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Private Company -Sociedad Anónima (SA)

Limited Liability Company - Sociedad de Responsabilidad Limitada (SRL)

Single Owner Company - Sociedad Anónima Unipersonal (SAU)


What is the main source of law authorising this entity form?

The LGS (´Ley General de Sociedades N 19.550´) - Argentine Companies Act.

Resolutions set forth by the IGJ (´Inspección General de Justicia´) -Public Registry of Buenos Aires City - as a companies’ control entity and public registry.

Regulations issued by AFIP (´Administración Federal de Ingresos Públicos´) – Tax Revenue Authority - as a public revenue control office.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The SRL has legal personality.

(Maximum) period of existence

There is no maximum period of existence. However, it must have a definite one.

Governing document(s)

The SRL is governed by its articles of incorporation.

Liability of incorporators / shareholders

Incorporators / partners enjoy limited liability up to the capital they undertook to invest in the SRL. Limited liability is subject to limited instances of piercing the corporate veil.

(Governing) bodies

The SRL governing body is the Partners´ Meeting. The SRL management body is the managers.The SRL has a syndic or Surveillance Body (if applicable).

Other particularities

The SRL may have holdings in any type of companies provided that there are no reciprocal holdings and that the holdings do not exceed certain legal limits.


Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Yes. The SRL may enter into legal national and international mergers (whereby the company ceases to exist by operation of law and its assets are acquired under universal succession of title) and divestitures/demergers of all or a portion of its assets and liabilities (with universal succession of title to the relevant assets) and conversions (changing into another form of legal entity without ceasing to exist).


Can this type of entity be publicly listed or held?

No.


Can this type of entity be used for a non-profit or charitable organization?

Generally, no, given its nature as a commercial entity, with the ability to make profit distributions, and being subject to taxes and supervision.



Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

notarial deed of incorporation or private instrument of incorporation, publication of incorporation in the Public Gazette, form of constitution and name´s booking, insurance policy for regular manager, affidavits of incorporators, Form 185 (in case a CUIT is requested).

The name of the SRL must include the word “S.R.L.” or “Sociedad de Responsabilidad Limitada”.

Involvement of notary, company register, governmental authorities

If the partners/incorporators decide to set up the company under a notarial deed of incorporation it must be executed before an Argentine notary, otherwise, the articles of incorporations can be executed by private instrument. The articles of incorporation must be executed in Spanish. The partners can be represented by a power of attorney. The SRL comes into existence pursuant to the notarial deed or the private instrument but it becomes regularly incorporated when registered with the incumbent Public Registry.

Timing (estimate)

Timing of regular procedure: 1 month; timing of expedited procedure: 5 days, subject to there being no observations of the Public Register of Commerce.

Main costs, including registration and similar fees (excluding legal fees)

The main costs are registration costs and notaries’ fees. Registration costs vary depending on the jurisdiction of incorporation. As an example, in Buenos Aires city, registration costs are approximately: 30,000 ARS under the regular procedure (302 USD) and 40,000 ARS under the expedited 5 days procedure (402 USD).

In case of incorporation of the SRL in the City of Buenos Aires under the expedited procedure, the registration of legal and accounting books with the Public Registry jointly with the registration of the SRL, may be used for an additional cost of 5,000 ARS (50.25 USD). This alternative may not be available in other jurisdictions.

Lawyers’ fees are approximately ARS 80,000 (USD 804).

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The SRL´s purpose (and any subsequent amendments to it) must be stated in the articles of incorporation filed with the Public Registry. The purpose of the SRL may include any activity with commercial purpose.


Minimum number of incorporators / shareholders and residency requirements

A minimum of 2 and a maximum of 50 incorporators/partners is required.

In Buenos Aires city, if there are only 2 partners and one of them is the minority party, the IGJ requires that the minimum percentage of participation shall be between 2% and 5% of the capital quotas.

No specific residency or nationality of incorporators/partners is required.

Partners/incorporators may be either persons or companies, which must demonstrate sufficient economic capacity in order to act as quota holders.

Furthermore, companies must be registered at the incumbent Public Registry in order to be partners of an SRL.


Minimum number of directors (or other applicable officers) and residency requirements

A minimum of 1 regular manager and 1 alternate manager is required. The majority of managers must have their residency in Argentina.


Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

There is no specific minimum capital amount for the SRL.

The SA´s minimum share capital (i.e. 100,000 ARS) is a guideline to what the minimum capital of a SRL might be.

The Public Registry of each jurisdiction ultimately decides what the minimum capital of a SRL is. In Buenos Aires city, for example, the IGJ establishes that the minimum capital of a SRL must be 30% of the minimum capital of the SA.

The SRL´s capital must be subscribed by 100% of the partners at the moment of incorporation. If contributions are monetary, 25% must be paid up at such time and there is a 2 year term to pay up the remaining 75%. If contributions are non-monetary, they must be paid up at the moment of subscription.

The SRL may only request the opening of a bank account after being registered at the Public Registry.


Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

Execution of the notarial deed of incorporation or the private instrument of incorporation may be carried out by virtue of a power of attorney.


Is a tax identification number, or equivalent, required? If so, how is it obtained?

In the City of Buenos Aires: (i) under the regular procedure to register the incorporation of a SRL, the CUIT (´Clave Única de Identificación Tributaria´) - Single Identification Tax Number – may be requested by filing AFIP’s Form 185, when filing to register the SRL with the incumbent Public Registry, and (ii) under the expedited procedure, the CUIT must be requested when filing to register the SRL with the incumbent Public Registry. Note that these alternatives might not be available in other jurisdictions.

In order to obtain a CUIT, a public accountant must issue AFIP´s Form 185 together with payment of 2,500 ARS (25 USD).



What is the title of the applicable company registry?

Argentina is politically divided into 24 Provinces. Each province is autonomous and therefore has its own Public Registry. All private SRLs must be registered with the Public Registry of the jurisdiction corresponding to its place of incorporation.

The IGJ manages the Public Registry in the City of Buenos Aires and most companies register with it to operate commercially in that city. Furthermore, foreign companies must register their articles of incorporation and bylaws with the IGJ, in order to be shareholders of a corporation.


What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The information listed below must be filed with the Public Registry of Commerce and is publicly available:

  • Articles of incorporation
  • Date of incorporation
  • Name of the SRL
  • Jurisdiction of incorporation
  • Address of the SRL
  • Object and activities of the SRL
  • Term of duration
  • Quotas (detail of issued and paid up quotas)
  • Incorporators´/partners´ personal information (if they are persons: full name, age, civil status, nationality, address, identification number; if they are companies: number and date of register of incorporation with the Public Register of Commerce in Argentina).
  • Personal information of the Manager or members of the Board of Managers and syndics or Surveillance Body (if applicable (full name, age, civil status, nationality, address, identification number) and duration of appointment term.
  • Procedure that must be followed in case of liquidation
  • Date of closing of fiscal year



 


What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The Management Body is the managing/executive body of the SRL. It represents the SRL and must carry out management duties in the interests of the SRL in accordance with its purpose.

Pursuant to the articles of incorporation, the members of the Management Body may either be jointly and severally responsible for all the acts carried out by the board or each manager may be responsible for his/her own acts. It is important to obtain legal advice on this issue prior to becoming a manager.


How are the members of the executive body appointed, dismissed and replaced?

The Management Body is initially appointed in the deed of incorporation and thereafter by the Partners´ Meeting. They may be appointed for an indefinite period of time.

Managers may be partners.

Alternate managers may be appointed.

Dismissal and replacement of the managers is decided by the Partners´ Meeting pursuant to the articles of incorporation.

Managers may always be dismissed by decision of the majority of the Partner´s Meeting.

The Manager is the president of the SRL with full powers to represent it. If there is a Management Body, the articles of incorporation may establish different positions of the members. Otherwise, they may jointly manage the SRL.

Any changes in the management appointments must be registered with the incumbent Public Registry.


Is it possible to appoint corporate directors or must all directors be natural persons?

No. Only natural persons can be managers.


Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

No. However, the articles of incorporation may establish that one or more members of the Management have to act as a non-executive manager or managers. The Management Body is always a one tier structure.


What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The Partners´ Meeting is the body of partners. It is the governing body of the SRL and, hence, adopts the managers´ acts and the fiscal statements, and makes all other governing decisions, including amending the articles of incorporation, the appointment of managers, quota issues, capital reductions, distributions, liquidation, etc.


What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Each quota gives a right to a vote in the Partners´ Meeting.

The bylaws of the SRL set forth the way in which the Partners´ Meeting may adopt resolutions. The bylaws may establish that the partners issue their votes either by serving a notice upon the Manager/s or convening a meeting.

The bylaws may establish the way in which the Partners´ Meeting may convene and hold meetings. By default, the SA regulation applies.

The bylaws may establish how Partners´ Meeting may change the articles of incorporation. By default, the majority representing ¾ of capital is required. Furthermore, if a partner represents the majority of capital, the vote of another partner is required.

Partners who vote against any decision that increases their responsibility have a right to withdraw.

Partners not present at a meeting that increases capital or who voted against it, have a right to subscribe quotas in proportion to their holdings.

Decisions others than those appointing managers or syndics or changing the articles of incorporation may be voted upon and adopted if a majority of the capital is present at the meeting, unless the articles of incorporation establish a higher requirement.


Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Yes.

  • A special surveillance regime applies to a SRL with capital of ARS 50,000,0000 (USD 502,512.5) or more.
  • Such SRL’s are subject to mandatory surveillance from the Public Registry.
  • Furthermore, the Partners´ Meeting must appoint a regular syndic and an alternate syndic or a Surveillance Body.
  • Partners must (i) convene an annual general meeting to consider and adopt the annual fiscal statement within 4 months after the end of the fiscal year, and (ii) file the fiscal statement with the Public Registry of Commerce.
  • The bylaws may establish surveillance rules; otherwise, by default the SA rules apply.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

No. Unless, the SRL´s capital is ARS 50,000,0000 (USD 502,512.5) or more, as stated above.


Is the entity permitted to determine its own financial year?

Yes.


Is the entity subject to any statutory (external) auditor obligations?

Yes. It is not a legal obligation but an accounting one.


Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Yes, an SRL with capital of ARS 50,000,0000 (USD 502,512.5 or more must appoint a regular syndic and an alternate syndic or a Body of Surveillance. This requirement does not apply to other SRL’s.



What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

The capital is divided in quotas nominated in Argentinean currency at 10 ARS or a multiple of such amount. The issue, transfer and granting of security interests on quotas must be registered with the incumbent Public Registry.


Are different classes of ownership interests possible? If so, what are some examples of different classes?

All shares must have the same nominal value and grant right to a vote.


What documentation is required for the transfer of ownership interests?

The Partner assigning quotas or the assignee must serve notice of the assignment certificate upon the Manager/s in order to enforce it. The SRL must request the register of the quota assignment with the incumbent Public Registry for the assignment be enforceable with respect to third parties.


Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

Yes.

  • If a partner assigns unpaid quotas, such partner is jointly and severally responsible with the assignee for the unpaid amount.
  • Quota transfers may be limited in the bylaws.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.


How are shares issued? (including information on payment obligations, registration requirements)

The bylaws may establish how quotas are issued. By default, the regulations applicable to the issue of shares by SA’s apply to SRL’s.


Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Non-cash payment of quotas is possible. Contributions in kind of real estate, equipment or other non-monetary assets must be integrally delivered at the time of the subscription, and their value must be duly estimated. Otherwise, the value might be challenged and the partner might be found responsible for such miscalculation. It is better to have contributions in kind estimated by an official auditor in order to avoid any challenges.

Partners are jointly and severally liable for the payment of any contribution to subscribed quotas and the valuation of contributions in kind.

Share premium contributions without issuing quotas are not specifically regulated. However, there is an available social investment device: supplementary quotas. These quotas are issued in proportion to the partner`s holdings in the SRL and are deemed paid up and capitalized after having been made by request of the Partners´ Meeting.


Any requirements with respect to share cancellation, share repurchase and other capital reductions

Capital reductions are mandatory when the annual fiscal loss equals the value of reserves and 50% of capital share. Otherwise, even if losses are not that high, the Partners´ Meeting may reduce capital to establish fiscal equilibrium or make a voluntary reduction by preparing a special balance sheet for such purpose. This procedure is subject to creditors’ opposition. There are no provisions in the LGS for repurchasing of quotas.


Any requirements with respect to distributions to shareholders?

The Partners’ Meeting may adopt resolutions regarding the distribution of dividends among the partners in proportion to their ownership.


Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes. The provisions of such an agreement must not contradict the articles of incorporation, but additional and/or more detailed provisions are allowed.



Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The SRL must:

  • Maintain its business address
  • Appoint managers and syndics or a Surveillance Body (if applicable)
  • Make applicable tax filings.
  • Inform to the Public Registry of Commerce regarding any capital share variation, transfer of quotas or granting of security interests.
  • Prepare annual accounts, adopt them at an annual Partners´ Meeting and file them with the Public Registry of Commerce (if applicable).

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

At the Federal Level:

Corporate income tax: flat rate of 25% for fiscal years initiated after January 1, 2021 (30% for fiscal years initiated after January 1, 2018 and before January 1, 2021). Dividends on Argentine shares originated in profits obtained in fiscal years started after 1 January 2021 paid to Argentine individuals and/or non-Argentine residents are subject to 13% dividend tax withholding. No dividend tax applies on dividends paid to Argentine entities.

Value Added Tax: The generic tax rate is 21% VAT. It is paid at each stage of the chain of production or distribution of goods or services.

Tax on debits and credits on bank accounts: All credits and debits originated in bank accounts held at Argentine financial institutions, as well as certain cash payments, are subject to this tax, which is assessed at a general rate of 0.6%.

Personal assets tax: This tax is basically imposed on assets existing as of December 31 each year held by:

  1. Resident individuals and estates (who are taxed at different tax rates depending on the computable value of the assets), which are located in Argentina and abroad; and,
  2. Non-resident individuals and estates (taxed at a 0.5% tax rate), which are located in Argentina.

Non-residents pay this tax exclusively on their assets in Argentina.

Shareholdings and/or interests in local companies owned by resident or non-resident individuals or non-resident entities are subject to this tax. The local company should pay the tax, as a substitute taxpayer in connection with the equity interests of its shareholders, at a rate of 0.5% on the net worth value per share (or quota) of the company, as reflected in the last financial statement closed prior to December 31 of the year in which the tax is assessed.


At a Provincial level:

Gross Income Tax: imposed on income derived from certain activities carried out within a province. The rate may vary from jurisdiction to jurisdiction depending on the taxable activity, usually ranging between 1% and 7%.

Stamp tax: levied by most Provinces on documents evidencing transactions for consideration. In general, the rate applied amounts to 1% on the economic value of the agreement (or consideration to be paid under the same), except on the transfer of real estate which rate is usually higher.


At municipal level:

Municipal taxes are grouped in various categories and their respective taxable basis and applicable rate depends on the kind of activities carried out and the applicable jurisdiction but, in general terms, they are not relevant in economic terms.

Various exemptions and special rules may apply to these taxes.




 


Summary of any specific matters, e.g. recent or prospective major legal developments

No imminent major legal developments are expected specifically in relation to companies in 2021.

However, it should be noted that, as a result of COVID-19, all terms relating to the incorporation of the SRLs may suffer delays as a consequence of the reduction and/or limitation of the public service and attention of the Public Registry.


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Argentina