Amendment of Regulation Regarding Simplified Corporations

1) Simplified Corporations

On July 27, 2017 General Resolution 6/201 (RG 6/17) was published in the Official Gazette. This resolution regulates Simplified Corporations (SC), a new type of company created by Law No 27,349, whose main characteristic is its low complexity and administration cost and wider flexibility to regulate internal corporate affairs.

RG 6/17 made it possible to start using this new type of company in the jurisdiction of the City of Buenos Aires as of September 1, 2017. Since its implementation, around 300 SC-type companies have been set up.

According to General Resolution 8/2017 (GR 8/17), the Public Registry of Commerce (PRC) has considered it necessary to adapt certain provisions of RG 6/17, taking into account its recent experience in the registration of this type of companies.

Among the innovations brought by the RG 8/17, the following changes stand out:

1. With regard to the instrument of incorporation it is clarified that it may consist of:

1. public instruments digitally signed through the system of the corresponding Notaries Association, deleting the express reference to Associations of the City of Buenos Aires.
    
2. an instrument with electronic signature of certain partners as long as the last signatory signs the instrument with a digital signature; thereby protecting the document with all the properties and security measures of a digital signature. Previously, the use of digital signature by all partners was required.

2. The professional opinion to be issued by a notary may be digitally signed through the signing system of the Notaries Association of the Province of Buenos Aires. Previously, reference was only made to the Notaries Association of the City of Buenos Aires.
    
3. The name of the SC cannot be the same or similar to that of an existing company nor should it include expressions contrary to the Law, public order or morality. The partners will be responsible vis-à-vis third parties for the name so elected if not complying with these guidelines.
    
4. The corporate purpose included in the sample instrument of incorporation was extended to include activities related to any type of industries related to the manufacturing process.
    
5. In the event that the term of the SC provided in section 2 of the sample instrument of incorporation is not chosen, the term chosen by the partners must be added to the sample edict to be published in the Official Gazette.

2) Conclusions

The amendments brought by RG 8/17 are aimed at adjusting certain regulatory aspects, taking into consideration the PRC’s recent experience in connection with the registration of this new type of companies.

The following aspects of the amendments stand out:  the possibility of partially subscribing instruments of incorporation with an electronic signature, the extension of the purpose in the sample instrument of incorporation, and the new provisions related to the requirements to be met with respect to the name of the SCs, including the responsibility of the partners for lack of compliance with those provisions.