Companies Act 19,550 · Article 284 — Statutory auditor: appointment and dispensing

The statutory auditor of the corporation (art. 284 LGS)

Article 284 of the General Companies Law governs the statutory auditor, the corporation's private oversight body. Auditors are appointed by the shareholders' meeting; in companies under article 299 the auditing body must be collegiate and have an odd number of members. Companies not falling under art. 299 may dispense with the statutory auditor if the bylaws so provide, in which case the shareholders exercise the oversight right under article 55.

Source: Act 19,550

What article 284

Article 284 governs the appointment of auditors, the collegiate auditing body in companies under art. 299, and dispensing with the statutory auditor in others.

Official text · Act 19,550, art. 284

It is entrusted to one or more statutory auditors appointed by the shareholders' meeting. An equal number of alternate auditors shall be elected.

When the company falls under article 299 —except in the cases provided for in subsections 2 and 7 and when it involves SMEs falling under the special SME regime regulated by the National Securities Commission— the auditing body must be collegiate with an odd number of members.

Dispensing. Companies not falling under any of the cases referred to in article 299, and those making a public offering of secured negotiable obligations under the regime established by the National Securities Commission, may dispense with the statutory auditor when so provided in the bylaws. In that case, the shareholders hold the oversight right granted by article 55.

Source: Law 19,550, art. 284 — InfoLEG (updated official text)

Commentary

The statutory auditor is the internal oversight body: it controls the legality of the board of directors' management. In large companies (art. 299) it is mandatory, collegiate and odd-numbered; in others, the law allows dispensing with it if the bylaws so provide.

When the statutory auditor is dispensed with, oversight does not disappear: it passes to the shareholders, who exercise the individual oversight right under article 55 (examining corporate books and records and requesting reports). This is the usual solution in closely held corporations and in limited liability companies without a statutory auditor.

Distinctions often confused

Mandatory statutory auditor (art. 299) is not the same as Statutory auditor that may be dispensed with. Companies under art. 299 must have a statutory auditor (collegiate, odd-numbered); others may dispense with it if the bylaws so provide.

Control by the statutory auditor is not the same as Control by the shareholders (art. 55). With a statutory auditor, the auditor oversees; without one, shareholders exercise the individual oversight right under art. 55.

Practical impact

When forming a closely held corporation, it is advisable to expressly provide for dispensing with the statutory auditor if the cost of the body is not wanted; bear in mind that individual shareholder oversight (art. 55) then applies, and that falling under art. 299 requires appointing an auditor.

Frequently asked questions

Does every corporation need a statutory auditor?

No. Companies not falling under article 299 may dispense with the statutory auditor if the bylaws so provide; in that case, oversight is exercised by the shareholders (art. 55).

When must the auditing body be collegiate?

In companies falling under article 299 (with the exceptions the law indicates), where it must be composed of an odd number of members.

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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