This brief deals with corporate governance in Argentina with a focus on the management of corporations, governed in general by the General Companies Law Number 19,550 (Ley General de Sociedades or LGS by its Spanish acronym).
Management body of corporations
Corporations are managed by a board of directors, which may be comprised of one or more individuals, as set out by the by-laws (LGS, Article Number 255, first paragraph). By-laws may also organize an Executive Committee formed by directors in charge only of the company's ordinary business (LGS, Article Number 269, first paragraph).
When a corporation is subject to permanent state auditing, a board of at least three directors shall be appointed (LGS, Article Number 255, second paragraph), with the exception of single-shareholder corporations that, in any case, may have a one-director board (LGS, Articles Number 255, second paragraph, and Number 299, Section 7)1.
Directors may be Argentine citizens or foreign nationals. However, the absolute majority of the directors must be Argentine residents (LGS, Article Number 256, fourth paragraph)2.
The appointment of the board of directors shall be registered with the Public Registry (LGS, Article Number 60).
Certain individuals are not legally allowed to act as directors, such as, those who may not exercise commerce; those gone bankrupt or directors of the company gone bankrupt until their re-qualification; those sentenced with accessories of disqualification to exercise public positions, sentenced for pilferage, theft, fraud, bribery, issue of checks without funds and infringements against public good faith; those sentenced for offenses committed in the constitution, working and liquidation of companies. In all cases until after ten years have elapsed after completing the sentence; and those officials of the public administration whose tasks are related to the purpose of the company until two years after they cease in their positions (LGS, Article Number 264). Additional restrictions and eligibility conditions may apply to certain regulated activities, such as banking.
Public companies and financial entities are also required to have as members of the board individuals who gather specific independence conditions for eligibility.
Appointment and removal of the board of directors
Directors are appointed and removed by an ordinary shareholders' meeting (LGS, Article Number 234, Section 2). By-laws shall set out the period for which the board...