Accountancy in Argentina

>> Choice of Legal Form in Argentina

Business in Argentina may be conducted by incorporated companies, partnerships, individuals, and branches of foreign constituted enterprises. In all cases pertinent information must be registered with the Public Registry of Commerce.

Foreign investors generally choose either the form of a Corporation, Limited Liability Company or a Branch to start operations in Argentina. The former may be a Sociedad Anónima (Corporation) or a Sociedad de Responsabilidad Limitada. The Branch has certain advantages, especially in the initial investment. It is mandatory for foreign companies operating in Argentina to name legally responsible individuals and to keep separate accounting records for their Argentine operations.

Corporación (Sociedad Anónima – S.A.)

This form is the most commonly used for doing business in Argentina. There must be at least two shareholders and the shares may be either privately held or quoted publicly. The minimum capital is $100.000. Their operation is governed by statutes in which the name, object, duration, capital, election and powers of the Board of Directors, and all other rules are established. The Board may have one or more directors but the absolute majority must be domiciled in Argentina.

The responsibility of the shareholders is limited to the amount of their contribution, with the exception of the legal representative or the members of the Board of Directors and the Board of Oversight (Sindicatura).

General Partnership – Unlimited responsibility (Sociedad Colectiva)

The partners acting as legal representatives or members of the Board of Directors have unlimited liabilities for the corporation or subsidiary.

Limited Liability Partnership (Sociedad de Responsabilidad Limitada- S.R.L.)

These companies are similar in all aspects to corporations except that:

The number of partners may not exceed 50, a corporation may not be a partner, they are always privately held, formation procedures are simplified and greater flexibility is permitted in the deed.

Managers have the same rights and duties as the directors of corporations. Partners are responsible up to the amount of their contribution unless they are part of the Board of Directors or the Board of Oversight. In recent years, local subsidiaries of US companies have preferred this form, and former corporations have changed to this one.

Limited Partnership  (Sociedad en comandita)

There are two classes of limited partnerships: “sociedad en comandita  por acciones” where the capital subscribed by the “silent partners” is divided into nominative shares of equal value, and “sociedad en comandita simple” where the capital is proportionally divided, but shares as such may not be issued. The appropriate description must be shortened to S.C.A. and S.C.S. respectively. Non-commercial General PartnershipsA limited partnership is subject to the Commercial Code, and has two categories of partners: “silent” partners (“comanditarios”), whose liability to third parties is limited to the capital subscribed by them, and “active” partners (“comanditados”), who do not enjoy a similar limitation of liability.

General partnerships not engaging in commercial activities (“sociedad civil”) are subject to the Civil Code. A “sociedad civil” is a matter of private agreement between the persons involved, and is generally found among professional groups.

Societies with only one partner

It is prohibited in Argentina to form societies with only one partner. It is strongly recommended that one partner holds no more than 80%.

Joint Ventures

Two types of contractual joint ventures are recognized by law: temporary partnerships (“agrupaciones de colaboración”) and temporary union of companies (“uniones transitorias de empresas – U.T.E.”).

Temporary partnerships embody joint organizations for renewable periods up to a maximum of ten years, to provide or develop certain stages of the business activity of their partners, or to improve and develop their mutual activities.

Temporary unions of companies are allowed to develop or execute a specific task, service or supply, and/or any extension thereof, both locally and abroad. Their duration is therefore limited to that particular task or service. In this contract, the bankruptcy of the members or the disability or death of the individual entrepreneurs does not in itself lead to the extinguishment of the U.T.E. contract.

Both types of joint ventures must have  the following characteristics:

  • They are not separate legal entities in their own right.
  • Agreements are entered through private or public deeds.
  • Agreements must be registered in the Public Registry of Commerce and must include their objectives, term of duration, name and other information on their partners’ responsibilities, financial contributions and other l egal implications.

Joint ventures may also exist under private agreements not registered in the Public Registry of Commerce when they are not one of the two types mentioned above. Such joint ventures enjoy similar rights and obligations and have the same tax requirements as those described above.

Foreign Corporations

Foreign corporations that carry out occasional transactions in the country do not need to be registered.

Since 2003, the Public Registry of Commerce has announced several resolutions that must be followed by foreign corporations in order to comply with the framework of the Act 19550- Business Associations.

Foreign corporations registered in tax havens are subject to additional conditions and parameters. The same applies with foreign corporations that are used only  as a vehicle by other companies that control them directly or indirectly and together with them form an economic foreign group.

Branch of a Foreign Corporation

A registered branch of a foreign corporation may perform all the acts its head office is authorized to perform. Therefore, operations are carried out under the responsibility of the headoffice, through its nominated legal representative, who is liable to the extent of the corporation’s subscribed capital. The legal representative must apply for the registration of the branch, together with the necessary documentation, duly authenticated by a public notary in the country of origin, then recognized by an Argentine consul or with the Haya’s Apostille, and finally translated locally  by an Argentine public translator.

The tax burden is similar to that of an S.A. As the branch is managed by its legal representative through a power of attorney, his attributes may be limited accordingly. On the other hand, as the parent is wholly responsible for the branch’s liabilities, it may be easier to deal with financial institutions and other suppliers locally.

Latest version updated 20th December 2017

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