Foreign entities: easing up annual requirements

On December 28, 2005 the Public Registry of Commerce of the City of Buenos Aires (“PRC”) enacted General Resolution Nº 12/2005. This resolution eases up the annual elements required by the PRC to the foreign entities registered in such agency under the terms of Sections 118 Paragraph 3 and 123 Law No 19,550 (“LSC”) in order to prove that their principal activity is developed outside the Republic of Argentina (General Resolution No 7/2003, see “Additional requirements to register foreign entities - Resolution No 7/2003” in Marval News # 21 of September 30, 2003) andthe identification of their partners (General Resolution No 3/2005, see “New requirements for the registration of foreign companies before the Public Registry of Commerce of the City of Buenos Aires” in Marval News # 37 of March 31, 2005.

This resolution is in force since December 30, 2005, the day of its publication in the Official Gazette and is applicable to presentations made or to be made from such date.

1. Proof that, according to its activity and patrimonial situation, the entity complies with its purpose principally outside the Republic of Argentina

1.1. Formation of dossiers

In order to simplify the annual information regime provided by General Resolution No 7/2003, a dossier may be made for every corporation with such elements considered sufficiently manifest to prove that the principal activity of the foreign entity is developed outside Argentina.

Resolution No 12/2005 brings a non-taxative and non-binding list of elements that could be filed:

i commercial advertising made outside the Republic of Argentina;

ii information about businesses, projects or investments published in specialized magazines or in economy sections and international business newspapers that are distributed in the Republic of Argentina;

iii extracts of web pages certified by a notary public.

When such documents are in English, French, Italian, or Portuguese their translation will not be necessary if they are accompanied by a synthesis of their content in Spanish and signed by the registered legal representative.

1.2. Non-substantial variations in the assets of foreign entities

Those corporations that have complied with General Resolution No 7/2003 and during the fiscal year have not suffered any substantial changes in their net worth, could be exempt from annaly filing their head office’s financial statement and/or the accountant’s certificate, provided they file a statement from the administrative body of their head office or the person authorized by it, issued according to the rules that govern its operations, or by the legal representative registered at the PRC if is empowered to that effect, indicating that:

- the composition and value of the corporate assets located outside the Republic of Argentina have been maintained without substantial variations;

- from the comparison between the corporate assets located outside the country and those related to the activities of the entity in Argentina (either by its representation, or branch office, or by its stock participation in a local entity or entities) shows that the principal activities of the foreign entity are still being complied with outside Argentina.

2. Identity of partners

Those entities that have already complied with the individualization of its partners at the moment of requesting the registration of the foreign entity before the PRC (according to General Resolution No 3/2005) or at the moment of complying with the periodical information regime set forth by PRC General Resolution No 7/2003, may comply in the future with such filing only when variations in the composition or in the capital ownership are produced.

If no variations are registered an express statement stating that no variations have occurred will suffice.