IGJ Amended Regulatory Framework of Simplified Corporations Incorporated in the City of Buenos Aires

Within the jurisdiction of the City of Buenos Aires, on March 16, 2020, General Resolution N° 9/2020 (the “Resolution”) of the Public Registry (the “IGJ” after its acronym in Spanish) was published in the Official Gazette, by means of which the regulatory framework applicable to simplified corporations (“SAS”) created by the Support for Entrepreneurial Activity Law, incorporated in the City of Buenos Aires, was amended as follows:

 

1. Applicability to SAS of rules regarding an adequacy ratio between capital and corporate purpose

 

According to the Resolution, the IGJ may verify compliance by SAS entities of the rules requiring an adequacy ratio between a company’s capital and its corporate purpose, as they were reinstated by General Resolution 5/2020 dated March 11, 2020.

Additionally, it establishes requirements to be met if a SAS wishes to challenge any objections raised by the IGJ.

 

2. Amendment of certain provisions of General Resolution 6/2017, imposing stricter requirements on SAS

 

Furthermore, the Resolution amends several provisions of General Resolution 6/2017 of the IGJ ("Res 6/2017") which regulates SAS entities incorporated in the jurisdiction of the City of Buenos Aires, including the following:

• Eliminates the possibility of attesting payment of the share capital of a SAS incorporated with the minimum statutory share capital as provided by the Support for Entrepreneurial Activity Law, by providing evidence of the expenses incurred for the registration in the articles of incorporation (replacing Section 25, inc. d of Res 6/2017);
• Establishes that the managers of SAS entities must provide a guarantee pursuant to Sections 76 and 119 of General Resolution 7/2015 (replacing Section 31 of Res 6/2017, which established the inapplicability of this requirement to the managers of SAS entities);
• Establishes the obligation to appoint a supervisory body when the capital of the SAS reaches the threshold set forth in Section 299, paragraph 2, of the Companies Law, setting out the composition that this body must have, as well as the duties and powers that its members will be granted. In all other cases, this appointment will be optional, and in this case, the SAS must comply with certain requirements to ensure shareholders’ right to information (replacing Section 30 of Res 6/2017, which established that appointing a supervisory body was not mandatory in any case); and
• Establishes the obligation for SAS entities to submit their annual accounting statements by digital means before the IGJ (replacing Section 46 of Res 6/2017, which established the inapplicability of this requirement for SAS entities, even in the case of companies falling under Section 299, paragraph 2, of the Companies Law). This last amendment will be effective as of June 30, 2020.

 

3. Further powers of the IGJ in the exercise of legality control over SAS entities

 

Finally, the Resolution establishes the power of IGJ to verify, when exercising legality control over the act of incorporation, amendments or other acts subject to registration, that the following requirements are complied with, among others:

• Principles arising from Section 13 of the Companies Law (invalid provisions) are not contravened;
• The rights provided under Section 69 of the Companies Law (approval and challenge of accounting statements) and right to obtain a copy of such statements in advance, are not abolished, limited or restricted;
• The setting up of voluntary reserves is contemplated as per the provisions of Section 70 of the Companies Law;
• The issuance of shares with a premium is contemplated in all cases when including a premium is a statutory requirement pursuant to General Resolution 7/2015,
• The pre-emptive and accretion rights and the right to withdraw are not abolished, limited or restricted;
• The events leading to a partial resolution as provided under the Companies Law are not excluded;
• Regarding the calculation of the value of the shares in case of withdrawal, reimbursement or acquisition by exercise of the pre-emptive rights, contemplated conditions must not lead to deviation from their real value;
• The right to challenge corporate resolutions is duly regulated;
• The election of directors by cumulative votes or class of shares is duly regulated, if applicable;
• The amendment/removal of any of the abovementioned rights be considered solely by the unanimous vote of the shareholders, calculated over the total share capital, and conferring voting rights to those shareholders who lack such right for other cases, in accordance with the issuance conditions of their class of shares; and
• Provisions to protect third parties’ rights are duly contemplated.