On March 27 2024, the Public Registry of Commerce (“PRC”) published in the Official Gazette General Resolution 10/2024 (the “Resolution 10/2024”) that modifies the regulations applicable to foreign companies. In its official communiqué, the PRC states that these changes are intended to resolve “at least partially and temporarily” until a new “Regulatory Framework” is enacted, the “profound problems that have arisen in relation to the operation in the country of companies incorporated overseas”.
The PRC enacts this “provisional” modification along these four main points:
- Greater openness for the registration of “special purpose vehicles” (“SPVs”) companies, including the possibility of registering (i) more than one SPV per corporate group; (ii) of vehicle companies even if the controlling company is already registered before the PRC; (iii) of vehicle companies resulting from a chain of control between successive single-member companies; and (iv) of single-member companies incorporated by a single-member company incorporated abroad, whether or not it is an SPV.
- Reduction of the requirements for compliance with the Annual Information Regime (“RIA”) by allowing abbreviated filing for 5 consecutive years and the possibility of invoking the notoriety of the group to which the company belongs.
- Elimination of the requirement for foreign-incorporated companies to report their investment plan for participation in local companies.
- Recognition before the agency of the registration in provincial jurisdictions of companies incorporated abroad.
Resolution 10/2024 repealed General Resolution 8/2021 and its Annex A which, among other matters, established the following requirements for foreign companies:
- Limited the registration of SPVs.
- Required the registration in the PRC of foreign companies with participation in local companies with jurisdiction in the City of Buenos Aires.
- Required foreign companies to have an investment plan in the country.
- Increased the requirements for the filing of the RIA.
See our article referred to General Resolution 8/2021 in the following Link.
Resolution 10/2024 amends, among others, the following articles of General Resolution PRC 7/2015, in relation to foreign companies:
- Art.212, Group Integration: The possibility of proving “group integration” is reestablished for the purpose of demonstrating that the company carries out effective business activities abroad and that its management center is outside the country.
- Art.218 and 240, Off Shore Companies: The prohibition to register “offshore” companies or companies coming from jurisdictions of that nature is maintained, except for “offshore” companies registered prior to the entry into force of General Resolution IGJ 7/2015 in which case they must comply annually with the RIA under restrictive assessment guidelines.
- Art.217 and 239, Foreign companies from non-cooperative countries or jurisdictions: In this case, the IGJ will use restrictive criteria, and may require additional documentation to prove that the company carries out economically significant business activity in its country of origin, and at the same time require information regarding its partners.
- Art.215, 206 and 219, Vehicle Companies: It is possible to register vehicle companies, provided that the requirements regarding assets, activities or rights abroad are fulfilled by their direct or indirect controlling company. The following must be submitted: (i) express statement of vehicle status, (ii) group organization chart, (iii) certificate of individualization of the controlling company’s shareholders, and (iv) certificate of registration of the controlling company in its country of origin, dated not more than six months prior to the filing date.
- Art.229 and 249, Transfer of jurisdiction: The possibility of transferring jurisdiction from the Autonomous City of Buenos Aires is reestablished.
- Art.245, Investment Plan: The obligation to inform the investment plan as a requirement to register a foreign company under the terms of article 123 of Law 19,550 is eliminated. The powers of the legal representative in relation to the registration of the company are limited only to those acts related to the status of partner or shareholder of the company.
- Art.255, RIA: the registered Legal Representative may file and sign the RIAs, if he/she is expressly authorized to do so.
Finally, Resolution 10/2024 provides that registrable acts of the local investee company shall be registrable even if the foreign investee company (i) owes annual filings with the RIA and/or (ii) is not registered under the terms of Art. 123 or 118 of Law 19.550, unless the votes cast by such foreign company have been decisive for the formation of the corporate decision.
Resolution 10/2024 became effective March 28, 2024.
