Companies with a purpose prohibited for the chosen form (LGS art. 20)
Section 20 of the General Companies Law subjects to absolute nullity companies whose purpose is prohibited by reason of the chosen company form (for example, conducting an activity reserved to a particular form under another form).
What article 20
Section 20 subjects to absolute nullity a company whose purpose is prohibited for the chosen company form.
Companies whose purpose is prohibited by reason of their company form are absolutely null and void. Article 18 shall apply, except as regards distribution of the liquidation surplus, which shall be governed by Section XIII.
Source: Law 19,550, art. 20 - InfoLEG (updated official text)
Commentary
The typical case is an activity that the law reserves to a particular company form (for example, banks or insurers, which must be corporations) being carried on under another form. The sanction is absolute nullity under the article 18 regime, except that the surplus is distributed under the ordinary liquidation rules.
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