The legal framework differs significantly depending on whether the transaction is structured as a: (i) a purchase of shares/quotas; (ii) a purchase of assets; (iii) a merger; or (iv) a demerger merger. Both share and asset deals are common.

Purchase of shares/quotas

Acquisitions via share purchase may occur through the issuance of new shares/quotas or by purchasing existing shares/quotas. If new shares are issued, the capital contributions are made to the company and not to its shareholders or partners. If existing shares are purchased, the payment is made to the selling shareholder/partners.

Purchase of assets

In Argentina, there are two ways to undertake a transfer of assets: (i) by means of the transfer of the individual assets; or (ii) by means of the transfer of a commercial establishment or a going concern.

The auction bid process is more common for major projects deals, depending on the size of the deal and the sophistication of the seller. Bid process letters are used. It is more common to use indicative bid letters that are non-binding.

Merger

Under Argentine law, two or more companies can merge by either consolidation or absorption. In both cases, the company surviving the merger acquires, as universal successor, all the assets and liabilities of the companies and the companies are dissolved without being wound up. As a result, the shareholders of the companies become shareholders of the surviving company in accordance with the share exchange mechanism agreed upon between the merging companies.

The main difference between the two merger procedures lies in the nature of the surviving company. Under the consolidation process, the merging companies are succeeded by a newly formed company, while in the absorption process, an existing company is absorbed by the surviving company.

Demerger merger

Where a transaction is structured as a demerger merger, an existing or a newly formed company acquires, as universal successor, certain assets and liabilities of a demerged company.

Argentine law provides for several types of legal entities. The most common types of entities are the stock corporation (sociedad anónima) and the limited liability company (sociedad de responsabilidad limitada), subject to different corporate requirements.

Stock corporations and limited liabilities companies are the two most commonly used private companies. Shareholders of stock corporations and quotaholders of limited liabilities companies are not, in principle, liable for corporate debts and obligations beyond the amounts due to pay in, based on the capital subscribed, unless certain circumstances related to fraud are met.

The main difference between quotas and shares is that quotas are not represented in certificates. All quotas must be subscribed upon incorporation. Quotas are freely transferred by assignment unless the bylaws provide otherwise and such transfers must be registered with the PR in order to be enforceable against third parties.

The managers of limited liability companies have the same rights and obligations as the directors of stock corporations and may or may not be quotaholders.

Unlike stock corporations, it is not mandatory for a limited liability company to have a minimum corporate capital, but the level of capital must be deemed reasonable to conduct the company's business activities. Capital is represented by quotas, all of which must have the same face value and must grant their quotaholders one vote per quota. All quotas must be subscribed upon incorporation and the quotaholders must pay in all contributions in kind and at least 25% of their cash contributions. The remaining 75% of the cash contributions must be paid within two years of the date of incorporation.

As regards the stock corporations, capital is represented in shares. The bylaws may provide for classes of shares, which may be entitled to different rights. Shares of the same class must have equal rights. The minimum capital requirement is ARS 100,000 (approximately USD 365 at the current official exchange rate), although the PR may request a higher capital depending on the activity to be carried out by the company. The stock corporation's capital must be reasonable to perform its corporate purpose. Upon incorporation, the shareholders shall have paid in all of their contributions in kind and at least 25% of their contributions in cash. The remaining cash contributions must be paid within two years from the incorporation date.

Stock corporations can be incorporated with one shareholder or with multiple shareholders. Sole shareholder corporations are subject to special requirements such as: (i) a requirement to appoint statutory syndics; (ii) a requirement to file annual financial statements with the PR (with prior notice to the PR when summoning shareholders' meeting approving such financial statements so that a PR office may attend the meeting); and (iii) a requirement that shareholders must pay in all contributions (whether in kind or in cash) upon incorporation or conversion into a sole shareholder company (if the company already exists). Stock corporations with multiple shareholders need at least two shareholders with no limit on the maximum number. Limited liability companies must have at least two quotaholders and a maximum of 50 quotaholders.

Acquisitions via share purchase may take place through the issuance of new shares/quotas or through the purchase of existing shares/quotas. If new shares are issued, the capital contributions are made to the company and not to its shareholders or partners. If existing shares are purchased, the payment is made to the selling shareholder/partners. If a foreign company plans to acquire shares or quotas in Argentine commercial companies, the foreign legal entity must be registered with an Argentine PR. Foreign legal entities applying for registration with the PR must comply with the following criteria: (i) the entity performs significant economic business activity outside Argentina; and (ii) the entity is not restricted to conduct businesses solely outside of its place of registration.

The purchase of all, or a substantial part, of the assets of a company should be regarded as a transfer of a going concern (transferencia de fondo de comercio) or bulk transfer. Transfers of going concerns are specifically governed by Law No. 11,867. The application of the provisions of this law is not mandatory, but can be voluntarily opted into where the buyer wants to be assured that the liabilities of the seller transferred to the buyer do not exceed those declared to the buyer by the seller. The main purpose of this legal procedure is to protect the buyer from the seller's hidden and contingent liabilities, and to protect the seller's creditors in cases where the seller is transferring a substantial part of its assets. Nevertheless, labor and some tax and social security liabilities and contingencies will pass to the buyer, which will be jointly and severally liable with the seller for these obligations. The purchase price may not be lower than those reported liabilities (Law No. 11,867).