New regulations of the Public Registry that reestablished the requirements related to the corporate purpose and clarified the term of validity of the guarantee for the legal representatives of foreign entities.
Briefly, the main amendments established by these resolutions are:
GR 5/20 - Corporate Purpose
GR 5/20 reestablished the stricter requirements related to the corporate purpose that must be met by local companies at the time of their incorporation or, later, when amending their corporate purpose. Specifically, GR 5/20 provides that:
i. The corporate purpose must be stated in a precise and determined way and other activities may only be included if they are related, ancillary and/or complementary to the activities that are included in the corporate purpose.
ii. Multiple corporate purposes will not be admitted.
iii. The activities described in the corporate purpose must be reasonably related to the corporate capital, and the PR is vested with powers to require an initial corporate capital higher than the one established in the incorporation documents.
Formerly, the regulations provided for the possibility to have multiple corporate purposes to the extent that the activities that the company actually intended to carry out were described in a precise and determined way. Likewise, such regulations did not vest the PR with powers to review the reasonableness of the corporate capital in relation to the corporate purpose.
GR 6/20 - Guarantee of the legal representatives
GR 6/20 clarified that the additional term for which the legal representatives of foreign companies must provide guarantees for the performance of their position is of three years (see our Alert of 21 February on the matter). This, in accordance to section 2,561, second paragraph of the Argentine Civil and Commercial Code for civil liability cases.
GR 5/20 and GR 6/20 became effective on 11 March 2020, upon their publication in the Official Gazette.
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