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THE PUBLIC REGISTRY OF COMMERCE OF THE CITY OF BUENOS AIRES, ARGENTINA, CHANGES THE RULES FOR FOREIGN COMPANIES
Resolution IGJ 2/2020 of the public registry of commerce of the City of Buenos Aores (“IGJ”) modified the registration and compliance regime applicable to foreign companies that want to get registered or that are already registered in such registry (please note that most of the companies in Argentina are registered in this registry).
Basically, the former regime, derogated by the prior government, was reestablished, in the sense that, from now on, those foreign companies that want to be registered in IGJ in order to participate in local companies or in order to do business directly in the country through a branch must prove that they effectively have substance, that their principal activity is outside Argentina, and that they can develop in their country of incorporation the same activity that they are going to develop in Argentina. They also have to inform the holders of their participations, including a sworn declaration of the “ultimate holder”. The relevant evidence requested is set forth in the new regulation.
Also, the foreign companies already registered have to annually prove, within 120 from the closing of their financial statements, if they suffered any relevant variation in their net worth, if there have been changes in the holding of participations, and if they maintain the conditions indicated in the paragraph above.
Additionally, the prohibition to register “off shore” companies (companies that cannot carry out their corporate purpose in their country of incorporation) was reestablished, unless it is proved that they are the “vehicle” of another foreign company with substance.
Finally, as an addition to the former regime reestablished, it was set forth that the legal representatives of the foreign companies registered or to be registered have to engage and maintain a guaranty in favor of the foreign company that they represent, in order to cover a potential breach in the development of their tasks. The most common guaranty is an insurance policy that is provided by certain insurance companies specialist in this kind of D&O insurance for local companies.
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