New IGJ Regulation Applicable Mainly to Foreign Companies

Below, we outline the main features of the new IGJ General Resolution No. 8/2021, published by the IGJ on May 17, 2021 and in force since its date of publication.

New requirements for companies incorporated abroad denominated or signaled as investment “vehicle” companies

The Resolution established new IGJ registration requirements pursuant to articles 118, subparagraph three, and 123, of Law No. 19,550, as well as for the annual reporting requirements for companies incorporated abroad denominated or signaled as investment “vehicles” of other foreign companies in their same international corporate group.

Under the Resolution, companies incorporated abroad either requesting registration or already registered as investment “vehicle” companies[1] with the IGJ are subject to the following requirements:

1. They must state that they are intended as investment vehicle companies upon requesting registration in Argentina, the IGJ may deny later statements to that effect.
2. The IGJ will deny registration of:

• more than one investment vehicle company per group;
• investment vehicle companies if their direct or indirect controlling company is registered in Argentina pursuant to article 118 or 123 of Law No. 19,550; or
• investment vehicle companies resulting from a chain of control between successive soleshareholder companies.

New requirements applicable to all foreign companies

Duty to register with the IGJ

Companies incorporated abroad and registered in any Argentine jurisdiction pursuant to articles 118 or 123 of Law No. 19,550, with shares mainly in local companies with legal domicile and corporate domicile in the City of Buenos Aires, have a duty to register in identical terms with the IGJ ; and registration in any other registry is not enforceable against the IGJ.

Duty to submit an investment plan

Likewise, the IGJ established that, for the purposes of registration pursuant to article 123 of Law No. 19,550, companies incorporated abroad must submit an investment plan stating in which company or companies they intend to participate or to incorporate in Argentina; this duty includes detailing, among others things, their corporate name, address, business activity, remaining shareholders and shares to be acquired.

Changes for companies incorporated abroad and its impact on locally held companies

The Resolution also eliminates articles 212, 217, 219, 222, 239, 240 and 249 of IGJ General Regulation (GR) No. 7/2015 and modifies articles 215, 218, 245, 255 and 256 of the aforementioned regulatory plexuses. It also clarifies that any other rule under GR No. 7/2015, as previously amended, that conflicts with the Resolution is rendered ineffective.

These eliminations and modifications mainly concern how the Resolution is to be implemented and stipulate the following:

1. Upon registration of a company incorporated abroad as an investment “vehicle” company, the name of the group’s controlling company must be stated after the “vehicle” company’s corporate name.
2. The IGJ will not register companies incorporated abroad that lack the capacity and authorization to conduct business in their place of incorporation. This language replaced a prior reference to “off shore companies from jurisdictions of that nature” in GR No. 7/2015.
3. The prior restrictive criterion provided by GR No. 7/2015 was replaced with the notion that the IGJ will not register foreign companies that are incorporated in jurisdictions and special tax regimes that are deemed non-cooperative for the purposes of tax transparency and/or that are categorized as non-cooperative collaborators in the fight against Money Laundering and Terrorism Financing, or that have low or no taxation in accordance with the criteria of the Argentine Central Bank (“BCRA”), Financial Reporting Unit (“UIF”), Ministry of Justice and Human Rights or of organizations governed by rules of public international law, or that, at the IGJ's reasonably founded discretion, fail to meet those standards.
4. The abbreviated annual filing regime is amended as follows:

• The abbreviated option may only be used by companies incorporated abroad that have submitted their annual filings in a timely manner and have no pending submissions.
• The abbreviated option may be alternated with the annual filing for a maximum of 1 consecutive year (instead of 3).
• The statement required under the abbreviated option must expressly confirm that there have been no variations in the composition and ownership of the company’s shares, when applicable.
• The IGJ may request accounting certification of the company's net worth when necessary at its discretion (the grounds on which the IGJ could issue such requests were eliminated).

5. Resolutions adopted by local entities with the intervention of companies incorporated abroad who are behind on their reporting duties will not be recorded (instead of limiting this sanction to those resolutions in which foreign companies intervene without being registered or through persons other than their registered representatives or the attorneys-in-fact appointed by them). Likewise, resolutions that fail to meet the foregoing are not enforceable vis-à-vis the IGJ until compliance with the duty to submit their annual report is fulfilled.
6. The following have been eliminated:

• The option to comply by way of group integration.
• The reference to the fact that the provisions of “offshore” companies or companies from noncooperating jurisdictions do not apply to companies incorporated abroad that are registered as an investment “vehicle.”
• The reference to the fact that “offshore” companies registered prior to RG No. 7/2015 will be subject to the strictest requirements that previously applied to noncooperating companies.
• All provisions relating to the change of jurisdiction of companies incorporated abroad from the City of Buenos Aires.

Inadmissibility of registration of any SAU formed by a foreign sole-shareholder company

Under the Resolution, the IGJ will no longer register any SAU whose shareholder is a sole-shareholder company incorporated abroad, whether or not the shareholder is designated as an investment vehicle.

New requirements for compliance with the ultimate beneficiary owner regime

Local or foreign companies that submit the sworn statement required under RG No. 7/2015 stating the absence of an ultimate beneficiary owner must provide documentary evidence of the following:

1. all shares of the head of the group admitted to trading; or
2. share ownership is so disperse among individual owners that none of them exceed the minimum ownership percentage contemplated by the IGJ.