Conditions for being a director of a corporation (art. 256 LGS)

Article 256 of the General Companies Law sets the conditions for a director: they are eligible for re-election and their appointment is removable exclusively by the meeting; being a shareholder is not required. The bylaws may not eliminate or restrict removability. A majority of the directors must have their actual domicile in the country and all must establish a special domicile in Argentina.

What article 256

Article 256 governs the conditions for the office of director: removability, shareholder status, security bond and domicile.

Source: Law 19,550, art. 256 — InfoLEG (updated official text)

Commentary

The director need not be a shareholder and is freely removable by the meeting: the bylaws cannot shield them from this. They must post the security bond set by the bylaws (regulated by the control authority) to answer for their conduct in office.

The domicile requirement matters in structures with foreign directors: a majority must have an actual domicile in the country and all must establish a special domicile in Argentina, where even liability actions will be validly served. It is a guarantee that the director can actually be sued there.

Distinctions often confused

Practical impact

In companies with directors abroad, the domicile requirement must be met (majority with actual domicile in the country; all with a special domicile). The director's security bond is a common registration requirement.

Frequently asked questions