On January 11th, 2018 Decree No 27/2018 (hereinafter, the “Decree”) issued by the Argentine Executive Branch was published in the Official Gazette. The Decree has two main purposes which are “De-bureaucracy and Simplification”.
The Decree is a long regulation and covers different issues such as: i) National Health Service and Agro-food Quality, ii) Companies, iii) Fiduciary Fund for the development of entrepreneur capital, iv) Port activities, v) Civil aviation, vi) Traffic and vial security, vii) Legal metric system, viii) Trademarks and patents, ix) Argentine warranty fund, x) Reciprocal warranty companies, xi) Digital signature, xii) Energy, xiii) Pieces of art, xiv) Promotion of work, xv) Administration of public assets, xvi) Warranty fund of sustainability, xvii) Public tenders, xviii) Industry, xix) Insurances, xx) Financial Information Unit, xxi) fiduciary fund of corporate capital and xxii) Access to credits – financial inclusion.
This article deals with the implications of the Decree regarding the General Corporate Law (hereinafter “GCL”), Organic Law of the Public Registry of Commerce of the city of Buenos Aires (“OLPRC”), National Registry’s Law (“NRL”) and Law to Support Entrepreneur Capital (“LSEC”).
The amendments introduced regarding corporate matters are included in Chapter II of the Decree and contains 19 sections regarding companies (from section 2 to section 20).
The Decree sets forth the following additions:
- Apparent partner: This figure is prohibited, and also the one named “hidden partner”. In case someone acts as apparent partner or hidden partner, their responsibility will be considered as subsidiary, solidary and unlimited. Agreements against this kind of responsibility will not be effective against third parties.
- National Registry of Stock Companies, National Registry of Foreign Entities; and National Registries of Associations and Foundations will no longer be in the orbit of PRC and NRL will not be applicable. The mentioned registries will be in charge of the Ministry of Justice and Human Rights or any other designated by it. These new registers will work via IT systems developed and granted by the Ministry of Modernization or whichever the Executive Branch designates for this task.
- National Registries will be public and held via IT systems. It will not be necessary to prove any interest on the information required, but only to pay the correspondent fee established by the Ministry of Justice and Human Rights. The sums collected will become part of the National Treasury and will be used to cover the expenses related to the National Registries’ activity.
- Digital Registries: The use of physical corporate and accountant books will be replaced by digital records, in which cases it will be applicable Law No 27,349 of Simplified Corporations (SAS). Documents filed in the registry must comply with the chain of register required by the relevant authority.
- Accounting Journal Books can be held using global entries including periods no longer than a month.
- The system used for the accounting must allow the individualization of the operations and the debit and credit accounts and also its verification through the comparison of the entries with the supporting documents.
- Incorporation of SAS: The relevant documents should be filed before the PRC, who will only check the accomplishment of formal requirements and regulations and then will register the company. The register will be performed among the following 24 hours as from the working day after the file of the documents, as long as the solicitor uses the model of Articles of Incorporation approved by PRC. Public Registries should apply the regulatory standards, providing the use of digital means with digital signature and establish a procedure for electronic notifications and resolution of the observations made by each Register to the documents filed. The same criteria will be applied in cases of amendments of the articles of incorporation of SAS.
- Limitations to SAS: Both to register and to maintain the SAS type, this kind of companies should fulfill two main requirements. The first one is that SAS cannot be of “mixed economy” nor public limited companies held in majority by the State, nor perform capitalization or saving operations nor require money to the public offering future benefits, nor exploit public concessions or public services. The second requirement is that SAS cannot be controlled nor participate in more than 30% of the capital of the companies mentioned before. In case the SAS breaches the requirements, it should be transformed into the types regulated in the GCL. Such transformation should be registered –at most- in 6 month period as from the fact that led to the transformation of the company. In case the fact that led to the transformation of the company is not issued by the SAS, the 6 month period will be as from the date in which the SAS becomes aware of such fact. If the period expires and the company does not register the transformation, the responsibility of the partners against third parties will be solidary, unlimited and subsidiary. In the case that during such 6 month period the SAS does not have the characteristics to be transformed anymore, it will not be necessary to register such changes.
As it was developed in this article, most of the new incorporations in corporate matters are related to a promise of development and technology, which will allow reducing terms and having the convenience to perform an endless amount of procedures from a computer. The aim of the new regulation is to modernize the system in general using digitalization.