Fines Imposed by the Public Registry of Commerce of the City of Buenos Aires

Room A of the Commercial Court of Appeals (the “Court”) in re. “Inspección General de Justicia c/ Kawell S.A. s/ Organismos Externos” confirmed the fine imposed by the Public Registry of Commerce of the City of Buenos Aires (the “IGJ” after its acronym in English) on Kawell S.A. (“Kawell”) in the amount of ARS 10,979, for the untimely filing of the financial statements and related documentation, corresponding to four fiscal years.

Although the amount of the fine imposed by the IGJ is not, in principle, significant, the Court’s position should be taken into account for the following reasons. Even in the event of non-public companies whose decisions are adopted unanimously by the shareholders and even though shareholders' rights are not  prima facie affected, the Court emphasizes that the fine aims to:

• Ensure compliance with the regulations, regardless of whether or not a specific damage results therefrom;
• Enforce the publicity requirement regarding the corporations (“Sociedades Anónimas”) equity situation which arises from the incorporation of the corporations; and
• Emphasize the economic function of corporations’ requirements that make it necessary for any person with a lawful interest associated to the activity of the company to know its equity situation in term.

Companies subject to permanent government supervision[1] must:

(i) notify the IGJ of the call to the annual ordinary shareholders´ meeting at least 15 days in advance of the date of the meeting, by means of filing a copy of said board of directors´ meeting minute, a list of the current board members and a copy of the financial statements to be considered by the shareholders at the meeting; and

(ii) file with the IGJ within 15 days as from the date of the annual ordinary shareholders’ meeting, a copy of the shareholders´ meeting minutes evidencing approval of the financial statements and a copy of the share deposit and attendance to shareholders’ meetings book.

On July 11, 2018, the Argentine Ministry of Justice and Human Rights issued Resolution No. 529/2018, which increased the required amount of capital stock for companies to become subject to permanent government control (Section 299, Subsection 2 of the Argentine Companies Law No. 19,550), from ARS 10,000,000 (ten million pesos) to ARS 50,000,000 (fifty million pesos). For further information please refer to the Marval News # 185.