The Public Registry of Commerce of the Province of Buenos Aires issued Disposition No. 18/2012, whose main aim is to reorganize all resolutions issued since 2003 as well as to match with certain regulations of the Public Registry of Commerce of the City of Buenos Aires.
On April 18, 2012, the Public Registry of Commerce of the Province of Buenos Aires (hereinafter "PRC") issued PRC General Disposition No. 18/2012 (hereinafter "Disposition 18/12"), published in the Official Gazette of the Province of Buenos Aires on May 4, 2012, which will become effective on July 3, 2012.
The main aim of Disposition 18/12 is to reorganize all resolutions issued by the PRC since General Disposition PRC 12/2003 ("Disposition 12/03"), and to prepare a complete, unified and restated text of applicable regulations. Once it is effective, Disposition 18/12 will replace Disposition 12/03 and its amendments.
Please note that, although Disposition 18/12 includes all general dispositions issued by the PRC after year 2003, some of them have been modified in certain aspects that reflect some of the principles currently applied by the Public Registry of Commerce of the City of Buenos Aires ("IGJ") with regard to foreign companies.
1. Some of the Main Regulatory Changes Implemented by Disposition 18/12
a) Documentation to Be Filed at the Time of Registration of Foreign Companies
Foreign companies that request their registration as a branch or to participate as a shareholder or partner in local companies must file, jointly with all other relevant corporate documents, their last statement of income with a report by an accountant of the country of origin to be converted and adapted to the professional norms for the conversion of financial statements. Also, the representative of the board of directors of the foreign company must inform if the foreign company is registered in another provincial jurisdiction or in the City of Buenos Aires and if this is the case, provide information regarding such registration.
b) Legality Control of Foreign Companies
According to Disposition 18/12, the authorities involved in the registration of acts, agreements and resolutions of foreign companies who have an interest in local companies registered before the PRC, will pursue a more severe control regarding the participation of foreign companies in the capital stock of local companies, demanding, as applicable, the registration required by Section 123 of the Argentine Companies Law No. 19.550 ("ACL").
Hence the PRC adheres to some principles related to foreign companies previously adopted by the IGJ, and expressly sets forth that local companie's managers and directors that allow a foreign company not registered in accordance with Section 123 of the ACL to acquire an interest in a local company under any form and/or to participate in shareholders' or quotaholders' meetings, could be subject to sanctions. The PRC may apply any of the sanctions established in Sections 7 and 8 of Decree Law No. 8671/76, consisting of fines and/or warnings. Moreover, the PRC may consider these acts as irregular or ineffective for administrative purposes.
c) Adequacy to Argentine Law
Disposition 18/12 establishes the procedures and requirements to be followed in order to adapt to Argentine law those foreign companies that according to Section 124 of the ACL, are considered local companies because their domicile is located in Argentina or their main corporate purpose is intended to be developed in Argentina. Adaptation to Argentine Law may be requested (i) by the PRC or (ii) voluntarily by the foreign company. If the foreign company is registered with the PRC as a branch or to participate as partner or shareholder of local companies, adaptation to Argentine law will involve the cancellation of such registrations.
Whether voluntary or requested by the PRC, adaptation to Argentine law implies the need to adopt one of the corporate forms or organization provided in the ACL and the fulfillment by the foreign company of the requisites and formalities imposed by the applicable legislation for local companies in Argentina.
d) Anti-Money Laundering and Terrorist Financing Regulations
As recently resolved by several federal agencies including the Financial Information Unit (UIF), the Federal Tax Authority (AFIP) and the IGJ, Disposition No. 18/12 imposes the obligation to declare the condition of Politically Exposed Person in order to prevent and/or identify acts or transactions arising from Money Laundering and Terrorist Financing Crimes. To that effect, the members of the Board of Directors and Statutory Supervisors of commercial companies and the legal representatives of foreign companies, as well as the administrators of non-profit organizations shall be obliged to file a sworn affidavit each time when requesting the following: (i) the registration of the incorporation of a company; (ii) The authorization to operate as a non-profit organization; and (iii) the registration of any change in the composition of the board of directors, or similar.
4. Final comment
Disposition 18/12 sets forth a variety of requirements that will demand higher levels of compliance for companies. The main scope of the new legal framework is mainly to verify that local and foreign companies comply effectively with the provisions of Argentine legislation.
Beyond the restated and unified regulation pursued by Disposition 18/12, its text poses a number of doubts as regards its interpretation and implementation, which we understand shall be answered with its application by the PRC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.