IGJ Revoked Digital Signature for Incorporation of Simplified Corporations

On April 23, 2020, General Resolution No. 17/2020 (the "Resolution") of the Public Registry of Commerce (the “IGJ” after its acronym in Spanish) was published in the Official Gazette, which revokes the relaxation of formalities for the incorporation of Simplified Corporations (“SAS” after their acronym in Spanish) entities with digital signature previously introduced by General Resolution 8/2017 of the IGJ.

 

1. Support to Entrepreneurial Activity Law

The Law for the Support of the Entrepreneurial Activity ("Law No. 27,349") considered the possibility of incorporating SAS entities by digital means with a digital signature in accordance with the regulatory requirements to be issued on the matter (article 35 of Law No. 27,349).

2. General Resolution 6/2017 and General Resolution 8/2017 of the IGJ

When regulating Law No. 27,349, the General Resolution 6/2017 of the IGJ included within the formalities to incorporate SAS entities, the possibility to issue an electronic document with digital signature of all its signatories (article 7, subsection a, sub- subsection 3 of IGJ General Resolution 6/2017).

Later that year, General Resolution 8/2017 of the IGJ replaced the aforementioned sub-subsection, providing the possibility that signatories may opt to execute the articles of incorporation with electronic or digital signature, being the last signatory however obliged to use digital signature to execute and close the document. For single shareholder SAS entities, digital signature of the single shareholder was required (article 2 of General Resolution 8/2017 of the IGJ).

3. Revocation of article 2 of General Resolution 8/2017 of the IGJ and rectification of incorporation acts granted under such provisions

Based on the grounds detailed below, the Resolution:

1. Revoked article 2 of General Resolution 8/2017 of the IGJ, therefore no longer admitting shareholders to subscribe the articles of incorporation of SAS entities with electronic signature;

 

2. Provides, in relation to the articles of incorporation of SAS entities which were partially executed with electronic signatures, a maximum period of 90 days to remedy the legal deficiency, under penalty of restoring to the remedies provided under the applicable  regulations. Such remediation must be implemented by means of a private instrument including:

 

• signatures of previous signatories and from legal representative of the company, notarized by a public notary, authorized bank officer, authorized judicial officer or authorized IGJ officer, who must digitalize the instrument and execute it digitally;

 

• an express and reciprocal recognition of the shareholders who signed with electronic signature and digitally, of their status as shareholders, share interest of each shareholder with individualization of their shares, with retroactive effects to the date of the articles of incorporation; and

 

• ratification by the shareholders of the terms and conditions of the articles of incorporation and, if applicable, of any subsequent amendment thereto, with retroactive effect to the dates thereof;

 

The instrument must be registered with the IGJ without need of a legal opinion;

 

3. Imposes the obligation to publish a notice, with identification of the signatories and their shareholdings, for one (1) day in the Official Gazette; and

 

4. Establishes that the IGJ will not register any act to those SAS that do not comply, previously or simultaneously, with the registration of the aforementioned remediation instrument.

 

4. Digital signature and electronic signature

Law No. 25,506 of Digital Signature defines digital signature as “the result of applying to a digital document a mathematical procedure that requires information of the signatory's exclusive knowledge, being under his absolute control. The digital signature must be susceptible of verification by third parties, simultaneously allowing the identification of the signatory and detecting any alteration of the digital document subsequent to its execution”. The Digital Signature Law equalizes the legal effects of a digital signature to those of a holographic signature and establishes iuris tantum assumptions regarding its validity, authorship and integrity.

On the other hand, the electronic signature is defined as a "set of integrated electronic data, linked or logically associated with other electronic data, used by the signatory as its means of identification, which lacks any of the legal requirements in order to be considered digital signature. In case the electronic signature is not acknowledged, validity shall be proved by the person who invoked it”.

The Argentine Civil and Commercial Code refers to digital signature in article 288, establishing that, for instruments generated by electronic means, the signature requirement will be satisfied  with a digital signature that undoubtedly ensures the authorship or integrity of the instrument. Thus, in the Resolution it is possible to conclude that digital documents executed with digital signature will be considered as private instruments, while those executed with electronic signature will be considered as non-signed instruments.

5. Grounds

Considering differences between the digital and electronic signatures, the Resolution bases the Resolution, among others, on the following:

1. Article 35 of Law No. 27,349 provides that SAS entities can be incorporated by digital means with a digital signature, and makes no reference to the possibility of using an electronic signature; and

 

2. Given the characteristics of the electronic signature, the instrumentation as provided in article 2 of IGJ General Resolution 8/2017:

 

• would not grant valid proof of the signatories’ consent to enter into the articles of incorporation;

 

• allows the use of a lesser solemnity than that required by law;

 

• improperly equalizes the digital signature to the electronic signature; and

 

• calls into question the legality of SAS entities incorporated through electronic signatures since it lacks full proof of the consent of those persons who have not executed the instrument as provided by law, as it is not possible to argue that the last person to sign with digital signature exercised some form of representation of those who previously executed the document with electronic signature.