G. CORPORATION

2.122 A Corporation (Sociedad Anónima) is the most common form of business organization and the most regulated as it was created for large enterprises.

1. Name

2.123 The company's name must include the word "Sociedad Anónima" or "S.A.". If one or the other is missing its representatives will be jointly and severally liable for the company's debts. The name of a Corporation may consist either of an artificial name or of the name of one or more of the partners.

2. Object

2.124 The object of a corporation may be any business activity but it must be precise and fully described in the bylaws.

3. Public and Closed Corporations

2.125 Public companies are such as are authorized to make public offering of their securities. They are subject to permanent supervision by the Federal Securities Committee (C.N.V.) that invests the following functions:

a) authorizes companies to make public offering of their securities;

b) carries the register of individuals and legal entities authorized to make public offering of securities;

c) issues the rules concerning public offering and inspects companies compliance with same, as also with the law and the bylaws;

d) authorizes bylaw amendments; and

e) supervises any capital modification, such as the dissolution and liquidation of companies.

Furthermore, the C.N.V. exercises the functions of the Companies Supervisory Agency, except for such as concern the incorporation of companies.

2.126 Even when they are not publicly-held companies, certain corporations are subject to permanent State control when they:

a) have a capital of over $ 2,100,000.-;

b) are of mixed economy or of State majority holding;

c) conduct capitalization or savings operations or any other acts requiring cash or other values from the public in exchange for promises of future services or benefits;

d) exploit public services or concessions; and

e) are companies controlling or being controlled by another subject to State control, in accordance with one of the above clauses.

2.127 Closed companies are only subject to State control over their articles of incorporation and amendments, and capital modifications. Nevertheless, the supervisory agency can exercise further inspection powers, whenever considered necessary and based on a justified resolution, for the protection of public interest. Moreover, State inspection may be requested by shareholders representing ten per cent of the capital subscribed or by a syndic. In this case, inspection is limited to the facts described in the request.

4. Incorporation

2.128 Corporation is constituted by public instrument or by single act or public subscription. For incorporation by single act, see Chapter 3.

2.129 Formation by public subscription requires a plan, written by the promoters that, once approved by the supervisory agency, will be registered with the Public Register of Commerce. The plan must contain the basis of the company bylaws and share issue and subscription, relevant information concerning promoters and determination of a bank that will represent the future subscribers. The promoters may or may not become shareholders.

2.130 The subscription agreement prepared by the bank will include the calling of a meeting of the organizing shareholders' that will consider: the promoters' negotiations, bylaws, non cash contributions provisional valuation, the appointment of directors and syndics, term for paying up the balance of any monetary contributions.

2.131 Once incorporation is approved by the shareholders' meeting, the relevant information about the company must be published for one day in the Official Gazette and their articles of incorporation registered with the Public Register of Commerce.

5. Capital

2.132 The minimum capital for Corporations is 12.000 pesos as of January 1st., 1992. The original capital must be subscribed when the corporation is incorporated. The capital is divided in shares. Shares may be paid in cash or tangible or intangible assets. If paid in cash, 25% has to be paid up at the time of subscription and to verify this it must be deposited with an official bank (in the case of the Federal Capital, the Banco de la Nación Argentina) and will be withdrawn after inscription of the incorporation or capital increase. If the capital is contributed in assets it must be fully paid up at the time of subscription. A person contributing assets will be jointly and severally liable for the valuation stated for same.

2.133 Closed Corporations may increase their capital up to five times without amending their bylaws and without having to register the increase with the Public Register of Commerce. In Public Corporations the shareholders meeting may increase the capital unlimitidly without amending their bylaws. In both types of Corporations the shareholders meeting may delegate in the Board of Directors the time of issuance, form and terms of payment. New shares can only be issued when the previously issued shares have been fully subscribed.

2.134 Shareholders have a right of first refusal on the subscription of shares resulting from an increase in capital, in proportion to the number of shares they already hold. The Corporation must offer the shares to the shareholders by means of a three days notice in the Official Gazette and, only in case of Corporations subject to permanent control, in a widely circulated newspaper. The shareholders must exercise their right of first refusal within 30 days as of the last publication, unless the bylaws establish a longer period. If one or more shareholders fail to subscribe the capital increase in whole or in part, then the remaining shareholders are entitled to increase their subscription pro rata to the shares they have subscribed. The right of first refusal may be limited only when an extraordinary shareholders meeting includes the matter in its agenda and the capital increase is covered with preexisting obligations of the Corporation or with in-kind contributions.

2.135 Shares may not be issued below par value except in Public Corporations if the capital is paid up in cash. Issuance of new shares may be above par value, in which case after deducting the cost of the issue, a special reserve account will be set up with the resulting premium, that may be subject to distribution.

2.136 A reduction in the share capital may be effected by resolution of an extraordinary meeting of shareholders in the following circumstances: (a) in the case of a loss, a reduction may be effected up to the total of the accumulated loss. It is mandatory if the losses are in excess of all the reserves plus 50% of the capital; (b) the company may voluntarily reduce its capital with the favorable opinion of the syndic. Creditors are entitled to oppose a capital reduction, in which case they must be guaranteed or disinterested or must obtain an attachment on assets of the corporation. Creditors are not vested with this right if the reduction is effected by writing down paid-up shares with profits or freely disposable reserves.

6. Shares

2.137 Shares must always be of equal value expressed in argentine currency. Different classes of shares with different rights may be specified in the Bylaws; however, each class of shares will extend the same rights.

2.138 A share certificate may represent one or more shares, and according to law 24.587, the share certificate must be registered and non-endorsable. Companies authorized to resort to public offering are entitled to issue certificates for the full number of their paid-up shares for registration in group deposit regimes. To such ends they will be considered definite, negotiable and divisible.

2.139 If the shares are not fully paid-up only interim registered certificates may be issued.

2.140 The Bylaws may establish that the shares not be represented by certificates. In such case they must be entered in accounts carried in the name of the respective holders by the issuing company in a register of shares in book entry form, or by authorized commercial or investment companies or depositary agencies. The capacity as shareholders is presumed from the entries in the accounts opened in the said registers.

2.141 The transmissibility of the shares is free. The bylaws may limit same with regard to the registered or book entry form shares, but limitation cannot imply prohibiting transfer of the shares. The limitation must be recorded on the certificate or in the account entries, the respective vouchers and statements.

2.142 Transmission of the registered or book entry form shares must be notified in writing to the issuing company or entity carrying the register, and entered in the proper book.

2.143 The shares may be common or preference. Each common share may entitle to from one up to five votes. The voting privilege is incompatible with capital preferences. Once a company is authorized for public offering of its shares, shares may not be issued with privileged voting rights.

2.144 Shares issued with preference rights over dividends and/or a preferential right to recover on liquidation may lack voting rights, without prejudice to the right to attend and be heard at meetings of shareholders. In exceptional cases such as transformation, extension or renewal; anticipated dissolution of the company; transfer of domicile abroad; fundamental change of object or total or partial reimbursement of capital, these shares are entitled to vote. They will also carry voting rights when failing to receive the benefits entailed in their preference or when the shares are quoted on the stock exchange and quotation is suspended, while the situation continues.

2.145 A usufruct of shares is possible, the owner subject to usufruct retaining his capacity as member. Said owner may retain the political rights. The member retains the right to participate in the results of the liquidation, barring agreement to the contrary and legal usufruct. If the shares are not paid up, in order to exercise said rights the usufructuary must meet the proper payments, subject to his right to recover from the owner.

2.146 A company may acquire the shares it has issued only in the following conditions:

a) To cancel same and following an agreement for capital reduction.

b) With net earned profits or freely disposable reserves when they are fully paid up and to avoid serious damage, which must be justified at the next ensuing meeting of shareholders.

c) To integrate the property of an establishment it acquires or a company it incorporates.

2.147 A company cannot accept its shares as security.

2.148 The bylaws may authorize total or partial writing down of paid up shares with net earned profits following a resolution of the shareholders stipulating the fair price and ensuring equality to the shareholders.

7. Participation Certificates

2.149 Corporations may issue certificates to members whose interest has been redeemed and certificates giving certain rights to holders of stock retired. The former are issued in favor of the holders of totally written down shares. They entitle to participate in the profits and, in case of winding up, in the proceeds of the liquidation, after the nominal value of the non written down shares has been refunded.

2.150 Participation certificates may be issued for contributions that are not capital contributions. They only entitle to participate in the profits of the year. These certificates may be awarded also to the company personnel. The profits to which they are entitled are computed as expenses. They are transferable and they lapse when the employment connection expires. The participation is paid together with the dividend.

2.151 Corporations, as well as joint stock companies may, if authorized by their bylaws, contract loans, publicly or privately, by issuing debentures. The debentures may be secured by a floating guarantee, a common guarantee or a special guarantee. Issues where the privilege is not limited to specific real estate are considered effected with a floating guarantee. The debentures may be convertible into shares in accordance with the issuing program, and may be issued in foreign currency.

9. Shareholders' Rights

2.152 Each shareholder is entitled to as many votes as shares he has subscribed and paid up to the stipulated extent.

2.153 Common shares entitled to one or more votes will extend their holder a preferential right to subscribe new shares of the same class pro rata to the number of shares he holds; they also extend the right to accretion pro rata to the shares he has subscribed in each case. Extraordinary shareholders’ meeting with a majority in excess of 50% of all shares with the right to vote and without applying more than one vote per share can approve when reasons of special interest for the corporation make this a condition limit or suspend the preferential right of suscription under the following conditions:

(i) that the approval be included in the agenda

(ii) that the integration of the shares be in-kind or that the shares be given in payment of existing obligations of the corporation.

2.154 The shareholders have a preferential right to subscribe debentures convertible into stock.

2.155 Shareholders are entitled to be distributed dividends or to collect interest provided they spring from net earned profits shown by a duly drawn up annual balance sheet. Distribution of anticipated or interim dividends or interest or dividends or interest resulting from special balance sheets is forbidden, except in the case of companies under permanent state control.

2.156 Shareholders dissenting with amendments that are the attribution of extraordinary meetings of shareholders and that require the favorable vote of the majority of the shares entitled to vote, without applying plurality vote, except in the case of anticipated dissolution and in the case of the shareholders of the incorporating company in a merger or in a spin-off, are entitled to withdraw from the company and to be refunded the value of their shares. They are entitled to withdraw also in the case of capital increases lying with an extraordinary meeting of shareholders and that imply disbursement for the shareholder; voluntary retirement of public offer or of quotation of the shares and continuance of the company by decision of an extraordinary meeting of shareholders when dissolution of the company would apply upon approval of the cancellation of public offering.

2.157 The shareholders are entitled to elect up to a third of the vacancies to be filled on the board, through the cumulative vote system.

2.158 The shareholders may examine the books and corporate papers and may request from the administrator any reports they consider pertinent. Shareholders are entitled to exercise individual control when the company does not have syndics or when expressly provided in the bylaws.

10. Shareholders Agreement

2.159 The shareholders of a company may enter, between themselves and outside the company, pacts or agreements that are known as "syndication of shares", in order to be able to influence the life and development of the company, regulate the exercise of the rights emerging from the holding of shares or the shareholder's obligation to exercise same in a given direction.

2.160 Although company law does not envisage these agreements, they are not considered illicit to the extent in which the object of same is not illegal. This will be evaluated by the judge in each case. The agreement does not oblige the company and may be questioned by the company when it affects the operation of same. It is not necessary that the agreement be contemplated in Company Law as it is governed by the general rules of law and of the commercial companies regime.

11. Management of the Company

2.161 Administration of the company is vested in a board of directors comprised of one or more directors appointed by a meeting of shareholders or by the surveillance committee, if applicable. In corporations subject to permanent state control it will be made up of at least three directors. The bylaws specify the maximum and minimum number of directors and fixing of the number of same is left to the meeting of shareholders, provided it is authorized for the purpose. It is not necessary to be a shareholder in order to be a director. The Board is reeligible. The bylaws stipulate the period for which a director is elected, that cannot exceed three accounting years.

2.162 The bylaws may stipulate the election of alternate directors. This is compulsory in companies that dispense with controllership.

2.163 The majority of the directors must have their real domicile in Argentina and all directors must establish a legal domicile in which all notifications regarding their tenure will be valid.

2.164 A director’s function is remunerated. If the remuneration is not determined in the bylaws it will be set by the shareholders annual meeting. The office is personal and is not subject to delegation. The maximum remuneration that the members of the board of directors can collect from the corporation including wages and other remuneration cannot exceed 25% of earnings. This percentage will be limited to 5% if no dividend is distributed and will be increased proportionally to the percentage distributed. When one or more directors perform special commissions or technical administrative functions and the small amount or inexistence of earnings make it necessary to exceed the percentage established the corporation cannot paid such sums except if expressly approve by the shareholders meeting.

12. Syndics

2.165 Private control of the company is in charge of one or more syndics appointed by the meeting of shareholders. A like number of deputy syndics are appointed. When the company is included under compulsory state control, except in the case of companies with a capital exceeding $2.100.000, controllership must be collegiate and made up of an uneven number of members.

2.166 Companies that are not included under compulsory state control may dispense with the controllership when so stipulated in the bylaws. In such case the right to control is vested in the shareholders.

2.167 Only lawyers and chartered accountants licensed in the country are entitled to be syndics.

2.168 The bylaws will stipulate the period for which the syndics are elected, which shall not exceed three years; however, a syndic must remain in office until he is replaced. Syndics are reeligible. Their appointment is revocable by a meeting of shareholders.

2.169 If there are several classes of shares, the bylaws may authorize that each one of them elect one or more titular syndics and a like number of deputies.

2.170 When the controllership comprises several members, it will act as a collegiate body and will be known as a "fiscalizing committee". The bylaws will regulate the organization and operation of same.

2.171 A syndic's function is remunerated. If the remuneration is not determined in the bylaws it will be set by the shareholders in general meeting. The office is personal and is not subject to delegation.

2.172 Syndics are unlimitedly and jointly responsible for performing the functions with which they are invested by law, by the bylaws or the regulations. They are also severally liable with the directors when the damage would not have occurred if they had acted in accordance with the law, the bylaws, the regulations or shareholders decisions.

2.173 There are also fiscalizations required under special laws, such as the control exercised by the Argentine Central Bank on finance entities, the Superintendency of Insurance on insurance companies or the Federal Securities Committee, on companies effecting public offer of securities.

13. Shareholders Meetings

2.174 Meetings of shareholders must be held at the place that corresponds to the jurisdiction of the company.

2.175 Their resolutions pursuant to law and the bylaws are binding on all of the shareholders, except for the right of withdrawal, and they must be carried out by the board.

2.176 Shareholders meetings can be ordinary and extraordinary. The former must consider and resolve the following matters:

1) They must approve the accounts and any other measure connected with the conduction of the company in accordance with the law and the bylaws, or that is submitted to the decision of the meeting by the Board, the surveillance committee or the syndics.

2) Appoint or remove directors, syndics, members of the surveillance committee, and stipulate their remunerations.

3) Resolve as to the responsibility of the directors, syndics and members of the surveillance committee.

4) Capital increases not exceeding five times the original figure.

2.177 All matters that are not attributed to ordinary meetings of shareholders must be resolved by extraordinary meetings, such as bylaw amendments and in particular:

1) Increasing the capital to over five times the current figure.

2) Capital reduction and reimbursement.

3) Redemption, reimbursement and writing down of shares.

4) Merger, transformation and dissolution of the company, appointment, removal and remuneration of the liquidators; spin-off; consideration of the accounts and further matters connected with the conduction of same in the winding up of the company, that must be upheld by a resolution of final approval.

5) Limitation or suspension of preferential rights in the subscription of new shares.

6) Issuing of debentures and conversion of same into shares.

7) Issuing of bonds.

2.178 Shareholders meetings are called by the board, or the syndic in the cases specified by law, or when considered necessary by either of them or required by shareholders representing at least five per cent of the corporate capital.

2.179 The shareholders or representatives attending a meeting of shareholders must sign the Register of Attendance at Shareholders Meetings.

2.180 Shareholders may have themselves represented at meetings of shareholders. The directors, syndics, members of the surveillance committee, managers and further employees of the company cannot act as proxies.

2.181 Directors, syndics and general managers are entitled and obliged to attend, and to be heard at all meetings of shareholders. If they are shareholders, they cannot vote on decisions connected with the approval of their conduction, responsibility or removal.

2.182 Shareholders meetings are presided by the chairman of the board or the person appointed by the meeting.

2.183 Quorum for an ordinary meeting of shareholders held on first notice requires the presence of shareholders representing the majority of the shares entitled to vote. On second notice a meeting is held duly constituted whatever the number of shares present may be. Resolutions are adopted by absolute majority of votes present that may be given on the particular motion, except when the bylaws require a higher number.

2.184 An extraordinary meeting is held on first notice with the presence of shareholders representing sixty per cent of the shares entitled to vote, provided a greater quorum is not required by the bylaws. On second notice thirty per cent of the shares entitled to vote is required.

2.185 Decisions are adopted by absolute majority of issuable votes present, unless a greater number is stipulated in the bylaws and in specific cases such as the transformation, extension or renewal, the anticipated dissolution of the company, the transfer of its domicile abroad, a basic change of object or the total or partial refunding of the capital, where the favorable vote of the majority of the shares entitled to vote, without applying plurality vote, is necessary. This majority will apply for a merger or spin-off, except with regard to the incorporating company that will be governed by the rules for capital increase.

2.186 When the meeting affects the rights of a class of shares, the consent or ratification of the class in point is required. The class in point must hold a special meeting governed by the rules for ordinary meetings of shareholders.

2.187 Meetings of shareholders may be impugned when they have been held in circumstances contrary to the law, the bylaws or the regulations. The action must be filed against the company, at the proper court for the company's domicile.

14. Accounts

2.188 The manner in which the company accounts are to be carried will depend on the nature of the business pursued. However, companies are obliged to carry two books: a journal containing an entry for each transaction -though monthly global entries may be made-, and an inventory book, containing highly analytical annual financial statements. These books must meet certain formalities -they must be bound, their pages must be numbered and they must be stamped by the local commercial court- and, with the exception of the inventories register, they may be substituted by computer, mechanical, magnetic or other methods provided this is authorized by the supervisory agency or the Public Register of Commerce. In this case the system must be registered in the inventory book.

2.189 Another four books are required in order to record, respectively, the minutes of shareholders and Board meetings, shareholders' attendance at meetings and stock ownership.

2.190 The following financial statements must be drawn up: a balance sheet, income statement and statement of net worth and footnotes. Copies of same must be held at the company offices, at the disposal of the shareholders from at least fifteen days in advance of the date scheduled for their consideration. Within fifteen days of approval, limited liability companies with a capital in excess of $ 2,100,000.- and share companies must submit a copy of the financial statements to the supervisory authority.

15. Profits and Dividends

2.191 Dividends may not be approved or distributed among the members except from net earned profits resulting from a duly drawn up and approved balance sheet. This principle does not apply to companies subject to State control, where dividends may be distributed in advance. In addition, profits may not be distributed until any losses from preceding accounting periods have been covered, except in the case where managers, directors or auditors are remunerated out of a percentage on profits, and where payment is decided by a meeting of shareholders. Any profits distributed contrary to this rule are reclaimable, unless they were received in good faith.

16. Mixed Capital Companies and Corporations with State Majority Holding

2.192 Mixed Capital Companies are the companies that are established by the Federal or a Provincial State, the municipalities or autonomous administrative entities, on the one hand, and private capitals on the other, for the development of enterprises directed to meeting group requirements, or the establishment, promotion and development of economic activities. This structure is rarely used at the present time.

2.193 Corporations with State majority holding are those in which shares representing fifty one percent of the capital and sufficient to prevail at shareholders meetings pertain, individually or jointly, to: the Federal or Provincial State, municipalities, State agencies legally authorized for the purpose or corporations subject to this system. They are subject to special rules as long as these conditions are not altered, otherwise, they will be legally treated as simple corporations. When the purpose to maintain State prevalence is expressed in the articles of incorporation, any disposal of shares implying the loss of the majority position must be authorized by law.

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