General Inspection of Justice General Resolution 5/2020 Corporate Purpose. Accuracy and Determination. Related, Auxiliary or Complementary Activities. Capital – Purpose Relation.
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Company Law Department Report | General Inspection of Justice General Resolution 5/2020 – Corporate Purpose. Accuracy and Determination. Related, Auxiliary or Complementary Activities. Capital – Purpose Relation.
Dear Sir or Madam,
General Inspection of Justice (IGJ for its acronym in Spanish) Resolution (G) 5/2020 was recently published in the Official Gazette. It completely repeals General Resolution 8/2016 (dated April 27th, 2016) and reestablishes the effectiveness of sections 67 and 68 of IGJ General Resolution 7/2015. Section No. 67 of the aforementioned resolution states that the corporate purpose shall be accurate and determined through a concrete description of the activities which shall contribute to its effective accomplishment. The inclusion of other activities is admissible only if they are related, auxiliary and/or complementary to those stated in the main purpose.
Regarding Section No. 68 of the same resolution, which establishes the capital-purpose relation, this means that the IGJ may require an initial capital amount higher than the one set by the constituting act, even for joint stock companies with the minimum sum stated in section 186 of Act 19,550, if it notices that the capital is clearly inadequate. In the case of Limited Liability Companies, the initial demand shall be a capital stock of 30% of that required for corporations in Section No. 186 of Act 19,550.
The Sections at issue are currently drafted as follows:
Section No. 67. I- The corporate purpose shall be stated in a precise and accurate manner through concrete and specific description of the activities which shall contribute to its effective accomplishment.
The inclusion of other activities also precisely and accurately described, shall be admissible only of these are related, auxiliary and/or complementary to the activities which lead to the development of the corporate purpose.
The constitution of companies or reforms of corporate purpose which complement the exposition of a multiple purpose shall not be admissible, notwithstanding related, auxiliary, and/or related activities in terms of the section herein.
The group of described activities shall be reasonably related to the corporate purpose.
PART FIVE: CAPITAL STOCK. Adaptation to the corporate purpose.
Section No. 68. The General Inspection of Justice shall require an initial capital amount higher than that stated in the constituting act, even for joint stock companies with the minimum amount stated in Section No. 186, paragraph 1, of Act No. 19,550, or in Section No. 40 of Act No. 27,349, if it notices that, by virtue of the nature of characteristics of the activities included the corporate purpose, the capital results clearly inadequate.
The resolution herein has entered into force as from its publication date on March 11th, 2020.
Should you require any further information on this matter, please do not hesitate to contact us.
Sincerely,
Fernanda Mierez
Miguel M. Silveyra
Miguel C. Remmer