A. COMPLIANCE FOR INCORPORATION
In order to conduct business in Argentina a foreign entity may do so either through a branch or a subsidiary. Normally we recommend our clients to create a local subsidiary since it limits the liability of the shareholders for any losses the local subsidiary may have. On the other hand, a branch does not limit the liability of the shareholders and creditors of the branch may seek to recover from the assets held abroad.
Under current regulations, there are essentially three types of entities that can be used: (i) a corporation (in Spanish, Sociedad Anonima); (ii) a Limited Liability Company (in Spanish, Sociedad de Responsabilidad Limitada); and (iii) a Simplified Stock Corporation (in Spanish Sociedad Anónima Simplificada).
In any case, a foreign entity seeking to hold interests in local Argentine entities must be duly registered before the local Office of Companies. The Limited Liability Company and the Corporation require at least two shareholders. The Simplified Stock Corporation may be a single-shareholder entity.
Registration of a foreign entity requires filing the following documents:
- Bylaws and articles of incorporation;
- Certificate of good standing;
- Latest audited financial statements;
- Board resolution deciding on the registration and appointing a legal representative to act for the company in Argentina.
Registration of foreign entities takes between 1-2 months as from filing.
In order to incorporate a local entity, it is necessary to:
- Decide on a corporate name;
- Prepare the articles of incorporation or association. Simplified Stock Corporations may adopt template articles of incorporation as approved by the relevant office of companies;
- Determine the initial capital of the entity; all types of entities have regulatory minimums, but those minimums may be increased;
- Appoint a board of directors. The local subsidiary, regardless of the type of entity, must have at least one director. If there is a single director, it may have any nationality but it must reside in Argentina. Should more than one director be appointed, then the majority must reside in Argentina;
- Determine the registered office, which must be in Argentina and in the specific jurisdiction of incorporation.
Once the initial determinations are made, and the documents have been signed, the incorporation takes place by filing all documents with the office of companies. Registration is usually achieved within 2-3 weeks.
B. POST INCORPORATION REGISTRATIONS
Immediately post incorporation a local entity must obtain a tax ID from the Argentine tax authorities and register for national and local taxes (income tax, VAT and gross revenue among others), and also register as employer before local labor authorities.
Annually local entities must file their tax returns and periodically they must elect a new board (in case of corporations), where the incumbent members may be re-elected.
Foreign entities registered as shareholders must comply with annual reporting requirements, including updating the shareholding information and filing the latest annual financial statements.