New controls on foreign companies in Argentina

By way of its General Resolution No. 2/2020 (hereinafter, the Resolution), published on the Official Gazette on 21 February 2020 and effective as of the same date, the General Inspectorate of Justice (Inspección General de Justicia. Hereinafter the IGJ) reinstated tighter controls on foreign companies in Argentina and additional obligations for their legal representatives.

Among many others, the Resolution set forth the following provisions:

1. Obligations to meet when filing for registration

Foreign companies wishing to establish a branch or register themselves to participate as partners in a company incorporated in Argentina are again required to evidence:

a) That they do not have, in its place of incorporation, registration or incorporation, forbidden or restricted the development of all its activities or the main one(s) of them;

b) That they have a significant business activity and their management center outside Argentina; and

c) Who their partners are.

2. Annual informative regime

Foreign companies must yearly comply with an informative regime showing proof that they keep a significant business activity and their management center outside Argentina and who their partners are, and reporting the value of their holdings in local companies and the percentage of such holdings over the share capital and net worth.

3. Registration of so-called “off-shore” companies

The IGJ has forbidden the registration of “off-shore” companies.

Off-shore companies are defined as those incorporated abroad which, in accordance with the laws of the place of its constitution, incorporation or registration, have a prohibition or restriction to carry out all of its activities, or the main one(s) of them, within such territory.

4. Guarantee of the legal representatives

Legal representatives of foreign companies will have to grant a guarantee equivalent to five times the minimum corporate capital required for local corporations (currently AR$ 100,000); such guarantee would, therefore, amount to ARS 500,000.

The guarantee must remain in force until the cancellation of the registration of the legal, representative, plus an additional period of time equal to the statute of limitations of the actions for damages (three years).

Mario E. Castro Sammartino

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