Increase in the minimum capital stock of corporations in Argentina

by 5 Mar 2024Companies, Corporate, Doing business in Argentina

The minimum capital stock of corporations in Argentina has been significantly increased.

By Executive Decree No. 209/2024, published on March 1, 2024, in the Argentine Official Gazette, effective as from the same day of its publication (hereinafter, the Decree), Section 186 of the General Companies Law No. 19,550 was amended, setting the minimum capital stock of corporations (in Spanish, Sociedades Anónimas, or SAs) at AR$ 30,000,000[1].

The new minimum capital stock of corporations in Argentina must be complied with by all corporations that are incorporated as from the effective date of the Decree, as well as by those already incorporated whose capital stock is lower.

If the minimum capital stock of existing corporations is lower than the amount currently required, it is the responsibility of the board of directors to immediately call a shareholders’ meeting to consider increasing the capital stock to the legal minimum, in the manner that best suits the interests of the corporation and its shareholders (e.g., new contributions of money from the partners, capitalization of credits that the partners have against the corporation, etc.).

The lack of adequacy of the minimum capital stock of corporations in Argentina may cause the liability of the board of directors and the shareholders for under-capitalization in case of insolvency of the corporation, making them personally liable. As well as the liability of the external auditors and control bodies of the companies (statutory auditors, surveillance committees) that do not warn about, nor denounce the lack of adequacy.

Therefore, compliance with the Decree that increases the minimum capital stock of corporations in Argentina is an imperative and mandatory requirement for good governance and administration.

 

[1] The effects of its lack of updating for a long time made the previous amount of AR$ 100,000 absolutely meaningless and without the intended functionality of the capital stock.

Mario E. Castro Sammartino

 

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time. Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer.​

 

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