As the economy opens up, foreign investors are beginning to look at Argentina as an attractive location to form a company. Traditionally, countries such as Mexico, Colombia, Peru, and Chile have received the greatest influx of foreign investment and trade. Countries like Mexico experiencing a boom in the manufacturing industry welcome international investment more and more every day. Others like Peru, with a seemingly endless supply of high-quality natural resources, have leveraged their resources to become one of the greatest Latin American economies.
Although today Argentina is not recognized as one of the great economic forces in Latin America, in the early 20th century, the country was the most powerful in all of the Americas. Since the late 1800’s various events and factors contributed to its economic downfall, however, Argentina recently jumped back on the horse and is starting to catch up to other countries
A highly educated and growing middle-class creates a wealth of opportunities for foreign investors in Argentina. Add onto this a highly varied landscape, a wealth of natural resources and strong agricultural sector and you have the perfect mix for highly profitable business opportunities. However, many are not sure how to penetrate the market. Should they export? Should they buy shares in an existing company? Should they create Branch Company? All these options have advantages and disadvantages and it is very factor dependent. However, there is one investment strategy that comes out on top – the formation of a company in Argentina. The process can be somewhat complicated, however, making partnering with a local firm can prove to be a strategic business move.
How do I form a Company? What Type of Company Structure Should I Choose for my Business?
For foreigners, there are plenty of different company types that can be formed. Each one slightly different. As a member of a recently formed Argentinian company, I have seen that there are definitely some options which are more attractive and less complex than others. See below the 3 most attractive types for companies for foreigners to form in Argentina and what their requirements, advantages, and disadvantages are.
Form an Argentine Corporation (S.A Sociedad Anónima)
- Main Requirements
- Board of directors in which the majority reside in Argentina
- Hold an annual shareholders meeting (to assess the financial position of the company)
- Minimum investment capital of $100,000 ARS (Argentinian pesos)
- You are allowed to trade shares on the stock market
- Financial benefits – banks are more likely to issue credit (opposed to an S.R.L)
- Flexible trade of company shares
- No limit on the number of shareholders (minimum or maximum)
- You can’t control who enters and leaves the company
- High minimum investment capital
- Financial burden in the form of high tax rates
- High administration costs
- The by-laws must be public
Form an Argentine Limited Liability Company (S.R.L Sociedad de Responsabilidad Limitada)
- Minimum of 2 shareholders and a maximum of 50
- No minimum capital requirements
- There is no limit on the number of people in the administration
- No minimum capital to begin the company
- You do not have to be a partner to be on the administration board
- Shareholders have protection from liability
- Company can be formed by public or private instruments
- Rigid and complex system for changing the ownership of the capital
- Can’t participate in the stock market
Form an Argentine Simplified Shares Company (S.A.S Sociedad de Acciones Simplificada)
- Capital will consist of shares
- Capital investment must be 2x the Argentinian minimum salary (current minimum salary is approximate $8800 ARS)
- Formation time is significantly less than an S.A or an S.R.L
- Easy and cost-effective to constitute
- Partners determine the organizational structure of the company
- Limited declaration obligations
- Approved in 24 hours
- Shares can’t be traded in the stock market
- Practical issues due to its recent implementation
The type of legal entity you choose to establish in Argentina will depend greatly on the type of business you plan on running, the internal structure of your business, amongst others. Before forming a company in Argentina, speak to local experts who can advise you on not only legal entity types but also a market entry strategy to ensure business success.
It is Time to Look to Argentina for Business Investment
While governmental and regulation complexities can still cause issues for individuals and companies looking to enter the market, there has been a shift to a more simplified process in addition to the opening up of the economy to foreigners. Investors worldwide are beginning to become interested in Argentina as an attractive destination for investment and trade. Now is a great time to look towards Argentina.
Biz Latin Hub in Argentina can assist in all aspects of your investment in Argentina from market entry, to company formation to accounting and legal assistance. Reach out to Javier here and see how we can add value to your Argentine investment.
If you are thinking about forming a company in Argentina, learn how to do so in this presentation.