Representatives of foreign companies: Changes in the guarantee system

General Resolution IGJ 5/2024 was published on February 23, 2024 and concerns the guarantees required by representatives of foreign companies domiciled in Buenos Aires. It amends Article 3 of General Resolution IGJ 2/2020, which was previously amended by Resolution IGJ 6/2020. These changes affect the guarantee obligations and their amount for representatives of companies registered abroad in accordance with Article 123 of Law 19550 (LGS).

Previously, representatives of both companies incorporated abroad pursuant to section 118(3) of the LGS and foreign companies pursuant to section 123 of the LGS were required to provide a guarantee in the amount of five times the minimum capital. This obligation is now waived for representatives of companies incorporated abroad in accordance with Article 123 of the LGS.

The rationale for these changes is that companies registered abroad under Article 118 of the LGS act directly and are therefore liable for their activities in the country, while companies under Article 123 of the LGS act as partners or shareholders of a domestic company, which is ultimately responsible for its activities and is subject to Argentine law.

The guarantee requirements remain only for representatives of companies incorporated abroad in accordance with Article 118 of the LGS. The amount of the guarantee for each representative is now equal to 60% of the minimum capital set for domestic companies or 60% of the capital allocated to the branch. The minimum and maximum limits from General Resolution IGJ 7/2015 also apply, whereby the amount of the guarantee must individually be between ARS 300,000 and ARS 1,000,000.

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