M&A deals as a form of FDI in Argentina

Purchasing shares of Argentinian companies belongs among the most popular types of FDI in Argentina. Other common forms are simultaneous or delayed signing and completion. Usually, the type mainly depends on the preliminary arrangements and terms negotiated by parties. Yet, their agreements are not everything: deals in regulated industries are required to be approved.

In Argentina, before an M&A deal involving a change of control is concluded, purchasers need to make an offer to minority stakeholders. Until a deal is completed, during the process of asset transferring buyers bear joint liabilities that are passed from the sellers.

The legal framework of purchasing

As of particular rules, Argentina does not have any special regulations for creating PEFs. It is typical that money for their establishment is raised in foreign countries and invested through SPVs. When it comes to conditions for creating an SPV in Argentina, foreign legal entities are demanded to appoint representatives as well as send an application for registration to the relevant state authorities and State register.

If a non-residential entity wants to purchase shares of an Argentinian company, they can do so in unlimited quantities. However, understandably some industries impose restrictions on this statement. In addition, foreign entities originally coming from a country with unobserved AML standards and low financial transparency must undergo additional control.

It is also important to note that potential investors should remember about double taxation treaties signed by Argentina. Considering this step will allow investors to properly structure their transactions.  

Capital market in Argentina

In 2018 and 2019 the vast majority of foreign investments streamed into the sectors of telecommunications and fintech. In fact, Argentina has introduced a special program aiming at promoting investments in hi-tech firms. The program allows the participators to obtain social benefits and tax exemptions.

In order to be qualified for the program, foreign companies are supposed to comply with at least 2 criteria and be registered in the Register of Beneficiaries. Once the requirements are fulfilled, applicants are eligible for receiving benefits such as:

  • No VAT;
  • Lower income tax (reduced by 15%);
  • Lower contributions in social insurance.

Regulating authorities

So far, Argentina does not have dedicated authorities that regulate private equity transactions. That is why Inspección General de Justicia regulates all SPVs registered in Buenos Aires. Another agency is responsible for approving deals that involve change of control. It is called the Antimonopoly Commission.

Do you need advice about registering a company or buying one in Argentina? Contact COREDO to arrange a tailor-made consultation.