Argentina: Regulation Of Simplified Corporations In Argentina To Bring Them Up To Speed

Last Updated: 15 August 2017
Article by Mario Eduardo Castro Sammartino

The regulation of Simplified Corporations in Argentina have just been put into force at the federal level, to have them fully operative as of 1 September 2017. This possibility of an organization is currently the most innovative, easy-to-incorporate, and customizable legal vehicle available to do business in Argentina.

Simplified Corporations in Argentina, also known as Simplified Joint Stock Companies or Simplified Shares Companies (Sociedad por Acciones Simplificadas, or SAS by its Spanish acronym) have been created by Law Number 27,349, published on 22 April 2017 in the National Official Gazette1.

Within the Autonomous City of Buenos Aires, the General Inspectorate of Justice (Inspección General de Justicia, or IGJ by its Spanish acronym) has issued its General Resolution Number 6/2017 – with its Annexes A, A1, A2 y A3 – allowing the filing for incorporating a SAS before the Public Registry as of 1 September of 2017. The IGJ and the Federal Administration of Public Revenues (Administración Federal de Ingresos Públicos, or AFIP by its Spanish acronym), have issued the General Joint Resolution Number 4098-E/2017 to complement immediate corporate registry with tax identification. From now on, we will refer to both resolutions as the SAS´ s Regulation.

The SAS´ s Regulation fundamentally deals with the registry of SAS, and the different acts that must also be registered with the Public Registry, as well as the acquisition of its tax identification and mandatory records, all considering the main goals of this legal vehicle, such as its easy and fast incorporation and management. Without going deep into technical analysis, the outstanding features of the SAS´s Regulation are:

  1. The IGJ will only act as a registry authority. The IGJ will not supervise SASs during their operation, dissolution, and liquidation, not even when the SASs´ share capital be higher than AR$ 10,000,000 (threshold set by the Article Number 299 of the General Companies Law Number 19,550 for other company types to be subject to permanent government supervision);
  2. The recording of SASs, and all of the corporate acts that also require registration before the Public Registry (change of jurisdiction and address, extension of term, amendments, regulations, stock capital variations, transformation, mergers, spin-offs, appointment and revoking of managers and members of the surveillance committee, as the case may be, dissolution, liquidation, registry cancellation, etc.), will be carried out by electronic means, through the Electronic System of Document Managements approved by the Federal Decree Number 561/2016, as amended;
  3. The SASs´ registry will be only electronic, keeping the IGJ a specific Digital Registry of SASs;
  4. The SASs´ certificate of registry will also be electronic;
  5. The IGJ has passed templates of the articles of incorporation, operating agreement, and publication in the Official Gazette announcing the SAS´ s incorporation. As far as these templates are chosen, the SAS´s registry and tax identification will be automatically issued by the IGJ and the AFIP. These officially approved templates will undoubtedly expedite the registry. However, the templates are too basic for the partners to enjoy the SAS's wide enabling legal provisions fully, and organize the company as best suits their particular interests and needs. Nonetheless and without renouncing to a lightning registry procedure, customization may always be introduced afterward through the relevant amendments to the operating agreement;
  6. When SASs are incorporated using the official template, their corporate name shall not include the words "Argentina" or "Mercosur";
  7. The corporate purpose may be plural and must set forth clearly and accurately the main allowed corporate activities, which may be related or not. Under no circumstance may the IGJ object the amount of the share capital contributed by the partners, as long as it is not lower than the minimum legally required capital for SASs (two monthly mandatory minimum salaries, which currently amounts to AR$ 17,720);
  8. Unlike the other legal vehicles to do business in Argentina, the SAS´s managers will not be required to set up a guarantee;
  9. Only one member of the management body must be an Argentine resident. Managers living abroad must only get a tax identification, set a legal address, and appoint a representative in Argentina. The power of attorney granted to a foreign manager´s legal representative will not have to be recorded with the IGJ, and will serve the only purpose of the service of process, and appear before the public authorities if needed;
  10. Irrevocable contributions on account of future subscription of shares may be kept on the balance sheet in such a way for two years, being a part of the net worth of the company;
  11. SAS´s are not required to submit their financial statements to the Public Registry, irrespective of the amount of its share capital;
  12. A sworn statement indicating the SAS´s beneficial owners must be filed with the IGJ when conducting registry procedures;
  13. The minutes book, the shareholder ledger, the journal book, and the inventories and annual accounts book are mandatory. All these books must be kept through digital records enabled by the IGJ upon registration.

Simplified Corporations in Argentina are already a reality, modernizing the companies´ law and offering the businesspeople a simple, flexible, and customizable legal vehicle, which will surely have a great role when doing business in Argentina. Except for those companies planning to offer their shares publicly (for which they will have to resort to the traditional corporation regulated by the General Companies Law Number 19,550), the SAS will fit the needs of companies of all sizes and business fields.


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Mario Eduardo Castro Sammartino
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