In depth
Regulatory changes
The Resolution establishes that foreign companies with a registered office in the province of Buenos Aires (PBA) and that are registered, in the process of being registered or will be registered with the DPPJ must comply with the provisions of the Resolution. The following are the most relevant items regulated:
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General comments
- Jurisdiction. The DPPJ will only register foreign companies that apply for registration (i) as a branch, or permanent representation, if they will carry out their activity in the jurisdiction of PBA; or (ii) to participate in or incorporate companies, if the latter are registered or will be registered in the DPPJ. If the foreign company participates as a shareholder in local companies in several jurisdictions, being registered in any of them will be sufficient if it is the controlling company of the subsidiary in the jurisdiction in which it is registered.
- Sufficiency. Registration as a branch, or permanent representation, entitles a foreign company to participate as a shareholder of a local company, without additional registration.
- Refusal. The DPPJ will not register offshore companies or companies incorporated in jurisdictions with low or no taxation and will apply restrictive criteria to register companies from noncooperative countries for tax transparency purposes and/or non-collaborators in the fight against money laundering and financing of terrorism.
- Participation in meetings. Only the legal representative of the foreign company registered with the DPPJ, or a person authorized by that representative, may participate in shareholders' meetings of local companies.
- Isolated act. An isolated act is not considered to produce permanent effects and does not require the foreign company to be registered. The interpretation of an isolated act is restrictive.
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Initial registration and general requirements
The following are certain additional requirements applicable to the registration of branches, permanent representations and foreign companies' participation in local companies:
- Activity outside Argentina. In order to evidence this, one of the following guidelines must be met outside Argentina: (a) existence of one or more agencies, branches or representations; (b) noncurrent fixed assets; (c) certificate by an economic professional on stock exchange operations carried out the previous year; (d) certificate by an economic professional on the exploitation of third parties' assets carried out the previous year; (e) participation in companies; and/or (f) last approved financial statements issued within the previous year.
- Investment plan. To register foreign companies' participation in local subsidiaries, the appointed legal representative will be required to subscribe an investment plan indicating the company/companies in which it intends to participate and related data.
- Notoriety. The DPPJ may waive, at its own discretion, compliance with the requirements if it is public knowledge that the company effectively carries out its activity abroad.
- Vehicle companies. The DPPJ shall register SPVs to the extent that: (a) their status as such is evidenced at the time of registration; (b) only one SPV per group is registered; (c) its shareholder is not registered with the DPPJ; and (d) it does not result from a chain of control between successive sole shareholder companies. To this end, it must prove that its direct or indirect controlling company complies with the requirements of economic activity outside Argentina, submit an organizational chart of the corporate group and comply with the requirements set forth.
- Guarantee. Legal representatives must provide a guarantee in favor of the branch or permanent representation for the proper performance of their duties.
- Sole proprietorships. Argentine sole shareholder corporations are not allowed to have a foreign sole shareholder company as shareholder.
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Subsequent registrations
The Resolution regulates the requirements that foreign companies must comply with to register a change of the registered office, a new legal representative or their resignation, the allocation of capital or the voluntary closing of branches or permanent representations, among others.
The following particularities are also provided for:
- Accounting statements. Branches or permanent representations must submit balance sheets within 120 calendar days of the end of the financial year.
- Net worth and assigned capital requirements. The DPPJ will verify the maintenance in positive terms of the net worth and, if any, of the assigned capital registered in branches or permanent representations. If the financial statements show a failure to comply with this requirement, it must be remedied within the stipulated period, under penalty of sanctions.
- Annual information regime. Within 120 days of the end of the fiscal year, foreign companies must submit a certificate attesting to significant activity outside the country, identification of shareholders and value of shareholdings in local companies, if applicable. An abbreviated informative regime is also provided for if there have been no significant variations in the information opportunely provided, which may be adopted for a maximum of three consecutive periods.
SPVs must additionally declare whether their status as an SPV still exists and submit an updated organization chart and individualize the shareholders.
- Adaptation to Argentine law. The DPPJ may request the adaptation of the foreign company to local law to become a local company, if it is demonstrated that: (a) there are no assets and/or activity abroad, and/or (b) the management or administrative center of the company is effectively located in PBA.
The Resolution also empowers the DPPJ to request the cancellation of the registration of foreign companies if they do not comply with the requirements applicable to them as provided for in the regulations.
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