background image Specific Constraints of Available Legal entities

Minimum Number of Shareholders

Argentine law requires local entities to meet the plurality of shareholders or partners test (two or more partners or shareholders). This plurality has to be substantial or meaningful. Although the statute does not define what substantial or meaningful means, with respect to corporations it has been construed that meaningful or substantial plurality implies a minority shareholder with a minimum participation of 5%. However, a simplified joint stock company (SAS) can be formed by one or more natural or legal persons, with their liability limited to their contribution.

Involvement of Non-residents in the Structure

There are specific constraints on foreign entities wishing to hold an equity interest in an Argentine company or to establish a branch or any other type of permanent representation, since they need to be registered with the Public Registry of Commerce. These constraints derive from the rules issued by the Registry of Commerce of the City of Buenos Aires.

Under these rules, the foreign registrant must evidence that (i) it has one or more offices or branches in its country of origin; (ii) it owns shares in other companies that have non-current assets; or (iii) it owns fixed assets in its country of origin. A special exception is stated for “investment vehicles” created for legitimate business reasons by a company holding assets outside of Argentina. In addition, companies prohibited from conducting business in their home country (e.g., “offshore” companies) cannot be registered either (unless they qualify as “investment vehicle” as referred above). Finally, if the registrant comes from a low-tax or tax-exempt jurisdiction, or if this country is not a recognized cooperator in the fight against money laundering and international crime, the IGJ may request, at its sole discretion, additional information.