New Rules on Bookkeping and Filings

As a result of different rules adopted as part of the Act on Support of Entrepreneurs and their Internationalization, the General Directorate for Registrars and  Notaries (DGRN) has issued an Instruction that clarifies the way in which companies will have to comply with the obligations laid down in that law as to the way to carry and legalize the official corporate books.

The Instruction has been scrutinized by the legal community from the moment it was issued. After a period of doubt and notwithstanding that there are various reasons that would justify the amendment to different aspects of the procedures, we are hereby making a brief summary of the key requirements.

Books to be legalized

Unless otherwise provided for in specific cases, all companies must necessarily keep,

* A book of Inventories and Annual Accounts, and a Journal book (Libro Diario) pursuant to Art. 25 of the Code of Commerce.

* A Minutes Book reflecting the proceeds of (i) all general meetings of partners and/or shareholders and (ii) meetings of the collegiate bodies (i.e. Board of Directors and others) of the company (Art. 26 code of Commerce and 106 RRM).

* Joint Stock Companies (SAs) must also keep, in addition to all the above books,  a book called “Register of registered Shares”. Limited Liability companies have an identical obligation with regard to the book called “Register of Partners” (Art. 27 and 28 of the code of Commerce).

* Sole Partner or Sole Shareholder  companies must also carry a Book called “Book of Contracts with the Sole Partner”.

Term and procedures for filing the Books (DGRN Instruction of February 12, 2015)

The above statements apply  to the legalization of the referred books for fiscal years open until September 29, 2013. Therefore books from previous years, although filed after the deadline, may still be legalized in the ordinary way.

All mandatory official books shall be hereafter filed in electronic form and will be presented to its legalization in the mercantile registry, within four (4) months from the close of the fiscal year.

Books that were legalized in blank in either binded or loose leaf formats may hereafter not be legalized for periods following September 29, 2013. Leaves in any form other than through (i) the Internet and (ii) an electronic signature..

Book of Registered Shares”. “Register of Partners” and  “Book of Contracts with the Sole Partner”.

One of the main novelties of the new regulations is that they extend the obligations that were so far applied to the legalization of the Accounting Books and Annual Accounts) also to the above  mentioned books that are commonly referred to as “Corporate Books”.

As has been said, the books witnessing the minutes of meetings of the corporate collegiate bodies and the decisions of the sole partner, related to fiscal years started as of September 29, 2013, must be legalized exclusively through electronic signature within four months following the close of the fiscal year.

Minutes of a given fiscal year may be legalized even if the minutes of previous fiscal years have not been filed for legalization.

The other books are also subject to the same requirements and obligations regarding the closure of the previous hard copy books (art. 18.3 and 334.2 Act on Support of Entrepreneurs and their Internationalization

In the case of newly created companies, the first book showing the ownership by the founding partners or shareholders will be legalized after the company is duly registered at the Mercantile Register.. New legalization of this book is only required when and if changes occur. These books must include the complete identity of the equity holders, their nationality and domicile. Omission of these data will not prevent the legalization of the book, but the note of legalization will reflect this fact.

Closing Certifications

Existing binded or loose leaf books may only be used for accounting, contracts, data of partners/participants and minutes of fiscal years started prior to September 29, 2013. After this last fiscal year, books will be closed by means of a certification that will be incorporated into the first electronic filing by means of a file that will be included in a certificate issued by the Board of Directors stating this circumstance (arts. 334.2 RRM and 18.3 of the entrepreneurs support Act and its internationalization).

Entries, contracts, data of partners/participants, or records of a period subsequent to the September 29, 2013, that had been transcribed to such books will be transferred to the new one which will be sent electronically.

The books so filed do not require a closing certificate.

The telematic presentation is done through the website of the Bar of Registrars (Colegio de Registradores) , through their website and by means of an electronic signature. The Bar will issue a certification withnessing that the  books have been delivered and shall send the documents thus received to the respective Commercial Registers. The process is executed through a specific program called Legalia

According to Article 8 of a D.G.R.N. Instruction of December 31, 1999, the company will be obliged to retain a copy of the books so presented with identical contents and format.

We are at the disposal of interested parties to expand the contents of the present report and discuss the way in which we can assist to adequately and timely comply with the above described obligations.///