Companies Act 19,550 · Article 206 — Mandatory capital reduction
Mandatory capital reduction (art. 206 LGS)
Reduction is mandatory when losses consume the reserves and 50% of capital.
What article 206
Article 206 establishes when a loss-driven capital reduction is mandatory.
Official text · Act 19,550, art. 206
The reduction is mandatory when losses consume the reserves and fifty percent of the capital.
Source: Law 19,550, art. 206 — InfoLEG (updated official text)
Commentary
This is a serious undercapitalization signal: once reserves and half the capital are consumed, the company must adjust stated capital and will commonly need recapitalization. It is linked to dissolution for loss of capital.
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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