New Requirements in the Province of Buenos Aires for Foreign Companies and Local Sole-Shareholders Corporations

General Disposition 64/2024 entered into force in the Province of Buenos Aires on July 17, 2024, modifying the regulatory framework applicable to companies incorporated abroad and local sole-shareholder corporations. The purpose of the Disposition is to reproduce certain limitations and additional requirements that the regulations of the Public Registry of the City of Buenos Aires imposed on such companies under the direction of Dr. Ricardo Nissen, including, through General Resolutions 7/2015 and 8/2022.

 

In this sense, as of the Disposition:

 

1. Local sole-shareholder companies. The Public Registry of Commerce of the Province of Buenos Aires (PR) will no longer register local sole-shareholder corporations when they are incorporated abroad, whether or not the shareholder is designated as an investment vehicle.

 

2. Requirements for the registration of companies incorporated abroad. To register companies incorporated abroad, it must be attested that:

 

1. the company is not subject to restrictions to conduct business in their place of incorporation,
2. its main activity takes place effectively outside of Argentina, through some of the alternatives included in the Disposition,
3. it identifies its shareholders following the guidelines in the Disposition,
4. it has a legal domicile in the Province of Buenos Aires.

 

3. Presentation of investment plan. Pursuant to article 123 of Law 19550, to register, companies incorporated abroad must submit an investment plan stating in which company or companies they intend to participate.

 

4. Offshore companies and companies incorporated in jurisdictions with no or low taxation. The PR will not register offshore companies. "Off-shore" companies are those subject to restrictions to conduct business in their place of incorporation, or those coming from or registered in countries with zero or low taxation. Foreign companies already registered in these terms must fully comply with Argentine legislation.

 

5. Vehicle companies. Companies incorporated abroad may apply for registration without complying with the requirements in 1. (a) and (b), even if they are offshore, if by complying with certain requirements in the Disposition, they apply for registration for the sole purpose of being a vehicle or investment instrument of another foreign company, which directly or indirectly exercises control over the petitioner (Vehicle Companies). If so, it must attest that its parent company complies with requirements 1. (a) and (b).

 

Companies incorporated abroad applying for registration before the PR or registered as Vehicle Companies must also comply with certain requirements: they must state that they are intended as Vehicle Companies when registering in Argentina. The PR may reject statements filed afterwards.

 

The PR will reject registering:

 

1. more than one Vehicle Company per group,
2. Vehicle Companies, if their direct or indirect controlling company is registered in Argentina pursuant to articles 118 or 123 of Law 19550,
3. Vehicle Companies resulting from a chain of control between successive sole-shareholder companies.

 

6. Restrictive analysis. The PR will analyze with restrictive criterion with the requirements established in the Disposition the compliance of foreign companies incorporated in special jurisdictions and tax regimes considered non-cooperative for the purposes of tax transparency, and/or classified as non-cooperative in the fight against Money Laundering and Terrorism Financing. The PR may also request additional documents to attest the patrimonial conditions.

 

7. Definition of isolated act: The PR may review the classification of isolated acts and order, if applicable, that the intervening foreign company registers. The purchase and sale of registrable assets is not considered an isolated act except in some cases, which must be proven.

 

8. Adaptation to Argentine law: A new regime applies to foreign companies with domicile or main purpose in Argentina. There are also new requirements for their adaptation to Argentine law (article 124 of Law 19550).

 

9. Duty to register before the PR: Companies incorporated abroad with shares mainly in local companies with legal domicile and corporate domicile in the Province of Buenos Aires must register before the PR. Registration in any other Argentine jurisdiction is not enforceable against the PR.

 

10. Annual reporting regime: Foreign companies must comply with the annual information regime within 120 calendar days after their fiscal year ends, to demonstrate that the foreign company continues to carry out its main activity outside of the country and to provide updated information regarding its shareholders.

 

An abbreviated annual filing regime is provided to comply with this requirement when there are no substantial changes in the composition and ownership of the capital of the foreign company. This regime may be used for a limited number of consecutive periods.

 

11. Other procedures. Specific requirements are established to file and/or register certain procedures, including: filing financial statements, change of headquarters of the foreign company in Argentina, change of representatives of the foreign company, resignation of the representative of the foreign company in Argentina, allocation of capital, voluntary closure of the branch and appointment of liquidator, cancellation due to inactivity, and registration of continuing companies.

 

12. Legal representative. The acts, authorizations, and approvals may only be carried out by the registered legal representative or by an attorney-in-fact invested as such. In the registration procedures and the authorization or approval of financial statements, this must be pointed out for the PR to register or approve them.

 

Representatives of foreign companies who apply for registration as such must establish a special domicile in the jurisdiction of the registered office of the foreign company in the provincial jurisdiction and prove the constitution of a guarantee.

 

13. Unenforceability and ineffectiveness of acts adopted by local companies: The PR will not registered resolutions adopted by local entities with the intervention of companies incorporated abroad who are behind them until they comply with the duty to submit their annual report.

 

Likewise, the PR will declare irregular and ineffective the decisions made in the annual meetings of local companies who must file their financial statements when their shareholders are foreign companies and their representatives are not registered with the PR and the vote of said foreign companies is decisive to approve the item on the agenda.

 

Considering all this, it is important to study on a case-by-case basis the impact of this new regime on local and foreign companies under the orbit of the PR. We invite you to contact us for further advice on this matter.