Nominee and undisclosed members: the prohibition (LGS art. 34)

Section 34 of the General Companies Law prohibits the use of a nominee member and an undisclosed member. No one may appear as a member without actually being one, nor act as the real member hidden behind another person.

What article 34

Section 34 establishes a prohibition on nominee and undisclosed members, together with the resulting liability consequences.

Source: Law 19,550, art. 34 - InfoLEG (updated official text)

Commentary

A nominee member lends his or her name to appear as a member without truly being one; the undisclosed member is the real interested person hidden behind the nominee. The Law prohibits both because they undermine corporate transparency and are often used to evade liabilities or restrictions.

The following article specifies the consequences: the nominee is liable to third parties as if actually a member and cannot rely on the fact that the appearance was false, while the undisclosed member is subsidiarily, jointly and severally, and without limit liable. The rule is an anti-interposition mechanism.

Distinctions often confused

Practical impact

Using nominees in corporate ownership is risky: the nominee becomes liable as a member and the true interested person is not freed from liability. Transparent ownership avoids these contingencies.

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