21 June 2009

Argentina Limited Liability Companies (S.R.L. - Sociedad de Responsabilidad Limitada)

The Limited Liability Company (S.R.L. - Sociedad de Responsibilidad Limitada) is the second most common legal entity in Argentina. It is similar to a corporation, but is somewhat cheaper to operate and there are limitations on the number of shareholders. Some of the properties of SRLs:
  • Capital: Instead of shares, capital is represented by “cuotas”. There is no minimum capital requirement, but the IGJ will require the company to have capital sufficient to comply with the company’s objective (i.e. if you say you’re going to build power plants, you can’t declare the company’s capital to be $12,000 pesos)
  • Partners: An SRL can have between 2 and 50 partners. Partners can be other SRLs, foreign companies, or individuals. An Argentine corporation cannot be a partner in a SRL.
  • Meetings: Meetings take place according to the bylaws of the company. They are not required, as in the case of a corporation.
  • Managers: The SRL is governed by managers, who can act individually or together, depending on the bylaws of the company. Managers do not need to be partners in the SRL.
  • Transferring Ownership: It is more burdensome to transfer ownership in a SRL than in a SA, since each transfer will require a visit to the notary (escribano). There are no restrictions on the transfer of cuotas, as long as the company's operating agreement doesn't prohibit it.
Who Shouldn't Form a Sociedad de Responsibilidad Limitada
Firstly, it is impossible to form a SRL if there are going to be more than 50 investors, but smaller groups may still want to avoid SRLs if the company is going to need multiple rounds of equity financing. Every time ownership changes hands, the partners of an SRL must return to an escribano to sign more documents. It can be cumbersome to deal with SRLs when many investors are involved and ownership is changing hands frequently.

Who Should Form a Sociedad de Responsibilidad Limitada
Small companies with small and stable groups of investors should form SRLs. The cost is lower, there is less publishing required, and fewer administrative burdens. SRLs are designed to accomidate smaller businesses which by nature of their size do not need all the formalities of corporations.


  1. In this post you mention foriegn companies being able to own cuotas of an Argentine SRL but how does that process work? Does the US company first have to be registered in Argentina? How do you do that?

  2. Take a look at the post on sucursal de compañía extranjera (foreign branch office). That explains the process. You will need to register any foreign company locally before it can own shares in an Argentine SRL.

  3. About transferring ownership in a SRL, I think the problem is also that it implies a change of the social contract ("reforma") and must be registered at the IGJ, with possible consequences on the validity of existing contracts in the name of the company.