Companies Act 19,550 · Article 356 — Capital reduction of the issuer
Limit on capital reduction with debentures outstanding (art. 356 LGS)
Article 356 of the General Companies Law only allows the capital to be reduced in proportion to the debentures repaid, except for a compulsory reduction.
What article 356
Article 356 limits the reduction of the capital of the debenture-issuing company.
Official text · Act 19,550, art. 356
A company that has issued debentures may only reduce its capital stock in proportion to the debentures repaid, except in cases of compulsory reduction.
Source: Law 19,550, art. 356 — InfoLEG (updated official text)
Commentary
It protects the debenture holders: the capital, which backs their claim, cannot be reduced while the debt is outstanding, unless the debentures are paid or the reduction is compulsory due to losses.
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