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closing of its pending transactions and the liquidation of those that have taken place. From the time of its dissolution the corporation cannot undertake new operations. The work of liquidation will be in charge of the directors, unless the articles of incorporation and bylaws provide otherwise. The general meeting of shareholders will continue for the purpose of approving or disapproving the balance sheets presented by the liquidators, and for the purpose of appointing new liquidators to fill any vacancies which may occur in their number, or to remove any of them when deemed advisable. The meeting of shareholders will decide any questions arising in this connection which are not within the powers of the liquidators to decide. The relationship existing between the liquidators and the corporation in liquidation is governed by the general principles of agency, which will decide any particular controversy arising in this connection in the absence of legal provisions contained in the articles of incorporation and bylaws or of a mandatory provision of the corporation law embodying a solution for the same.

As stated before, shareholders of a corporation are liable for the debts and obligations of the corporation only to the limit of their interest in the corporation, which in each case extends to stock subscribed by them and unpaid. Consequently, the shareholders are obliged to pay only the balance of the face value of their shares up to the amount that the needs of the liquidation may require to pay the corporate liabilities or to equalize the losses among the shareholders, and it was so held in the case of Bray v. Barrows (Jurisp. de los Tribs. Nacs., October 1912, p. 375).

RIGHT OF CORPORATION TO ISSUE BONDS AND DEBENTURES

Every corporation may contract loans against the issue of bonds or debentures, providing that the authority to do so is contained in the articles of incorporation and bylaws of the corporation. The loans must be contracted and bonds issued in accordance with the provisions of law no. 8875 of February 1912, generally known as the law of debentures. The text of this law may be consulted in the Division of Commercial Laws, Department of Commerce.

EXPENSES OF INCORPORATION

A corporation pays a stamp tax of 1.50 pesos per 1,000 pesos of authorized capital and at the same rate for later increases in capitalization. (Art. 18, law no. 11290 of Nov. 29, 1923.) If no amount of capitalization is expressed, 200 pesos is required to be paid by domestic corporations and 500 pesos by foreign. This tax is paid when the constitutive act, or its amplification providing for an increase in capital stock, is protocolized after being approved by the executive power. It is the only tax imposed upon a corporation as such, is paid but once, and is not an annual charge. Besides this fixed fee, there are others which must be paid for the publication and inscription of the constitutive act and the presidential decree authorizing the organization of the corporation for which no accurate estimate may be given. There are other expenses to be borne in organizing an Argentine corporation, such as attorneys' and no

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taries' fees, for which also no accurate estimate can be given. It is calculated, however, that the whole cost of organizing a corporation amounts to 1 percent, more or less, of the total authorized capital.

OPERATION OF FOREIGN COMPANIES IN ARGENTINA

Under the provisions of article 285 of the Code of Commerce, companies legally constituted in a foreign country which have no domicile, branch, or any kind of company representation within the Republic, nevertheless may undertake in Argentina the respective acts of commerce that are not contrary to national law.

This article envelops a well-settled principle of commercial law. Under it a foreign company may trade directly with residents of Argentina without becoming bound to fulfill the requirements imposed by the law upon foreign companies domiciled in Argentina or which conduct their trade through established branches or any kind of company representation kept within the Republic, and are consequently free from the risks and handicaps which flow from the noncompliance with these requirements, which are herein discussed below. It bears out the method of carrying on trade with Argentina as distinguished from the one of carrying on trade within Argentina. The latter action leads into the discussion suggested by the title of this chapter.

The word "company" as used in the foregoing is inclusive of partnerships and corporations.

REGISTRATION

Under the provisions of article 287 of the Code of Commerce, companies legally constituted in a foreign country which may establish a branch or any kind of company representation within the Republic are subject, precisely like national companies, to the provisions of the Code of Commerce with respect to registration and the publication of their organization documents and the power of attorney granted to their respective representatives, and, in case of bankruptcy, to the provisions of article 1385 of the Code of Commerce. The representatives of the said companies have the same responsibility with respect to third parties as the managers of directors of national companies.

PARTNERSHIPS

Under the above-cited article, a foreign partnership desiring to establish a branch or any kind of company representation within the Republic must comply with the requisites of registration imposed upon an Argentine sociedad colectiva, or sociedad en comandita, as the case may be. These requisites are discussed in the chapters of this work which deal with the formation of these companies. Executive authorization is not required.

CORPORATIONS

Under the above-cited article, a foreign corporation desiring to establish a branch or any form of corporate representation in Argentina must effect a publication and an inscription in the commercial registry of all the documents required in the case of an Argentine

sociedad anónima or domestic corporation. In the case of a domestic corporation the inscription cannot be made until the executive power has approved the articles of incorporation and bylaws. It therefore follows that a foreign corporation desiring to establish a branch or any kind of coporate representation in Argentina must first submit to the executive power its organization documents, in order to obtain the required executive authorization without which the required publication and inscription may not be effected, except in the cases which fall within the provisions of law no. 8867 of February 6, 1912.

Law no. 8867 of February 6, 1912, which supplements article 287 of the Code of Commerce hereinabove cited, provides:

ART. I. The Sociedades anónimas (corporations) referred to in article 287 of the Code of Commerce may engage in business in Argentina, without the necessity of prior authorization from the executive power, upon condition that they prove before competent judges that they have been constituted in accordance with the laws of their respective countries, and providing they inscribe their organization documents in the commercial registry.

ART. II. The provisions of the foregoing article shall apply from the date of the promulgation of this law to those corporations whose countries of origin extend reciprocity.

Foreign insurance companies may not avail themselves of the procedure created by this law. In their case, according to article 528 of the Code of Commerce, authorization from the executive is necessary before any kind of representation is established within the Republic.

Foreign corporations seeking registration under this law must only appear before a commercial judge and establish to his satisfaction (1) that the petitioning corporation has been duly organized and exists under the laws of the country or State of origin, and (2) that the country or State of origin of the petitioning corporation extends reciprocity to Argentine corporations. The judge should thereupon enter an order directing the inscription of the articles of incorporation and' bylaws without further formalities.

MEANING OF RECIPROCITY

The judges of the commercial courts, before whom the petitions must be made, have considered reciprocity to mean not only reciprocal treatment of Argentine corporations in the manner by which they may become domiciled in a foreign state but also reciprocal treatment of the Argentine corporation after it has acquired domicile abroad. That is to say, some of the commercial judges have held that to constitute reciprocity it is not sufficient that an Argentine corporation seeking to establish a branch in a foreign country need only comply with the same formalities that are required of a foreign corporation which desires to register in Argentina under the provisions of law no. 8867. It is also necessary that the Argentine corporation, after registration, shall be accorded the same privileges which a foreign corporation is granted after it has acquired a domicile in Argentina. A foreign corporation duly domiciled in Argentina enjoys all the privileges and rights possessed by domestic corporations. In fact, a foreign corporation may be said to enjoy greater freedom than a domestic corporation in that it may hold its directors' and shareholders' meetings in the State or country of its origin, in accordance with laws of such State or country, and may conduct its internal affairs without the supervision of, or interference

by, the Argentine authorities. Some of the States of the United States are not so liberal in their treatment of foreign corporations. In some cases they impose statutory restrictions upon the right of foreign companies to acquire and to hold real property, which have been held by the Argentine courts to be a denial of the reciprocity contemplated by law no. 8867.

The commercial judges of Buenos Aires, the Federal capital, are not in agreement with respect to the interpretation of the corporation laws of certain States of the United States. Different judges have expressed conflicting opinions, and for that reason it is rather difficult to state definitely whether a corporation organized under the law of a given State of the United States can acquire a domicile in Argentina by mere application to the courts. It depends considerably upon the judge before whom the application must be made. For example, a certain New York corporation was registered without difficulty under the reciprocity theory, without objection on the part of the court. Later a different judge rejected the application of another New York corporation upon the ground that reciprocity is denied by article 23 of the general corporation law of the State of New York.

APPLICATION UNDER LAW NO. 8867

Although it is quite impossible to foresee how a judge of commerce will rule on an application for registration in any given case, it may be considered good practice to apply for domicile under law no. 8867. The advantage of this method is that the entire proceeding can usually be terminated in a month under normal conditions, whereas an application to the executive power generally requires from 3 to 6 months. Therefore, it is a good practice always to commence with an application to the court. If the application is denied, the executive power may then be petitioned.

In the light of former rulings by the judges of commerce, it is believed that, generally speaking, it would be easier to secure registration by judicial application in the case of corporations organized under the laws of Delaware and New Jersey than in the case of corporations organized under the laws of the State of New York.

The following documents should be furnished in making application for domicile under law no. 8867.

(1) Extract of corporation laws of the State of origin relating to the rights of foreign corporations to register, domicile, and function within the State. These extracts should be certified to by the secretary of state under the great seal of the State.

(2) Certified copies of the articles of incorporation and bylaws. These should be certified to by the secretary of state of the State wherein the corporation was organized.

(3) List of shareholders with the amounts of their holdings certified to by the president or secretary of the corporation before a notary public.

(4) Power of attorney granted by the corporation to the agent that is to represent it in Argentina. This power of attorney should include a special power to apply for the registration of the corporation and to bring suit in the name of the corporation, as well as to accept process and defend any action brought against the corporation. It should be drawn in accordance with the practice

of the civil law; that is to say, it should contain extracts from the corporation law of the State of origin, articles of incorporation, bylaws, and resolutions of the board of directors, which constitute the authority under which the person granting the power of attorney on behalf of the corporation executes the instrument, which should be executed before a notary public.

(5) Copy of the resolution of the board of directors authorizing the officers of the company to take steps to domicile the corporation in Argentina. This copy should be certified to by the secretary under the seal of the corporation before a notary public.

The signatures of all notaries public should be certified to by the county clerk or other officer qualified to authenticate their signatures. This, in turn, should be certified to by the Argentine consul, if there is one, for the district of the county clerk. The signatures of the secretary of state must also be authenticated by an Argentine consul general, if there is one with authority to do so in the particular State, because otherwise the signatures of the secretary of state must be certified to by the signature of the Secretary of State of the United States, which, in turn, must be certified to by that of the Argentine Ambassador in Washington. It should be noted that all of the above documents should reach Argentina duly authenticated by Argentine consular or diplomatic representatives in this country, as the case may be. There are cases where in some particular State there is no Argentine consul to certify any of the above signatures, which are necessary in the chain of authentication. In such a case it is necessary to resort to certification by the secretary of state, etc., in order to authenticate the signature of the notary public.

APPLICATION WHERE NO RECIPROCITY EXISTS

Where there is no reciprocity between the State of origin and the Argentine Republic, a foreign corporation desiring to register in the latter must make application to the executive power of the nation. This is done by submitting the same documents mentioned in (2), (3), (4), and (5) above. As soon as the executive power has promulgated the decree approving the articles of incorporation and bylaws and recognizing the legal status of the corporation, the latter must thereupon effect a publication of the decree in the Boletin Judicial for a period of 15 days and thereafter apply for a judicial order, directing the inscription of the incorporation papers in the commercial registry.

As stated before, where a corporation is able to establish the existence of reciprocity between the State of origin and the Argentine Republic and has obtained the necessary order of a commercial judge to inscribe its articles of incorporation and powers of attorney in the commercial registry pursuant to the provisions of law no. 8867, it is unnecessary for the corporation to make any application to the executive power; and under the rulings of the court in the case of Societé des Grands Travaux de Marseilles, decided on September 13, 1923, it is not bound to publish its articles of incorporation and bylaws as would be the case had it obtained permission to register from the executive power. With regard to the latter point it may be said that this is not at all conclusive, as in later instances

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