Financial Statements´ reporting in constant currency

The enactment of Law N° 27,468 on November 15th, 2018 reestablished the effectiveness of previously abrogated Section 62 (in fine) of General Corporations Law N° 19,550 that sets forth that interim and annual financial statements are required to be reported in constant currency and delegated in the Public Registry of Commerce (“IGJ”) its effectiveness date.

In such respect, IGJ´s issuance of General Resolution N° 10/2018 (the “Resolution”) on December 28th, 2018 reestablished the effectiveness of such obligation and additionally amended General Resolution Nº 7/2015 in the following related matters:

  • financial statements must be filed in constant currency (except those issued by entities subject to special control regimes)
  • financial statements shall be restated in accordance with the regulations issued by the Argentine Federation of Professional Councils of Economic Sciences (FACPCE) and adopted by the Professional Council of Economic Sciences of the City of Buenos Aires (CPCECABA);
  • the decisions to be adopted by governance bodies must be taken with accounting information in constant currency;
  • all restatements must be expressed in their actual value;
  • companies subject to the Public Registry of Commerce’s control that are controlling, controlled or affiliated to other companies subject to oversight by the National Securities Commission may adopt specific regulations applicable to the latter, explaining the reasons in the financial statements.

Any further information, please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or

Relevant News in Renewable Energies: Implementation of Distributed Generation Law No. 27,424

On December 21, 2018, Resolution No. 314/2018 (the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”), under the Ministry of Treasury, was published in the Official Gazette of the Republic of Argentina.

The Resolution contains implementation rules of the Distributed Generation Law No. 27,424 (the “Law”) and its pertaining Decree No. 986/2018 (the “Decree”, and jointly with the Law and the Resolution, the “Distributed Energy Framework”).

Most relevant matters of the Resolution are outlined below:
1) Categories of users-generators and connection to the grid

The following categories of users-generators are contained in the Resolution:

  1. Small users-generators (UGpe, for its Spanish acronym): users connected to the distribution in low voltage, with an equipment of a nameplate capacity no greater than 3 kV.
  2. Medium users-generators (UGme, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 3 kV and 300 kV.
  3. Major users-generators (UGma, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 300 kW and 2 MW.

The Resolution also establishes that the equipment of any of the users-generators described above shall not exceed the total aggregate of 2 MW per each MW for each supply point and that such users are allowed to connect to the grid up to a nameplate capacity equivalent to the one actually contracted with the relevant distribution company (authorization of the pertaining regulatory agency is mandatory for greater installed capacity).

For those purposes, the procedure in order to connect to the grid will be carried out by means of a public access digital procedure, to be implemented by the Undersecretary of Renewable Energy (the “URE”).

Equipment already connected as of the date on which the Resolution is issued, must also follow the connection procedure to verify whether such equipment complies with legal and technical requirements set forth in the Distribution Energy Framework.
2) Distributed Generation Agreement

The distributed generation agreement will be entered by and between any of the user-generators described above and the relevant distribution company and shall become effective as of the date on which it is executed with no expiration date (except for those events allowing for termination, as further described below). This agreement will be ancillary in respect of the agreement already in place with the distributor.

Assignment of the distributed generation agreement is allowed upon prior consent of the distribution company.

Rights and obligations with respect of the user-generator and distribution company, as applicable, are foreseen in the Resolution, inter alia:

  1. distribution company’s right to verify compliance with the requirements set forth in the Distributed Energy Framework and to disconnect users-generators from the grid in case technical conditions are not complied with;
  2. distribution company’s obligation to purchase the electricity generated and injected to the grid by the user-generator;
  3. users-generators’ right to supply energy into the grid with no additional charges whatsoever; and
  4. user-generator’s ability to assign accumulated credits derived from surplus energy; accumulated credits by injected energy and receive payments from such credits.

Finally, the Resolution enables the pertaining distributor to suspend the distributed generator agreement should the user-generator fail to comply with the requirements set forth in the Distributed Energy Framework and in turn, terminate such agreement upon a material breach. Prior remedy stage and defense by the user-generator before the regulatory agency is foreseen.
3) Qualified Installer

Qualified installers shall verify that distributed generation systems comply with the requirements set forth in the Distributed Energy Framework. Professionals from different levels of education may participate as qualified installers and in order to act in such capacity, degree validated by the Ministry of Education, Culture, Science and Technology is required together with enrollment in the relevant professional association.
4) Payment structure

Payments under the Distributed Energy Framework shall be in accordance with the requirements set forth below:

  • At the end of each billing period, users-generators shall receive an invoice detailing their consumption and energy injected into the grid, expressed in kilowatt-hour (kWh) with the corresponding prices of each unit expressed in argentine pesos/kWh.
  • Energy injected to the grid shall be measured, registered and paid by distribution companies, which shall be duly reflected in the corresponding invoice.
  • No additional charges from the distribution companies allowed.
  • Should the energy injected into the grid be greater than the one consumed by the user-generator, the user-generator shall have a credit which will be taken into account for future billing periods.
  • Credits in favor of users-generators shall not expire and remain in the corresponding account until they are compensated.
  • Assignment of such credits to accounts of other users of the same distribution company shall be carried out in accordance with the procedure set forth by the corresponding regulatory agency.

5) Promotional Benefits

Promotional benefits shall be granted to users-generators acting under those jurisdictions which adhere to the Distributed Energy Framework. Local promotional benefits may also apply.
6) Pending Matters

Matters related to (i) the Distributed Generation Development Trust (Fondo Fiduciario para el Desarrollo de Generación Distribuida); (ii) the public access digital platform; (iii) the promotional benefits; and (iv) the fiscal credit certificates set forth in section 28 of the Law remain pending of implementation and are subject to future regulation by the URE.
At TRS&M we are available to provide clarifications or further information of any matter addressed above.

Eugenia Pracchia joins TRS&M as partner of the Litigation, Arbitration, Insolvency & Compliance Team Eugenia Pracchia

Tavarone, Rovelli, Salim & Miani expands its Litigation, Arbitration, Insolvency & Compliance Team through the addition of Eugenia Pracchia as a partner.

Eugenia is an 11-year experienced lawyer with a J.D. degree from the School of Law of the University of Buenos Aires. She holds a post-graduate degree in Economic & Business Law from the Catholic University of Argentina and an LL.M. from the Pompeu Fabra University of Barcelona. She is also an Ethics & Compliance Professional, certified by the Argentine Association of Ethics & Compliance (an IFCA member).

Prior to joining Tavarone, Rovelli, Salim & Miani, Eugenia worked both in the private and public sectors. While serving in renowned Argentine firms, Eugenia represented before Court first-tier companies in commercial litigation and administrative proceedings and also advised in regulatory aspects of financial, FX, capital markets and AML matters. While in the public sector, she acted as counsel to the Central Bank of Argentina’s Board of Directors, enhancing her knowledge of the financial market, banking supervision and regulation, retail payment systems and financial innovation. She has also received several academic distinctions and served as professor in business and banking law academic programs.

In joining Tavarone, Rovelli, Salim & Miani, Eugenia will contribute to the development and expansion of the Firm due to the continuous need for legal services related to domestic and international compliance and its controversies.

Tavarone, Rovelli, Salim & Miani is proud to have Eugenia among its members, who will strengthen the Firm and will contribute to maintain it as one of the most active in our legal market.

RenovAr 3 program - MiniRen

On November 15, 2018, Resolution No. 100/2018 (hereinafter, the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”) has been published in the Official Gazette.

By means of this Resolution, the SGE has launched RenovAr 3 program – MiniRen, addressed to small-medium renewable projects that, if selected as awardees, will enter into a long-term power purchase agreement (“PPA”) with the Wholesale Electric Market Management Company (“CAMMESA” for its Spanish acronym). The tender’s terms and conditions are also attached as Annex thereto.

An outline of the tender terms is summarized below:

Schedule Consultation period: 14/11/2018 – 18/02/2019
Bid submission: 27/03/2019
First-stage qualification: 7/05/2019
Selection of winners: 17/05/2019
Execution of PPA: 20/05/2019 – 8/11/2019
Required Capacity by Technology Wind/Solar PV: 350 MW
Biomass: 25 MW
Biogas: 10 MW
Landfill Biogas: 5 MW
Small Hydro (PAH): 10 MW
Requirements by Technology
Wind S.P. Biomass Biogas L.G. PAH
Minimum Capacity (MW) 0.5 0.5 0.5 0.5 0.5 0.5
Maximum Capacity (MW) 10 10 10 10 10 10
Maximum COD (days) 730 730 1095 1095 1095 1095
Maximum Price (USD/MWh) 60 60 110 160 130 105
Qualified Bidders • Natural persons or legal entities (onshore or offshore)
• Consortiums (“UTE” for its Spanish acronym)
• Trusts
PPA – Payment Priority and Dispatch Priority • 20-year term PPA as from COD. Generators are entitled to terminate the PPA for convenience upon the tenth (10) year anniversary with no associated penalties.
• The PPAs shall have the same payment priority that those PPAs under RenovAr 1, 1.5 and 2.
• No dispatch priority will be granted for RenovAr 3 projects.
Payment Guarantees – FODER • FODER shall provide a short-term guarantee backing up CAMMESA’s obligation to make payments under the PPA. Tenor of this guarantee shall be of ninety (90) days. Adhesion to the FODER by means of the execution of a FODER Adhesion Agreement is required.
• A USD 35,000,000 bank guarantee provided by the National Bank of Argentina and BICE also foreseen.
• No world bank guarantee contemplated.
Integrity Policy • Bidders shall provide an Integrity Policy Program in accordance with Law No. 27,401 of Corporate Criminal Liability.
Other relevant matters • Both trusts and consortiums are authorized to act as bidders.
• For wind and solar photovoltaic technologies, hybrid projects are allowed.
• A Technical Connection and Commercial Agreement Letter shall be executed with the Distribution Agent and, if applies, the Provider of the Technical Transmission Function (“PAFTT”).
• Except for the Province of Buenos Aires, a maximum capacity of 20 MW per province is foreseen.

At TRS&M we are available to provide clarifications or further information of any matter addressed above.

Thermal Generation and Fuel Procurement: New and Most Relevant Regulation

On November 7, Resolution No. 70/2018 (hereinafter, the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”) has been published in the Official Gazette, with relevant impact towards thermal generators, auto-generators and co-generators, acting within the wholesale electricity market (the “WEM” and “WEM Agents”, as the case may be), whereas by means of this Resolution, Resolution No. 95/13 issued by the former Secretary of Energy (“SE”) has been partially derogated, and therefore, WEM Agents are now entitled to procure their own fuel, whether by their own means or by private third-party fuel supply agreements.

After the enactment of Resolution SE 95/13, WEM Agents were required to receive supply directly from Wholesale Electric Market Management Company (“CAMMESA”, for its Spanish acronym, which acts an independent system operator or ISO), and generators were expected to receive sums arising only under the provisions of Resolution SE No. 95/2013.

By this Resolution that has been recently issued -with abrogating effects regarding Resolution SE 95/13 on fuel-supply matters- WEM Agents may now purchase the fuel that is necessary for their operations in such capacity-.

Because of this Resolution, CAMMESA has ceased to be the sole fuel-supplier of the WEM.

This is significant as the policy adopted by this Resolution is that the SGE has reinstated a fuel-supply market in Argentina, which is aligned with the foundations and criteria originally set forth in Law No. 24,065.

Please find below a brief summary of the Resolution, its relevance and associated business opportunities:
1. Partial abrogation of Resolution SE 95/2013

As indicated before, the Resolution abrogates former Resolution SE 95/2013 on matters regarding CAMMESA acting as sole supplier of the necessary for the WEM Agents’ operation. The former section of Resolution SE 95/13 established that fuel supply, operation and management of the WEM and dispatch of electricity were carried out solely by CAMMESA.

As of the date hereof and by means of this Resolution, WEM Agents may now procure their fuel without resorting to CAMMESA. Associated costs for self or third-party fuel supply will be calculated pursuant to CAMMESA’s variable-fee scheme.

The Resolution further states that CAMMESA shall remain as independent system operator and in charge of supplying fuel to those WEM Agents that do not (or may not) opt-out from CAMMESA’s sole-supply mechanism.

Complementary regulation is expected in the short term by the SGE -or lower-ranked authority depending from the SGE, addressing matters such as technical issues and the opt-out mechanism.

2. Business opportunities

As it is publicly known, hydrocarbon unconventional reservoirs, as Vaca Muerta have generated a big interest for investment.

Vaca Muerta is far yet from achieving its full potential despite notorious advances occurred recently. Analysts estimate that the production of natural gas will be further significantly increased. Such boost would enlarge natural gas supply and in turn, provide a proper environment for new investment and further business opportunities.

Enabling power generators to freely-negotiate the terms and conditions for their fuel-supply, without intervention from CAMMESA, together with growing natural gas production, certainly will enhance efficiency and competitiveness of the electricity markets.
At TRS&M we are available to provide clarifications or further information of any matter addressed above.

Renewable Energy: Regulation of Distributed Generation Law No. 27,424

On November 1, 2018, Decree No. 986/2018 (the “Decree”) was published in the Official Gazette of the Republic of Argentina.

The Decree contains the applicable regulation of Law No. 27,424, which approved the Distributed Renewable Energy Generation Incentive Scheme (the “Law”), passed by the National Congress on November 2017.

The Law sets forth policies and contractual conditions applicable to the distributed renewable energy generation by distribution network users (which in turn are enabled to connect their small-scale renewable energy projects to the electricity grid for purposes of supplying power remainders) and declared this activity as of national interest. Moreover, the Law is also based on open access rules, whereby the distribution companies regulated as public utilities must provide open access to the systems operated by them in this regard.

The Decree establishes that measures implemented under the Law shall be oriented towards achieving a total installed capacity of one thousand megawatts (1,000 MW) on the twelfth- year anniversary as from the date on which the Decree becomes effective (year 2030).

The most relevant aspects of the Decree are summarized below:

1) Enforcement Authority

  • The Secretary of Government of Energy, under the Ministry of Treasury, is designated as the enforcement authority of the Law and the Decree (the “Enforcement Authority”), with faculties to issue clarifying and complementary regulations.
  • The Enforcement Authority shall: (a) provide technical requirements which users-generators must fulfill in order to generate electric energy for self-consumption and to inject surpluses to the distribution network, and (b) define the categories of users-generators according to technical parameters.
  • Further regulation containing safety and technical requirements, to be carried out by the distribution companies in order to enable connection to their grid, is differed to a later stage.
  • The Enforcement Authority will approve the terms and conditions of the renewable energy contract to be entered by and between the user-generators and distribution companies. Pursuant to the Decree, the Enforcement Authority shall define the Distributed Renewable Energy Generation Contract main terms and conditions.

2) Scope

  • Categories of user-generators shall be defined by the Enforcement Authority, based on power of contracted load and capacity of generation to be installed.
  • The way upon the user-generators will connect to the grid, as well as procedural steps including a special authorization, are deferred to further complementary regulation.

3) Connection authorization

  • In order to obtain a connection authorization, users willing to install a distributed generation equipment connected to the distribution network shall comply with the procedure to be approved by the Enforcement Authority.
  • Such procedure shall include -inter alia- the following steps:

    • Analysis of connection feasibility based on the distribution network and the characteristics of distributed generation equipment to be installed.
    • Verification of the installations.
    • Execution of a distributed electric energy generation agreement.
    • Set-up of smart-grid equipment.
    • Connection to the distribution network.
  • When the technical and security evaluation is approved, the user-generator and the distributing companies shall execute a distributed electric energy generation agreement.
  • Once such agreement is executed and the connection is allowed, the Enforcement Authority shall issue a certificate of compliance with applicable requirements and the date of connection to the bidirectional measuring equipment.

4) Invoicing system

The Decree sets forth a net balance invoicing system, whereby costs of consumed energy and produced energy are compensated between each other.

Each distribution company shall comply with the following:

  • Distributing companies shall buy and pay to user-generators all energy that may be injected to the distribution network generated by renewable sources.
  • The “Injection Rate” shall be the purchase price of electric energy, including the transmission rate of the Wholesale Electricity Market (the “WEM”).
  • This compensation shall be valued in Argentine pesos and included in the pertaining invoice.
  • If there are any surpluses in favor of user-generators, a credit for future invoices will be generated. If such credit remains, user-generators may request the distribution companies to compensate the remaining amounts. Distribution companies shall pay the remaining amounts in no less than two fixed annual payments.
  • Credits may be assigned by users connected to the same grid and may be allocated for tax benefit purposes.


  • The Law creates a government-trust fund known as the Distributed Renewable Energy Generation Fund (the “FODIS”, for its Spanish acronym), which is regulated by the Law, the Decree, rules dictated by the Enforcement Authority, the trust agreement and further regulation. FODIS’ most relevant aspect are summarized below:
    • FODIS’ parties: the Enforcement Authority shall act as FODIS’ trustor. A public financial entity shall act as trustee.
    • FODIS’ beneficiaries: final beneficiaries shall be the owners of renewable energy generation projects as approved by the FODIS (the “Beneficiaries”).
    • Purpose:

      • The FODIS is entitled to grant non-fiscal incentives.
      • The FODIS may also grant other benefits–e.g., through bonuses in the capital cost for the acquisition of distributed generation equipment–.
      • Beneficiaries’ may also benefit from benefits granted by the FODIS, in their capacity of equipment supplier’s or services providers.
      • Equity contributions are enabled, as well as financing facilities.
    • Funding: the FODIS will be funded by means of:

      • Resources from the national budget, determined from time to time by the Enforcement Authority. In this matter, the Law has allocated the sum of Argentine Pesos five hundred million (AR$ 500,000,000) for 2018.
      • Capital reimbursements; interests, fines, charges, expenditures, administrative costs and any amounts which the FODIS is entitled to receive; rights, guarantees or insurance which the FODIS receives from the Beneficiaries or third parties.
    • Other issues: financing facilities shall be in accordance with requirements that will be determined by the FODIS. Interest rate for repayment may also be subject to a reduced rate.

6) Promotional regime

  • The granting of incentives shall be available to user-generators of jurisdictions which adhere to the Law and only if general, technical and security requirements are fulfilled.
  • The Enforcement Authority shall set forth the conditions and procedures which shall be fulfilled for the granting of incentives.
  • The Enforcement Authority shall set forth the procedure by which the Beneficiaries may request the fiscal credit certificate.
  • The Enforcement Authority and the Federal Bureau of Public Income (the “AFIP”, for its Spanish acronym) shall regulate further conditions in this regard.
  • The fiscal credit certificate shall not be designated to set off obligations arising from liability caused by third parties’ debts or from the acting of taxpayers as withholding agents.
  • Credits and other incentives of the Law may be granted during the twelve (12) year period as of the entry into force of the Decree.


  • The Ministry of Production and Work (the “MPyT”, for its Spanish acronym) shall set forth the requirements and technical regulations related to the Systems, Equipment and Inputs National Manufacturing Incentives Scheme (the “FANSIGED”, for its Spanish acronym).
  • Activities of technical assistance for the investigation and development of new prototypes of the addition of improvements in products design shall be considered activities of investigation, design and development and, consequently, shall be benefited by the FANSIGED.
  • The MPyT shall set forth requirements and procedures which interested parties shall comply with in order to receive incentives.
  • Micro, Small and Medium enterprises which comply with requirements set forth in the Law and which wish to adhere to the FANSIGED shall obtain a PyME Certificate and shall submit documentation which shows proof of turnover and shareholding structure of the corresponding company.

8) Tax incentives

The following incentives are included in the FANSIGED:

  • Fiscal certificate for the investment on investigation and development, design, capital assets and certificates for manufacturing companies. The procedure to obtain such certificate shall be jointly determined by the MPyT and the AFIP.
  • Accelerated depreciation in Income Tax, for the acquisition of capital assets for the manufacturing of equipment and supplies destined for the distributed renewable energy generation, except for automobiles, in the conditions which shall be set forth by the MPyT and the Ministry of Treasury.
  • VAT early reimbursement for the acquisition of assets mentioned in the immediately preceding section, pursuant to a procedure to be determined by the MPyT and the Ministry of Finance.
  • Access to financing with preferential rates, in accordance with regulation which the MPyT shall set forth.
  • Access to the Suppliers Developers Program, in accordance with regulation which the MPyT shall set forth.

9) Penalties

The Decree also sets forth that failure to comply with terms related to information and authorization requests, as well as to measuring systems installation and connection by user-generations, shall be penalized and shall result in a compensation in favor of the user-generator based on the penalties set forth by each regulatory authority.
Further steps regarding implementation of applicable procedures as well as other requirements mentioned above are due and expected to occur briefly.

At TRSyM we are available to provide clarifications or further information of any matter addressed above.

Improvements in Databases Registration Process

On October 22, 2018, the Public Information Agency issued Resolution No. 132/2018 (the “Resolution”), amending Provision No. 2 issued by the National Directorate for the Protection of Personal Data. These amendments are aimed at enhancing the registration of databases with the National Database Registry, not only for private but also for state-owned companies.

In this regard the Resolution sets forth that:

  • all registrations, modifications and deregistration of personal databases -both private and public- must be processed exclusively through the Distance Procedures Platform (Trámites a Distancia – TAD) or through the Electronic Document Management System (Gestión Electrónica Documental – GDE).
  • any and all officers responsible for of private archives, registers, databases or personal data banks registered with the National Database Registry should proceed to renew their registration through any of the abovementioned procedures by October 31, 2019. Any and all officers responsible for public databases must comply with this obligation by February 28, 2019; and
  • all registration procedures to be carried-out will be free of any costs.

Finally, please note that the Resolution entered into force on October 23, 2018.

Please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or for any further information.

Integrity Guidelines to comply with the provisions of the Criminal Liability of Legal Entities Law No. 27,401

The Argentine Anticorruption Office (“AO”) has recently published the Integrity Guidelines (the “Guidelines”), in order to comply with the provisions under sections 22 and 23 of the Criminal Liability of Legal Entities Law No. 27,401 (the “Law”). The Guidelines consist of a technical guide for the implementation of Integrity Programs (each, a “Program”) required under the Law and include, among others, the following issues:

  • Accountability of the Program before the Argentine authorities
    The legal entities comprised by the Law must create a Program in accordance with the dynamics of their own activities, and explain its foundations and reasonableness to the applicable authority.
  • Not mandatory
    Notwithstanding the advantages mentioned by the AO, adopting a Program is not mandatory. The decision on its implementation will be subject to the analysis that each legal entity makes in accordance with its risk’s exposure and the framework for the development of its activities, among other factors.
  • Reasonableness of the Program
    In case a Program is implemented, it must be made in a reasonable way, i.e., considering the Guidelines on Risk, Dimension and Economic Capacity of the legal entity.
  • Mandatory and optional content
    In addition to the elements that are mandatorily required (Code of Ethics, Rules and Preventive Procedures and Periodic Training), the Guidelines suggest to adopt other tools such as Internal Complaint Channels, Whistleblower Protection, Periodic Risk Analysis, among others.
  • Steps for designing and implementing a Program
    Although each Program should be created in accordance with the particulars of each legal entity, the Guidelines suggest that certain steps be followed in connection with its design and implementation. Among them, commitment of senior management regarding the development of the Program; evaluation of the legal entity and identification of its risks; definition of a risk exposure plan; implementation of such plan; evaluation of the Program in progress; communication and diffusion of the Program to the employees of the legal entity and relevant third parties.
  • Content
    The Guidelines describe certain elements that the Program may contain, providing general parameters to facilitate its design and implementation:
    • Code of Ethics
      The Program should group in a single document all general integrity policies applicable to the legal entity’s employees and third parties. The values of the organization, the ethical guidelines applicable to its members, prohibitions of improper behavior and sanctions in case of non-compliance should be clearly stated.
    • Integrity in bidding procedures and interactions with the public sector
      These rules and procedures must cover all relevant interactions of the legal entity with the public sector. The Guidelines suggest to cover: (i) with respect to purchases and contracts, interactions with public officers who: (a) have decision-making capacity in the allocation of public resources; (b) prepare investment projects; (c) make tender procedures public; (d) take part in evaluation committees; (e) are in charge of inspection activities or work supervision; (f) take part in commissions that receive or express conformity to purchased services and products; (g) take part in accounting or financial sectors in charge of making payments. (ii) With respect to other potential risky interactions, officers who oversee: (a) authorizations and permits; (b) fundraising activity; (c) inspections and superintendence; (d) exercise of a regulatory activity. (iii) With respect to its own members: (a) commercial, sales, purchasing and marketing sectors; (b) managers and legal and commercial representatives; (c) areas of institutional relationships and relations with governments; (d) distributors and operational areas responsible for the delivery of goods; (e) technical representatives in works and operational areas responsible for the execution of contracted works; (f) financial areas and areas responsible for approving or making payments.

      Regarding rules and procedures, the Guidelines suggest to include: (i) clear identification of public officers as risky counterparties; (ii) specific reference to zero tolerance to bribery or illegal payments made on behalf, or in the interest, of the legal entity; (iii) clear intention that no act carried out on behalf, or in the interest, of the legal entity pursues, as its main purpose, to unduly influence a public officer for the benefit of the legal entity; (iv) prohibit searching or using of privileged or confidential information; (v) disincentives to any participation or collaboration in fraudulent acts conducted by public officers; (vi) clear regulation on prohibitions and exceptions to gifts to public officers; (vii) disincentives to any illegal employment, solidarity initiatives or similar actions; (viii) clear distinction between payments to organizations and payments directed to public officers that result in personal benefit; (ix) prohibition of campaign contributions on behalf of the legal entity; (x) obligation to internally communicate the existence of relationships with senior officers that ease compliance with Decree 202/17 (Conflicts of Interest) or similar.

    • Trainings
      With respect to periodic trainings, the Guidelines recommend the following: (i) promotion by the Board of Directors and the management of the legal entity of active participation in the activities by the employees; (ii) full participation of senior management in training activities; (iii) synchronization with the Code of Ethics and Program’s policies; (iv) combination of general trainings with personalized trainings; (v) an initial training (as part of the induction of each employee starting in the organization) and a mandatory general training at least once a year; (vi) clear incentives for training; (vii) evaluation of the trainings in terms of: (a) proper training of those receiving it; (b) through satisfaction surveys or other mechanisms;(c) evidence of existence by documenting its details; (d) projection of continuous monitoring; (e) update and continuous renewal of its contents, incorporating lessons learned; (f) incorporation of guidance stages that include advice upon queries and specific cases.
    • Internal Research
      Internal Research should be regulated in such a way that the limitations arising from privacy rights and worker’s dignity be respected, while, as per the management of information, the provisions for obtaining and processing personal data must be complied with. The Guidelines recommend putting in place a written internal protocol to regulate on matters related to media access and devices that the employer provides to its workers informing that the information stored in those sources and devices belongs to the legal entity. Also, it is advisable to consider policies related to the chain of information custody (and the adoption of external support when dealing with electronic evidence), witnesses’ interviews, and involvement or exclusion of internal areas, depending on the potential involvement in the investigated facts. The Guidelines suggest to implement rules on how to proceed in certain special cases such as: access to employees’ corporate e-mail, access to telephone call records; vehicle satellite tracking records; access to Internet browsing history; access to stored documents; access to drawers or cabinets; video surveillance; access to entry and exit records; inspections of clothing, bags and automobiles; tests for drug consumption; interviews on internal investigations.
    • Due diligence to third parties
      The Guidelines suggest to: (i) know the counterparties and have information about the characteristics and relationships of third parties, including their commercial reputation and the relationship, if any, with local or foreign public officers; (ii) increase the level of scrutiny to the extent that the alerts are greater; (iii) ensure an adequate understanding of the rationale of the relationship that is created with third parties. In addition, it is important to control that the third party is actually performing the work for which it was hired and that its compensation is in accordance with its work; (iv) transmit properly to third parties the integrity policies of the legal entity and demand their compliance; (v) control the actions of third parties in such activities that may be perceived as acting on behalf, for the benefit or in the interest, of the legal entity according to its usual meaning in the context of the businesses that are carried out. The following will be considered relevant counterparties: subsidiaries; partners in joint ventures; dealers; agents; commercial representatives; intermediaries; managers; lobbyists; contractors; consultants; customs’ brokers; suppliers; service providers and customers.

      The analysis to be applied on the third parties must include aspects such as: structure and operation; composition of the third party's business; reputation; links and relationships; potential conflicts of interest; financial solvency; technical/professional suitability; track record; existence of anti-corruption program or policies.

    • Due diligence in processes of corporate transformation
      The Guidelines recommend to carry out an analysis on the integrity of the acquired legal entity consisting of a broad and rigorous scrutiny. The cases include transformation, merger and split in the terms of the General Corporation Law.

      The M&A due diligence may include actions such as: verification of anti-corruption compliance by the target company; implementation of anti-corruption policies by the target company; providing directors with training in such policies; and post-closing audit.

    • Internal Responsible Person
      The Guidelines provide for rules on the functions of the Internal Responsible, listing the following, among others: analysis of ethical risks; design of internal policies; conduction of the Program; advice on ethical dilemmas; management of complaints received; whistleblower protection; leadership in internal investigations; support on self-denunciation and cooperation with authorities; Program supervision; strategic planning of the legal entity; training design; adaptation of the Code of Ethics to current regulations.

At TRS&M we remain available to provide a further analysis on the matters described herein.

Public-Private Partnership Agreements – Preliminary Terms for National and International Public Tender Power Transmission Works

On September 21, 2018, the Secretary of Public-Private Partnership (the “SPPP”) has made available in its website, the preliminary tender terms (the “Preliminary Tender Terms”) for the first-high voltage power transmission lines under a new public-private partnership (“PPP”) scheme. The awardee will be selected as contractor (the “PPP Contractor”), who will undertake the construction and further operation and maintenance of the 500 kV high-voltage line, the future substations Río Diamante and Charlone, and complementary works (the “Project”).

The preliminary PPP Agreement (the “PPP Agreement”), the Preliminary Tender Terms and its appendixes contain the main characteristics of the Project as of September 21, 2018.

The awarded bidder will execute a PPP Agreement for a total fifteen-year term. The PPP Agreement comprises (i) a construction period (the “Construction Period”), for the term comprised within its execution and commercial operation date (“COD”), term that may not exceed the maximum a term of thirty-six (36) months; and (ii) further to COD, an operation and maintenance services period (the “O&M Period”), up to the fifteenth (15) year as from its execution.

The Project’s total compensation –CAPEX and OPEX– (the “Required Total Amount”) will be due and payable by means of (i) investment payment titles (“TPI”, for its Spanish acronym) equivalent to 90% of the Required Total Amount, and (ii) a residual compensation (the “Residual Compensation”) equivalent to 10% of the Required Total Amount. Both will be issued and paid by and individual PPP Trust (Fideicomiso Individual PPP Transmisión Eléctrica and hereinafter, the “PPP Trust”), which will be constituted specifically for the Project and in order to manage issuance and payments due to the PPP Contractor. For specifics about this matter, please refer to point 9 below.

The Argentine government, through the Secretary of Government of Energy (the “SGE”), currently under the Ministry of Treasury, shall provide funding to the PPP Trust by yearly budgetary contributions. The PPP Trust will also receive those funds collected by the Compañía Administradora del Mercado Mayorista Eléctrico S.A. (“CAMMESA”), related to charges under Resolution No. 1085/17 of the former Secretary of Energy.

The relevant authorities in relation to the Project are: (i) the SGE, as convening authority of the tender, and (ii) Integración Energética Argentina S.A. (the “Contracting Entity”), successor of former Energía Argentina S.A. (“ENARSA”).

Schedule, final terms and conditions of the tender are yet still to be defined. A consultation period and a deadline for the tender of bids will be specified in such schedule.

It should be noted that, due to the preliminary nature of the documents and the fact that the SPPP will be publishing complementary information regarding the Project, the information contained herein may be updated in the future and therefore, subject to further modifications In this respect, we will be closely following this process and inform any relevant updates as soon as possible.

The most relevant aspects of the Preliminary Tender Terms are summarized below:

1) Selection process

The selection process of the PPP Contractor will be implemented through a two-stage national and international tender procedure.

2) Main rules

The main legal rules and documents to be considered regarding the Preliminary Tender Terms are comprised by the following: (i) Law No. 27,328 and its regulatory Decree No. 118/2017; (ii) Law No. 27,431, which approved the national budget for the current 2018 year; (iii) the 2019 period national budget law1; (iv) the PPP Agreement; (v) the agreement and rules of the Law 27,431 PPP Trust; (vi) the Trust Agreement; (vii) Trust joinder agreement; (viii) Resolution No. 1/2017 issued by the SPPP; (ix) Resolution No. 1/2018, issued by the SPPP; and (x) specific regulations of the electricity regulatory framework, such as (a) Laws No. 15,336 and 24,065; (b) their regulatory decrees (i.e., Decrees No. 1398/1992 and 186/1995), and (c) the Procedures for Programming the Operation, the Dispatch and Calculation of Prices, approved by the former SEE Resolution No. 61 dated April 29, 1992, as amended and supplemented to date.

3) Tender documents

The final tender terms and conditions will be published by the SPPP. Clarifying circular letters (circulares aclaratorias) may be issued upon queries of the bidders, which shall be performed no less than fifteen (15) days as from the date set forth as deadline for bid submission.

4) Bidders

  • Legal capacity: bidders may accredit their legal capacity by any of the following: (i) having an address in the Republic of Argentina; (ii) having its principal place of business in the Republic of Argentina; or (iii) being dully registered as a branch.
  • Limitations: the same legal entity or may not integrate different bidders. However, a bidder may be integrated by two or more legal entities or persons, in which case they will be held as jointly and severally liable vis-à-vis the SGE.
  • Corporate purpose and term: the corporate purpose of those legal entities acting as bidders or members of a bidder must allow their performance as bidders and, subject to being awarded, PPP Contractor. The term of these legal entities must be, for at least three (3) years greater than the total duration of the PPP Agreement.
  • Restrictions: certain restrictions are set forth in the tender documents (i.e., corporation matters, anti-corruption).
  • National component: minimum thresholds for national component are mandatory.
  • Minimum capital stock: the PPP Contractor must subscribe a capital stock of at least 0,1% of the Required Total Amount as follows:
    1. 25%, concurrently with the execution of the PPP Agreement.
    2. 50%, at the sixth (6) month anniversary as from the execution of the PPP Agreement.
    3. 75%, at the twelfth (12) month anniversary as from the execution of the PPP Agreement.
    4. Outstanding balance, at the eighteenth (18) month anniversary as from the execution of the PPP Agreement.
  • Prior to the execution of the PPP Agreement, the awarded bidder must incorporate the PPP Contractor as a sociedad anónima, which will act as a sole purpose vehicle.

5) Reference and alternative projects

The reference project comprises the design, construction, expansion, maintenance and operation of the Project, in accordance to the technical specifications, which must be complied with by the PPP Contractor. These are attached as Appendixes V, VI, VII, VIII, IX and X (the “Reference Project”).

Bidders must expressly indicate if they adopt the Reference Project or if they propose alternatives, in which case they must include a detail of their alternative project (the “Alternative Project”). Alternative projects must comply with the minimal technical requirements which are attached to the Preliminary Tender Terms as Appendix V.

If an Alternative Project fails to comply with the Preliminary Tender Terms’ minimal technical requirements or if the Alternative Project fails to obtain CAMMESA’s approval, the PPP Contractor must adopt the Reference Project with the same Annual Fee (as such term is defined below) than the one offered for the Alternative Project.

6) Bid formalities

Bids must be submitted in original or certified copies.

Bidders must submit the following documents:

  • Envelope No. 1: this envelope shall include the technical bid, which is comprised of (i) legal documents regarding the bidder and its legal capacity; (ii) documents which prove technical capacity and bidder’s track record, and (iii) documents which prove financial capacity of the bidder.

    With respect to the documents mentioned in point (ii), the bidder shall comply with the following requirements:

    1. Background on construction of high-voltage lines and substations:
      Requirements Acceptable minimum
      i. Civil works and mechanical and electromechanical assembly and erection of power transmission lines and of substation projects, which operate with a voltage equal or higher than 500 kV, with metallic structures, including control, protection and telecommunications systems, in the last twenty (20) years. - Length of high-voltage lines of no less than two-hundred and fifty (250) kilometers
      - 1 substation
      - 1 project in the last ten (10) years
      ii. Civil works and mechanical and electromechanical assembly and erection of substation projects, which operate with a voltage equal or higher than 500 kV, with metallic structures, in the last twenty (20) years. - Length of high-voltage lines of no less than two-hundred and fifty (250) kilometers.
      - 1 substation
      - 1 project in the last ten (10) years

    2. Background on provision of operation and maintenance services for high-voltage lines and substations:
      Requirements Acceptable minimum
      i. Power transmission lines and substations which operate with a voltage equal or higher than 500 kV maintenance, in the last twenty (20) years. Five (5) years
      ii. Power transmission lines and substations which operate with a voltage equal or higher than 500 kV operation, in the last twenty (20) years. Five (5) years

    3. Design engineering background:
      Requirements Acceptable minimum
      i. Preparation of electric studies and projects for 500 kV facilities One project of at least two-hundred and fifty (250) kilometers

      Bidders must submit a copy of those contracts or certificates issued by their contracting parties, for compliance with these standards.

      With regards to those requirements indicated in point b) above, the Preliminary Tender Terms do allow subcontracting as a way to comply with those minimum standards.

  • Envelope No. 2: this envelope must include the economic bid, which must be submitted using the forms attached in Appendix IV of the Preliminary Tender Terms.

    The economic bid must indicate a specific amount of an annual fee in US dollars (the “Annual Fee”)2. Preference will be granted to the bidder who bids the lowest Annual Fee.

7) Guarantees

Pursuant to the Preliminary Tender Terms, the following guarantees are mandatory and therefore required: (i) a bid bond, (ii) a financial close bond, and (iii) a main works bond.

Such guarantees must be constituted by the PPP Contractor in favor of the SGE as first-demand guarantees and may be constituted as (i) a bank deposit, (ii) a bank guarantee, and/or (iii) a stand-by letter of credit.

  • Bid bond:
    1. Amount: fifteen-million US dollars (US$ 15,000,000).
    2. Requirements: if bidders are integrated by more than one legal entity, the bid bond must be issued by the bidder’s controlling shareholder.
    3. Execution: the SGE shall be entitled to execute the bid bond in the event that (i) a bidder withdraws its bid in advance; (ii) a bidder forges information; (iii) the PPP Agreement is not executed; or (iv) a bidder fails to issue the main works bond or the financial close bond in accordance with the PPP Agreement.
    4. Term: one-hundred and twenty (120) days as from tender submission with automatic term renewal.
    5. Return: upon execution of the PPP Agreement and submission of the financial close bond and main works bond.
  • Financial close bond:
    1. Term: as from execution of the PPP Agreement and achievement of financial close.
    2. Initial amount: 2% of the Required Total Amount.
    3. Increases: if the financial close is not achieved by the PPP Contractor within the term of six (6) months since the PPP Agreement is executed, the PPP Contractor must increase the financial close bond in a 2.25% of the Required Total Amount for TPI. If financial close is not achieved within the term of nine (9) months, the financial close bond must be increased in a 2.75% of the Required Total Amount for TPI.
    4. Execution: the Contracting Entity may execute the financial close bond in the event that (a) the PPP Contractor does not achieve financial close upon the committed date (considering extensions); and/or (b) the PPP Contractor does not extend or renew the financial close bond.
  • Main works bond:
    1. Term: as from execution of the PPP Agreement once year further to COD.
    2. Initial amount: the amount of the main works bond shall be equal to: (a) as from the execution of the PPP Agreement, 2.5% of the Required Total Amount for TPI; and (b) from the financial close until one (1) year after the Project’s COD, to 4.5% of the Required Total Amount for TPI.
    3. Increases: the main works bond may be subject to renewals and increases in the event of late COD.
    4. Execution: the Contracting Entity may execute the main works bond in case that (i) the PPP Contractor is fined under the PPP Agreement and such penalty is not paid in due time; (ii) the PPP Contractor fails to compensate the Contracting Entity for liquidated damages related to the execution of the Project; (iii) the PPP Contractor fails to pay any charges or penalties owed to the Contracting Entity if the PPP Agreement is terminated prior to its maturity date; (iv) the PPP Contractor fails to pay any amounts which are determined by recommendation of a technical board or an arbitral award in favor of the Contracting Entity; or (v) the PPP Agreement is terminated by justified decision by the Contracting Entity.

8) Transmission companies

The Preliminary Tender Terms provide that in case TRANSENER S.A. or TRANSBA S.A. are awarded as PPP Contractor, as applicable, they will be not entitled to collect he supervision fee that the PPP Agreement establishes. Project’s supervision will be defined in a future tender process to be carried out by the SGE.

9) PPP Contractor’s payment scheme

TPIs will be issued by the PPP Trust during the Construction Period on a quarterly basis, pursuant to the actual works progress. Monthly investment advancement acts (“ARAI”) will be executed. TPIs shall be considered mature on the forty-two (42) month anniversary of the PPP Agreement’s execution date and will be payable on twenty-four (24) semi-annual payments.

With respect to the Residual Compensation, it shall be due and payable as from the Project’s COD monthly. Invoices for the corresponding Residual Compensation shall be issued by the PPP Contractor and delivered to the Contracting Entity. The PPP Trust will pay those invoices within fifteen (15) days.

  • Both TPIs and the Residual Compensation will be nominated in US dollars and shall be deemed as fixed, unconditional, irrevocable and transferable, without the Contracting Entity’s prior consent.
  • Non-timely TPIs will accrue interests to a rate equivalent to two-hundred (200) points above the performance of bonds ARG2026, ARG2027 and ARG2028N.
  • As TPIs are issued in accordance with the main works’ progress, the PPP Contractor will benefit itself with a speedy execution of the works under the Project.

10) Dispute resolution

  • Amicable negotiations: the PPP Agreement sets forth an initial stage of amicable negotiations in case there are any disputes between the parties. This initial stage has a period of thirty (30) days.
  • Technical board: once the thirty (30) day period of amicable negotiations expires, a technical board must intervene and issue a recommendation.
  • Arbitration:
    1. Requirements: if the technical board does not issue a recommendation in the term of ninety (90) days, any party may submit the dispute to arbitration.
    2. Venue: venue shall be in the City of Buenos Aires, unless: (i) the dispute is not quantifiable; (ii) the value under dispute exceeds the sum of ten-million US dollars (US$ 10,000,000); or (iii) the controlling shareholder is not Argentine. Upon any of those circumstance, the seat of arbitration may be in the City of Buenos Aires or in a member state of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).
    3. Composition: the arbitral tribunal shall be composed of three (3) members when the dispute is not quantifiable or when the value under dispute is equal or higher to ten-million US dollars (US$ 10,000,000). If the value under dispute is less than ten-million US dollars (US$ 10,000,000), the arbitral tribunal shall be composed of one (1) member.
    4. Nationality: the president of the arbitral tribunal shall not be national to any of the parties nor to any controlling shareholder with a direct or indirect participation higher than 10% of the PPP Contractor.

11) Risk matrix

A preliminary risk matrix has been made available, whereby the Project’s risks are allocated either to the PPP Contractor or to the Contracting Entity, as the case may be. Such risk matrix indicates that the PPP Contractor shall bear, inter alia, (1) power-line easement-associated risk, pursuant to Law No. 19,552; (2) COD risk; (3) environmental risk. As for the Contracting Entity, it shall bear: (1) demand risk; and (3) exchange variation risk.

We are available to provide clarifications or further information of any matter addressed above.


1. Currently, such bill as proposed by the National Executive is under review in the National Congress of the Republic of Argentina.
2. The Annual Fee is the PPP Agreement awarding variable and represents a sum equal to the twelfth part of the Required Total Amount.

Simplification of requirements for foreign companies

On August 28, 2018, the Public Registry of Commerce of the City of Buenos Aires (Inspección General de Justicia) issued General Resolution N°6/2018, which amends and includes relevant changes for the registration of, and procedures to be carried out by, foreign companies under Articles 118 and 123 of General Corporations Act N° 19,550 (the “GCA”), in order to continue with the adaption of the Public Sector to the so-called “Good Practices in matters of Simplification”.

In this regard, the main modifications are as follows:

It will no longer be necessary to submit documentation from the foreign company regarding its shareholding structure nor to inform details of its assets located abroad in order to comply with the registration procedure provided for in Article 118, third paragraph of the GCA.

A foreign company’s obligation to submit Annual Information was repealed.

Regulations on isolated acts were repealed.

Representation of foreign companies will no longer be limited to the legal representative appointed in Argentina, but may be extended to officers appointed directly by the head office.

For those companies from countries considered high-risk and non-cooperative, according to the criteria of fiscal transparency and/or categorized as non-collaborators in the fight against Money Laundering and Financing of Terrorism, the obligations set forth in Article 217 of General Resolution N° 7/2015 to file annual information remain in effect.

General Resolution N° 6/2018 shall be enforceable as from August 30, 2018, both for new procedures to be filed, as well as for those already in progress.

Please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or for any further information.