Corporation (Sociedad Anónima - SA)

Details on the Argentinian corporation and how to get a venture started...

Capital and Shareholders - At least two shareholders, which can be either corporate entities or individuals, are required to set up an SA. Minimum capital is A$ 12,000 (i.e. approx. US$ 4,000 at the present exchange rate). While the share capital must be fully subscribed upon incorporation, only 25% need be paid up on such shares and the balance within two years thereafter. Contributions in kind of real estate, equipment or other non-monetary assets must be made in full at the time of subscription.

Capital is divided into shares which must be in registered form and denominated in Argentine currency. Except for specific cases provided by the law there are no nationality or residence requirements, foreign individuals (whether residents in Argentina or not) or foreign companies may hold up to 100% of the share capital. Shares must be of equal par value and have equal rights within the same class. However, different classes of shares may be created. Transfers of shares are generally unrestricted, but restrictions may be included in the by-laws provided that they do not effectively prevent the transfer of shares.

Management and representation - The SA is managed by a board of directors elected at a shareholders' meeting. The directors and even the president of the company may be foreigners; however, the majority of the members of the board of directors must be Argentine residents.

Shareholder Meetings - A shareholders' meeting must be held at least once a year in order to consider the annual financial statements, and customarily will determine the allocation of profits and appoint directors and statutory supervisors.

Shareholders’ resolutions must be recorded in the appropriate minutes book. SAs must keep the following corporate books: Share Registry book, Attendance Record book for shareholders’ meetings, Board’s meetings minutes book, Shareholders’ meetings minutes book, and, if applicable, a Supervisory Committee minutes book. In addition, accounting books must be kept.

Supervision - Argentine companies are subject to the external supervision of the PRC and the internal supervision of controllers or supervisors (síndicos / comisión fiscalizadora) appointed by the shareholders.

Shareholders’ liability - Shareholders who have fully paid-up their subscribed shares are in general not liable for the company's obligations beyond their capital contributions. Shareholders with partly paid up shares are required to pay any outstanding balance within a maximum period of two years from the date of subscription.

Any shareholder with interests in conflict with those of the company has a duty to abstain from voting on any matter which relates to such conflict. The shareholder that does not comply with this provision will be responsible for any damages resulting from a final resolution of the matter in conflict if such vote contributed to form the majority vote necessary to adopt the resolution. Further, shareholders who vote in favor of a resolution which is subsequently declared null shall be jointly and severally liable for any consequences resulting therefrom.

Directors’ and managers’ liability - All directors and managers of an SA are subject to a standard of loyalty and diligence; non-compliance with these standards results in unlimited joint and several liabilities for damages arising therefrom.

Information supplied by Marval, O'Farrell & Mairal Av. Leandro N. Alem 928 piso 7, (C1001AAR) Buenos Aires, Argentina Tel: (011) 4310-0100, Fax: (011) 4310 0200 www.marval.com.ar