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Company Formation

The following are the types of company formation permitted in Argentina. The most common business entity used by foreign businesses when setting up in Argentina is a Sociedad de Responsabilidad Limitada.

Sociedad de Responsabilidad Limitada or Limited Partnership Society

Relatively speaking, the incorporation of a Sociedad de Responsabilidad Limitada (S.R.L.) is not complicated. However, its perpetuation relies on its members, since majority and, in some cases, complete consensus is needed for any changes. Compared to a Corporation, the time needed to form a Limited Partnership is shorter, and there is much less government supervision or interference. Corporations may not be partners of a Partnership. Capital is divided into shares, and the responsibility of the partners (of which there must be between two and fifty) is limited to paying up their personal quotas.

The Company Formation Process for a Sociedad de Responsabilidad Limitada

Company formation in Argentina for a Limited Partnership Society is a 15-step process, as follows:

1. Firstly, the name of the company is verified by the Office of Corporations (Inspeccin General de Justicia - IGJ). The request to name a new company or change an existing name must be submitted using the reservation of name form (reserve de nombre), which expires after 30 days. This process takes 1 day and costs approximately 20 ARS.
2. Certify founding members' signatures by a notary public. For each signature this costs around 100 ARS. At the inaugural meeting of partners and quota holders, draft statutes are approved and the capital is subscribed to and paid in. The capital must be fully subscribed upon incorporation - but only 25% need be paid in. The remaining balance must be paid within two years. This process takes 1 day and costs 250 ARS.
3. Deposit initial capital (at least 25% of the subscribed capital and no less than 3000 ARS) in National Bank (Banco de la Nacion Argentina). Proof of payment needs to be obtained. This can be withdrawn once the company's bylaws are registered by the Office of Corporations. This takes 1 day and costs 30 ARS.
4. Publish the new company's notice in the official paper (Boletin Oficial). This must be done before the company moves on to the 5th step. The company must authenticate the representative's signature before a notary public and the notice must comply with specific syntactic guideline prescriptions. This takes 7 days and costs between 500-800 ARS.
5. Payment of the incorporation fee, which takes 1 day and costs 30 ARS.
6. Registration with IGJ for companies located outside the federal capital. The company representative must file the official record of incorporation, with the documents approving the directional nomination, a copy of the publication and evidence of the guarantee required for principal directors and managers. The company may operate under its name during the formation period (after the inaugural meeting and before the final registration at the Public Registry of Commerce) by adding the words "en formacion". Its partners and managers are jointly responsible and not protected by limitation of liability during this period unless their actions have been authorised in the inaugural meeting deed. The filing time for this procedure takes 5 to 20 days for regular filing, or if urgent 1 to 5 days. The directors are responsible for the directors' guarantee, not the company.
7. Buy special books takes 1 day and the cost is included in the 8th procedure.
8. Have notary public submit company books for rubrication by IGJ. The IGJ must rubricate Book of Minutes of Quotaholders and Managers' Meetings, along with 4 other books for accounting purposes. This can only be done after the company has been registered. The cost for this procedure includes the purchasing of books in the previous step, notary services (including the form and the fees), and with IGJ registration. The public notary must be the one to apply for the rebrication of the accounting books. They must file a form given by the Public Notaries College. If the company wishes to rubricate more than 5 books then they will need to obtain another form, at a cost of 115 ARS. The whole procedure costs 435 ARS and takes 5 days.
9. Corporate manager needs to obtain a fiscal code (Clave Fiscal) before access can be made to the online tax system, and before a CUIT tax identification number is obtained. This is to link the responsible individuals (Corporate managers) with the new company, to limit companies that do not pay tax. To obtain the fiscal code the corporate manager must file an online tax authority form, which needs to be signed and certified by a notary public, as well as a copy of their identification report. The form should contain information relating to the company's address. This takes 4 days.
10. Obtain a CUIT tax identification number from the National Tax Office (Administracion Federal de Ingresos Publicos or AFIP) and register for social security. This can be done jointly at the National Tax Office. To obtain a CUIT (Clave unico de Identificacion Tributarial) the company needs to file an application form (with the signature certified by a notary public) subscribed by its legal representative. The company must register all principals with the National Tax Office individually as managers before the company is registered. This process takes 4 days.
11. Register sales tax at the Direccion General de Rentas (DGR) in Buenos Aires. The 24 jurisdictions collect tax on sales generated within its boundaries, whether or not the beneficiary of the sales maintains a place of business in that jurisdiction. The related rates of tax, rules and other assessment procedures are determined by each jurisdiction's government authority. This takes 1 day and costs 50 ARS.
12. Register with the Unified System for Labour Registration (USLR) to make social security withholdings and pay contributions, which are calculated on the salaries paid to employees. This process takes 1 day.
13. Take out insurance for employees with a risk labour company (Aseguradora de Riesgos del Trabajo). These are private companies. Typically takes 1 day to complete.
14. Register with Aseguradoras de Fondos de Jubilaciones y Pensiones (AFJPs) which are retirement and pension fund insurance schemes which employees have chosen. The employer can then deposit the worker pension instalments into these. If an AFJP is not chosen, then employers' contributions are made to the public entity in charge of the national state pension system. This takes 1 day.
15. Rubricate books of wages in the Ministerio de Trabajo (Ministry of Work) - this takes 1 day and costs 75 ARS.

Corporations or Sociedades Anonimas (S.A)

Along with foreign branches, corporations are among the most favoured kinds of company formation by foreign investors in Argentina. Features of a corporation are:

• Capital is represented by shares of stock.
• Corporations are required to have at least two shareholders, and shares may be privately held or quoted publicly. Only this kind of company is permitted to go public.
• The liability of shareholders is limited to their investment capital.
• The Board of Directors is responsible for running of the business. Directors are selected by the shareholders' yearly meeting. They are individually liable for their actions.

Corporations are also subject to oversight and control by government agencies:

• Publicly-held quoted corporations are controlled by the Comision Nacional de Valores
  
• Banks are overseen by the Argentinean Central Bank
  
• Privately held corporations are controlled by the Inspecci -->n General de Justicia or General Inspection

Fundamental characteristics of the corporation are laid out in the articles of incorporation which requires approval by the Inspeccion General de Justicia, published in the Official Gazette, registered with the Public Register of Commerce and also notarised.

Branches of Foreign Corporations

If you want to expand your business by establishing an overseas branch office or any other kind of permanent representation, you have to:

• Prove the existence of the parent company. Register the parent's articles of incorporation or partnership contract with the Public Register of Commerce and delegate and register your representatives.
• Establish a company residence in Argentina
• Fulfill the same publication and registration requirements as Argentinean businesses. As with Corporations, Branches are subject to permanent control by the Inspeccion General de Justicia
• Delegate a representative or manager

If a branch is chosen as the form of business, it must have delegated capital. Keep accounts separate from those of the parent company and file all accounting statements with the Inspeccion General de Justicia within 60 working days of their financial end of year.

Joint Ventures

There are a few kinds of joint venture, of which the most favoured are temporary partnerships and temporary unions of companies, otherwise known as Uniones Transistorias de Empresas (U.T.E.). For these, there must be no new company or new legal entity created. Contracts such as these must be registered with the Public Register of Commerce and must include company aims, duration, name and other information concerning partners' liabilities, financial involvement and other legalities.

The aim of a temporary partnership is to work synergistically, to help the specific stages of corporate activity of the partners, or to better and develop their mutual activities.

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