ILN: ESTABLISHING A BUSINESS ENTITY: AN INTERNATIONAL GUIDE

This collaborative guide serves as a quick, practical reference for those with corporate needs in these jurisdictions.

Fall 23

I NTERNATIONAL L AWYERS N ETWORK

ESTABLISHING A BUSINESS ENTITY: AN INTERNATIONAL GUIDE

ILN CORPORATE GROUP

[ESTABLISHING A BUSINESS ENTITY]

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This guide offers an overview of legal aspects of establishing an entity and conducting business in the requisite jurisdictions. It is meant as an introduction to these marketplaces and does not offer specific legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship, or its equivalent in the requisite jurisdiction. Neither the International Lawyers Network or its employees, nor any of the contributing law firms or their partners or employees accepts any liability for anything contained in this guide or to any reader who relies on its content. Before concrete actions or decisions are taken, the reader should seek specific legal advice. The contributing member firms of the International Lawyers Network can advise in relation to questions regarding this guide in their respective jurisdictions and look forward to assisting. Please do not, however, share any confidential information with a member firm without first contacting that firm. This guide describes the law in force in the requisite jurisdictions at the dates of preparation. This may have been some time ago and the reader should bear in mind that statutes, regulations, and rules are subject to change. No duty to update information is assumed by the ILN, its member firms, or the authors of this guide. The information in this guide may be considered legal advertising. Each contributing law firm is the owner of the copyright in its contribution. All rights reserved.

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Table of Contents CHAPTER CONTRIBUTORS & FIRMS ............................................................................................................ 5 ESTABLISHING A BUSINESS ENTITY IN ARGENTINA .................................................................................. 12 ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA ................................................................................... 20 ESTABLISHING A BUSINESS ENTITY IN AUSTRIA ....................................................................................... 40 ESTABLISHING A BUSINESS ENTITY IN BELGIUM ...................................................................................... 50 ESTABLISHING A BUSINESS ENTITY IN BRAZIL .......................................................................................... 63 ESTABLISHING A BUSINESS ENTITY IN CANADA ....................................................................................... 77 ESTABLISHING A BUSINESS ENTITY IN CHILE ............................................................................................ 92 ESTABLISHING A BUSINESS ENTITY IN CHINA ......................................................................................... 100 ESTABLISHING A BUSINESS ENTITY IN COLOMBIA.................................................................................. 114 ESTABLISHING A BUSINESS ENTITY IN COSTA RICA ................................................................................ 123 ESTABLISHING A BUSINESS ENTITY IN CYPRUS ....................................................................................... 132 ESTABLISHING A BUSINESS ENTITY IN THE CZECH REPUBLIC ................................................................. 140 ESTABLISHING A BUSINESS ENTITY IN DENMARK................................................................................... 153 ESTABLISHING A BUSINESS ENTITY IN ENGLAND ................................................................................... 161 ESTABLISHING A BUSINESS ENTITY IN ESTONIA ..................................................................................... 173 ESTABLISHING A BUSINESS ENTITY IN FINLAND ..................................................................................... 182 ESTABLISHING A BUSINESS ENTITY IN FRANCE....................................................................................... 190 ESTABLISHING A BUSINESS ENTITY IN GERMANY................................................................................... 207 ESTABLISHING A BUSINESS ENTITY IN GREECE ....................................................................................... 219 ESTABLISHING A BUSINESS ENTITY IN HONG KONG............................................................................... 233 ESTABLISHING A BUSINESS ENTITY IN HUNGARY ................................................................................... 248 ESTABLISHING A BUSINESS ENTITY IN INDIA .......................................................................................... 258 ESTABLISHING A BUSINESS ENTITY IN ITALY........................................................................................... 265 ESTABLISHING A BUSINESS ENTITY IN KENYA......................................................................................... 286 ESTABLISHING A BUSINESS ENTITY IN LIECHTENSTEIN .......................................................................... 299 ESTABLISHING A BUSINESS ENTITY IN LITHUANIA.................................................................................. 308 ESTABLISHING A BUSINESS ENTITY IN MALTA ........................................................................................ 321 ESTABLISHING A BUSINESS ENTITY IN MEXICO ...................................................................................... 330 ESTABLISHING A BUSINESS ENTITY IN THE NETHERLANDS .................................................................... 347

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ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND ........................................................................... 357 ESTABLISHING A BUSINESS ENTITY IN NORWAY .................................................................................... 372 ESTABLISHING A BUSINESS ENTITY IN THE PHILIPPINES ........................................................................ 381 ESTABLISHING A BUSINESS ENTITY IN PORTUGAL.................................................................................. 391 ESTABLISHING A BUSINESS ENTITY IN ROMANIA ................................................................................... 409 ESTABLISHING A BUSINESS ENTITY IN SINGAPORE ................................................................................ 422 ESTABLISHING A BUSINESS ENTITY IN SLOVAKIA ................................................................................... 435 ESTABLISHING A BUSINESS ENTITY IN SPAIN.......................................................................................... 443 ESTABLISHING A BUSINESS ENTITY IN SWEDEN ..................................................................................... 461 ESTABLISHING A BUSINESS ENTITY IN TAIWAN ...................................................................................... 468 ESTABLISHING A BUSINESS ENTITY IN THAILAND................................................................................... 477 ESTABLISHING A BUSINESS ENTITY IN TURKEY ....................................................................................... 489 ESTABLISHING A BUSINESS ENTITY IN UGANDA..................................................................................... 494 ESTABLISHING A BUSINESS ENTITY IN UKRAINE ..................................................................................... 508 ESTABLISHING A BUSINESS ENTITY IN THE UNITED STATES ................................................................... 519

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CHAPTER CONTRIBUTORS & FIRMS

“Establishing a Business Entity in Argentina” Mr. Juan Manuel Campos Alvarez Partner SyLS – Buenos Aires

“Establishing a Business Entity in Brazil” Ms. Patrícia Braga Partner KLA – Koury Lopes Advogados – São Paulo “Establishing a Business Entity in Brazil” Mr. Eduardo Bouwman Associate KLA – Koury Lopes Advogados – São Paulo “Establishing a Business Entity in Canada” Ms. Sharon G. Druker, Ad.E. Partner Robinson Sheppard Shapiro LLP – Montreal “Establishing a Business Entity in Canada” Mr. Michael Slan Partner Fogler, Rubinoff LLP – Toronto

“Establishing a Business Entity in Argentina” Mr. Rafael Salaberren Dupont Partner SyLS – Buenos Aires

“Establishing a Business Entity in Australia” Ms. Denise Wightman Partner Kalus Kenny Intelex – Melbourne

“Establishing a Business Entity in Austria” Dr. Andreas Bauer Partner BRAUNEIS RECHTSANWÄLTE GMBH – Vienna “Establishing a Business Entity in Brazil” Ms. Melissa Kanô Partner KLA – Koury Lopes Advogados – São Paulo

“Establishing a Business Entity in Canada” Mr. Bill Hearn Partner Fogler, Rubinoff LLP – Toronto

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“ Establishing a Business Entity in Canada ” Mr. Ryan Wachtel Lawyer Fogler, Rubinoff LLP – Toronto “Establishing a Business Entity in Chile ” Mr. Juan Pablo Schwencke Partner PAGBAM | Schwencke – Santiago “Establishing a Business Entity in Chile ” Mr. Franciso Prado Partner PAGBAM | Schwencke – Santiago

“Establishing a Business Entity in China ” Mr. Patrick Gu Partner Llinks Law Offices - Shanghai “Establishing a Business Entity in China ” Mr. Kenneth Kong Partner Llinks Law Offices - Shanghai “Establishing a Business Entity in Colombia” Mr. Juan Ignacio Gamboa Uribe Partner GAMBOA, GARCÍA & CARDONA ATTORNEYS – Bogotá “Establishing a Business Entity in Colombia” Mr. Daniel García Piñeros Partner GAMBOA, GARCÍA & CARDONA ATTORNEYS – Bogotá “Establishing a Business Entity in Colombia” Ms. Mónica Pastor Partner GAMBOA, GARCÍA & CARDONA ATTORNEYS – Bogotá “Establishing a Business Entity in Costa Rica” Mr. Rolando González Calderón Partner Cordero & Cordero Abogados – San Jose

“Establishing a Business Entity in Chile ” Mr. Martín Casse De Ferari Advisor PAGBAM | Schwencke – Santiago

“Establishing a Business Entity in China ” Ms. Selena She Partner Llinks Law Offices - Shanghai

“Establishing a Business Entity in China ” Ms. Joyce Zhang Contractual Partner Llinks Law Offices – Shanghai

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“Establishing a Business Entity in Costa Rica” Mr. Hernán Cordero Baltodano Partner Cordero & Cordero Abogados – San Jose

“Establishing a Business Entity in Estonia”

Mr. Sander Kärson Managing Partner TGS Baltic – Tallinn

“Establishing a Business Entity in Cyprus ” Lawyers at LLPO Law Firm – Nicosia

“Establishing a Business Entity in Estonia” Ms. Anu Kirss Senior Associate TGS Baltic – Tallinn “Establishing a Business Entity in Estonia” Ms. Maris Vutt Senior Associate TGS Baltic – Tallinn “Establishing a Business Entity in Estonia” Mr. Sergei Jegorov Senior Associate TGS Baltic – Tallinn

“Establishing a Business Entity in the Czech Republic” Ms. Adéla Krbcová Partner PETERKA & PARTNERS – Prague “Establishing a Business Entity in Denmark” Ms. Siw Ryan Attorney DAHL Law Firm – Denmark “Establishing a Business Entity in Denmark” Mr. Bent Ramskov Partner DAHL Law Firm – Denmark

“Establishing a Business Entity in Estonia” Ms. Siret Saks

Senior Associate TGS Baltic – Tartu

“Establishing a Business Entity in England” Lawyers at Fladgate LLP – London

“Establishing a Business Entity in Finland ” Mr. Mikael Salmi Partner Fenno Attorneys at Law – Helsinki

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“Establishing a Business Entity in Finland ” Mr. Markus Laakkonen Director, Business Clients Fenno Attorneys at Law – Helsinki

“Establishing a Business Entity in Greece” Mr. Kriton Metaxopoulos Partner A. & K. Metaxopoulos & Partners Law Firm – Athens “Establishing a Business Entity in Greece” Mr. Achilleas Christodoulou Associate A. & K. Metaxopoulos & Partners Law Firm – Athens “Establishing a Business Entity in Hungary” Ms. Ágnes Bejó Senior Attorney Jalsovszky Law Offices – Budapest “Establishing a Business Entity in Hungary” Mr. Gábor Kerekes J. Attorney Jalsovszky Law Offices – Budapest

“Establishing a Business Entity in Finland ” Mr. Mikko Tolvanen Attorney-at-law Fenno Attorneys at Law – Helsinki

“Establishing a Business Entity in France” Mr. Pierre-Menno de Girard Partner Reinhart Marville Torre – Paris “Establishing a Business Entity in France” Mr. Charles-Audouin Pascaud Partner Reinhart Marville Torre – Paris “Establishing a Business Entity in Germany” Dr. Jochen Mittag Partner OMF – Otto Mittag & Partner – Frankfurt “Establishing a Business Entity in Germany” Dr. Thomas Hofacker Partner OMF – Otto Mittag & Partner – Frankfurt

“Establishing a Business Entity in Hungary” Mr. Ádám Hilgert Trainee Lawyer Jalsovszky Law Offices – Budapest

“Establishing a Business Entity in India” Mr. Alishan Naqvee Partner LexCounsel Law Offices – New Delhi

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“Establishing a Business Entity in India” Mr. Abhijeet Das Partner LexCounsel Law Offices – New Delhi

“Establishing a Business Entity in Lithuania” Mr. Agnius Pilipavičius Partner TGS Baltic – Vilnius

“Establishing a Business Entity in India” Ms. Jyoti Vats Mishra Senior Associate LexCounsel Law Offices – New Delhi

“Establishing a Business Entity in Lithuania” Ms. Elena Mickevičienė

Associate Partner TGS Baltic – Vilnius

“Establishing a Business Entity in Italy” Mr. Antonello Corrado Partner EXPLegal – Italian & International Law Firm – Rome, Milan

“Establishing a Business Entity in Mexico” Lawyers at Martinez, Algaba, de Haro y Curiel, S.C. – Mexico City

“Establishing a Business Entity in Kenya ”

“Establishing a Business Entity in Mexico” Lawyers at Martinez Berlanga Abogados, S.C. – Mexico City “Establishing a Business Entity in the Netherlands” Mr. Jan Leo de Hoop Partner PlasBossinade Advocaten en Notarissen – Groningen “Establishing a Business Entity in Norway” Mr. Tom Carsten Troberg Partner Økland & Co DA – Oslo

Dr. Cathy Mputhia Managing Partner C. Mputhia Advocates

“Establishing a Business Entity in Kenya ” Mr. Mourice Okon

Lawyer & Researcher C. Mputhia Advocates

“Establishing a Business Entity in Liechtenstein ” Mr. Egon Hug Partner Müller & Partner Attorneys at Law - Vaduz

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“Establishing a Business Entity in the Philippines” Lawyers at Kapunan & Castillo Law Offices – Manila “Establishing a Business Entity in Portugal” Ms. Helga Lopes Ribeiro Partner MGRA & Associados – Lisbon “Establishing a Business Entity in Portugal” Mr. Ricardo Jorge Silva Lawyer MGRA & Associados – Lisbon

“Establishing a Business Entity in Sweden” Mr. Jonas Forsman Partner Hellström Advokatbyrå – Stockholm “ Establishing a Business Entity in Sweden” Mr. Anton Westin Associate Hellström Law – Stockholm

“Establishing a Business Entity in Taiwan ” Mr. James Huang Partner Lee and Li, Attorneys-at-Law – Taipei

“Establishing a Business Entity in Romania” Ms. Cosmina Romelia Aron Partner PETERKA & PARTNERS – Bucharest

“Establishing a Business Entity in Taiwan ” Ms. Maggie Huang Associate Partner Lee and Li, Attorneys-at-Law – Taipei

“Establishing a Business Entity in Singapore ” Lawyers at Goodwins Law Corporation – Singapore

“Establishing a Business Entity in Taiwan ” Mr. Andrew Mai Attorney Lee and Li, Attorneys-at-Law – Taipei

“Establishing a Business Entity in Spain ” Ms. Marta Brosa Partner BROSA Abogados y Economistas – Madrid

“Establishing a Business Entity in Thailand” Mr. Dej-Udom Krairit Partner Dej-Udom & Associates – Bangkok

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“Establishing a Business Entity in the United States” Lawyers at Davis Malm & D’Agostine – Boston, Massachusetts, USA

“Establishing a Business Entity in Thailand” Mr. Worawut Krairit Partner Dej-Udom & Associates – Bangkok “Establishing a Business Entity in Thailand” Ms. Nipa Pakdeechanuan Partner Dej-Udom & Associates – Bangkok “Establishing a Business Entity in Turkey” Lawyers at Özcan & Natan Attorney Partnership – Istanbul “Establishing a Business Entity in Uganda ” Brendah Mpanda Founder & Managing Partner BNM Advocates Brendah Mpanga

“Establishing a Business Entity in the United States” Lawyers at Lewis Rice LLC - St. Louis, Missouri, USA

“Establishing a Business Entity in Ukraine ” Lawyers at PETERKA & PARTNERS LLC – Kyiv

“Establishing a Business Entity in the United States” Lawyers at Connolly Gallagher LLP – Wilmington, Delaware, USA

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Fall 23

I NTERNATIONAL L AWYERS N ETWORK

ESTABLISHING A BUSINESS ENTITY IN ARGENTINA SALABERREN & LÓPEZ-SANSÓN ABOGADOS

ILN CORPORATE GROUP

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ESTABLISHING A BUSINESS ENTITY IN ARGENTINA Types of business entities The two most common types of legal entities adopted in Argentina are the limited liability company (“Sociedad de Responsabilidad Limitada” or “SRL”) and the corporation (“Sociedad Anónima” or “SA”). In 2017, Argentina incorporated a new type of legal entity, the Simplified Company ("SAS"), which was expected to simplify procedures, corporate bodies and reduce costs for new

companies. However, several regulations have been issued by the Public Registry of Commerce of the City of Buenos Aires which have significantly reduced access to this type of entity as well as increasing the bureaucratic burden. Below you will find a comparative analysis of the most relevant characteristics and the basic differences between SRL, SA and SAS.

CORPORATION

SIMPLIFIED CORPORATION

LIMITED LIABILITY COMPANY “SOCIEDAD DE RESPONSABILIDAD LIMITADA”

Creation: A sociedad anónima (“ SA ”) must be formed through a public deed, and then be registered with the Public Registry of Commerce. The name of the company must include the words “Sociedad Anónima” or the abbreviated form “S.A.” The Public Registry of Commerce has limited the term of the SA to 30 years, which can be renewed by the shareholders. Capital: The corporate capital is divided in shares. The SA may issue classes of shares having the right to more than one vote per share. Shares must be issued in registered form. The minimum registered capital to create a SA is AR$ 100,000 (approx. US$273.6). Subscribers must pay at least 25 % of the subscribed capital amount at the time of the creation of the SA. If

Creation: A sociedad por acciones simplificada (“ SAS ”) may be formed through a public deed or through a private document. The name of the company must include the words "Simplified Company" or the abbreviated form "S.A.S.". The duration of the existence of the SAS is 20 years, which can be renewed by the shareholders.

Creation:

A

sociedad

de

responsabilidad limitada (“ SRL ”) may be formed through a public deed or through a private document, and then it must be registered with the Public Registry of Commerce. The name of the company must include the words “Sociedad de Responsabilidad Limitada” or the abbreviated form “S.R.L.” The Public Registry of Commerce has limited the term of the SRL to 30 years, which can be renewed by the shareholders. Capital: The corporate capital is divided in quotas. All quotas must have the same face value and voting rights. Quotaholders may own more than one quota. Although there is no minimum registered capital to create an SRL, the Registry usually requires approx. 30% of the minimum capital of an SA, i.e., AR$ 30,000 (approx. US$82,08). Subscribers must pay in at least 25 % of the subscribed

Capital: The corporate capital is divided in shares. The SAS may issue classes of shares having the right to more than one vote per share. Shares must be issued in registered form. The capital cannot be less than an amount equivalent to two (2) times the minimum wage (this currently amounts to approx. U$S 645.69). The capital has to be proportionate to the company’s purpose and the Registry can request a higher initial capital (the usual

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the SA has only one shareholder the capital must be paid in a 100% at the time of incorporation.

requirement is now AR$ 100,000). Subscribers must pay in at least 25 % of the subscribed capital amount at the time of the creation of the SAS if it is in cash, if it is in kind the 100 % must be paid at the time of incorporation. Shareholders: The SAS may have one (1) or more shareholders. Shareholders may be individuals or companies, whether local or foreign.

capital amount at the time of the creation of the SRL.

Shareholders: The SA may have one (1) or more shareholders. Shareholders may be individuals or companies, whether local or foreign. Should the company have two or more shareholders, the Public Registry of Commerce requires that the minority shareholder hold at least 2% of the corporate capital. Participation in other companies: An SA can only be part of another SA (corporation) or SRL. A single- shareholder SA cannot be a shareholder of other single- shareholder companies. The administration of the SA is performed by a Board of Directors, with at least one member. Directors must be individuals and not legal persons. The directors do not need to be shareholders. Directors must procure a tax ID in Argentina. The majority of the directors must have their domicile in Argentina (please note that the requirement is residence and not nationality). Directors may hold office for a maximum period of three consecutive terms. However, their appointment is renewable without limitations. The board must meet at least once every three months. Board of Directors: The representation of the SA is carried out by the Chairman of the

Quotaholders: The SRL requires at least two quotaholders with a maximum of fifty. Quotaholders may be individuals or companies, whether local or foreign. Should the company have two or more quotaholders, the Public Registry of Commerce requires that the minority shareholder hold at least 2 % of the corporate capital. Participation in other companies: SRL are not subject to limitations regarding participation in other companies. Managers: The administration of the SRL is performed by one or more managers. The managers may act individually or as a corporate body similar to a board of directors. Managers must be individuals and not legal persons. The managers do not need to be quotaholders. Managers must procure a tax ID in Argentina. The majority of the managers must have their domicile in Argentina (please note that the requirement is residence and not nationality). Managers may hold office without term limitations. Directors have to obtain assurance while they are members of the Board. For alternate directors it is optional, until they occupy a position in the board.

Participation in other companies: A single-shareholder SAS cannot be a shareholder of other single- shareholder companies.

Board: The board may have one or more members, of whom at least one should be an Argentine resident. Directors must be individuals and not legal persons. Board members who are not Argentine residents should obtain a foreigner tax ID (CDI) and appoint a representative in Argentina, the special power of attorney for the appointment of the representative in Argentina has to be presented before the Public Registry of Commerce. One of the board members must act as legal representative of the SAS. Directors may hold office for a determinate or indeterminate period. Directors have to obtain assurance while they are members of the Board. For alternate directors it is optional, until they occupy a position in the board.

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Board of Directors. Directors have to obtain assurance while they are members of the Board. For alternate directors it is optional, until they occupy a position in the board. Directors Liability: Directors are jointly and severally liable vis-à-vis the company, shareholders and third parties for the poor performance of their duties, as well as for non-compliance with the law, bylaws or regulations and for any damages caused by fraud, abuse of their faculties or serious fault. They must fulfill their obligations in a loyal way and as a "good businessman". There are some exceptions to the rules described above. Shareholders’ Meeting : Annually, the Shareholders’ Meeting considers the financial statements, and if profit has been obtained it can approve the distribution of a dividend to the shareholders. Corporate Records: An SA must have at least four corporate books, as follows: Shareholders’ Meetings Minutes, Board Meetings Minutes, Shareholders Registry and Attendance to Shareholders’ Meeting Registry plus accounting records. Syndic/Syndic’s Committee : Syndics act as internal auditors of an SA, verifying that it complies with applicable law. All syndics must be lawyers or accountants. The appointment of one or more syndics is optional, unless the SA (i) has a corporate capital in excess of AR$ 50,000,000 (approx.

Directors Liability: The directors are individually or jointly liable, depending on the organization of the management and the regulation of its operation established in the contract. If a plurality of directors participated in the same events generating responsibility, the court may determine their liability pursuant to their personal involvement in the events. Provisions relating to the responsibility of directors of an SA are applicable when management is organized as a board. Shareholders’ Meeting : Annually, the Shareholders’ Meeting considers the financial statements, and if profit has been obtained it can approve the distribution of a dividend to the shareholders. Resolutions may be adopted through written consents. Digital Records: The SAS must keep the following electronic records: Minutes Book, Shareholder’s Registry and accounting records.

Managers Liability: The managers are individually or jointly liable, depending on the organization of the management and the regulation of its operation established in the contract. If a plurality of managers participated in the same events generating responsibility, the court may determine their liability pursuant to their personal involvement in the events. Provisions relating to the responsibility of directors of an SA are applicable when management is organized as a board. Quotaholders’ Meeting: Annually, the Quotaholders’ Meeting considers the financial statements, and if profit has been obtained it can approve the distribution of a dividend to the quotaholders Corporate Records: An SRL may have only one corporate book for Quotaholders’ and Managers’ Meetings Minutes plus accounting records.

Syndic/Syndic’s Committee : The appointment of one or more syndics is optional, unless the SAS (i) has a corporate capital in excess of AR$ 50,000,000 (approx. USD 136,798.9), (ii) has only one shareholder, (iii) is a public company, (iv) is owned by the government (51 % or more of shares), (v) is engaged in

Syndic/Syndic’s Committee : Only an SRL with a corporate capital in excess of AR$ 50,000,000 (approx. USD 136,798.9) must appoint a syndic.

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USD136,798.9), (ii) has only one shareholder, (iii) is a public company, (iv) is owned by the government (51 % or more of shares), (v) is engaged in financial or savings activities, (vi) is a public utilities company, or (viii) controls or is controlled by a company included in items (i) through (vi) above. Transfer of Shares: Shares may be transferred without limitations, and any transfer is registered in the Shareholders Registry. Shareholders’ liability : Shareholders are granted limited liability for the liabilities which the SA may incur. Only in certain cases of bankruptcy or of fraud (in particular, in the fields of labor and tax law) the shareholders may be held liable for the SA’s obligations. Corporate Obligations: Annually, the SA must file its financial statements with the Public Registry of Commerce, as well as a service fee to the Public Registry of Commerce (which is not significant).

financial or savings activities, (vi) is a public utilities company, or (viii) controls or is controlled by a company included in items (i) through (vi) above.

Transfer of Shares: Shares may be transferred without limitations, and any transfer is registered in the Shareholders Registry, along with the stock purchase agreement. Shareholders’ liability : Shareholders are granted limited liability for the liabilities in which the SAS may incur. Only in certain cases of bankruptcy or of fraud (in particular, in the fields of labor and tax law) the shareholders may be held liable for the SAS’ obligations Corporate Obligations: Annually, the SAS must file its digital financial statements with the Public Registry of Commerce.

Transfer of Quotas: Quotas may be transferred without limitations. However, the transfer must be registered with the Public Registry of Commerce to be enforceable against third parties. Quotaholders’ liability : Quotaholders are granted limited liability for the liabilities in which the SRL may incur. Only in certain cases of bankruptcy or of fraud (in particular, in the fields of labor and tax law) the quotaholders may be held liable for the SRL’s obligations. Corporate Obligations: Only SRL with a corporate capital in excess of AR$ 50,000,000 must file its financial statements with the Public Registry of Commerce.

2. Other relevant corporate matters

requirements and limitations relating to this registration. Both individual and legal entities shall obtain a foreign Tax ID before local Tax Authorities. ▪ Directors: Depending on the type of entity, one or more of the board members must be Argentine residents. Non-Argentine board members will need to obtain a local Tax ID before local Tax Authorities and pay social

▪ Shareholders: Any foreign person (individuals or legal entities) can be a shareholder of a company organized in Argentina. In order to participate in local companies in Argentina, foreign companies must register before the local Public Registry of Commerce. The Public Registry of Commerce of the City of Buenos Aires has extensive

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security taxes in connection with their position as directors. ▪ Permits: Depending on the company’s purpose and industry in which company’s activities are carried out, certain permits might be necessary to operate. 3. Outline of Argentine Tax Regulations (notwithstanding the application of Double Tax Treaties) Please find below a general description of the main taxes applicable to companies in Argentina. This should be analysed on each specific case as exceptions or special regimes may apply. NATIONAL TAXES: Corporate Income Tax (CIT): Resident companies are subject to CIT on a worldwide basis. The income tax law has a progressive tax rate, according to the following criteria (for fiscal year 2023): a) if the net income of the company does not exceed ARS 14,301,209.21 million (approximately USD39,000) in the fiscal year, a 25% tax rate applies; b) if the net income range exceeds ARS 14,301,209.21 million but is less than ARS 143,012,092.8 million (approximately USD391,000), a tax rate of 30% applies to the income exceeding ARS 14,301,209.21 million; and c) if the net income exceeds ARS 143,012,092.08 million, a tax rate of 35% applies to the income exceeding ARS 143,012,092.08 million. Withholding tax in dividends: A withholding tax of 7% applies to the payment of dividends. Value Added Tax: the general VAT rate for Argentine local transactions is 21 %. For certain

goods or services could be 10,5%. There are also exemptions that may apply. For example, exports are levied at a 0% VAT and exporters can be reimbursed for the local VAT paid related to its exportation. Bank credits and debits tax: credits and debits on local bank accounts are subject to a 0.6 % tax rate on the debits and a 0.6 % tax rate on the credits. In general, depending on the kind of activity of the local entity certain exceptions may apply. There is an additional 1.2% tax rate for cash withdrawals, except for SMEs (Small and Medium Size entities). In general, this tax generates a tax credit of 33% that can be used to offset income tax or its instalments. Customs duties : Import/export of “goods” are taxed at different customs rates according to each tariff position (identification for customs purposes). Social security taxes (SST): Employers Contribution for SST: The social security tax rate for employers which activities are related to commerce or services and who are not a SMEs 1 is 20,40% and for the rest of employers the tax rate is 18,00%. The health care tax rate is 6%. So, it is 26,4% for the first case and 24% for the second one and it applies on the gross salary. Employee Payment for SST: Please note that the local company shall withhold the relevant social security taxes from the employee’s salaries which represent approximately 17% of the gross salary, health case included. Also, the company shall withhold the income tax from the employee’s salaries if applicable. TAXES ON SHAREHOLDERS: Capital gains tax (Direct or Indirect Sale): In broad terms, direct or indirect sale is taxable at

1 SME: small and medium-sized enterprises.

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a 15 % on the net gain (sale price minus acquisition cost) or 13.5% of the total sale price (gross price of the operation). There are some requisites to comply with for the indirect capital gains to be taxed. If there is a seller located abroad and in a non-cooperative jurisdiction the tax rate will be higher (35% net gain or 31,5% gross price of the sale). Wealth tax on shares: A 0.50 % tax rate on the book value of the equity held in the local company. The local company pays this tax on behalf of the shareholders. Transfer Pricing Rules: Transfer pricing rules in Argentina follow the OECD Model, based on the principle that transactions between an Argentine company and related companies based outside of Argentina (or with companies located in non-co-operative, low- or no-tax jurisdictions) must be done in arm's length conditions. Argentina’s rules include the five methods from the OECD model, but in addition to the five OECD methods, Argentina has an additional rule, called the 'sixth method', which in general applies to the import and export of commodities made through an international related intermediary or an intermediary located in a non-co-operative jurisdiction or low-tax jurisdiction. Thin Capitalization Rules: In line with international standards (OECD guidelines), interest on financial debts (excluding, as a consequence, debts generated by acquisitions of goods, leases and services related to the company's business) owed to related parties (Argentine residents or not) will be deductible subject to certain quantitative limitations. The deductibility limitation on the interests does not apply to financial entities, certain financial trusts, or when a WTX (withholding tax) apply in relation to the interest paid, among others. CFC Rules: In broad terms, local residents in Argentina having participations on foreign

entities that don´t pay taxes abroad in the relevant jurisdiction (despite the fact that the relevant jurisdiction has a corporate tax regulated) or local residents that have direct or indirect participations of 50% or more on entities that obtain passive income in certain ratio, or local residents having control over trust or foundations located abroad have to monitor this particular set of rules on a case by case basis to determine if they have or they have not to recognize income from such entities or trusts on an accrual basis. Tax Havens and non-cooperative jurisdictions: The Income Tax Law includes different tax effects when a jurisdiction qualifies as tax haven or non-cooperative. Such effects should be analyzed on a case by case basis, but in general the qualification of a jurisdiction for those concepts are as follows: 1- countries, territories or tax regimes that establish a corporate income tax rate that is lower than 15% will be considered low or no tax jurisdictions 2- jurisdictions that do not have a tax Information Exchange Agreement or a Double Taxation Treaty with broad clauses of Information Exchange in force will be considered non-cooperative jurisdictions. The Income Tax Implementing Decree includes a list of “non - cooperative jurisdictions” in Section 24. LOCAL TAXES: Turnover tax: A 3 % average tax rate on gross income. Such rate may be increased to 5 % in accordance with the company’s annual gross income. Note that such tax rate may also vary depending on the activity developed. Exemptions may apply. Stamp tax: A 1 % tax rate over the value of written contracts. This tax may not apply if the instrumentation of the document is made by offer/acceptance letters.

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Municipal tax: city councils apply different taxes which usually amount to 0,5% or 1 % of the

gross income of the company. 4. Outline of Labor Regulations.

Argentina has a clear pro-employee labor legislation. The usual practice in Argentina regarding labor agreements is to use verbal agreements (as opposed to written agreements) for indeterminate duration, whose main conditions (wages, initial date, etc.) are registered with the tax authorities and in the company’s registry. Lack of registration of the employees is considered labor fraud. Wages must be paid by way of a wire transfer to the employee’s bank account. Dismissals require paying a severance compensation, which amounts to one monthly wage per year of seniority or fraction exceeding 3 months, in addition to one or two monthly wages of as pre-notice. Failure to comply with Argentine labor laws could result in labor fraud penalties imposed on the employer and payable to the employee (e.g., 25% of all amounts irregularly paid) in addition to the social security and tax contingencies of the employer vis a vis the Tax Authorities.

ILN Corporate Group – Establishing a Business Entity Series

Fall 23

I NTERNATIONAL L AWYERS N ETWORK

KALUS KENNY INTELEX

ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA

ILN CORPORATE GROUP

[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]

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ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA TYPES OF BUSINESS ENTITIES There are a number of business structures to choose from when starting a new business venture in Australia. Investors need to determine which form of business organisation is the most appropriate for their requirements. The main types of business structures used by investors in Australia are:

The most common company types are public companies and proprietary (or private) companies. A proprietary company is generally simpler and less expensive to administer than a public company because it is subject to fewer administrative requirements imposed by the Corporations Act.

Proprietary company limited by shares (“Pty Ltd”) This is the most common form of corporate business entity in Australia. The company is incorporated with share capital which is owned by the shareholders. The liability of the shareholders is limited to the amount which is unpaid on their shares. Pty Ltd companies:

(a)

companies, including branch offices of foreign companies;

partnerships;

joint ventures; and

• trusts. Each particular structure has advantages and disadvantages. Therefore, specific legal and accounting advice should be obtained before deciding upon the most appropriate investment vehicle. Company All Australian companies are regulated by the Corporations Act 2001 (Cth) ( Corporations Act ). A foreign investor can register an Australian company under the Corporations Act. The “limited liability” company is the most common business structure used by foreign investors in Australia. A company is its own legal entity and has the same rights and obligations as an individual person. This means that a company can incur debt, can sue and be sued, is taxed as a separate legal entity and must file its own tax return. A significant benefit in choosing a company structure is that the liability of the owners of the company (the shareholders) to third parties is generally limited to the amount (if any), which is unpaid on their shares.

must have at least one, but no more than 50, non- employee shareholders; must have at least one director residing in Australia; must have a registered office in Australia; must have a public officer, who is responsible for complying with the tax obligations of the company and dealing with the Australian tax authorities; may have a company secretary, but does not need to; and have fewer fundraising options available, compared to a public company.

Pty Ltd companies are further divided into “large proprietary” and “small proprietary” companies.

ILN Corporate Group – Establishing a Business Entity Series

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The Corporations Act sets out certain tests to determine whether a company is a “large proprietary” or a “small proprietary” company, including consolidated revenue thresholds and the number of employees of the company (and any other entity it controls). There are less disclosure requirements imposed on a small proprietary company, including that its financial reports do not need to be audited. Public company (Limited) Public companies involve ownership by the public and they are not restricted by the same limitations that apply to Pty Ltd companies. A public company is able to raise capital directly from the public by offering shares and other securities. Subject to certain requirements as set out in the ‘ASX Listing Rules’, public companies may also apply for listing on the Australian Securities Exchange in order to get access to capital markets. Public companies:

must have a registered office in Australia that is open each business day for at least 3 hours between 9am and 5pm; and may raise capital by issuing a disclosure document to offer shares and other securities to the public/potential investors.

Establishing a Pty Ltd company The process for incorporating a Pty Ltd company in Australia is relatively straightforward and inexpensive. It is also a relatively quick process - subject to all relevant information being provided, a company can be registered in a matter of days.

(b)

Choose a company name Before registering a company, the owners must choose the name for the company. The appropriate searches should be conducted to ensure that the proposed company name is not identical or similar to another Australian company or business name, and that it does not infringe on the intellectual property rights of another entity. If the company wishes to trade using a name that is different to the company’s registered name, then it must register this name separately as a business name with ASIC. Appropriate searches should also be conducted to ensure the proposed business name is not similar to existing business names, company names or trade marks. Consider internal operations Before registering the company, the owners will need to decide what the governance framework for the company will be. For example, how directors will be appointed and removed, the terms of

(c)

must one shareholder with no upper limits on the number of shareholders; have at least must have at least three directors (not including alternate directors), two of whom must ordinarily reside in Australia; must have at least one secretary, who ordinarily resides in Australia; must have an auditor, and such auditor must be appointed within 1 month after the day that the company was registered; must have a public officer for tax purposes;

(d)

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issue for shares, the right of shareholders to receive dividends, and the process for transferring shares. Usually, these governance issues are addressed in a document called a constitution. Sometimes, the constitution is also supplemented by an additional agreement entered into by the shareholders called a “shareholders agreement”. The constitution is usually adopted upon the registration of the company. If a constitution is not adopted upon the registration of the company, then the “replaceable rules” in the Corporations Act will apply. However, the “replaceable rules” do not cover all governance matters, so it is preferable for a company to adopt its own constitution upon registration. Registration In Australia, a company is registered by using the Australian Government's Business Registration Service. The application for registration must contain details of the following:

the address for the registered office of the company and its principal place of business; the amount paid by each shareholder for its shares; the proposed name of the company; and

details of any ultimate holding company of the company. Any constitution for the company must also be lodged. Once registration is complete, the company will be issued an Australia Company Number ( ACN ). The company’s name and ACN must be displayed on documents published by the company, and wherever the company conducts business. Australian Branch An overseas company wanting to carry on business in Australia must either incorporate a new company in Australia (refer above) or register itself as a foreign company with ASIC. Registration of a branch office under the Corporations Act gives the overseas company the right to carry on business in Australia. The overseas company must comply with Australian law and is subject to certain reporting and disclosure requirements. A foreign branch is not classified as a separate legal entity. Therefore, the overseas company will be liable for all of the debts and obligations of the Australian branch. An Australian branch of a foreign company:

(e)

the directors of the company (one of whom must reside in Australia); the “Director ID” number (also referred to as the DIN) for each director; the company secretary (if the company is to have one). has At least 1 secretary must reside in Australia; the shareholders of the company and the number of shares held by each shareholder;

is taxed as a separate entity in Australia, on all income sourced from Australia;

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corporation’s legal structure and the means by which it is able to bind itself to obligations in Australia; and the annual return of a branch office must include the worldwide financial accounts of the company of which it is a branch, unless exempted by ASIC. This document is available to the public.

must have a local agent who is responsible for the company’s obligations in Australia and may be personally liable for breaches; and must have a registered office in Australia.

Choice of Australian Branch or Subsidiary There are a number of factors to consider when deciding whether to establish an Australian branch or incorporate a new company in Australia as a subsidiary of a local parent company. These factors include the following:

Partnership A partnership is an arrangement between two or more entities to carry on a business together with a view to a profit. Except for certain professional partnerships, business partnerships cannot have more than 20 partners. A partnership is created by an agreement among the partners. Usually, this agreement is documented in a written partnership agreement. Partnerships are regulated by the terms of the partnership agreement (if there is one), the common law and the relevant Partnership Act which applies in the applicable state and territory. A partnership is not a separate legal entity. Therefore, each partner is jointly and severally liable for the debts of the partnership. Partners also share in the profits of the partnership. Limited partnerships can also be established in some states under specific state legislation. Limited partnerships allow some partners to limit their liability for debts. Limited partnerships are generally taxed as companies. Joint Venture A joint venture occurs when two or more parties come together in order to undertake a specific project. The joint venture arrangement can be incorporated or unincorporated.

a subsidiary is a separate legal entity from its parent company. It has limited liability, and the parent is not usually liable for the debts or obligations of the subsidiary. There are some exceptions to this, such as in the case of the insolvency of the subsidiary; an Australian branch of an overseas company is not a separate legal entity. Therefore, the overseas company will be liable for all debts and obligations of the Australian branch; the use of an Australian branch may cause practical difficulties when dealing with financiers. For example, if finance from an Australian financial institution is required, then that institution may require audited financial statements relating to the Australian operations of the applicant. This may not be readily available in an acceptable form in the case of an Australian branch; the use of a branch may also cause some difficulties when dealing with third parties. For example, they may need to be satisfied as to the nature of the foreign

Unincorporated Joint Venture In an unincorporated joint venture, the parties usually enter into a joint venture

(f)

ILN Corporate Group – Establishing a Business Entity Series

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