How to set up a company in Argentine

Foreign investors normally elect to set up a subsidiary under the type of Limited Liability Companies (Sociedades de Responsabilidad Limitada, “S.R.L.”) because the foreign investor’s liability is limited to the stock capital amount invested in the subsidiary. A Limited Liability Company requires at least two quota holders. In Argentina until today it is not possible to set up a “Unipersonal Limited Liability Company”.

However, there are some cases in which foreign companies prefer to set up a subsidiary under the type of Unipersonal Corporations (“Sociedad Anónima Unipersonal, “S.A.U.”). As in the S.R.L., the foreign investor’s liability is limited to the stock capital amount invested in the subsidiary. But in case of Unipersonal Corporations the company must appoint a statutory auditor and an alternate one. It's important to mention that the statutory auditor has to be a public accountant or a lawyer with real domicile in Argentina. Besides, the company should file before the Registry of Commerce all the proper documentation when they summoned a shareholder meeting and, after such a meeting, the company should also file the corresponding minutes.

No minimum capital is required to form a limited liability company. As in the case of the corporations, the corporate capital must be proper to the development of the corporate purpose and the Public Registry of Commerce may request the companies to fix an amount higher than the one decided by the partners. At least 25% of the capital must be paid up at the time of incorporation and the remaining 75% must be contributed within a term of two years as of that moment.

Minimum capital for Unipersonal Corporations is of AR$ 100.000 and the total amount of the share capital has to be fully paid in at the moment of incorporation of the company.

There is no limit for ownership of quotas/shares by foreign companies. 100% of corporate capital may be owned by foreign companies.

Limited liability companies are managed by managers who may be appointed indefinitely. Managers are not required to be quota holders or residents in Argentina. However, the law requires that the majority of the managers must be resident in Argentina. You can appoint any number of managers and they can act individually or jointly, as the quota holders decide. Besides, quota holders may also establish specific functions to each manager.

Unipersonal Corporations are managed by a Board of Directors who may be appointed up to three years. Directors are not required to be shareholders or residents in Argentina. However, the law requires that the Board of Directors meets at least quarterly. The law also requires that the majority of the Directors be domiciled in Argentina.

Foreign companies must be registered mandatorily with the Register of Commerce to be able to incorporate a subsidiary or to acquire participation in an existing local company according to Art. 123 of the Argentine Company Law.

Moreover, foreign companies are obliged to designate a legal representative and to constitute a legal domicile in Argentina. Further legal requirements that a foreign company has to comply with or specific documentation to be provided, depend on the competent register of commerce/ legal domicile of the foreign company in Argentina.

Incorporating a subsidiary in Argentina involves a two-step process: (i) registration of the foreign company with the Register of Commerce in order to incorporate or participate in Argentine companies under the terms of Section 123 of Company Law and (ii) incorporation of the local subsidiary.

The biggest challenge setting up a subsidiary abroad is the registration of the foreign company in order to be able to be a share- or quota holder of the local NewCo. There have to be filed a series of documents, to be produced abroad, signed before public notary, apostilled, translated into Spanish (in case it’s in another language) and legalize argentine translators’ signature. In some provinces (e.g. City of Buenos Aires) the foreign company as well has to provide (i) evidence that the main activity of the foreign company effectively takes place outside Argentina, providing for example information of branches, subsidiaries or representations in other countries, (ii) individualize the share/quota-holders of the foreign company and (iii) state that the foreign entity in the country of its incorporation is not subject to any restrictions with regard to its activities.

Nevertheless, local advisors will provide the necessary information to cope with the sometimes-burdensome filing procedures of foreign companies and like that open doors to the wide market with interesting investment opportunities in Argentina.