Public Registry of Commerce Amends Regulatory Framework for Simplified Corporations

On February 27, 2024, the Public Registry of Commerce (IGJ) published in the Official Gazette General Resolution IGJ 7/2024, which becomes enforceable on February 28, 2024. This resolution fully repealed General Resolution IGJ 22/2020, which had established a system to control real estate transactions carried out by simplified corporations (SAS).

The repealed resolution had established a coordination system between the IGJ and the Public Registry of Real Estate of the City of Buenos Aires (RPI) to obtain information on transactions involving the creation of in rem rights over property in which acquirers, creditors, or assignees—in full or fiduciary capacity—were SAS registered before the IGJ or before any other provincial public registry.

Likewise, in accordance with the text of General Resolution IGJ 22/2020, the IGJ had vested itself with the power, should it deem it necessary, to request additional information from the RPI, and carry out inspections. This included as well, under certain circumstances, the power to promote or entrust the promotion through the State’s Attorney’s General Office or the prosecutors (as the case may be) of the necessary legal actions to seek the ineffectiveness of the legal personality of the company and the assets or rights it owned, to attribute these to the controlling shareholder or shareholders that made their acquisition possible, or to order the dissolution and liquidation of the company.

Further, the repealed resolution determined that the provisions in it could be extended to acts related to assets registered in other public registries. Similarly, it specified that the IGJ would not register corporate acts arising from SAS that, following the particular and subjective criteria of the organism, were deemed to distort or frustrate the purposes of said resolution.

Mainly, the new resolution states that the repealed regulation constitutes an overreach of the IGJ powers since, on the one hand, regulations cannot modify the text of the law and, on the other, only the companies included in the different paragraphs of article 299 of the General Corporations Law (LGS) are subject to permanent government control; SAS are expressly excluded by article 39, paragraph 1 of Law 27349. Said law vests the IGJ with specific functions regarding these companies. Therefore, the IGJ would not have the legal power to control the operations SAS carry out within the framework of the categories of acts included in their corporate purpose, regardless of whether they are of a real estate nature or not.

The new resolution also states that the power to investigate actions carried out by SAS registered before other jurisdictions exceeds the IGJ's jurisdictional capacity, as it goes beyond the powers expressly reserved to the provinces: its powers are limited exclusively to companies with registered domicile within said jurisdiction.

Finally, the new resolution states that, as a general rule, there is no legal provision in the corporate legal regime authorizing the IGJ to promote legal actions, which are necessary to declare the ineffectiveness of the legal personality of the company and the assets or rights it owns. The Resolution states that the criteria adopted by General Resolution IGJ 22/2020 regarding the promotion of legal actions to disregard the legal personality of SAS in certain generic cases was incompatible with the merely auxiliary nature of the unenforceability declaration in article 54 paragraph 3 of the LGS.