“Shareholders' rights in private and public companies in Argentina: overview” (article published in Practical Law, Thomson Reuters, July 31, 2015). 

September, 2015 - Roberto H. Crouzel, Maria Shakespear, Constanza Connolly and Felipe Videla

TYPES OF LIMITED COMPANIES AND SHARES1. What are the main types of companies with limited liabilityand shareholders? Which is the most common? Which typedo foreign investors most commonly use?
The most common types of companies that enjoy limited liabilityare the Sociedad Anónima (SAs) and the Sociedad deResponsabilidad Limitada (SRLs), and these are the main types ofcompanies with limited liability. Joint stock companies (Sociedaden Comandita por Acciones) are also common. In joint stockcompanies only the non-managing partner (socio comanditario)has limited liability up to the capital he subscribes.
Foreign companies doing business in Argentina usually choosebetween an SA and an SRL. SAs are more common. However, US investors tend to prefer SRLs for tax reasons.In SAs capital stock is represented by shares and in SRLs it isrepresented by quotas. Only shares can either be represented inphysical certificates or kept as book-entry stock. Quotas areregistered with the General Inspection of Corporations (GIC). GIC isthe supervisory authority for companies incorporated in the City of Buenos Aires. The majority of limited liability companiesincorporated in Argentina are incorporated in Buenos Aires. Other jurisdictions usually follow the GIC criteria; however, each case is assessed on an individual basis.Both shares and quotas are freely transferable unless thecompany's bye-laws provide otherwise. However, provisions in thecompany's bye-laws can only limit transfers and cannot prohibit transfers.
Foreign companies commonly operate in Argentina through abranch, instead of a subsidiary. Branches are easier to operate andrequire only a power of attorney. They also have less bookkeepingrequirements than SAs and SRLs. Argentine law considersbranches one and the same person with their head offices, andbecause of this the head office can be held jointly liable with itsArgentine branch. However, if an Argentine subsidiary isincorporated, the liability of the head office will generally belimited to the assets contributed to that subsidiary (that is, thesubsidiary's equity capital).
As from 1 August 2015 companies with one shareholder can beregistered with the GIC (Business Association Law (BAL) 19,550 (asamended)). This only applies for SAs and does not apply for SRLs.Additionally, companies with one shareholder cannot participate inother companies organised with only one shareholder. The BALalso establishes that one shareholder companies are treated asSAs that are permanently controlled by the state. Therefore, thesecompanies require, among other things, a minimum of threedirectors and three syndics (a syndic is a controller, a person thatcontrols the company in order to protect the interests ofshareholders) and must inform the GIC before holding shareholder. (...)


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