On July 16, 2024, the General Inspectorate of Justice (“IGJ”)published in the Official Gazette Resolution) No. 15/2024 (the “Resolution”), which comprehensively restructures the regulatory framework of the IGJ integrated by General Resolution No. 7/2015 and the amending resolutions.
The new regulations seek to encourage local and foreign investments, for the reactivation of the economy and the development of social action carried out by civil society organizations. The Resolution promotes deregulation, simplification of procedures, elimination of bureaucratic and discretionary obstacles, and enshrines the principle of freedom of enterprise.
Among the major changes in the Resolution are:
New perspective on the functions of the State Control authorities:
- The role of the General Inspectorate of Justice is redefined under the new regulations, establishing that it is not only a registration and control authority for certain private legal entities. The IGJ becomes, in addition to a supervisory entity, an “Economic Service of General Interest” available to citizens.
- The regulation emphasizes that the functions and operation of the agency must be aligned with the principles and objectives established by the founders of the Republic, as reflected in the National Constitution. Specifically, the guarantees of Articles 14, 17, 18, 19 and other related articles must be respected, such as reasonableness, proportionality, good faith, transparency, administrative simplification, or the right to be heard, within a democratic framework that promotes freedom, the principle of legality, legal reserve and normative hierarchy.
Responses to requests entrusted by the Civil Society:
- The possibility is granted to churches, confessions and religious communities, different from the Catholic Church and authorized for worship under Law 21,745, to voluntarily register in the Public Registry of the IGJ. This will allow them to keep a regular accounting system with official books and records, facilitating accounting transparency and legal recognition in lawsuits. In addition, those entities that are already registered and supervised by the IGJ as civil associations or foundations, may opt to leave this supervision and become mere religious entities according to their bylaws, without losing the right to regular accounting with initialed books.
- Horizontal property consortiums domiciled in the Autonomous City of Buenos Aires may voluntarily register in the Public Registry of the IGJ, obtaining initialed books that may be used in legal proceedings.
- A voluntary registry is enabled for persons not required by law to keep accounts, being allowed to register in the Public Registry to obtain initialed books due to specific needs. This includes guardians, curators, administrators of special property regimes and auxiliaries of justice, among others.
The procedures for civil associations and foundations are simplified and made more flexible:
- Procedures for the incorporation, operation, dissolution and liquidation of all civil society organizations are simplified. Simplified and free procedures are introduced for the creation of small-scale civil associations.
- The dissolution and cancellation without liquidation of civil associations that have not been active in the last six years is allowed through a simple and agile process.
- The creation of small-scale civil associations is allowed without the need for a public deed or a professional pre-qualification opinion. The additional documents required for the presentation of the list of authorities are also eliminated, simplifying the process.
- The registration of the termination of administrators of Civil Associations and Foundations is made more flexible and simplified. In addition, the texts of the model bylaws are modified to allow remote meetings and meetings by remote means. The system of convocations is simplified, allowing the use of electronic mail to summon associates and authorities.
- The admission by DNU 70/2023 to enable the participation of civil associations and foundations in corporations is regulated.
- The registration regime for civil entities incorporated abroad is simplified.
Deregulation and simplification of companies to promote local investment:
- The control on the originating and derived substantial plurality is eliminated, eliminating a barrier that limited the principle of freedom in the incorporation of companies. In addition, the term for the cancellation of companies without liquidation and without activity is extended to six years.
- Certain regulatory aspects related to the guarantees to be provided by directors and managers are eliminated, making these requirements more flexible and simplified. Likewise, sanctioning provisions established under the previous administration that were not authorized by law are eliminated, such as the one that allowed the IGJ to promote the action of unenforceability of the legal personality in certain cases of registrable assets.
- Processes considered inoperative in practice, such as the printing of stock certificates at the Mint, and others not provided for by law, such as the communication of anticipated dividends, are eliminated.
- The requirement to establish an issue premium in cases of capital increase with effective contribution of the partners is eliminated, since this matter corresponds exclusively to them and is outside the competence assigned by law to the IGJ. The mandatory prior capitalization of capital accounts in capital increases is also no longer imposed administratively.
- The prohibition of the so-called “accordion operation” is eliminated, allowing its validity under the compliance of certain requirements.
- The regulation of the cumulative voting regime for the election of directors and members of the supervisory board is adjusted, in accordance with the provisions of the General Corporations Law.
- The regime of irrevocable contributions on account of future capital increases is simplified, maintaining the principle that these contributions must remain recorded in shareholders’ equity, and only require following the capital reduction procedure for their restitution in case of bankruptcy or liquidation. In addition, the requirement to present a certificate of inhibitions in corporate reorganization processes is eliminated.
- Simple, free or residual corporations, including the de facto corporations contemplated in Section IV of Chapter I of the General Corporations Law, are allowed to have access to stamped books.
- The possibility of integrating contributions in the incorporation of companies and in capital increases through virtual assets and cryptocurrencies is incorporated, subject to compliance with certain requirements, recognizing that this mechanism may offer opportunities for growth, efficiency and security in the business environment.
Relaxation of the Regime for Foreign Companies:
- Restrictions and limitations established in the past for the operation of foreign companies in the country, which derived from personal, ideological or discretionary appreciations that denaturalize national laws and international treaties subscribed by the Argentine Republic, are eliminated.
- The requirement to prove the ownership of assets abroad in order to register branches, seats or permanent representations of foreign companies, or to incorporate or participate in local companies is eliminated.
- The obligation to prove the beneficial owners of foreign companies is maintained at the time of registration and annually when filing their financial statements, pursuant to the provisions of Law 27,739 and Section 118, subsection 3 of the General Corporations Law.
- The registration of off shore companies and those incorporated in non-cooperative jurisdictions in terms of tax transparency or fight against money laundering and financing of terrorism is allowed. However, a restrictive criterion will be applied when considering their registration, and the IGJ reserves the right to request additional information before proceeding with their registration.
- Specific and simple rules are established for the transfer of foreign companies registered in provincial jurisdictions to the orbit of the Autonomous City of Buenos Aires.
- The procedure for the registration of the resignation of representatives appointed by foreign companies without the required documentation, or in case of resignation not accepted by the parent company, is eliminated, matching the criteria followed by the IGJ for local companies.
- The Annual Informative Regime (“RIA”) is eliminated for foreign companies registered under the regime of Section 118, paragraph 3, as well as for those referred to in Section 123 of the General Corporations Law.
Modifications in the requirements for goodwill:
- The requirement to submit a certificate of inhibitions by the transferor to register transfers of commercial and industrial establishments under the regime of Law No. 11,867 has been eliminated. This measure was taken on the basis of what was resolved more than eighty five years ago by a plenary decision of the National Chamber of Appeals in Commercial Matters, in the case “Arrese, Edmundo M.C. y otro” of December 5, 1938.
Continuity of the Deregulated Regime for Simplified Joint Stock Companies (“SAS”):
- The simplified and deregulated regime for Simplified Joint Stock Companies, established by General Resolutions IGJ No. 11/2024 and No. 12/2024, will remain in force. However, new measures are being prepared to further deregulate and simplify the system, which will be implemented through a specific resolution in the near future.
Update of the Manual for the Prevention of Money Laundering and Financing of Terrorism.
- The Manual of Policies and Procedures for the Prevention of Money Laundering and Financing of Terrorism, approved by General Resolution IGJ No. 10/2015, will be updated through new resolutions. This update will be made to align it with the provisions of the recent Law No. 27,739 and future resolutions issued by the Financial Information Unit (“UIF”), created by Law No. 25,246. In addition, the recommendations derived from the peer review carried out in April 2024 will be incorporated.
The new regulatory framework will become effective on November 1, 2024. In the meantime, General Resolution No. 7/2015 will continue to be in force, unless the taxpayer requests the application of RG 15/24 as it is more favorable.
