New Rules Issued by the Companies' Registry in Argentina Applicable to Foreign Companies

The Companies' Registry ("IGJ") issued General Resolution No. 2/2005 [*1] (the "Resolution"), which rules on certain issues related to:

(i) companies incorporated abroad ("Foreign Companies") with no powers and legal standing to act in their places of incorporation;

(ii) Foreign Companies incorporated in (a) low or zero tax countries or territories or (b) jurisdictions considered as "non-cooperative" in the fight against international crime and drug trafficking;

(iii) Cancellation of certain Foreign Companies;

(iv) Foreign Companies unable to conduct their activities in their places of incorporation which state they perform "isolated acts" in Argentina; and

(v) Foreign Companies usually referred to as "vehicle" companies.

1. Foreign Companies with no powers and legal standing to act in their places of incorporation

In accordance with the provisions of General Resolution No. 7/2003 issued by the IGJ [*2] ("Resolution 7"), the Resolution sets forth that the IGJ shall not register Foreign Companies in the Public Registry of Companies under sections 118 and 123 of Law No. 19,550 (the "Companies Act") if the companies do not have powers and legal standing to act in their places of incorporation (i) to conduct their activities or (ii) within the scope of sections 118 and 123 of the Companies Act.

Sections 118 and 123 of the Companies Act refer to, respectively, (i) Foreign Companies willing to develop their corporate purpose in Argentina, and (ii) Foreign Companies willing to participate in Argentine Companies as shareholders or quota holders.

Therefore, the Resolution makes it clear that Foreign Companies with no powers and legal standing to act in their places of incorporation (i) to conduct their activities relating to their corporate purpose or (ii) within the scope of sections 118 and 123 of the Companies Act and which have the intention to (i) conduct activities within their corporate purpose in Argentina and (ii) participate in Argentine Companies as shareholders or quota holders must fully comply with the Argentine laws (i.e. regularize their status).

Said regularization comprises the observance of the criteria set forth by General Resolution No. 12/2003 issued by the IGJ [*3], which rules on the proceedings and requirements for the regularization of Foreign Companies.

Regularization of Foreign Companies within the Argentine legal framework is based on section 124 of the Companies Act, which provides that Foreign Companies with principal places of business or corporate purpose to be carried out in Argentina shall be considered as local companies for incorporation formalities and surveillance over their operation.

2. Foreign Companies incorporated in (a) low or zero tax countries or territories or (b) jurisdictions considered as "non-cooperative" in the fight against international crime and drug trafficking

Section 1 of Resolution 7 provides that Foreign Companies that request their registration before the IGJ in order to (i) conduct activities within their...