Impact of Decree 70/2023 on the Corporate Regime

 

The Emergency Decree No. 70 titled "Bases for the Reconstruction of the Argentine Economy" (the “Decree”), dated December 20^th, 2023, primarily aims to heavily deregulate the Argentine economy and legal system. In its rationale, it emphasizes the importance and necessity of amending the legal status of State-Owned Companies, converting them into Corporations (Sociedades Anónimas) according to the provisions of the Argentine Companies Law, with the objective of enhancing transparency and corporate governance within these companies.

 

Thus, to facilitate the implementation of certain reforms in other areas, the Decree has modified the corporate regime in the following aspects:

 

• Within the framework of the transformation of the State-Owned Companies:

 

•  To implement their subsequent privatization, the legal status of State-Owned Companies is amended, transforming them into Corporations under the scope of the Argentine Companies Law No. 19,550, T.O. 1984, and its amendments (ACL).

 

This provision encompasses State-owned companies without a corporate legal form, State-owned Companies, Corporations with Majority State Participation, Mixed Economy Companies, and all other corporate organizations where the national government has a stake in the corporate capital or in the decision-making processes and are not incorporated as Corporations. Likewise, Decree-Law No. 15,349/46 regulating Mixed Economy Companies, Law No. 13,653 on the legal regime for the operation of state-owned companies, and Law No. 20,705 on State-owned Companies were abrogated.

 

 

 

 

 

• Furthermore, subsection 3 of section 299 of the ACL was amended to eliminate the reference to Mixed Economy Companies and Corporations with Majority State Participation (section VI of the ACL) and include Corporations with state participation, whether by the national government, provincial governments, the Autonomous City of Buenos Aires, municipalities, and/or state agencies legally authorized for this purpose. These companies, in addition to regulatory oversight during their incorporation, will be subject to the supervision of the controlling authority of their registered domicile during their operation, dissolution, and liquidation.

 

Section VI of the ACL that regulates the Corporations with Majority State Participation, has not been eliminated.

 

 

• Within the framework of the amendments of Law No. 20,655 which aims to the introduction of new corporate structures for the formation of entities within the "Sistema Institucional del Deporte y la Actividad Física" thereby expanding the options available to these entities. Specifically, football clubs may now convert into corporations, the following sections of the Argentine Companies Law No. 19,550 are amended:

 

• Section 30 of the ACL, allowing non-profit associations and entities to become part of Joint-Stock Companies and be parties to any associative contract.

 

• Section 77, subsection 1° of the ACL, incorporating that civil associations may transform into a commercial company or decide to join as a member of a joint-stock company, requiring the vote of two-thirds of the associates.