19 June 2009

Argentina Legal Entities - Types of Companies You Can Form

There are essentially three types of legal entities which are useful for doing business in Argentina: corporations (SA), limited liability companies (SRL), and the branch office. There are of course other types entities that can be created under the Argentine Commercial Companies Law, but they serve little practical use and I won’t be discussing them.

Companies of all types are regulated by the Inspección General de Justicia (or “IGJ”). Public companies are also regulated by the National Securities Commission (Comisión Nacional de Valores).

Both corporations and limited liability companies must declare an “objective”, which specifies the business activity the company will be allowed to perform. A company can’t simply specify “perform services”. It actually needs to say, “provide architectural services for the construction of new residencies and remodeling of existing ones.” The more specific the objective, the easier it is to get it approved by the IGJ.

Limited Liability
In both the case of the Corporation and the Limited Liability Company, liability is limited to the capital invested by each shareholder or partner. To the best of my knowledge, a foreign branch office (since it is not a separate legal entity) exposes the parent company abroad to full liability for its operations in Argentina. For this reason, most multinationals (and every bank) form subsidiary companies rather than operate as a branch.

I will make a detailed post on each entity type in the coming days.

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