According to the World Bank’s Doing Business Report for 2020, only eleven and a half day on average are needed to fulfil the procedures to start up a business in Argentina. The whole average in the region is 28.8 days and Argentina is the third best country in South America. It is also one of the most inexpensive countries to start up a business in the region. This article is a step-by- step initial guide based on Argentina company laws to assist investors who want to set up a company in Argentina.
1. Argentina company ID
1). Select an entity type (A)
First of all, investors should choose the entity type which suits the investment they are willing to do best. For such election, the Argentine legislation offers a wide range of options which are listed and specified at the end of this chapter.
2). Verify name availability (B)
Access the Public Registry of Commerce (“Inspección General de Justicia” or IGJ) website and complete the form on “Control of Homonymy” section.
3). Reserve entity name (C)
By submitting the previous form. It is mandatory to upload the form to the site in less than 30 days; otherwise, the request will expire.
2. Argentina investment type
For registration, there are five possible paths according to the investment choice.
1). Branch of Foreign Business in Argentina
Although the branch shall be registered at the Public Registry of Commerce (“Inspección General de Justicia” or “IGJ”) and the corresponding provincial registry of societies, it is a decentralization of the company’s head office, with no legal entity of its own, ruled by the laws of the country of origin of its head office, which is responsible for the branch’s operations. Said company does not require either its own capital, or shareholders’ or board’s meetings, or records of minutes whatsoever. It must have its accountability separated from the head office’s and must file annual financial statements to the IGJ.
The branch must be managed by a legal representative, who must be a natural person.
The followings are the requirements of branch company:
-Form “Inscripción de sociedad constituida en el extranjero para el ejercicio de la actividad habitual” (Art. 118 LSC) approved.
-Pre-qualification report issued by local notary public or lawyer.
-Head-office documentation (duly legalized, apostilled and translated). (i) articles of incorporation, (ii) certificate of good standing, (iii) government’s body resolution regarding the branch’s creation, stating an address, its fiscal year end and its representative ́s designation, and (iv) proof of the fact that the head office’s main activity and assets are located outside Argentina.
-Identification of its shareholders or legal partners.
-Politically exposed person affidavit.
-A document signed by the representative and certified by a notary public where (s)he accepts her/his appointment and provides personal information, including the national tax ID number.
-Payment of registration fee at IGJ.
-Registration must be published on the Official Gazette.
2). Foreign shareholder or partner of a local entity in Argentina
In order to own shares or quotas of an Argentine entity, a foreign company must be, firstly, registered at the IGJ and the corresponding provincial registry of societies in that regard.
The company registered locally is a separate entity from its head office, with its own rights and obligations, its own capital and its own governing and administrative bodies. Therefore, the head office is not responsible for its operations. The branch shall be responsible before third parties with its own assets.
It must fulfil the same requirements that a branch of foreign business.
3). Foundation of a local company
Drafting and signing the company’s bylaws – which must include: (i) identification of the shareholders or partners; (ii) name and domicile; (iii) purpose; (iv) capital, identifying each partner’s contribution; (v) terms; (vi) provisions regarding management, auditors and shareholders’ meetings; (vii) provisions regarding profits and losses; (viii) partners’ rights and obligations; and (ix) provisions regarding the company’s performance, dissolution or liquidation. Depending on the type of entity chosen, bylaws shall be signed in a public document (SA or SAU) or in a private one with notarized signatures (SRL).
Depositing the initial capital – SAU’s capital must be fully subscribed and paid up upon its incorporation. Remaining entities may only deposit, at least, 25% of their capital at the beginning, completing the remnant within 2 years. Those amounts must be deposited in “Banco de la Nación Argentina”, where the corresponding deposit receipt or a notary public’s certification will be required.
Publishing a notice in the Official Gazette of the Republic of Argentina with the following information: (i) identification of the shareholders or partners; (ii) date of the bylaws; (iii) name; (iv) domicile; (v) purpose; (vi) term; (vii) capital; (viii) managers and auditors; (ix) representative; and (x) fiscal year closing date. In order to publish the notice, in case it is the legal representative who does it, (s)he shall submit a Note to the Official Gazette.
Filling in the registration request at the IGJ and the corresponding provincial registry of societies: (i) form duly stamped; (ii) prequalification report; (iii) bylaws and registered office; (iv) notice signed by the managers and the auditors accepting their designation and a guarantee in favour of the regular directors; (v) notices published on the Official Gazette; (vi) proof of the capital’s deposit; (vii) politically exposed person’s affidavit by directors or auditors; and (viii) payment of the registration fee. This is a general description that may change according to each province.
4). Acquisition of stock ownership in an existing local company
-Signature of a letter of intent or memorandum of understanding and confidentiality agreements.
-Due diligence of the target company.
-Signature of the purchase agreement and submission of the corresponding shares certificates.
-If the target company is a Corporation: (a) the board of directors must be notified of the shares’ transfer; (b) the shares’ transfer must be registered at the Registry of Shareholders’ Book; and (c) if there is a change in the managing body, a Shareholders’ Meeting shall.
be held in that respect to accept resignations and make appointments. Then, the newly appointed authorities must be registered at the IGJ. The new Chairman must link his/ her own tax ID number with the company’s ID.
-If the company is a Limited Liability Company, the transfer of the quotas and the management changes, if applicable, have to be registered at the IGJ. The new Chairman must link his/ her own tax ID number with the company’s ID at AFIP.
5). Acquisition of a goodwill
It is a procedure that implies the purchase of all the assets of the vendor’s business, including not only the facilities, equipment, furniture and tools but also the business’ name, the lease agreements and the customers. It differs from the acquisition of ownership interests in the fact that, by acquiring a goodwill and following its procedure, the buyer is not responsible for hidden liabilities, without the need of contractual provision in that regard.
-Signature of a bill where the vendor should provide the buyer with a detailed and signed note of all the liabilities.
-Publishing a notice on the Official Gazette with a detail of the transaction and information on the place and the date when the vendor’s creditors must present their oppositions.
-Creditors have a 10 days’ period since the last notice published to oppose to the transaction.
-If an opposition is filed, the buyer has to withhold from the purchase price the amount of such liability and deposit it as guarantee in a special account at the “Banco Nación”. The sole deposit shall not imply payment.
-That deposit is valid for a 20 days’ period in which creditors should place a lien against it. If they do not, the deposit is released after those 20 days.
-The creditor who has not placed a lien cannot initiate a claim against the buyer or the assets that are a part of the goodwill once they are transferred- the only exception is for labour creditors, who can claim against both buyer and vendor.
-The purchase price shall not be lower than the amount of the liabilities mentioned in along with the ones corresponding to the creditors that have filed an opposition.
-If there were no oppositions, or if the previous procedures were followed, the purchase agreement is signed and registered at the IGJ and the corresponding provincial registry of societies. The transaction is binding to the parties since that signature and to third parties since it is registered. For third parties, said transaction will be valid upon registration.
The IGJ is the official agency in charge of societies in the Autonomous City of Buenos Aires.
3. Accounting Requirements
After the registration at the IGJ is completed, according to the legal society specifications, a notary public must require the following at the IGJ: corporate books (except for foreign entity branches) and accounting books. There could be differences according to the legal entity established.
Every company must register at the public registry of societies in each province as well, where the procedure may differ.
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