July 14 2006
A foreign financial corporation should carefully analyze the advantages and disadvantages of electing an individual or a separate legal entity as its representative in Argentina, and of reorganizing a representation office in Argentina.
According to regulations issued by the Central Bank, a foreign bank may structure a representation office through either an individual or a local entity incorporated in Argentina. Both structures require prior authorization from the Superintendency of Financial and Foreign Exchange Entities of the Central Bank for the representation office to act as the foreign bank's representative in Argentina. Among other requirements, the individual appointed as representative or the director(s) of the local entity appointed as representative must provide evidence to the superintendence of their background in the banking and finance business.
The authorized representative may not delegate its authority to a third party, although the regulations authorize the appointment of a co-representative with the same duties as the main representative. This appointment is also subject to the prior authorization of the superintendence.
Market practice shows that representation offices registered with the superintendence have used both options: electing individuals or legal entities as their representatives.
Recently, the superintendency has adopted a new regulatory interpretation in connection with the approval or continuance of representation offices operated by individuals. Such representatives must now be registered with the Public Registry of Commerce under Article 118 of the Companies Law, which provides that in order to perform business activities within the Argentine territory on a permanent and continuous basis, a foreign legal entity must register its corporate documentation with the Public Registry of Commerce, establish a domicile in Argentina and appoint and register a legal representative.
Among other effects, this requirement means that the registered representative of a foreign financial institution may be summoned before the courts. Thus, given that the local representation office is the same legal entity as the foreign financial institution, the required registration allows the Argentine courts to summon registered foreign financial institutions.
Furthermore, the activities of the representation office must be conducted in accordance with Argentine laws and regulations (eg, the tax, accounting, employment and social security regulations applicable to business activities developed by permanent establishments of foreign corporations in Argentina).
For further information on this topic please contact Gabriel G Matarasso or Diego Juan Abelleyra at Marval, O'Farrell & Mairal by telephone (+54 11 4310 0100) or by fax (+ 54 11 4310 0200) or by email (email@example.com or firstname.lastname@example.org). The Marval, O'Farrell & Mairal website can be accessed at www.marval.com.ar.
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Gabriel G Matarasso
Diego Juan Abelleyra