Companies Act 19,550 · Article 33 — Controlled and affiliated companies

Controlled and affiliated companies (LGS art. 33)

Section 33 of the General Companies Law defines when one company controls another - through the votes needed to determine the corporate will or through dominant influence - and when companies are affiliated - where one holds more than 10% of another's capital. It also requires notice of holdings above 25%.

Source: Act 19,550

What article 33

Section 33 defines control (legal internal control and de facto internal control) and corporate affiliation, key concepts for corporate groups, controlling-person liability (art. 54), and consolidation.

Official text · Act 19,550, art. 33

A company shall be considered controlled where another company, directly or through another company that it also controls: 1) holds an interest, on any basis, carrying the votes necessary to determine the corporate will at meetings of members or ordinary shareholders' meetings; 2) exercises dominant influence as a result of shares, quotas or interests held, or because of special relationships existing between the companies.

Affiliated companies. For purposes of Section IX of this chapter, companies shall be considered affiliated where one holds more than ten percent (10%) of the capital of another. A company holding more than twenty-five percent (25%) of the capital of another shall notify it so that its next ordinary shareholders' meeting may take note of the fact.

Source: Law 19,550, art. 33 - InfoLEG (updated official text)

Commentary

The article distinguishes two forms of control: legal internal control (holding the votes necessary to determine the corporate will) and de facto internal control (dominant influence arising from the shareholding or special relationships). A majority of capital is not required; the votes actually needed in practice are enough.

An affiliation arises above 10% of another company's capital; above 25%, a notice duty arises so the investee's ordinary meeting can take note. These concepts lead into corporate-group issues: controlling-person liability (art. 54), related-party transactions and consolidated financial statements.

Distinctions often confused

Controlled company is not the same as Affiliated company. Control involves decision-making power over the corporate will; affiliation is a significant interest (more than 10%) that falls short of control.

Legal internal control is not the same as De facto internal control. The first comes from holding the necessary votes; the second from dominant influence arising from the interest held or special relationships, even without those votes.

Practical impact

Correctly identifying control and affiliation is essential in due diligence, controlling-person liability under article 54, and transactions within an economic group. Exceeding 25% triggers the notice requirement.

Frequently asked questions

When does one company control another?

When it holds the votes necessary to determine the corporate will at ordinary meetings, or when it exercises dominant influence through its interest or special relationships.

What level of ownership constitutes affiliation?

More than 10% of another company's capital. Above 25%, notice must be given so that the investee's meeting may take note.

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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