Corporate Governance in Argentina
Argentina has launched several recent initiatives for improving corporate governance in Argentina, including the following:
General Resolution 34/2020. The Public Registry of the Autonomous City of Buenos Aires (Inspección General de Justicia) (IGJ) issued General Resolution 34/2020 on 3 August 2020 (as amended by General Resolution No 35/2020 and ratified by General Resolution 12/2021). This Resolution introduced an obligation on certain legal entities to guarantee gender parity among members of their representative/management bodies. The Argentine General Companies Law . 19.550 (AGCL) does not provide for gender quotas for a company's board.
The resolution requires that certain private companies and non-profit organisations registered with the IGJ when the Resolution becomes effective to appoint to their boards and, where appropriate, statutory committees (see Structure and Management), an equal number of female and male members (in even-numbered boards), and a minimum of one third of female members (in odd-numbered boards.
- General Resolution 8/2022. This removed the permission in Resolution 11/2020 for meetings to be held remotely, as they were during the pandemic. From the date of this resolution for virtual/remote meetings, companies' bye-laws must be reformed, to allow the shareholders/quotaholders and/or BoD/managers to meet remotely using various electronic means.
General Resolution 112/2021. Under this Resolution, the Financial Information Unit (FIU) established the legal framework applicable to ultimate beneficial owners (UBOs) of companies, based on Financial Action Task Force (FATF) Recommendations.
The UBO of a company is the person who owns at least 10% of the capital or voting rights of the company or who, by any other means, exercises the final control of the company, either directly or indirectly.
If no person qualifies as UBO under the above rule the UBO will be deemed to be the person in charge of the administration, direction or representation of the legal entity, trust, investment fund or any other asset and/or corporate structure.
General Resolution 939/2022. On 24 August 2022, the Argentine Securities Commission (Comisión Nacional de Valores) (CNV). established the requirements for publicly traded companies to hold remote shareholders meetings.
To meet remotely, the following requirements, among others, must be met:
- the bye-laws must allow the shareholders' meeting to meet remotely;
- when calling for the shareholders' meeting, the BoD must communicate if the shareholders' meeting is going to be held remotely or not;
- access to the meeting must be guaranteed;
- the syndics (see Structure and Management) must verify that every shareholder can speak and vote;
- a recording of the meeting must be kept in the company for five years, so that any shareholder or the CNV can access it.
Under Argentinian law, the following are the most common types of legal entities used for conducting business activities:
- Corporation (sociedad anónima).
- Wholly-owned corporation (sociedad anónima unipersonal).
- Limited liability company (sociedad de responsabilidad limitada).
- Simplified corporation (sociedad por acciones simplificada) (SAS). SAS companies were created by Law 27,349 and have a flexible legal framework more suited to the needs of entrepreneurs. For example, an SAS can be incorporated by digital means and their corporate books and records must be kept by means of electronic records and registries.
All the above entities limit the liability of their shareholders/quotaholders in relation to third parties up to their respective capital contribution.
Corporations can be privately or publicly held.
Main Legislation
In principle, both private and public corporate entities are regulated by the AGCL and are subject to the regulations of the Public Registry of its place of incorporation (for example, in the City of Buenos Aires, companies are subject to the regulations of the IGJ).
Public companies subject to the public offering regime (through the listing of their debt instruments or shares) are subject to the CNV's supervision and regulations.
Banks, financial entities and representative offices of foreign financial entities are also subject to the regulations of the Argentine Central Bank (Banco Central de la República Argentina) (BCRA).
Anti-Bribery and Corruption
The Anti-Bribery and Corruption Agency is responsible for the regulation of corporate governance in relation to anti-bribery and corruption. Its main functions are to:
- Set up programmes for preventing corruption and promoting transparency in public management.
- Monitor declarations of personal assets by public officials and evaluate relevant personal circumstances that could indicate:
- unlawful enrichment;
- they are holding the position for which they have been appointed illegally; and/or
- any conflict of interest in the exercise of their public function.
- Enforce compliance with the Public Ethics Law No 25.188 by issuing opinions and recommendations and informing officials of proscribed conduct.
- Receive complaints and investigate irregularities and corruption.
- Submit a criminal complaint when an offence against the public administration has been detected, and in some cases assume the role of a private prosecutor in such cases.
- Identify corruption offences and request the appropriate prosecution.
The main legal framework concerning corporate governance for anti-bribery and corruption is set out in the Public Ethics Law, which establishes:
- The duties and good behaviour standards for public officials.
- A transparent system of declaration of assets by public officials.
- Legal bars on holding public positions.
- A conflicts of interest regime.
- Rules governing gifts that can be made to public officials.
Decree 1179/2016 regulates the regime relating to gifts made to public officials under section 18 of the Public Ethics Law. Public officials are prevented by law, with some exceptions, from receiving gifts, donations, benefits, or similar by reason of, or on the occasion of, the exercise of their duties. Permissible gifts must be registered in the Register of Gifts to Public Officers. Gifts with a value of ARS4,000 or more, or of indeterminable value, must be transferred to the government.
Decree 1179/2016 also regulates trips and travel expenses of public officers that are financed by third parties, providing that they must be registered in the Register of Trips Financed by Third Parties.
Institutional Investors and Shareholder Groups
Institutional investors and shareholder groups are not active or influential in monitoring or enforcing corporate governance.
The CNV and the BCRA have adopted a corporate governance code (CG Code) for companies subject to their supervision (generally, public companies and financial institutions). It is based on the "comply or explain" principle and sets out various non-binding recommendations and guidelines. However, certain specific principles are binding, such as the independence requirements for members of a public company's board of directors (BoD) and syndics (see Question 6). These provide that the directors of public companies must disclose their level of compliance with the CG Code in the company's annual report (memoria).
The CG Code provides basic guidelines for public companies. These guidelines require public companies to:
- Promote transparency in related-party transactions.
- Set foundations for proper management and supervision.
- Support policies for effective risk management.
- Protect financial information through independent audits.
- Protect shareholders' rights.
- Maintain direct and responsible relationships with the community.
- Pay responsible and fair remuneration.
- Promote business ethics.
- Consolidate the scope of good corporate governance provided by the CG Code.
Under the BCRA rules, financial entities subject to the supervision of the BCRA must implement a corporate governance code based on its guidelines (Communication A 5201). The BCRA guidelines provide that the board and higher management of a financial entity should:
- Adopt policies to fulfil the entity's corporate objectives.
- Ensure that the entity's activities fulfil the required levels of security and solvency, and that they are in accordance with the applicable laws and regulations.
- Define the risks to be assumed by the entity.
- Protect the interests of investors.
- Assume their responsibility as directors before the shareholders and consider the interests of other relevant third parties.
- Perform daily activities.
It is considered good practice for financial entities to:
- Implement an internal code of corporate governance that includes the entire entity as an integral discipline of managing all risks, taking into account the guidelines contained in such regulations, in proportion to the size, complexity, economic significance and risk profile of the financial institution and the economic group to which the entity belongs.
- Have board members that are able to exercise independent judgement in relation to decisions regarding issues of management and inappropriate outside interests.
Non-public companies are not legally compelled to report on social, environmental and ethical issues. Therefore, it is not common for these companies to report on these issues.
However, public companies subject to the supervision of the CNV must "maintain a direct and responsible relationship with the community ", and under this guideline they must:
- Provide online access to the bye-laws, financial statements and relevant information on their shareholders and directors.
- Issue an audited statement on social and environmental responsibility annually.
- There are no other guidelines or best practices in relation to corporate social responsibility.
- Report the rules or initiatives they have adopted to carry out their policies on corporate responsibility on an annual basis.
Source:
Thomson Reuters Practical Law: https://uk.practicallaw.thomsonreuters.com/5-506-7926
