The Public Registry Reinstated Tighter Control Regulations Applicable to Foreign Companies

Furthermore, the Resolution imposed an obligation to grant a guarantee similar to that required from managers of local companies on the legal representatives of foreign companies registered under sections 118 and 123 (branches and subsidiaries) of the Argentine Company Law.

The Resolution stated that the current regulatory regime is subject to further review, and preempts a reworked text of the IGJ rules to be published in the near future.

       (i) Companies incorporated abroad

The following are the main reinstated obligations:

       (a) Requirements for registration of a foreign company with the IGJ (to create a branch or participate in a local company):

• Evidence must be provided that the main activity of the foreign company takes place effectively outside Argentina, through the existence abroad of agencies, branches or permanent offices, ownership of interests in companies outside Argentina not subject to public offer, ownership of non-current fixed assets, among others;
• Identification of the foreign company’s shareholders;
• Evidence must be provided that the company is not subject to any restrictions to carry out its activities in the place of its incorporation;

      (b) Registration of “offshore” companies is prohibited, although exceptionally they may be registered as investment vehicles;

     (c) The IGJ is authorized to request additional documentation to prove the patrimonial conditions of companies abroad in jurisdictions considered non-cooperative for the purposes of fiscal transparency and /or categorized as non-collaborative in the fight against money-laundering and financing of terrorism;

    (d) Compliance with the annual information regime to demonstrate that the foreign company continues to carry out its main activity outside the country and to provide updated information regarding its shareholders; and

   (e) The IGJ is authorized to review the qualification of isolated acts carried out by companies incorporated abroad, being able to demand, if applicable, the registration of the foreign company involved.

     (ii) Guarantee of the legal representatives of the companies incorporated abroad

The representatives of companies registered under Sections 118 and 123 of the Argentine Company Law must grant a guarantee similar to that applicable to the Directors and Managers of corporations and limited liability companies. The amount of the guarantee for each representative must be equivalent to five times the minimum corporate capital required for local corporations, so such guarantee would at present amount to ARS 500,000 (approximately USD 7,900).

Representatives of foreign companies requesting their registration as such must prove the constitution of the guarantee. The representatives acting at the time of the entry into force of the Resolution must prove the constitution of the guarantee with the first presentation that they must make in compliance with the annual information regime referred to above.