On May 17, 2021, the Office of Companies in charge of the Public Registry of Commerce of the City of Buenos Aires enacted General Resolution No. 8/2021 (the “Res. No. 8/2021”), published in the official gazette, which establishes new requirements for the registration of foreign companies, either as branches, permanent representations, or shareholders of local companies, with a special focus on companies defined as “vehicles”.
“Vehicle companies” are defined as those companies whose place of incorporation or registration, prohibits or restricts the development of all their activities or their main activity or activities, and cannot comply with evidence of having an economically significant activity outside the Argentine Republic (i.e., non-current assets or shareholdings abroad).[1]
New requirements and limitations for the registration of foreign companies The new requirements and limitations for the registration of foreign companies are the following: Foreign companies may only be registered as “vehicle companies” by the time of its initial registration. The status of “vehicle” will not be admitted after the registration of the already existing foreign company; Only a maximum of one “vehicle company” per economic group may apply for registration; The registration of a “vehicle company” will not be allowed if their direct or indirect controlling company is already registered in the Argentine Republic, either as branches, permanent representatives, or shareholders of local companies. We highlight that this restriction will only apply to those foreign companies to be registered as “vehicle companies”. On the contrary, this restriction will not apply to those foreign companies that can evidence an economically significant activity outside the Argentine Republic, even if their controlling company, directly or indirectly, is already registered; The registration of a “vehicle company” resulting from a chain of control between successive sole proprietorships will not be allowed; The registration of Argentine sole shareholding companies whose sole shareholder is also a sole shareholding company, whether it is a vehicle or not, will not be allowed. We understand that the aforementioned new requirements and limitations may only be enforced upon foreign companies that request their registration after its implementation. Under this criterion, the groups existing as of today, which obtained their registrations in accordance with the regulations in force at the time, will be able to maintain their legal structure.
Foreign Companies registered in provincial jurisdictions
Foreign companies registered in provincial jurisdictions, with “principal shareholdings” in local companies with headquarters in the City of Buenos Aires, must be registered with the Office of Companies of the City of Buenos Aires. For the purpose of verifying when “principal shareholdings” is involved, three circumstances must be assessed: If the foreign company holds a majority shareholding or a controlling interest in a local company which is domiciled and headquartered in the City of Buenos Aires; If the foreign company holds share only in local companies domiciled and headquartered in the City of Buenos Aires, notwithstanding that such holdings are minority holdings or do not grant control; or If the foreign company holds share in local companies domiciled and headquartered in the City of Buenos Aires and in other provincial jurisdictions, when most of them are located in the former jurisdiction, notwithstanding that such holdings are minority or do not grant control. If either of these circumstances is met, the foreign company must register with the Office of Companies of the City of Buenos Aires.
Additional Statement
Foreign companies that register with the Office of Companies of the City of Buenos Aires as foreign shareholders must submit, at the time of their initial registration, an additional statement which must include the following items: a list of the company or companies in which it seeks to hold shares or incorporate in the Argentine Republic, specifying the domicile of the company, its legal name – in the case of a company already incorporated; the effective activity carried out by the foreign company abroad; the effective activity of the developed company or companies that expects to incorporate or hold shares in; the identification of the remaining shareholders; and the number of shares that expects to acquire.
Ultimate Beneficial Owner
In the event that it is declared that there are no beneficial owners of the foreign company, one of the following scenarios must be proven: a) that the parent company has all of its shares listed in the public offering; or b) that the ownership of the shares is so dispersed among the individuals that none of them holds 20% of the shares (minimum percentage).
This report should not be considered as legal or any other type of advice by Allende & Brea.
[1] Section 215, General Resolution No. 7/15 7/15
