Public Registry of Commerce: capital increase and premium issuance

On October 06, 2006, the “Inspección General de Justicia” (“IGJ”), the office in charge of the Public Registry of Commerce of the City of Buenos Aires, issued General Resolution No 9/2006 (“Resolution 9/06”) which determines the guidelines for the registration with the IGJ of effective capital increases or in application of section 197 of the Argentine Companies Law (“ACL”).

Therefore, capital increases approved in shareholders’ meetings called as of January 1, 2007 will have to include an issuance premium in the subscriptions’ value of their shares, whenever the value of the shares issued before the capital increase is higher than its nominal value.

Moreover, Resolution 9/06 determines the method by which companies will have to ascertain the greater value of the shares issued before the capital increase, stating that it will have to arise from a general or special balance sheet, depending on the elapsed time between the closing date of the balance sheet and the date of the shareholders’ meeting that decided the capital increase.

Nevertheless, Resolution 9/06 will not be applicable when:

(i)    the corporate resolutions have been adopted in unanimous meetings;

(ii)   all shareholders’ have exercised in full capacity their right to preferred subscription, or have exercised their right to retire set forth in section 245 of the ACL;

(iii)   there were special conditions agreed to in the by-laws.