Transcript Foreign Law in US Courts

Latin American Law
Corporate law
Basics
Last updated 30 Nov 11
Today’s topics
• Civilian business organizations
– Types: “hub and spoke”
– Rules (mandatory / default)
• Organizational basics
– Formation
• Promoter / notary / authorization / registration
• Single act or public subscription
• Constitutive documents
– Structure
• Shareholders / managers
• Oversight: board / supervisory council
• Centrality of shareholder meeting
– Liability
• Promoter liability for pre-formation agreements
• “Piercing corporate veil”
• Director/manager liability
Value of knowing other legal systems
•
•
•
•
Model for borrowing
Gain perspective
Discover truths
Impose / power
State directed economy …
Business organizations …
Latin American (Spanish)
United States
1.
2.
3.
4.
A.
B.
C.
D.
E.
F.
G.
H.
sociedad anónima (SA)
sociedad cerrada
sociedad colectiva
sociedad en comandita
(sociedad comanditaria)
5. sociedad de empresas
(en participación)
6. sociedad de inversiones
7. sociedad de responsabilidad
limitada (SRL)
8. sociedad filial
9. sociedad matriz
10. sociedad por acciones (SpA)
11. sociedad pública (corporación)
12. sociedad unipersonal
I.
J.
Corporation
close corporation (not “closed”)
general partnership
government agency
limited partnership
joint venture
individual corporation
investment company (mutual
fund)
limited liability company
parent company
K.
subsidiary company
1-A / 2-B / 3-C / 4-E / 5-F / 6-H / 7-I / 8-K / 9-J / 10-A / 11-D / 12-G
“Hub and spoke”
(civilian bus orgs)
Argentina Business
Organizations Act
Associations,
foundations
Title II
Norms for legal
entities
-----• Registration
• Voting
• Limited liability
Partnerships
Limited
liability
companies
Corporations
Form an Argentine business …
Form an SRL / LLC
SRL – Argentina
•
reserve a company name with a specific governmental
form (IGJ form #3)
•
have company members' signatures verified by a notary
•
deposit subscribed capital in the national bank
•
publish an announcement of the company's formation in
the Official Bulletin
•
pay the incorporation fee
•
register the corporation
•
obtain books for company record-keeping
•
submit books to a notary for certification
•
obtain a tax 'password’
•
obtain a tax identification number
•
register for sales taxes with the local government
•
register with the Social Security Administration
•
obtain employment insurance
•
submit company books to Labor Ministry for certification
LLC – US
• ensure name
availability within your
state of organization
• develop an operating
agreement
• file the articles of
organization
• apply for a tax
identification number
Sam Wellborn
Constitution Instrument
1.
2.
3.
4.
5.
6.
7.
8.
Name (must include SA)
Purpose
Classes / rights of shares
Amount of capital
Subscription terms
Identity of shareholders
Election of directors
Company domicile
What are company “statutes”?
STRUCTURE
FORMATION
Promoters
Members
Notary
Single
act
Public
subscription
Comptroller
Public
Registry
Judge
Bank
Board of
Trustees
Supervisory
Council
Directorate
Company
Winslow Taylor
Argentina is “a chronically unstable,
endemically corrupt polity with a rich
history of dictatorship, economic
mismanagement and the occasional
political lunacy.”
In Argentina, the culture has
created a “tendency towards
individualism, unwillingness to
engage in teamwork and a lack
of trust in people.”
Form Argentine branch
of US corporation?
Inspeccion
General de
Justicia
Form US branch of
Argentine corporation?
Secretary of
State (foreign
corporation)
Winslow Taylor
• Corporate federalism?
According to Olivares, all Argentine
shareholders enjoy the right to
• cumulative voting (one-third of the board
vacancies)
• right to be informed in advance of the
shareholder meeting matters
• pre-emptive right (right to purchase pro rata
in any stock offering)
• right to request judicial oversight of the
company “as a preventive measure … serious
danger to the company.”
• right to dividends.
Sam Wellborn
•Compare to US?
•Shs better off in Argentina?
Argentina Business Organizations Act
Article 59: The managers of the organization shall act
loyally and exercise the level of care of a good
businessman. If they neglect their obligations they are
responsible unlimitedly and jointly for any harm that
may result from their acts or omissions.
Taryn Kadar
•How do you run the business?
•Who might sue you?
•Piercing the veil?
•BJR?
A business purpose plays a significant role in Argentine
corporate law. In Argentina, the description of a
corporation’s objective must be “precise and definite.”
Section 54 of the ACL provides that shareholders of a
local corporation shall be held unlimitedly and jointly
and severally liable if such corporation has been used
as a mere vehicle to pursue goals alien to the corporate
purpose, breach the law or the public order or to impair
third parties rights
[student]
End
The measure of a corporate law
system is how it deals with
executive compensation …
Pay/GDP
4500
4000
3500
3000
Value
2500
Pay/GDP
2000
1500
1000
500
0
US
Argentina
Canada
Venezuela
Country
Mexico
South Africa
Spain
Invest in Argentine company?
Grupo Financiero Galicia (GGAL)
IESE Business School in Spain: Argentine life
is “characterized by making the least possible
effort, ignoring the law and seeking individual
advantage over any other interest.”
Do “ethics codes” reassure
foreign investors?
Jen Beatty