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2.1. Main Formation Requirements

Argentine law requires the following items to form a corporation:

a. Purpose Clause

A corporation may be formed for any lawful purpose. Depending on the terms of its by-laws, it may enter into associations with other entities or corporations, own stock in other corporations, or merge with other corporations. Corporations, however, may only hold shares in other corporations or in corporate silent partnerships (sociedadesencomanditaporacciones). They cannot participate in legal entities whose capital is not represented by shares.

b. Incorporators

At least two shareholders are required at all times (except in the case of a SAS which can be formed by one or more natural or legal persons). Shareholders may be either domestic or foreign corporations or individuals. Under the prevailing interpretation of the Registry of Commerce of the City of Buenos Aires, the second shareholder must hold at least 5% of the shares, although the holding may be diluted during the life of the corporation. To become a shareholder in an Argentine corporation or limited liability company, a company domiciled abroad must register with the Registry of Commerce.

c. Articles of Incorporation

The deed or articles of incorporation must be executed locally before a notary public by the incorporators or their attorneys in fact. If the shareholders are corporations, the articles must include several details (e.g. place of incorporation, domicile, etc.). The articles of incorporation must also include each shareholder’s initial participation in the new company. The by-laws must include the following: name and domicile of the corporation; corporate purpose; corporate capital; duration; internal structure (e.g. shareholders’ meetings, Board of Directors, syndics, organization, control, etc.); rules to distribute benefits and to share losses; terms governing the rights and duties of shareholders among themselves and vis-à-vis third parties; and stated capital. They must also identify the names of the initial directors and the “syndic” (a corporate controller) who will oversee the corporation’s affairs.

d. Capital

Domestic corporations must have an initial minimum capital of AR$100,000, 25% of which must be paid-in at the time of incorporation. The remaining 75% must be paid-in during a term not exceeding two years from the date of incorporation.