On March 11, 2020, General Resolution No. 5/2020 ("Resolution 5/20") of the Superintendency of Corporations of the City of Buenos Aires (Inspección General de Justicia or "IGJ") was published in the Official Gazette, amending IGJ's General Resolution No. 7/2015 ("Resolution 7/15").
The new resolution forms part of the recent trend in the IGJ to re-establish regulations that were repealed during the previous administration. In this case, General Resolution IGJ No. 8/2016 is repealed and certain requirements regarding the corporate purpose and share capital are reinstated.
1. Prohibition of multiple corporate purposes
Resolution 5/20 provides that the incorporation of companies or the amendment of their corporate purpose must comply with the following provisions:
- the corporate purpose must be precise and determined, describing in a concrete and specific manner the activities that will contribute to its achievement;
- other activities may be included provided that they are related, ancillary or complementary to the activities leading to the development of the corporate purpose;
- the incorporation of companies with multiple corporate purposes is not allowed;
- nor will amendments of a multiple corporate purpose be admitted.
With respect to this last requirement, those corporate objects registered prior to the effective date of General Resolution IGJ No. 7/2005, predecessor of Resolution 7/15, are excepted. This provision, although not entirely clear, seems to indicate that:
- a dual situation is generated in which the multiple corporate purpose is admitted only for those companies that had obtained their registration prior to General Resolution 7/2005[1], recognizing in some way the full force and effect of the existing regime during its period of application; and
- the IGJ would be reserving the possibility of requiring the adequacy of the corporate purpose of those companies that have obtained the registration of a multiple corporate purpose during the term of application of General Resolution IGJ No. 8/2016, rejecting a validity equivalent to that resolution. In any event, we believe that a reasonable interpretation of this second possibility should be limited to those cases in which a company intends to amend its corporate purpose after the effective date of Resolution 5/20.
2. Initial share capital appropriate to the corporate purpose
In relation to the share capital established initially in the by-laws:
- it must be reasonably related to the corporate purpose;
- the IGJ may require a higher amount if it considers that the share capital is manifestly inadequate in relation to the nature or characteristics of the activities described.
The criteria on the basis of which IGJ officers will conduct this analysis are not determined.
Resolution 5/20 came into force on March 19, 2020.
[1]
Entered into force on February 21, 2006.
