Legal

1
Legal Business Overview of Argentina

• North Carolina Bar Association, May 6, 2008
• Carlos Gabriel Kaplan
• JD University of Buenos Aires
• LLM Duke University

2
Argentina

• Facts
• Legal system
• Business law
• Vehicles available
• Regulations on foreign investment
• Taxation
• Business Opportunities

3
Facts

• Location
• Mercosur

4
Facts

• 23 provinces City of Buenos Aires
• Territory
• 1,068,302 sq mi
• 8th largest country in the world
• 2nd in the region
• 40 million inhabitants

5
Economic Growth

• Economy
• Crisis in 2001/2002
• Growing 8.5 for 5 years

6
Trade (2006)

• RTP
• (At least!) 4 Companies

7
Foreign Direct Investment (2005)

• Spain
• United States (15 13.2bn)
• France
• Brazil
• Canada
• Mexico

8
Legal System

• Democratic Republic
• Federal Constitution
• 3 Levels of Government
• Federal
• Provinces City of Buenos Aires
• Municipalities
• Each with
• Executive
• Legislative
• Judicial powers Civil law

9

• Legislative powers of the Federal Government
• Delegated by the Provinces
• Enact codes
• Regulate international and inter-provincial
  commerce
• Companies Law 19,550
• Foreign Investment Act 21,382

10
Foreign Investment Act

• Foreign investors
• Same rights than local investors
• May use any type of business organization
• Free access to local and international financing
• Allowed repatriation at any time of revenues and
  investment, now subject to regulation

11
Areas of investment

• No restriction to foreign investors
• Exceptions
• Media Limit 30

12
Federal Companies Law

• Types of Business Organizations
• Jurisdiction
• Provincial / City of Buenos Aires
• Incorporation
• Control
• Federal
• Public offerings

13
Business Organizations

• Branch Sucursal
• Corporation Sociedad Anónima (S.A.)
• LLC Sociedad de Responsabilidad Limitada
  (S.R.L.)
• Trust Fideicomiso
• Partnership Sociedad de Hecho
• Joint Venture Unión Transitoria de Empresas
  (UTE)

14
Branch

• Same entity
• Separate accounting
• Parent responds with assets
• Registration
• Domicile
• Representative resident in Argentina
• Additional requirements

15
Corporation Sociedad Anónima

• At least 2 shareholders
• Limited liability
• Capital
• Minimum requirements
• Par value
• Classes of shares
• Purpose
• Unique and determined

16
Corporation Sociedad Anónima

• Governance
• Shareholder meetings
• Ordinary
• Extraordinary
• Board of Directors
• President
• Control
• Registry of commerce

17
Corporation Sociedad Anónima

• Control
• Registry of commerce
• Statutory supervisor
• Supervisory Commission, if
• Capital gt A2,100,000
• Public offering
• Public concessions

18
LLC Sociedad de Responsabilidad Limitada (S.R.L)

• Limit 50 partners
• Limited liability
• No capital requirement
• Pass Thru
• Start as S.R.L. convert to S.A.

19
Trust Fideicomiso

• Widely used in real estate financing
• Allows to
• Isolate risks
• Securitization of funds
• Fiscal benefits

20
Foreign Investor

• Activity in Argentina
• Branch Regular activity
• Shareholder in S.A. / Partner in S.R.L. (Art.
  123)
• Registration and information requirements
• Articles of incorporation, by laws
• Shareholders
• Non off shore
• Principal purpose out of Argentina
• No prohibition to act in place of incorporation
• Activity and assets in other jurisdiction
• Exception part of a corporate group

21
Central Bank Regulations

• Capital inflows
• Minimum term for loans 365 days
• Subject to mandatory 30 non - interest local
  Bank deposit
• Exceptions
• Direct investment
• Real estate operations
• Portfolio investments in publicly traded
  securities

22
Federal Taxation

• Income Tax
• Residents World Wide Income
• Non residents Argentine source income
• Treaty with US not in force
• Value Added Tax
• Sale of goods, provision of services and imports
• Personal assets
• Residents or assets located in Argentina
• Tax on Credits and Debits in Bank Accounts
• Tax on Exports

23
Local Taxation

• Provinces
• Turnover tax Gross Income
• Stamp Tax
• Municipalities
• Service fees

24
Risks

• Inflation
• Official 8
• Unofficial 20?
• Legal uncertainty

25
Business Opportunities

• Agriculture machinery, genetics
• Financial services
• Information technologies
• Telecommunications
• Airport and ground support equipment
• Residential building materials and supplies
• Travel and tourism

26

• Thank you very much!
• Carlos Gabriel Kaplan carlos.kaplan_at_law.d
  uke.edu