New regulatory framework of the Public Registry of the City of Buenos Aires
Non-governmental Entities: Transformation into Corporations and Equity Participation in Companies.
On July 16, 2024, General Resolution No. 15/2024 was enacted by the Public Registry of the City of Buenos Aires (“PR”), replacing the regulatory regime established by General Resolution No. 7/2015. Additionally, on August 20, 2024, General Resolution No. 18/2024 was enacted by the PR, which modifies and complements the regulatory applicable to the regime of non-governmental entities.
General Resolution No. 18/2024 introduces into General Resolution No. 15/2024 the regulations for the process of transforming non-governmental entities into corporations, and modifies the regime for the equity participation of non-governmental entities in companies.
The most relevant changes focus on the following topics:
- The requirements for the transformation of civic non-profit associations into corporations are incorporated. Among these requirements, it is highlighted that the approval of such transformation requires the favorable vote of two-thirds (2/3) of the members present at an extraordinary assembly;
- The previous limitations on civic non-profit associations and foundations, as well as on the representations of similar entities constituted abroad and registered with the PR, for participating in companies and corporations through the acquisition of shares for consideration, are removed;
- It is established that civic non-profit associations, foundations and the representations of similar entities constituted abroad and registered with the PR may participate in corporations by acquiring shares in existing corporations or by establishing new ones, whether they are with multiple shareholders or as single-shareholder corporations (S.A.U.). This equity participation must be approved by a two-thirds (2/3) majority of the members present, board of directors, or the competent body, in accordance with the regulations in force in its place of incorporation, as applicable, unless otherwise provided by the bylaws;
- Civic non-profit associations are authorized, through assembly approval with a two-thirds (2/3) majority of the members present to delegate to the administrative body the decision regarding the advisability of acquiring shares in companies;
- Civic non-profit associations and foundations, as well as the representations of similar entities constituted abroad and registered with the PR, may acquire shares representing the capital of corporations for free. They may also receive, through inter vivos acts or upon death, free of charge and without encumbrances, usufruct rights or other rights assignments for the collection of dividends corresponding to shares;
- It is established that civic non-profit associations and foundations may only acquire shares in corporations and that those that had acquired, prior to the entry into force of General Resolution 15/2024, other types of companies that limit the liability of their partners, may retain such equity participation, complying with the requirements for the “Acquisition of shares free of charge”;
- The restriction on civic non-profit associations, foundations, or representations of similar entities constituted abroad and registered with the PR from being controlling shareholders of the participated corporation, under the terms of Section 33, paragraph 1, of Law No. 19.550, as a result of the acquisition of shares, whether for consideration or free of charge, is eliminated;
- The publicity regime for shareholdings for civic non-profit associations and foundations, as well as the representations of similar entities constituted abroad and registered with the PR, is modified;
- The PR, as the supervisory body, is authorized to request any additional information it deems necessary regarding the participation of the mentioned civil entities in the participated companies. If it is detected that the holdings may imply, on the part of non-profit entities, an indirect way of engaging in activities covered by the purpose of the directly or indirectly participated company, it may notify the Federal Administration of Public Revenues;
- Additionally, the PR is authorized to request the liquidation of shareholdings and/or impose the fine established in Law No. 22.315 if it deems that the civil entity’s assets are compromised and detects insufficient fulfillment of the civil entity’s purpose;
- The restriction on civic non-profit associations, foundations, and local representations of entities constituted abroad and registered with the PR from making any type of fund disbursement, delivering goods, or transferring rights in favor of the company in which they participate is eliminated.
General Resolution No. 18/20254 and 15/2024 will come into effect on November 1, 2024, until which date the previous regime will remain in force and will apply to procedures initiated and ongoing until their conclusion, even if this occurs after the aforementioned Resolutions come into effect.
Notwithstanding this, in the procedures to be initiated or in progress before its entry into force, the application of the provisions of General Resolution No. 18/2024 and 15/2024 that the interested parties consider more favorable, may be requested.
The official text of Annex I of General Resolution No. 15/2024, can be found at the following link.
In the following weeks, we will be sending bi-weekly newsletters with more information and in-depth guidance on the most relevant topics arising from General Resolution No. 15/2024.
For further information, please contact:
This message is of a general informative nature and should not be considered as legal advice. In case you need professional assistance, please contact our experts.