Loss of title to a contributed asset: consequences (LGS art. 46)
Article 46 of the General Companies Law permits the company to exclude a member if a contributed asset is lost through eviction from title; if the member is not excluded, that person owes the value of the asset plus damages.
What article 46
Article 46 establishes the consequences where a contributed asset is lost through eviction from title.
Eviction from title authorizes exclusion of the member, without prejudice to liability for the damages caused. If the member is not excluded, the value of the asset and compensation for the damages caused shall be owed.
Source: Law 19,550, art. 46 - InfoLEG (updated official text)
Commentary
If a third party successfully establishes superior title against the company over the contributed asset, the contributor has failed in the title warranty: the company may exclude that member or demand the value of the asset plus damages. The rule protects the company against contributions made under defective title.
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