One of the major changes introduced by the amended General Companies Law is the possibility of setting up corporations formed by a single shareholder. While the introduction of single-shareholder corporations is a step in the right direction, the restrictions and requisites imposed therein evidence that this new type of organisation does not meet the expectations of the legal and business communities.
In its continued effort to promote the revival of the Argentine economy, the government recently submitted a bill to Congress to create a new type of simplified corporation. At present, in order to undertake a business venture in Argentina – no matter how small – an entrepreneur must set up a traditional company, which will be subject to the same rules and taxes applicable to well-established big businesses.
The granting of stock options to top-tier executives in Argentine privately held companies is becoming increasingly frequent, as they offer an excellent instrument for aligning the top executives' interests with those of the company. However, companies intending to implement such options should be aware of the risks and contingencies involved in Argentina due to the lack of specific regulation on the matter.
The Commercial Court of Appeals of the City of Buenos Aires recently passed a ruling regarding the right to exclude shareholders in closely held corporations in the event of 'just cause'. Closely held corporations account for more than 90% of legal entities in Argentina, employ more than 70% of the workforce and account for more than 50% of the economic activity in the country.
Trade secrets or confidential information regimes grant protection to valuable secret commercial information from misappropriation by third parties. Such regimes constitute an adaptive discipline seeking to respond to increasing employee mobility, changing technology and rising entrepreneurial activity. In Argentina, trade secrets are protected by Section 156 of the Penal Code and the Confidentiality Law.
Since the issue of General Resolution 7/2005, legislative activity by the Corporations Inspectorate has decreased. However, the regulations enacted by the inspectorate are now starting to have a real effect on businesses, and the courts have issued rulings in cases challenging decisions of the inspectorate.
Since the issue of General Resolution 7/2005 in August 2005, the Corporations Inspectorate has taken a step back from the need to regulate many matters concerning companies incorporated in Argentina, and specifically in Buenos Aires. The reason behind this move is the fact that all such matters requiring regulation are covered by the provisions of Resolution 7/2005.
The Corporations Inspectorate issued a resolution providing that foreign companies which register their corporate documents according to the provisions of Section 123 of the Business Associations Law must establish a domicile so that all notices sent by the inspectorate will be considered to have been duly sent and received upon delivery to the registered domicile.
The Argentine legislature enacted Law 26,047 in a new attempt to centralize all information on companies incorporated or to be incorporated in Argentina. The new law fulfils the requirements of Section 8 of the Business Associations Law to create the National Registry of Companies, and is also within the scope of the new criteria adopted by the Argentine authorities with regard to the control of corporations.
The Buenos Aires Commercial Court has confirmed that a company incorporated with two partners, one owning 99.999% of the stock and a minority shareholder owning 0.001%, does not fulfil the plurality requirement of the Business Associations Law. Given the resolutions on the matter issued by the Corporations Inspectorate since 2003, most companies have already adapted their shareholdings to meet this interpretation.
A new resolution stipulates that all foreign corporations that need to register to do business in Argentina, as well as those that have already registered, must identify their shareholders in order to fulfil the publicity requirement for the registration of foreign companies.
The Argentine Inspectorate of Corporations has issued a variety of regulations in recent months in relation to the Business Associations Law, including one which states how companies incorporated in Buenos Aires must describe the activities they plan to perform and another on registering appointments to the board of directors.
The Argentine Inspectorate of Corporations has issued a number of general and particular resolutions that increase its participation in matters affecting registered corporations. Among other things, a board member or legal representative may now have his resignation accepted by the inspectorate in cases where the company has not accepted it.
New registration regulations have been set out for foreign companies wishing to participate in Argentine companies or wishing to set up a local branch in Argentina. The regulations also apply to foreign companies already registered in Argentina and are expected to have a significant impact on the structure of businesses set up by foreign investors.
Including: Corporations; Limited Liability Companies; Foreign Companies.
A recent decision by the Labour Court, together with previous case law, indicates a trend for the principle of 'piercing the corporate veil' to be applied liberally - contrary to the intent of legislators. As a result, if a company performs an illegal act, the directors face being personally liable for any damages caused.
A court in Buenos Aires has interpreted Argentina's Civil Code in such a way that consumers may now be able to sue manufacturers for negligence without having to prove negligence, as would be the case in product liability claims.
Recent legislation has established new regulations for leasing contracts. The act now allows for the leasing of rights, and generally broadens the range of objects that may be leased.
Including: Stock Company; Limited Liability Company; Foreign Companies; Foreign Investment