I.- INTRODUCTION:
Before the reform, the majority doctrine and the tax authorities were in favour of the dissolution of irregular or de facto companies when a partner leaves the company for any reason, and their dissolution registration must be carried out in accordance with the terms of art. 98 LGS.
In response to the reform of the commercial companies law (now general law of companies) and following what was previously a minority doctrine, the tax authority changes its criteria by accepting the continuity of the company, which is supported by its Opinion No. 8/2018 17/4/18
II.- REGIME PRIOR TO THE REFORM
The relationships between the members of the old companies not regularly constituted - irregular and de facto companies - were limited by the articles 21 y 23, second paragraph, of the commercial companies law.
El Article 23 of the Commercial Companies Act It established a general principle when it said that "partners may not invoke, with respect to any third party, or among themselves, rights or defenses arising from the social contract," although it leaves open, in the terms of the Article 22 of the Commercial Companies Act, the path to dissolution at the request of any partner.
Article 23 of Law 19550 established that partners will be jointly and severally liable for corporate operations without being able to invoke the benefit of Article 56, nor the limitations based on the corporate contract.
These companies were legal entities and, therefore, capable of acquiring rights and incurring obligations. Their creditors could sue the company, or the individual partners, or collectively. The latter's liability was joint and several and not subsidiary, which means that the partners did not have the right to demand that the company's assets be excluded first and then their own.
In short, in irregular and de facto companies, the will of their members gives rise to them. Once created, the partners do not have the right to invoke their internal regime until their dissolution, at which time the contract will produce its effects with respect to the past.
As Ricardo A. Nissen pointed out,(1)"The principle enshrined in the law on companies is the unenforceability of the contract between partners, such that they cannot judicially request protection of their rights until the dissolution of the company."
In accordance with Old text of the second paragraph of Article 23, partners of companies not regularly incorporated lacked the right to:
- a) to demand contributions from each other, although such a request is appropriate during the liquidation period, when they are necessary for its realization(2);
- b) sue for exclusion of a partner, since the partial resolution does not apply to these companies, whose total dissolution occurs as a result of the mere discretion of the partner who intends to withdraw from the community.(3);
- c) sue the partners, or any of them, for damages arising from non-compliance with the social contract(4);
- d) sue for the removal of the administrator, or, consequently, request judicial intervention, except in the case of a suit for the dissolution of the company ( 22) and appointment of the liquidator;
- e) invoke the term of duration of the company agreed in the contract, since it is dissolved when any of the partners so requests;
- (f) require the division of profits and losses, not only because of the provisions of article 23, second paragraph, of the Law on Commercial Companies, but because, if such a possibility were admitted, the general principle established in article 68 of the aforementioned law on profits would be violated, which subordinates the collection of such profits to the preparation of a balance sheet in accordance with legal regulations, which presupposes the existence of legal accounting records to which these companies cannot have access;
- g) invoke the registered office for the purposes of determining territorial jurisdiction, since the latter must be determined by the location of the registered office, and since it is not reliably determined, the jurisdiction of the judge of the place of establishment or main headquarters of the operation must be followed;
- (h) the partners may not invoke the arbitration clauses to settle disputes between partners, nor, consequently, demand the constitution of arbitration tribunals, except at the liquidation stage, if this has been provided for such an opportunity; the jurisprudence has admitted that when suing the administrator for dissolution and accountability, these were complex, the appointment of friendly mediators, independently of the aforementioned accountability, would be in charge of the liquidation of the irregular company, proceeding to the realization of the assets, the payment of debts and the distribution of profits, if any.(5);
- i) demand accountability from the administrators, in accordance with Article 70 of the Commercial Code, without dissolving the company.
On the contrary, partners of companies not regularly incorporated were empowered to:
- a) demand the dissolution of the entity at any time ( 22, LSC);
- b) sue the partners, once the company has been dissolved, so that they may integrate their contributions or complementary contributions, necessary for the liquidation of the company;
- c) sue the directors for accountability, an action that may be attempted upon dissolving the company or subsequently, and in this case, for the period from the dissolution to the final partition.
During the validity of the previous regime of Law 19550, a strong doctrinal controversy arose on the feasibility of modifying the composition of the list of partners in companies not regularly incorporated. (6)
The doctrine in general (7) denied legal validity to the modifications and internal acts of these companies, because they were unenforceable to third parties and to the partners themselves by virtue of the then current article 23, second paragraph, of law 19550 and due to the inapplicability of the partial resolution, not contemplated for de facto companies in article 90 of law 19550.
According to this position, the voluntary withdrawal or death of partners in irregular companies or in de facto companies with a commercial purpose or the transfer of shares inevitably led to the dissolution of the company.(8) -which had to be registered in the Public Commercial Registry for the purposes of its enforceability-, making it appropriate to continue the commercial activity by establishing a new company.(9)
The adhesion of the Treasury to this dissolving position(10) concerned the tax doctrine(11), because if these events led to the dissolution and liquidation of the de facto commercial partnership, they generated a result subject to income tax in the name of the company being dissolved, consisting of the difference between the market value and the tax cost of the assets awarded, pursuant to the provisions of article 71 of the regulatory decree of the income tax law, which provides that "The assets that the companies included in paragraphs b, c) and the last paragraph of article 49 of the law ... award to their partners in the event of dissolution, withdrawal or reduction of capital, shall be considered to be realized by the company for a price equivalent to the market value of the assets at the time of their award". In turn, the result generated by the award of assets made by the company to its partners, as a result of the dissolution, should be attributed to each of the partners in their tax balance sheet -see art. 50 of the tax law-.(12)
In relation to VAT, the award made by the company to its partners, as a result of the dissolution, would also be taxed by application of the provisions of article 2 of the tax law which states: "For the purposes of this law, the following are considered to be sales: ... a) Any transfer for consideration, between persons of visible or ideal existence, undivided estates or entities of any kind, which involves the transfer of ownership of movable property (sale, exchange, payment in kind, etc.) award for dissolution of companies, social contributions, sales and auctions, judicial and any other act that leads to the same end, except expropriation)…”.(13)
III.- NEW POSITION OF AFIP(AFIP Opinion No. 8/2018 – 17/4/18) SUPPORTING THE CONTINUITY OF THE COMPANY
Before the reform, another part of the doctrine had advocated the validity of the transfer of part, made by one of the partners to third parties or when the former withdraws taking a part of the assets or its proceeds, if this is accepted by the other members of the company, on the basis that this, far from harming the company, its creditors or third parties, avoids the dissolution and liquidation of the entity in a solution that takes into account the principle of preservation of the company.(14)
The inalterability of the legal personality of these companies, even in the event of the death of a partner, by maintaining their patrimonial continuity and their economic activity, when such acts were consented to, expressly or tacitly, by the remaining partners - and in the event of the death of a partner, by their heirs - had been upheld by Cabanellas de las Cuevas.(15), a position to which he adheres(16) like the most recent doctrine(18) and jurisprudence(17), since the acts in question did not require the invocation of the social contract, a possibility prohibited by the previously cited article 23, second paragraph, law 19550 before the reform. Even the incorporation of heirs does not imply the invocation of the social contract, since the succession is not caused by this but by the declaration of heirs or by the judicial approval of the will that fulfills the same purpose.
This is precisely the position that AFIP now seems to be taking by upholding its AFIP ruling 8/2018 that:
“Under the new legislation, the departure of one of the partners from a company in Section IV of Chapter I of the LGS (for example, a de facto company under the old name) does not necessarily lead to its dissolution and liquidation; therefore, if the continuity of the entity is verified in the terms admitted by law, it must maintain its registration with this Tax Authority, under the same CUIT number with which it was previously registered.”
III. CONCLUSIONS
We support this new position, especially since the general law of companies in its article 22 is now very clear (19) in considering that the contract entered into in this type of companies is valid for the parties and third parties who know it.
However, we advise that both in the old irregular or de facto companies and in the new ones now called companies of section IV LGS, it will be highly advisable to draw up the contract and include a clause establishing the wishes of the partners in the event of the transfer of shares or the death of one of the partners.(20)
Marcelo Perciavalle is a lawyer and academic director of Companies and Competitions at Errepar SA
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Notes
(1) See Nissen, Ricardo A.: «Commented Law of Commercial Companies» – Ed. Astrea – Bs. As. – T. I – page 263
(2) See Halperín, Isaac: «Commercial Law Course» – Ed. Abeledo-Perrot – Bs. As. – T. I – page 133
(3) CNCom. – Room B – 20/3/1976, proceedings “Basile, R. c/Gómez, H.”
(4) CNCom. – Room B – 8/8/1958 – LL – T. 94 – page. 306
(5) CNCom. – Room B – 17/6/1977, proceedings “Cafiero, M. c/Fernández, E.” – ED Repertoire – Volume XII – page. 830 – summary 72
(7) See among others Zunino, Jorge O.: “Commercial companies. Dissolution and liquidation” – Ed. Astrea – Bs. As. – 1984 – p. 54 et seq. Halperín, Isaac: “Commercial law course” – 7th reprint. – Ed. Depalma – Bs. As. – 1994 – p. 333. Zaldivar, Enrique; Ragazzi, Guillermo E. and Rovira, Alfredo L.: “Corporate law notebooks” – Ed. AbeledoPerrot – Bs. As. – 1976 – Vol. III – Vol. IV – pp. 200/1. Etcheverry, Raúl A.: “Irregular and de facto companies” – Ed. Astrea – Bs. As. – 1981 – pp. 232/5. Brugo, Damián: “The change in the list of partners that make up a company not regularly incorporated” – ED – 182:1497 with citations to doctrine and jurisprudence.
(8) “Fucci, Osvaldo c/Batcliffe, Enrique” – CNCom. – Room D – 27/2/1984; “Camiño Trigo SA c/García, José A.” – CNCom. – Room A – 27/12/1978; “Millara, J. c/Matarazzo, F.” – CNCom. – Room B – 7/7/1980; “Rueda de Demarco, Herminia and others c/Demarco, Aurelia and another” – CApel. CC Azul – Room II – 23/9/2003 and “Capelo, Alicia c/Hernández, Miguel Ángel” – CNCom. – Room A – 30/8/2007
(9) Murguillo, Roberto A.: “Irregular or de facto companies” – Ed. Gowa Ediciones Profesionales – Bs. As. – 1997 – pages 129/130. Nissen, Ricardo A.: “Irregular and de facto companies” – Ed. Hammurabi – Bs. As. – 1989 – page 108. Perciavalle, Marcelo L.: “Irregular and de facto companies” – ERREPAR – Bs. As. – 2000 – page 140
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