Investments in Argentina are likely to pick up renewed steam in the near future. A new administration took office in December 2015, putting and end to a 14-year period of strong state presence and populism and is strongly committed to reduce the intervention of the State over the economy and leave far more room for private initiatives and ventures. In line with this new business environment, we will review the legal environment for business in our country.
The following laws basically set the legal framework for investments in Argentina:
The General Companies Law Number 19,550 (Ley General de Sociedades - LGS); The Capital Markets Law Nº 26,831 (Ley de Mercado de Capitales - LMC) and the regulations of the controlling authority, the National Securities and Exchange Commission (Comisión Nacional de Valores) for companies making public offering of their securities; The antitrust provisions contained in Law Number 25,156 (Ley de Defensa de la Competencia - LDC) if applicable to the transaction; Specific additional legal provisions for certain regulated industries, such as oil and gas, energy and media and broadcasting; and The Law on Transfer of Commercial and Industrial Establishments Number 11,867 (Ley de transmisión de establecimientos comerciales e industriales - LTECI) regulating transactions on going concerns. Investments in Argentina may be carried out through different legal structures, such as: setting up a brand new subsidiary to start the business or conducting a merger and acquisition operation to purchase either a going concern (asset deal transaction) or the shares of an already existing and active company (stock deal transaction).
Choosing the most cost-effective and expeditious structure will depend on not only corporate considerations but also on tax schemes, exemptions and benefits, and assets of the target company, especially when acquiring an already existing ongoing business or company, being such acquisition either an asset deal transaction or a stock deal transaction.
As we have already dealt with how to set up a subsidiary company in Argentina, we invite the reader to visit the relevance entry (See our Guide to set up and maintain a company in Argentina on our Legal Blog and successive posts). Following, we will summarily analyze the differences between a stock deal transaction and an asset deal transaction.
Stock deal transaction
The key point to consider here is that the transfer of shares also passes on to the...