Argentine corporations (sociedades anonimas) and foreign corporations may publicly offer their equity securities in Argentina. An Argentine corporation may issue different classes of common or preferred stock, provided that shareholders within each class are granted equal rights. Both common and preferred stock may be subject to public offering. Dividends and capital reimbursements corresponding to common stock holdings are always proportional to the common shareholders' interest in the stock capital. Preferred shares are usually nonvoting and grant to their holders an economic advantage which may include the right to a fixed dividend, cumulative or not, or a privileged right to capital reimbursement upon liquidation and termination, as stated in the stock issue.
Section 4 of Chapter 1 of CNV Resolution No. 290 permits Argentine corporations to issue preferred shares without voting rights (acciones de participacion or nonvoting shares). The principles established by such resolution are as follows:
In a liquidation of the issuer, the par value of nonvoting shares will be repaid before payment of ordinary shares.
Nonvoting shares may be issued up to a maximum of 30% of the issuer's total capital stock.
If the issuer withdraws voluntarily from registration for public offering eligibility, holders of nonvoting shares shall enjoy appraisal rights.
The issuer may select from the following alternative final solutions for nonvoting shares: (i) repayment of nonvoting stock on predetermined conditions, (ii) repayment at the shareholders' option on predeterminded terms, (iii) repayment by capital reduction approved in an extraordinary shareholders' meeting, or (iv) conversion into common shares.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Bernado E. Duggan or Leonardo F. Fernandez on Tel: 54 1 310 3980 or Fax: 54 1 310 3944. Alternatively enter a text search 'Basilico, Fernandez Madero & Duggan' and 'Business Monitor' or view the entire information archive on the Business Monitor web site (http://businessmonitor.co.uk).
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Agreements providing for the three types of activities are not rare although such activities are fully distinct and treated by the Brazilian legislation as such.
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