Branches – Capital assignment

On October 26, 2006, the “Inspección General de Justicia” (“IGJ”), the office in charge of the Public Registry of Commerce of the City of Buenos Aires, issued General Resolution No 11/2006 (“Resolution 11/06”), which considers that capital assignment to local branches represent a commitment from the foreign company to hold assets in Argentina for an equal or higher value than the sum of the assigned capital.

The IGJ will therefore supervise branches, offices or any other type of permanent representations registered under the terms of section 118, third paragraph of the Argentine Companies Law (“ACL”) (hereinafter, the “Branches”) so that their net worth always shows profits and that their assigned capital, if any, is equal to or higher than such sum.

If their financial statements reveal a negative net worth or, if applicable, assets not worth the assigned capital, the Branches will have ninety days as from the moment they are notified or one hundred and eighty days as from the closing of their financial statements to rearrange their net worth or their assigned capital, or to request cancellation to the IGJ after liquidation proceedings.   If not, the IGJ itself will determine if the Branch will have to rearrange its net worth and/or assigned capital or request its cancellation.

Resolution 11/06 also determines which documents shall be filed with the IGJ so as to register the capital assignment or its variations and, in case of assignment, the way in which it shall be paid-in.

This resolution became effective on October 26, 2006, the day it was published in the Official Gazette.