Transformation of Typical Companies

General Resolution 5/2025 of the Public Registry of Commerce of the City of Buenos Aires (IGJ) was published in the Official Gazette on February 11, 2025. According to it, the IGJ will register those acts corresponding to companies domiciled in the City of Buenos Aires and incorporated under one of the types indicated in the Argentine Companies Law 19550 (ACL) and in Law 27349 of Simplified Stock Companies or (SAS) that decide to transform—under the terms of article 162 of the Civil and Commercial Code of Argentina (CCCN)—into companies included in Section IV, Chapter I of the ACL (i.e., those that omit essential requirements or fail to comply with the formalities required for the corporate types contemplated in Chapter II). This procedure will be completed as long as companies comply with the requirements indicated in the Resolution.

The aim of this measure is to simplify corporate activity within the framework of the City of Buenos Aires. In this way, the IGJ becomes the first public registry in Argentina to expressly admit this transformation modality. For example, a corporation can now transform into an atypical company (such as the commonly called "simple companies," in which the partners stipulate their rights and obligations among themselves and towards the company, under the rules of Chapter I, Section IV of the ACL).

For this, the IGJ quotes on the grounds of the Resolution that the private legal system recognizes two basic modalities for transforming private legal entities:

1.    General modality: regulated through article 162 of the CCCN. This article provides that these entities can transform in the cases provided by the CCCN or by special law.
2.    Specific and typical modality: provided in articles 74 and subsequent of the ACL, according to which there is a transformation when a company adopts another of the types provided in such Law.

However, the IGJ emphasizes that the law says nothing about the possibility of a typical and regularly constituted company undergoing a reverse process, i.e., transforming into a company under Section IV, Chapter I, of the ACL, resorting to the generic operation enabled by article 162 of the CCCN. It should be noted that this is not expressly prohibited in the current regulations. Thus, it falls within article 19 of the Argentine Constitution in the sense that "no inhabitant of the Nation will be obliged to do what the law does not mandate, nor deprived of what it does not prohibit" and that, conversely, when the legislator has wanted to restrict the option of transforming certain legal structures, it has done so expressly.

Likewise, from a practical point of view, the IGJ receives the opinion of various experts in the doctrine that establishes that, in general, changes of corporate type are usually imposed because of the need to adapt the organizational structure—administration, governance, liabilities, and participation in the profits of the partners, among others—to the development of the corporate purpose. Thus, the partners may wish to modify the originally adopted corporate type due to a more complex legal organization or, on the contrary, they wish to adopt a simpler, more flexible, or simply different corporate type that better adapts to the composition or structure of the company as an instrument intended to fulfill the corporate purpose and objective.

Regarding the requirements for registering the transformation, the IGJ requires submitting the following documentation within three months of the decision:

1.    Public deed or original private instrument of the act that implements the transformation, which must include: 
a)    The transcription of the minutes of the extraordinary shareholders or partners meeting, with the attendance record, from which it arises: 
i)    the transformation agreement approved unanimously or by the majority required for the transformation provided in the contract or bylaws,
ii)    the approval of the special balance sheet, also unanimously or by the majority required for the transformation provided in the contract or bylaws.
b)    The adopted agreement, from which the legal continuity link must arise, unequivocally, between the corporate name held before the transformation and the resulting one.
c)    The mention and individualization of the partners who continue in the company and, if applicable, those who join, maintaining or establishing their plurality.
d)    The explicit mention of the withdrawing partners and the capital they represent, or the statement that the right of withdrawal has not been exercised.

2.    The special transformation balance sheet closed to a date earlier than one month from the transformation agreement, with an audit report that includes an opinion, for which the accounting standards applicable to year-end balances will apply.
3.    Accounting opinion to the transformation procedure.
4.    Legal opinion, which must individualize all the books the company held before the transformation and indicate those books that will be subject to transfer and those that will be discontinued.
5.    Notarized certified copy of the last used page of each of the company’s books in use at the date of the transformation and that the company decides to discontinue.

6.    Proof of the following publications: 
a)    The call to shareholders or partners meeting, if the company being transformed is a corporation, unless the meeting has been unanimous under the terms of article 237 (in fine) of the ACL. If this is not the case, the legal opinion must rule on the compliance with the formalities of the call, citation, or consultation with the partners -except that the presence of all of them is recorded.
b)    The publication of a notice for one day in the Official Gazette corresponding to the corporate domicile and its branches.
7.    If the company decides to transfer endorsed books or discontinue the books in use and obtain new books, it must follow the book endorsement procedure contemplated in articles 405 and 398, subsection 8, respectively, of IGJ General Resolution 15/2024.

Once compliance with these requirements is verified, the IGJ will make a marginal note of cancellation of the company in the registration book in which its incorporation is registered.

Finally, Section IV, Chapter I of the ACL applies to any company that is not incorporated in accordance with the corporate types contemplated in Chapter II of the ACL, that omits essential requirements, or that fails to comply with the formalities required by this Law.

Some of the most important regulations of this Section concerning the companies it includes are:
1.    The bylaws can be invoked between the partners and are enforceable against third parties only if it can be proven that they knew it effectively at the time of contracting or the birth of the obligatory relationship. It can also be invoked by third parties against the company, the partners, and the administrators.
2.    Clauses relating to representation, administration, and others that provide for the organization and governance of the company can be invoked between the partners. In relations with third parties, any of the partners represents the company by exhibiting the bylaws, but the provision of the social contract can be opposed if it is proven that the third parties knew it effectively at the time of the birth of the legal relationship.
3.    The existence of the company can be proven by any means of evidence.
4.    Partners are liable before third parties as simply joint and several obligors and in equal parts, unless solidarity with the company or among them, or a different proportion, results: 
iv.    from an express stipulation regarding a relationship or a set of relationships,
v.    from a stipulation of the bylaws,
vi.    from the common rules of the type they manifested to adopt and regarding which substantial or formal requirements were not met.
5.    Any of the partners can cause the dissolution of the company when there is no written stipulation of the duration pact. The partners who wish to remain in the company must pay the departing partner their share.