Companies Act 19,550 · Article 37 — Default in making a contribution

A member who fails to contribute: default and exclusion (LGS art. 37)

Article 37 of the General Companies Law governs a shareholder or member who fails to pay or deliver the agreed contribution: default occurs automatically upon expiration of the deadline, damages and interest are owed, and the company may exclude the defaulting member or sue for performance. In companies limited by shares, article 193 applies.

Source: Act 19,550

What article 37

Article 37 establishes the consequences of default in making a contribution: when default occurs and the remedies available to the company.

Official text · Act 19,550, art. 37

A shareholder or member who fails to make the contribution under the agreed conditions is in default merely upon expiration of the applicable term and must compensate damages and interest. If no term was fixed, the contribution is due from the company's registration. The company may exclude the defaulting member, without prejudice to that person's right to bring a judicial claim, or may demand performance of the contribution. In companies limited by shares, article 193 shall apply.

Source: Law 19,550, art. 37 - InfoLEG (updated official text)

Commentary

Default is automatic: no formal demand is required; expiration of the term is enough. If no term was agreed, the contribution becomes due upon registration of the company. The defaulting shareholder or member is liable for the damages and interest caused by the breach.

The company has a choice: exclude the member (subject to article 91) or judicially enforce the contribution. For companies limited by shares, article 193 provides the specific mechanism, including possible sale or forfeiture of subscription rights. It is a key remedy where a member undertakes to contribute but fails to fund that commitment.

Distinctions often confused

Enforce the contribution is not the same as Exclude the member. The company may choose to sue for performance of the contribution or exclude the defaulting member under article 91.

Partnership-type companies / SRL (art. 37) is not the same as Companies limited by shares (art. 193). For companies limited by shares, shareholder default is governed by article 193 and its specific remedies, including forfeiture and sale of subscription rights.

Practical impact

Where a member fails to make a contribution, the company should document the due date and make a reasoned choice between enforcing the contribution and excluding the member. The bylaws or company agreement may regulate the procedure and consequences in greater detail.

Frequently asked questions

What happens if a member does not pay the agreed contribution?

Default arises automatically when the term expires; damages and interest are owed, and the company may exclude the member or sue to enforce the contribution.

Is a formal demand required?

No. Default occurs merely upon expiration of the term. If no term was fixed, the contribution is due from registration of the company.

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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