This Alert describes the most important aspects of the Amendments (the Amendment), published in the Federal Official Gazette on June 13, 2014, pursuant to which certain provisions of the General Corporations Law, Code of Commerce, Law of General Negotiable Instruments and Credit Operations, Investment Funds Law, Federal Governmental Fees and Charges Law, and the Federal Government Organization Law, were amended, supplemented and repealed.

I. Commercial Code.

As a result of the Amendment, certain provisions of the Commercial Code were amended, supplemented or repealed, including the following:

1. Publication of Commercial Status

The obligation for merchants to publish their commercial status in the press was repealed.

2. Publications in the electronic system

Pursuant to the Amendment, the publication of certain commercial acts shall be made through the Public Registry of Commerce (the Registry), under the relevant Section depending on the nature of the recordable acts. Likewise, it is provided that the electronic system to be developed and implemented by the Ministry of Economy shall be used for such publications.

3. It is established that recordable acts in the Registry shall become effective vis-à-vis third parties upon their recordation at the Registry, and shall have priority over other encumbrances, whether previous or subsequent, that are recorded subsequently.

4. Security interests shall be considered commercial acts and, therefore, shall be recorded under the relevant Section of the Registry: (i) when granted in favor of a merchant, or (ii) in the event they are used to secure a commercial obligation. These security interests include the following: (a) non-possessory pledge, (b) ordinary commercial pledge, (c) pledge on working capital loans, and (d) industrial mortgage.

5. Commercial assignments of rights shall be effective vis-à-vis third parties upon registration at the Sole Registry for Guarantees on Movable Property (RUG)

II. General Corporations Law. (the Corporations Law)

Certain provisions of the Corporations Law were modified as follows:

1. The powers of commercial corporations to perform all necessary acts to accomplish their purposes is established, as long as such commercial acts do not contravene either applicable law or the bylaws of such corporation.

2. Likewise, the Amendment includes a provision similar to the one in the Securities Market Law applicable to a sociedad anónima promotora de inversion (SAPI).  Now the Corporations Law authorizes a corporation to provide in its bylaws for puts, calls, drag along and tag along agreements, as well as rights relating to transfers and those affecting ownership, sale or right to exercise preemptive rights otherwise established under the Corporations Law. Shareholders may now enter into agreements for the exercise of their corporate and economic rights, subject to the general rule that such agreements are not be enforceable against the corporation (except by judicial action).

3. The Amendment benefits minority shareholders (minority rights) by reducing the minimum percentage required for the exercise of certain rights, such as the right to delay meetings and for the exercise of actions against the directors of a corporation, from 33 percent to 25 percent of the capital stock.

4. A new electronic system is introduced in order to register and publish certain acts including, among others, (i) the publication of notices to call General Shareholders’ Meetings, (ii) extracts of the spin-off resolutions, (iii) merger agreements, and (iv) the publication of the balance sheet in the event of liquidation. It should be noted that the Ministry of Economy, which is the entity tasked with creating and operating the electronic system, was given a term of one year following the publication of the Amendment to implement such system.

III. General Negotiable Instruments and Credit Operations Law. (LGTOC)

1. A non-possessory pledge shall be valid upon its execution, and any provision thereof that may be invalid shall only invalidate the offending provision and not the pledge as whole.

2. The Amendment establishes that a trust relating to personal property assets is enforceable against third parties, once such trust is registered at the RUG.

3. Additionally, the parties to a guarantee trust may agree among themselves as to who shall bear damages for loss, damage or deterioration of the trust assets, regardless of who retains actual possession of such assets.

4. Similarly to the provision regarding the non-possessory pledge, a guaranty trust agreement shall be valid upon execution, and the invalidity of a provision of the agreement shall not invalidate the entire trust.

IV. Investment Funds Law. (LFI)

As a result of the implementation of the electronic system for publications entrusted to the Ministry of Economy, the LFI revokes the exception referencing the publication in the Federal Official Gazette of financial statements of investment fund operating companies, investment fund share distributing companies and share appraisal companies.

V. Federal Governmental Fees and Charges Law.

The Amendment repeals the payment obligations for extemporaneous filings of the following notices: (i) use of permit for the incorporation of companies or associations and changes of corporate name or purpose, (ii) liquidation, merger or spin-off of companies, and (iii) changes from the exclusion of foreigners clause to the admission of foreigners clause.

VI. Federal Government Organization Law.

As a result of the Amendment, express authority is granted to the Ministry of Economy for the determination and operation of the electronic system in which publications should be made in accordance with the commercial laws.

VII. Final Notes.

The Amendment was published on June 13, 2014, and took effect June 14, 2014.

As previously noted, the Ministry of Economy must establish the electronic system for publications within one year following the publication of the Amendment.