Factors to be considered in order to set up a foreign company in Argentina
Foreign companies can operate in Argentina by registering with the Public Registry of Commerce (Registro Público de Comercio), as a branch or a subsidiary.
Subsidiaries are created by setting up a business company. The commonest types are the Corporation (known as Sociedad Anónima or S.A.) and the Limited Liability Company (known as Sociedad de Responsabilidad Limitada or SRL).
Both, branches and subsidiaries, are subject to the same tax regime.
The following are the main characteristics and dissimilarities between the different possibilities:
DOING BUSINESS IN BUENOS AIRES, ARGENTINA: A. BRANCH
In Argentina, the Argentine Companies' Law (LSC, Ley de Sociedades Comerciales), considers that a branch (the "Branch") is a decentralization of the company's headquarters (the "Headquarters" or the "Company"). The Branch is governed by the laws of the country of origin of the Headquarters, and thus, it is authorized to perform all the acts that are permitted to the Headquarters. As a result of the relationship established between the Headquarters and the Branch, the former is indirectly responsible for the transactions carried out by the Branch.
Even though the Branch has no limitations to have its own assets, it is not obliged to have a specific capital stock. However, it must keep separate accounts from the Headquarters and submit its Financial Statements every year before the Public Registry of Commerce (the PRC) of the City of Buenos Aires.
The transactions of the Branch do not generate much administrative control, as long as there are no meetings of the partners, shareholders or board of directors and it is not necessary to keep a record of the minutes, either. However, the Branch must take the necessary administrative measures, such as the registration with the PRC and with the social security entities and tax authorities. Likewise, every year when the Branch submits the Financial Statements, it must inform the PRC about any change that might occur pursuant to what is set forth in item 4.(v) described as follows.
In order to register a Branch in the Argentine Republic, the headquarters must fulfill the following requirements before the PRC:
Certificate of good standing issued by the Secretary of State or the relevant public office certifying that the company is duly authorized or incorporated and in good standing pursuant to the laws of its country of origin. This certificate must also state that such company is under no liquidation or any other kind of legal proceedings that result in restrictions imposed on its assets and/or activities. Copy of the company's bylaws or articles of incorporation, including any amendments thereto. Copy of the resolution by the headquarters' competent body, through which the following decisions are stated: to set up a branch in Argentina; to appoint a legal representative in Argentina (the legal representative may or may not have a domicile in Argentina); to establish a legal domicile in Argentina. Statement subscribed by the legal representative in Argentina, through which he: accepts his appointment as the legal representative; states his personal data; establishes a legal domicile in Argentina. Statement subscribed by a headquarters' representative with sufficient power, providing evidence: that the development of the Company's activities or its main activity or activities is not prohibited or legally restricted in its place of origin. that the company complies with any of the following conditions outside the Argentine Republic: (i) of the existence of one or more branches or permanent agencies in good standing; (ii) the ownership of fixed non current assets or exploitation rights on third parties' assets of the same kind; (iii) interest ownership in any other company in the form of non current assets, in accordance with the definitions set forth in the Generally Accepted Accounting Principles (GAAP). of the company's shareholders / partners, indicating: (i)...