawyer Attorney Barrister Solicitor – Argentina
Setting up a business
Principal forms of business entity
Formalities for setting up a company
There are three basic types of legal entity available for carrying on commercial activities in Argentina: corporation (Sociedad anónima or SA), limited liability company (Sociedad de responsabilidad limitada or SRL) and a branch of a foreign company. These entities generally are regulated by Corporate Law 19,550. Most SAs also are regulated by resolutions issued by the Superintendency of Corporations. Public companies are subject to regulations issued by the National Securities Commission.
Businesses also may be established as sole proprietorships, general partnerships, and cooperatives.
The procedure for setting up a new firm is simple. The name of the company is first vetted by the Superintendence of Corporations to ensure that no other company has the same name. This involves submitting a simple form with the firm name and type of organization. Registration takes place when the new company submits its notarized contract, along with the remaining documentation required by the Superintendency of Corporations.
Foreign companies interested in incorporating local companies or in having interests in local companies must be registered with the relevant Superintendence of Corporations. A foreign company doing business in Argentina must present its balance sheet to the government and show the assets it has in each country in which the company operates.
Forms of entity
Requirements for an SA
The SA is one of the most common legal entity in businesses.
Actually, there is a requirement of minimum capital of at least ARS 100,000. The level of an SA’s capital stock must be appropriate for the achievement of the corporate purpose, and the Superintendency of Corporations may request that an SA set an amount of capital higher than the minimum. If cash is paid in consideration for the capital stock, at least 25% of the capital must be paid in at the time of incorporation. Then, the payment of the remaining amount will be within the following two years. If the consideration is other than cash, subscriptions must be fully paid in.
Above all, there is a minimum requirement of two shareholders. In fact, the Corporate Law does not set minimum or maximum amounts of capital or percentages that an individual must own in a company or corporation to become a shareholder. However, in Buenos Aires City, the maximum participation a shareholder may currently own is around 95% of the capital stock. Then, at least one other shareholder should own the remaining 5%.
Shareholders can be domestic or foreign companies or individuals of any nationality or residence. In addition, shareholder liability limits to the full payment of the stock each shareholder owns.
Board of Directors:
Indeed, for most SAs, the board may consist of only one director. However, certain corporations require a minimum of three board members. For instance, where capital exceeding ARS 10 million is publicly held and in the case of public utilities.
On the other hand, there are no nationality requirements for directors and they need not be shareholders. However, special rules apply regarding the actual domicile of the directors. But, the board must appoint a president. Also, an absolute majority of the board constitutes a sufficient quorum. Special requirements apply to public companies.
Types of fees:
Fees and related expenses for registration of a local company are around USD 5,000, and some provinces may impose a stamp tax of up to 1% upon registration.
The board of directors is responsible for the management of the business of an SA. The shareholders are the governing body.