On February 21, 2020, General Resolution No. 2/2020 of the Superintendency of Corporations of the City of Buenos Aires (Inspección General de Justicia or "IGJ") was published in the Official Gazette, repealing IGJ's General Resolution No. 6/2018 which had timely simplified the procedures related to companies registered abroad . This regulation reinstates previously applicable requirements for the registration, or for the registration's continuance, of foreign companies with the IGJ for purposes of (i) participating as partner or shareholder in an Argentine company (Section 123 Argentine Companies Law No. 19,550, hereinafter "LGS") or (ii) carrying out activities on a regular basis in Argentina (Section 118 third paragraph LGS). These requirements are mainly aimed at providing evidence that the company has substantial activities or assets abroad and at identifying who the partners or the shareholders of the company are. Additionally, the representatives of these foreign companies in Argentina are required to provide a guarantee for the adequate performance of their duties.

 

The main highlights of the new resolution are summarized below:

• In order to register foreign companies before the IGJ, the following requirements and rules (in addition to those already in force) are reinstated:

1. The foreign company must show proof that it is not prohibited or restricted in its home jurisdiction from carrying out all or part of its main activities. Consequently, the registration of offshore companies, which include company types that are popular in other jurisdictions, is prohibited.
    
2. The foreign company must show evidence, in accordance to a detailed regulation on admissible documentation or information, that its main activities or assets and its management are located outside Argentina. Consequently, foreign companies must provide accounting information or individualize assets in order to evidence overseas substance.
    
3. The foreign company must submit a complete list of its shareholders or partners.
    
4. The criterion according to which the requirements mentioned in paragraphs A) and B) above shall be evaluated in a restrictive manner with respect to those foreign companies that are incorporated or registered in countries, domains and jurisdictions, territories, associated states and special tax regimes, considered non-cooperative for the purposes of tax transparency or categorized as non-cooperative in the fight against money laundering and terrorism financing.
    
5. For a foreign company that is unable to comply with the requirements mentioned in paragraphs A) or B) above, the new resolution reinstates the exception that allows for it to be registered as a "special purpose vehicle" of another foreign company, which in turn must comply with the aforementioned requirements and additionally inform who its shareholders or partners are.
    
6. The IGJ may, at its own discretion, waive certain registration requirements when it is publicly known that the foreign company carries out economically relevant activities abroad.

• The "Annual Informative Regime" is reinstated. Consequently, foreign companies registered with the IGJ are required to certify on an annual basis, within 120 days from the closing date of their fiscal year, that they continue to comply with the registration requirements mentioned in paragraphs B) and C) above. Additionally, foreign companies registered for the purpose of acting as partner or shareholder of Argentine companies, must report the value of their holdings in local companies and the percentage they represent over the capital and assets of the foreign company. Although the regulation does not expressly establish it, it is understood that foreign companies that have obtained their registration without complying with the applicable requirements mentioned in paragraphs A) through F) above, must provide proof of such compliance at the time of submitting their first Annual Informative Regime.

• The express recognition of the validity of acts performed by attorneys-in-fact appointed directly by the foreign company is eliminated, reestablishing the criterion previously upheld by the IGJ according to which any act in Argentina shall be performed by the company's registered local representative or by an attorney-in-fact appointed exclusively by such representative.

• The new resolution reinstates the "Registry of isolated acts" according to which assets and rights registries must disclose transactions carried out by foreign companies; this implies that the IGJ will have a tool designed to detect habitual activities in Argentina performed by foreign companies in breach of the obligation to register pursuant to applicable law (Section 118 of the LGS).

• Each representative of a foreign company is required to provide a guarantee^[1], which must remain in effect until the representative's registration is cancelled plus a period of three years. The amount to be covered by such guarantee is currently AR$ 500,000^[2]. Representatives in office must prove compliance with this requirement when complying with the Annual Informative Regime.

General Resolution IGJ No. 2/2020 entered into force on February 21, 2020.

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^[1]  It may consist of bonds, public securities or amounts of Argentine or foreign currency deposited with financial institutions or securities firms to the order of the company; or in bonds, bank guarantees or insurance guarantees in favor of the company.

^[2]  Equivalent to five times the minimum capital set for local corporations.