Do You Want to Register a Subsidiary in Argentina?

image of Doing business in Argentina

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If you are interested in doing business in Argentina, one attractive option is to register a subsidiary, which will operate with a significant level of independence from the holding company based elsewhere, and thus offer a level of protection in the event your subsidiary encounters any sort of financial or legal inconvenience. For that reason, many investors interested in entering the market choose to register a subsidiary in Argentina.

Buenos Aires in Argentina, where many people register a subsidiary in Argentina.
Buenos Aires, the capital city of Argentina

Argentina is the third-largest economy in Latin America, with a gross domestic product (GDP-PPP) of $903.5 billion (all figures in USD). It is also at the higher end of upper-middle-income nations, with a Gross National Income (GNI) of $22,000 per capita. The South American nation benefits from a developed agricultural sector and has significant reserves of gas and lithium, as well as a highly-educated population that includes a large and well-established middle class.

Furthermore, the country recorded more than $6 billion of foreign direct investment (FDI) inflows in 2019 and has emerged as a hub of tech innovation in the region, with a great deal to offer potential investors. Argentina also has the highest level of English language proficiency in Latin America.

Read on to learn about how to register a subsidiary in Argentina to leverage business opportunities in the country.

Register a subsidiary in Argentina: advantages

If you register a subsidiary in Argentina you will enter the market while protecting your holding company from possible losses or liabilities that can put your international commercial operations at risk. A subsidiary will be established as a separate legal entity and therefore it will have its own bank account, and enjoy a high level of autonomy to make important business decisions and develop its own corporate culture. Meanwhile, the subsidiary in Argentina will be fully responsible for complying with Argentinian legal and tax regulations.

Keep in mind that if a subsidiary in Argentina declares bankruptcy, it can accept the sanctions of the bankruptcy procedure without involving the parent company or its that parent company’s funds. This also means that the subsidiary can be sued by a third party without involving the parent company.

How to register subsidiary company in Argentina?

In order to register a subsidiary in Argentina, you must first register the company under the terms of article 123 of the Law of Commercial Companies or (Ley de Sociedades Comerciales) . In this way, the basic conditions that ensure the legal participation of all the shareholders will be established, regardless of whether the latter is a Public Limited Company (SA) or a Limited Liability Company (SRL).

In addition, foreign shareholders who are involved in the registry of the subsidiary in Argentina must register in the Public Mercantile Registry (RPC). To do this, they will need to submit the following documents:

  • Certificate of validity of the company in its place of origin, proving the existence of the company in that place.
  • Copy of the Constitutive Contract of the subsidiary company.
  • Copy of the resolution approved by the company that describes who is the legal representative of the company and the physical address of the company in Argentina.
  • A document signed by an official of the parent company certifying that the company has other subsidiaries abroad, evidencing that there are no immobilized assets.
  • Declaration signed by a senior official of the parent company in which the composition and ownership of the company’s capital stock is clarified.

Buy a subsidiary already established in the country

Rather than register a subsidiary in Argentina, a common way to enter the market is by buying a subsidiary that has already been established. This can be advantageous if you consider that you will not have to go through the legal process to establish a subsidiary in Argentina from scratch. Buying a subsidiary in Argentina is also a good option if you want to work with a brand that is already recognized in the market.

Source: Biz Latam Hub

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