On May 17, 2021 IGJ Resolution No. 08/2021 (“RG 8/2021”) was published in the Official Gazette. The purpose of this resolution is to regulate registered foreign companies, as well as those wishing to register in the future; narrowing the criteria related to the registration of foreign companies and strengthening the controls for registration and oversight, especially on those registered as special purpose vehicles (“SPVs”).

The main features of RG 8/2021 are as follows: 

1. New regime applicable to SPVs

 RG 8/2021 creates new requirements for the incorporation of SPVs, and also establishes categorically that:

A. The character of an SPV can only be given only with the initial registration of the foreign company and cannot take on that character later and/or in compliance with an annual report. 

B. Only one SPV will be allowed to be registered for an entire economic group.

C. Registration of an SPV will not be permitted if its direct or indirect parent is already registered under the terms of Articles 118 or 123 of the Argentine Corporations Law (Ley General de Sociedades “LGS”).

D. Registration will not be permitted of SPVs resulting from a chain of control of successive single-shareholder companies.

E. Registration will not be permitted of local single-shareholder companies whose sole shareholder is a single-shareholder company incorporated abroad—even if it lacks the specific character of an SPV.

F. Those companies that obtain registration shall state in their corporate names the names of the parent company of the group of which they form part.

2. New registration requirements for companies registered under the terms of LGS Article 123.

Among other new requirements to be fulfilled, it is important to highlight the requirement of an investment plan for those companies intending to register as foreign companies in order to participate in local companies. Those companies must articulate an investment plan in Argentina in which they must indicate: (i) in which companies they will participate; (ii) the activities they carry out abroad and the activities the local companies in which they will participate carry out in Argentina; (iii) details of the remaining shareholders of the local companies of which they will be shareholders; and, (iv) the number of shares they intend to acquire.

Likewise, it is stipulated that companies incorporated abroad under the terms of LGS Articles 118 or 123 in any jurisdiction of Argentina, which hold – as main activity- shares in a company which is domiciled in the City of Buenos Aires, must register themselves in identical terms before the IGJ. Moreover, IGJ expressly states that it will not recognize effectiveness of registrations of foreign companies under the terms of LGS Article 123 from any other jurisdiction of Argentina.

3. New requirements for the proof of the ultimate beneficial owners

The new resolution provides that in the absence of an ultimate beneficial owner in a company, in addition to the affidavit that normally accompanies each procedure in compliance with RG IGJ 7/2015, it must also be accredited with documentation: (i) that the parent company of the group has all of its shares admitted to public offering or (ii) the ownership of the shares is so atomized that no natural person is a final beneficiary as defined by Article 510 of RG IGJ 7/2015.

4. Annual Reporting Regime: limitation on the filing of abbreviated annual reports

The annual reporting regime reinstated for foreign companies pursuant to RG IGJ 02/2020 (the “RIA”) is also affected by the resolution that is the subject of this newsletter, modifying the possibility of filing abbreviated annual reports.

The RIA in its abbreviated form may only be presented alternately and for a maximum of one consecutive year, provided that: (i) the foreign company does not owe any prior filings; and (ii) the previous RIA has been filed in its duly time.

5. Impact on local companies and their respective registrations

In order to register those resolutions from local companies who have foreign shareholders, it will be required in advance that the latter comply with the provisions of RG 8/2021, with respect to their registration, that of their legal representatives and compliance with the filings of RIAs.

6. Some repealed items

As of the publication and entry into force of RG 8/2021, certain regulations have been repealed, including those relating to: (i) the possibility of registering foreign companies by group integration and (ii) regulations for the transfer of jurisdiction of foreign companies from the City of Buenos Aires to another jurisdiction.