Companies Act 19,550 · Article 1 — Concept of a company

What constitutes a company under Argentine law (LGS art. 1)

Section 1 of the General Companies Law defines when a company exists: one or more persons who, in an organized manner and under one of the legal forms provided by law, undertake to make contributions for the production or exchange of goods or services, sharing in the profits and bearing the losses. Since 2015, the law permits a single-member company, which may only take the form of a corporation (sociedad anónima).

Source: Act 19,550

What article 1

Section 1 establishes the essential elements of every company: plurality (or permitted single-member status), organization, adherence to a statutory company form, contributions, a production or exchange purpose, and participation in the results - profits and losses.

Official text · Act 19,550, art. 1

A company shall exist when one or more persons, organized in accordance with one of the forms provided for in this Law, undertake to make contributions to be applied to the production or exchange of goods or services, participating in the profits and bearing the losses.

A single-member company may only be incorporated as a corporation. A single-member company may not be incorporated by another single-member company.

Source: Law 19,550, art. 1 - InfoLEG (updated official text)

Commentary

The definition brings together the elements that legal scholarship calls essential: organization, statutory form (adopting one of the forms offered by law), the obligation to contribute, a purpose involving production or exchange, and participation in profits and losses. The absence of any one of them may affect the company's existence or validity.

The 2015 reform (Law 26,994) introduced the single-member corporation (SAU): it may be incorporated with one shareholder, but only as a corporation and subject to its specific requirements. A single-member company may not itself be the sole shareholder of another single-member company.

Distinctions often confused

Company is not the same as Civil association. A company pursues a profit-making purpose whose results are distributed among its members; a civil association pursues a common-interest purpose and does not distribute profits.

Bearing losses is not the same as Liability for company debts. Every member bears internal losses; liability to third parties for company debts depends on the company form (limited in corporations and SRLs, broader in partnerships).

Practical impact

Choosing the proper company form at incorporation determines the members' liability, capital structure and corporate bodies. A clause exempting a member from losses or excluding that member from profits (a leonine clause) is invalid.

Frequently asked questions

Can a company have only one member?

Yes, since 2015, but only as a corporation (single-member corporation). A single-member company may not be the sole shareholder of another single-member company.

Which elements are indispensable in a company?

Contributions, organization under a statutory company form, a production or exchange purpose, and participation in profits and losses.

This page is informational and does not constitute legal advice nor replace professional consultation. It quotes the official text of the rule; for its application to a specific case, consult a licensed professional.

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