Setting up a branch or subsidiary in Argentina   Foreign companies may operate in Argentina either directly or through branches or indirectly through subsidiaries. There are several different ways of forming a local company. ESTABLISHING A BRANCH   Branches are subject to the same requirements as local companies regarding administrative control and registration of the documents, by-laws and other corporate papers.   The branch may be managed by one or more appointeed named by the parent company. These managers should have an adequate power-of-attorney granted by the foreign company in order to conduct the affairs of the Argentine branch. They are subject to the same rules governing the liability of local company directors.   It is mandatory for the branch to maintain separate accounts in Argentina and to submit financial statements and tax returns. LOCAL COMPANIES   The most common types of companies are the SOCIEDAD ANONIMA (S.A.), a stock company, and the SOCIEDAD DE RESPONSABILIDAD LIMITADA (S.R.L.), a limited liability company. The Sociedad Anonima (S.A.)   The S.A. is a company whose capital is represented by shares: the shareholders are liable only up to the amount subscribed and paid in. It is similar to an American business corporation. Capital Stock: The shares must have an equal, fixed par value expressed in Argentine pesos. The minimum capital to form a S.A. is fixed at US$ 12,000. Types of shares: Under present regulations, only non-endorsable shares may be issued. Shares may be represented by a stock certificate or may be registered. They may be common or preferred shares. The latter are those which receive special benefits, such as a fixed dividend. The transfer of shares must be notified in writing and registered in the Company's Stock Register. Each common share may carry from one up to five votes. For taking decisions on fundamental matters, the multiple vote is not applicable. Preferred shares may be issued without voting rights. Under certain circumstances all shares are entitled to vote. Management: The S.A. must have a Board of Directors consisting of one or more Directors appointed at the annual shareholders meeting. The Board may have foreign residents among its members. Nonetheless, the majority of the Directors must be domiciled in Argentina, a fact to be considered when appointing Directors with real domicile outside Argentina. Directors are required to maintain high business standards. They are personally liable concerning company taxes, import and export duties and social security obligations. Other than those exceptions, Directors are not personally liable for other S.A. commitments. Meetings: Shareholders' meetings may be either regular or special meetings depending on the matters to be discussed. The shareholders should hold every year a regular meeting to consider : (a) the approval of the financial statements and (b) the appointment of the members of the Board and the Supervisory body. Special meetings are called to consider such matters as the amendment to Bylaws, mergers and dissolution. Quorum and majorities to pass resolutions in these cases are subject to greater requirements as those at regular meetings. Shareholders may be represented at any meeting by proxy. Neither Directors, nor member of the Supervisory body, nor company employees may be proxies. Supervision: Companies may have a Supervisory Body. This office may be held by an individual called "syndic" or by a Control Committtee of three or more members. Should the capital amount exceed US$ 2,100,000 the company must appoint supervision. It is in charge of supervising management and of controlling the accuracy of the financial statements as a trustee of the shareholders. Only a lawyer or C.P.A. is eligible for this position. The Sociedad de Responsabilidad Limitada (S.R.L.)   The S.R.L. has some characteristics of an S.A. and some of a partnership. The number of members cannot exceed 50 and their liability is limited to their participation in the capital. The advantage of an S.R.L. over an S.A. is that the S.R.L. formation and operation require much simpler procedures. Capital: The capital must be divided into quotas of equal value which may be freely transferable. Management: An S.R.L. has one or more managers who have similar rights and duties as those of Directors of an S.A. The S.R.L. may also have a Supervisory Body. Meetings: The formation agreement shall provide the rules which govern the meetings and resolutions of quota-holders. If no provisions are established, the resolutions of quota-holders shall be validly taken if authentically documented. Should the S.R.L. capital exceed US$ 2,100,000, similar provisions as those governing S.A. meetings will apply. Traditionally, foreign companies have operated in Argentina both through branches or subsidiaries. Nevertheless, most business transactions are carried out preferably through S.A. rather than S.R.L.s or branches.