New PCR Resolutions: Admissibility of the Multiple Business Purpose, Abrogation of the Relation Requirement between Capital and Business Purpose, and Provisions Regarding Technical Account Revaluations

The Public Registry of Commerce of the City of Buenos Aires ("PRC") recently issued the following general resolutions: (i) Resolution No. 8/2016 (the "PRC Res. 8/16"), published in the Official Gazette on April 29, 2016; and (ii) Resolution No. 9/2016 (the "PRC Res. 9/16"), published in the Official Gazette on May 19, 2016. Both of them amended PRC Resolution No. 7/2015 (the “PRC Res. 7/15”). They came into force on May 7 and May 20, 2016, respectively.

Along these lines, the most important changes incorporated by the above resolutions are as follows:

1. PRC Res. 8/16 – Multiple business purpose and its relation with companies’ capital.

By issuing this resolution, the PRC amends article 67 of the PRC Res. 7/15 which established that besides the requirement for the business purpose to be accurate and determined through the specific and particular description of the activities included therein, it could contain other activities only if they were related, accessory and/or complementary leading to the development of the main business purpose. Moreover, PRC Res. 7/15 did not allow multiple business purposes. Furthermore, PRC Res. 7/15 maintained the PRC criteria with regards the need to maintain a reasonable relation between the amount of the corporate capital and its business purpose (see “New Regulatory Framework for the Public Registry” and “Amendments to the regulatory framework under IGJ Resolution 7/2015”, Bárbara Ramperti – Lorena Aimó, 31/08/2015 and 30/10/2015, Marval News No. 153 and 155).

PRC Res. 8/16 abrogates the above-mentioned limitations and enables again the multiple business purposes, which must be precisely and determinedly exposed through a description of the activities to be carried on to achieve said purpose, and that the company will actually implement.

On the other hand, PRC Res. 8/16 abrogates article No. 68 of the PRC Res. 7/15, which allowed the PRC to require a higher amount of capital than that which was established by law, if it is considered that, taking into account the nature, characteristic (see “New Regulatory Framework for the Public Registry” and “Amendments to the regulatory framework under IGJ Resolution 7/2015”, Bárbara Ramperti – Lorena Aimó, 31/08/2015 and 30/10/2015, Marval News No. 153 and 155).

2. PRC Res. 9/16 – Technical Account Revaluation

PRC Res. 7/15 did not allow the application of the Technical Account Resolution No. 31 Introduction of the property goods revaluation model (except for biological assets) (“AFPCEC TARes. 31”) of the Argentine Federation of Professional Council of Economic Sciences. Technical Account Revaluation was established by other system fixed by PRC Res. 7/15, causing many problems. Moreover, prior approval from the PRC was necessary to reflect the revaluation in the financial statements.

PRC Res. 9/16 allows limited liability companies with a higher capital amount than the quantity fixed in article No. 299 clause 2 of Law 19.550 (currently AR$10,000,000) and corporations, the application of the AFPCEC TARes. 31 to assess their property goods (except for biological assets) using the revaluated value.

The most important points of the PRC Res. 9/16 are: (a) Prior approval of the PRC will not be necessary. However, the revaluation must be approved by the corresponding management and governance body; (b) measuring criterion must be properly supported through documentation that does not imply a limitation to responsibilities of administrators and auditors in relation to financial statements; (c) an independent appraiser with an operating license must take part in the measuring; (d) Such independent appraiser will be deemed as a consultant of the corporation’s administrators; thus administrators are liable for the revaluation; (f) the corporation must inform the PRC of the revaluation within the term of fifteen (15) days since the date in which a shareholders’ meeting expressly approved such revaluation and financial statements.

That is to say, PRC Res. 9/16 amends articles No. 310, 319 and 320 and also abrogates section 6° of article 305, section 2° of the second part of article 316 and article 321, all articles from the PRC Res. 7/15.