Registration with insurance regulator
Registration with representative office
Tax treatment
Under recent regulations issued by the insurance regulator, in order to act as an 'admitted insurer' on an exceptional basis, foreign reinsurers must be registered with the local insurance regulator and establish either a branch or a representative office in Argentina. Insurers must also register the branch or representative office with the local corporate authorities.
Registration with insurance regulator
The requirements for obtaining registration, as imposed by the new regulations, include:
- evidence that the company is incorporated and validly exists (eg, bylaws and a certificate of good standing);
- evidence that the company is authorised to act as reinsurer in relation to risk ceded from foreign countries, indicating the date when it commenced its activities as a reinsurer;
- evidence that the laws of the country where the company is incorporated enable it to pay abroad all monetary obligations arising from the reinsurance contracts in free convertible currency;
- a certificate from the company's external auditor indicating that the company has a net worth in excess of $30 million;
- annual financial statements for the last five fiscal years, together with their respective audit reports;
- appointment of an attorney in fact with broad administrative and judicial powers, including the power to receive notice of any lawsuit filed against the company. The attorney in fact must establish a special domicile within the city of Buenos Aires, where all notices given shall be deemed valid; and
- registration of a representative office or branch with the Office of Corporations.
Registration of representative office
Establishing a representative office for the foreign reinsurer may be a better course of action, since the local vehicle will:
- act as a liaison between only the local party (insurer or cedant) and the foreign reinsurer;
- conduct management with respect to insurance business conducted abroad; and
- not book or underwrite any reinsurance contract in its own name.
In accordance with the Corporations Law (19,550), the corporation (ie, the foreign reinsurer) must file certain documents in order to register a representative office in Argentina with the Office of Corporations (Public Registry of Commerce) of the City of Buenos Aires.
In addition to those requirements, the public registry has issued General Resolution IGJ 7/2005, requiring certain information, including:
- whether the corporation has any legal prohibitions or restrictions on carrying out all or some of the activities contemplated in its corporate purpose in its place of incorporation; and
- evidence that the corporation can carry out its corporate purpose in its place of incorporation and that it can hold participation in other companies, both in its place of incorporation and abroad.
In order to operate from abroad with the limited authority or capacity set out above, the admitted foreign reinsurer need not meet the minimum capital requirements imposed on a local reinsurer under Insurance Regulator Resolution 35.615/11. In order for admitted insurers to comply with minimum capital requirements, it is sufficient to submit the certificate from the company's external auditor indicating that it has a net worth in excess of $30 million.
Certain issues regarding income tax, value added tax, turnover tax and tax on deemed minimum income must be considered when incorporating a representative office.
For further information on this topic please contact Martín Argañaraz Luque at Allende & Brea by telephone (+54 11 4318 9900), fax (+54 11 4318 9999) or email ([email protected]).