On February 21, 2020 the Superintendency of Corporations for the City of Buenos Aires (the “Superintendency”) reinstated onerous disclosure requirements on foreign legal entities owning Argentine companies. These same rules apply also to legal entities registered in Argentina as a foreign branch.
These disclosure requirements had been in effect for several years when the Superintendency was under the helm of Ricardo Nissen, a renowned expert in Argentine corporate law who favors heavy-handed regulation as a means to assure foreign entities are not merely vehicles for tax evasion. These regulations were repealed in 2018 by the prior (Macri) administration, which sought to reduce the burden of doing business in Argentina. With the return of the Peronist government, Mr. Nissen has reassumed control of the agency and reinstated the disclosure requirements (the “Enhanced Disclosure Rules”).
The Enhanced Disclosure Rules apply only to companies chartered in the City of Buenos Aires. Nonetheless, well over 80% of Argentina’s companies are registered in this jurisdiction and, if you or your client owns a business in Argentina through a foreign legal entity, these changes are likely to apply.
What You Need to Know:
- Foreign legal entities holding an interest in an Argentina subsidiary must be qualified by the Superintendency. Qualification requires, among other things, filing of the foreign legal entity’s organizational documents. This rule never changed and it is likely you have already done this.
- Under the Enhanced Disclosure Rules, at the time of qualifying a foreign legal entity, you must demonstrate a genuine trade or business “of economic significance outside Argentina” and disclose the identity of the owners of that foreign legal entity.
- The Enhanced Disclosure Rules require you to recertify this information annually, within 120 calendar days of the foreign legal entity’s close of its financial statements.
- The Enhanced Disclosure Rules bar the registration of foreign legal entities chartered as “offshore” companies. This refers to companies that are barred by their charter from performing activities within the place of their charter.
- The Enhanced Disclosure Rules mandate that local agencies (e.g., provincial and municipal tax and property recorder offices) notify the Superintendency of any registration or claim asserted by a foreign entity. If the Superintendency determines the registration or claim is not an “isolated act”, it is empowered to demand, within 180 calendar days, registration of the foreign entity as a branch or permanent representation or deem the foreign entity a de facto Argentine company.
- Legal representatives of all foreign legal entities must now be bonded just as directors of a local entity.
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The foregoing article is a description of publicly available information and is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.