By Javier Canosa

Law 27,349 known as the “Venture Capital Support Law” (the “Law”) promises to revolutionize the daily practice of corporate law and business affairs.

 

First filing of the Articles and Bylaws and subsequent filings.

In the City of Buenos Aires, the Business Entities’ Controlling Body (“IGJ”) is the entity in charge of the incorporation of the SAS. The filing will be made through a Management System of Digital Documentation (“GDE”) and the system of Remote Proceedings (“TAD”).

The number of the filing proceeding will be the CUIT (Single Taxpayer Code) of the SAS.

Corporate capital: shares.

The capital will be divided into shares. At the incorporation, capital must not be less than two (2) adjustable minimum living wages (currently, AR$17,720).

The subscription and paying up of the shares must be made in accordance with the conditions, proportions and terms set forth in the Articles of Incorporation. At least 25% of the contributions in cash must be paid at the time of the subscription. The outstanding amount must be paid up in no more than two (2) years. Contributions in kind must be fully paid at the time of the subscription.

Contributions may be in cash or in kind. Contributions in kind may be made at the value unanimously agreed on by the shareholders in each case. They must indicate on the Articles of Incorporation the chosen method of assessment, or otherwise, the market value. In case of corporate insolvency or liquidations proceedings, the creditors may challenge the assessment within five (5) years as from the day of the contribution. The challenge will not succeed if the assessment was made by the court. The financial statements must include a statement indicating the assessment mechanism for the contributions in kind.

Ancillary services may be rendered, either by shareholders, directors or third party providers. These services may consist in services already rendered or to be rendered in the future, and their contribution amount may be determined by the shareholders in the Articles of Incorporation or by the unanimous decision of the shareholders, otherwise the contribution value will be determined by one or more experts unanimously appointed by the shareholders. The Articles of Incorporation must include the assessment mechanism used.

The service contribution must be described in the Articles of Incorporation and/or subsequent amendments, and must indicate its content, term, method, compensation, penalties for violations and the alternative mechanism for paying up when the contribution renders impossible for any event. These contributions may only be amended as agreed, or otherwise, with the consent of the obligor and the shareholders.

If the service contribution is pending either in whole or in part, the transfer of shares held by the shareholder who promised the service contribution will require the unanimous consent of the shareholders, in which case an alternative mechanism for paying up must be established.

Shareholders guarantee third parties the paying up of the contributions jointly and unlimitedly.

Capital increase.

When the capital is increased, shareholders may decide at the shareholders’ meeting the characteristics of the shares to be issued, indicating their class and rights.

The shares may be issued at face value or at a premium, in which case different premium values may be set for shares issued upon the same capital increase. For this purpose, shares of different classes must be issued, which may hold equal dividend and voting rights with different premiums.

When the capital increase does not exceed 50% of the registered corporate capital, the articles of incorporation may provide for a capital increase without serving any notice or registration of the shareholders’ meeting resolution.

Irrevocable capital contributions.

Contributions may be irrevocable subject to a subsequent issuance of shares for 24 months as from the date on which the contributions are accepted by the SAS management body, which must decide whether to accept them or reject them within 15 days as from the payment in whole or in part of the contribution amount. The conditions and requirements for payment of these contributions must be set forth in the relevant rules.

Classes of shares.

The SAS may issue non-endorsable registered shares of common or preferred stock, and their face value must be indicated as well as the dividend and voting rights held within each class.

Book-entry shares may also be issued.

The different classes of shares may have the same voting and dividend rights, regardless of any differences in their purchase price. The Articles of Incorporation must indicate the voting rights held by each class of share, as well as if they carry one or more votes, if applicable.

In the event the share certificates are not issued, the share ownership will be proved by means of the SAS record certificates included in the book of shares. In addition, the SAS must issue account balance statements.

Transfer of shares.

The trading mechanism or transfer of shares must be set forth in the Articles of Incorporation, which may establish that any transfer of shares or of any class of them will be subject to prior authorization of the shareholders at the shareholders’ meeting. In the event the Articles of Incorporation do not include this provision, notice of the transfer of shares must be served to the SAS and recorded in the book of shares to be effective against third parties.

The Articles of Incorporation may prohibit the transfer of shares or a class of shares, provided that the term of the prohibition does not exceed ten (10) years as from the date the shares were issued. This term may be extended for additional periods not exceeding ten (10) years, provided that this decision is adopted by the shareholders representing all of the SAS capital.

The restrictions or prohibitions imposed on the shares must be registered in the Book of Shares. If the shares are certificated, the restrictions/prohibitions must be also registered in the applicable certificates of shares. If the shares are book entry, the restrictions must be registered in the documents issued.

The transfer of shares will be void if it does not comply with the provisions of the Articles of Incorporation.

This comprehensive article was written by Javier Canosa, Aliant partner and head of the Argentina office. It is the second part a four-part series. To read the first post, please click here