COVID-19: Standards for Electricity Distribution

On May 16th, 2020, Resolution No. 35/2020 (the “Resolution”) was published in the Official Gazzette, in which the Electricity Regulatory Authority–in Spanish Ente Nacional Regulador de la Electricidad–(“ENRE”) authorizes certain EDENOR and EDESUR users reached by the mandatory isolation measures established by Decree No. 297/2020 (as amended) to either suspend payments or make partial payments on account of the contracted capacity through supply agreements; or otherwise, to terminate the contract or require an amendment.

1. Benefited users and periods comprised

EDENOR and EDESUR users belonging to categories T2, T3 and Toll (i.e. medium to large users) whose power demand was reduced in 50% or more as a result of isolation measures, may resort to the alternatives provided in the Resolution for payments accrued since March 20th, 2020 and pending subsequent periods.

2. Benefit’s extension and payment facilities

For users which have opted to whether suspend or make partial down payments, this benefit will terminate when the demand recovery reaches 70% of its contracted capacity. In addition, users who resort to this option shall pay debt accrued pursuant to criteria to be determined by ENRE.

3. Distribution companies’ obligations

Distribution companies shall communicate to users the extent of the different options authorized and refer a weekly report to ENRE with the contractual suspensions, modifications and/or terminations based on the Resolution.

For further information, please contact Nicolás Eliaschev and/or Javier Constanzó.

In the following link, you can access the Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.


The Superintendence of Corporations Continues to Tighten Controls on Simplified Companies

Following the trend adopted by the Superintendence of Corporations (“Superintendence”) this year regarding Simplified Companies (“SAS”), on May 6, General Resolution 22/2020 (“RG IGJ 22/2020”) was published in the Official Gazette, which tightens the level of supervision for this type of company.

The RG IGJ 22/2020 provides mechanisms for obtaining information and measures to determine the business development of the SAS, registered both in the public registry of the City of Buenos Aires ("CABA") and other local jurisdictions, in relation to the ownership by this type of companies of property rights over real estate located in the CABA. The intention of the regulator would be to be able to determine if said ownership is alien to the corporate purpose. For this, the resolution provides for collaboration between the Superintendence and the Registry of Real State of the City of Buenos Aires, to obtain information on the existence of transactions regarding real estate rights in which the acquirers, creditors or assignees, fully or acting as trustees, are SAS.

If, based on such information, the regulator determines that those properties are not related to the development or financing of an organized economic activity of production of goods and services conducted by the SAS, the Superintendence will promote -or entrust the Public Ministry Prosecutor- the corresponding legal actions to declare the disregard of the legal entity. In turn, the Superintendence will be empowered to adopt additional measures if it deems it necessary.

In the same sense, note that on May 4, the Superintendence published General Resolution 20/2020, through which it modified article 38 of General Resolution 6/2017, establishing that for the registration of the appointment of administrators, those who are domiciled abroad must file the powers-of-attorney granted to their representatives, which may only be granted in favor of the directors of the  residing in the Argentine Republic.

We also refer to our other Newsletters (see General Resolution IGJ 9/2020 and General Resolution IGJ 17/2020) in relation to the latest regulations applicable to SAS.

For further information, do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, Pablo Tarantino, Agustín Griffi, or corporateteam@trsym.com.

In the following link, you can access the Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.


Province of Chubut’s Series XLV Treasury Notes Issuance for AR$ 52,253,500

 

Legal counsel to Banco del Chubut S.A., as arranger, placement and financial agent in the issuance of Province of Chubut’s Series XLV Treasury Notes. The Treasury Notes Series XLV are secured by certain rights of the Province of Chubut to receive amounts under the federal tax co-participation regime and were issued for AR$ 52,253,500 fixed rate equivalents to 25.50% annual nominal, due on June 22, 2020.


COVID-19: Extension of the Limitations to the Interruption of Telecommunication Services

On May 1st and 4th, 2020, Decree No. 426/2020 (the “Decree”) and Resolution No. 367/2020 (the “Resolution”), respectively, were published in the Official Gazette. Both rules further supplement Decree No. 311/2020, which bans providers from ceasing to supply services  comprising fixed or mobile telephony, Internet and cable television to certain users (listed therein), in case of delay or lack of payments up to three (3) consecutive or alternate bills with due dates as from March 1st, 2020.

Below is a summary of the regulations’ most relevant aspects.

1. Decree No. 426/2020

The Decree extends until May 31st, 2020, the obligation placed upon the providers of telecommunication services to offer limited services capable of guaranteeing  connectivity to users who fail to pay top-up fees to access consumption, and the resulting impossibility to shut-off the service due to such cause.

2. Resolution No. 367/2020

The Resolution has been issued by the National Communications Agency (“ENACOM”, for its Spanish acronym), with the purpose of supplementing certain provisions included in Decree No. 311/2020 and Resolution No. 173/2020, issued by the Ministry of Productive Development, with regards to telecommunication services’ providers.

The Resolution imposes the following additional obligations over those companies:

  1. The obligation to provide, within a maximum term of three (3) days, the following data: 1) List of all users whose service is registered prior to March 26th, 2020, that may be subject to shut-off caused by lack of payment, or keep ongoing shut-off notices; and whose invoices were due as of March 1st, 2020; and 2) List of all the users with pre-paid services who have required a top-up on February and/or March, 2020. This information has to be entered as a Sworn Affidavit in accordance with Appendix No. 1 of the Resolution, available at the following link.
  2. The prohibition to suspend or shut-off services due to lack of payment from users not included in the lists prepared by the Coordination Unit created via Resolution No. 173/2020.
  3. The obligation to report to the ENACOM within the first (15) days as of the Resolution, all prices established for the limited services comprised by article 1 of Decree No. 311/2020 and the terms and conditions and/or forms of the financial facilities offered to users and their information process. Those financial facilities should at least prescribe the possibility for the service to be paid in three (3) monthly installments, to which no interest will accrue, nor penalty will be applicable.
  4. The obligation to publicly disclose these regulatory provisions not only through providers’ web pages, but also via the social networks used and/or advertisement.

Failure to comply with these will result in penalties being imposed under Law No. 26,522 and 27,078, as applicable.

For further information, please contact Nicolás Eliaschev and/or Javier Constanzó.

In the following link, you can access the Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.


Restrictions on Blue Chip Swaps and FX Market

On April 30, 2020, the Argentine Central Bank implemented certain restrictions to blue chip swap transactions, by Communication “A” 7001.

The key takeaways of the new resolution are:

1. Restrictions to Blue Chip Swaps.

In order to access the exchange market to purchase foreign currency (i.e. external indebtedness, imports of goods and services, savings, etc.), the following requirements shall be satisfied:

  • The client shall not have made sales of securities with settlement in foreign currency or transfers of these to foreign depositary entities within the last 30 days; and
  • The client shall undertake not to make sales of securities with settlement in foreign currency or transfers of these to foreign depository entities for the following 30 days.

Transactions involving sales of securities with settlement in foreign currency are those by which the client sells securities and receives dollars, either in Argentina or abroad).

2. Promotional credit lines under the COVID-19 sanitary emergency.

Clients with financings in Pesos under Communication “A” 6937 (promotional credit lines at a 24% rate under COVID-19 sanitary emergency):

  • May not access the foreign exchange market to pay services of principal or interest on external indebtedness past due before March 19, 2020, or with no specified maturity.

    Some clarifications:

    • Not applicable to performing external indebtedness.
    • Not applicable to indebtedness with local financial institutions.
    • Not applicable to external indebtedness incurred after March 19, 2020.
    • Not applicable to payments of imports of goods and services (according to BCRA newsletter dated April 30, 2020).

● May not sell securities with settlement in foreign currency or transfer those to foreign depositary entities.

3. Payments with debit or credit cards.

Clients may not purchase jewels, precious stones as well as precious metals (gold, silver, platinum, etc.) by local credit or debit cards. The following transactions with debit and credit cards were already forbidden: (a) gambling; (b) transfers to payment providers (i.e. PayPal); (c) transfers to investments accounts located abroad; (d) foreign exchange operations; and/or (e) purchases of cryptocurrencies.

4. Reporting of Foreign Exchange Operations.

The BCRA reduced the threshold of transactions that shall be reported to the BCRA with 2 business days in advance from US$ 2 million to U$S 500 thousand.

For more information please do not hesitate to contact Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero and/or Francisco Molina Portela.

In the following link, you can access the Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.


Renewables and Distributed Generation: Between Promises and Reality During COVID-19 Times

As the worldwide oil prices volatility show, the energy industry has not been left unaffected by the global crisis caused by COVID-19 pandemic.

During these hard times, it is worthwhile to wonder about the present and the future of the Argentinian electricity sector and the potential to turn the crisis into an opportunity.

In the attached report, we argue that price volatility of energy commodities and the current and future presence of health and environmental disruptive threats, advice to keep betting for diversification of the electricity mix as the best path to ensure security and continuity for long-term power supply.

Under this context, the report summarizes the main aspects of laws and regulations targeting renewable distributed generation which have shown strong consensus in the country as we further claim that fostering renewable distributed generation such as our current policy does, seems convenient under existing circumstances.

The report also includes preliminary remarks regarding the following issues:

1. Short-term relevant needs of the electricity sector

  1. Preservation of payment cash flow and short and mid-term economic and financial sustainability of all industry players.
  2. Termination of emergency under Law 27,741 during the legal period provided thereof and operation of the electricity sector under the rules of Law 24,065.
  1. Short-term focus for renewables
  1. Possibility of extending commercial operation dates and intermediate milestones in power purchase agreements corresponding to projects under structuring and/or advanced construction affected by the health crisis and measures adopted consequently either in Argentina or abroad.
  2. Assessing on a-case-to-case basis opt-outs and/or voluntary renegotiation of power purchase agreements for projects with no activity prior to March 12, 2020 (date under which the health crisis was declared), using uniform and non-discriminatory approaches.
  1. Long-term decisions
  1. Definition of transmission infrastructure expansion structure and planning for deployment for additional capacity of renewables for complying with the goal of 20% of consumption for 2025.
  2. Technical and financial evaluation of expanding such consumption target beyond 2025.
  3. Continuity of the electricity mix diversification, evaluating the role of efficient thermal, nuclear and hydropower technologies.
  4. Assessment of new technologies to strengthen the system and supplement the development of Distributed Generation, including power storage, smart metering, demand management and electric mobility.
  5. Assessment of opportunities to boost regional integration and cooperation for spot and long-term exchanges of natural gas destined to power generation and, power itself, with nearby countries.

Download Report

In the following link, you can access the Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.


Changes Regarding Foreign Currency Held by Open-end Funds

On April 23, 2020, the Securities and Exchange Commission (“CNV”) issued General Resolution No. 835/2020 (the “Resolution”), making changes to the restrictions regarding liquidity and cash management applicable to open-end funds (the “Funds”) (with the exception of money market funds):

1) In general, all Funds may keep up to a 100% of their net worth in Argentine Pesos or invested in money market open-end funds.

2) Funds in foreign currency may keep up to a 100% of their net worth in the fund’s currency, both in local or foreign accounts.

3) Funds in foreign currency with shares that may be subscribed in Argentine Pesos, are allowed to keep up to the 25% of their net worth in the fund’s currency, both in local or foreign accounts. This restriction does not apply to those Funds authorized under Law No. 27,260 nor to amounts of shareholders not reached by the maturity extensions imposed by Decrees No. 596/19 and No. 141/20 (cuotapartistas no reperfilados).

Furthermore, the Funds in Argentine Pesos investing in foreign currency will only be able to invest up to 25% of their net worth, having to deposit the amounts both in local or foreign accounts. This restriction does not apply to amounts of shareholders not reached by the maturity extensions imposed by Decrees No. 596/19 and No. 141/20 (cuotapartistas no reperfilados).

Funds’ managers must comply with these new restrictions according to a schedule ending on May 15, 2020.

For more information, do not hesitate to contact Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero and/or Matías Otero.

In the following link, you can access the Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.


The Superintendence of Corporations Tightens Requirements for Simplified Companies

On April 23, 2020, the Superintendence of Corporations (“Superintendence”) published General Resolution No. 17/2020 (“RG IGJ 17/2020”) in the Official Gazette, by which Section 2 of the General Resolution IGJ No. 8/2017 on Simplified Companies ("SAS") was repealed.

The repealed rule expressly provided for the possibility of incorporating the SAS through an “electronic document with electronic or digital signature of its grantors, where only the last of the partners to be signing should execute the document with a digital signature in order to finalize the document with all the properties and assurances provided by said digital signature.” Regarding the differences between electronic and digital signature, we refer to the Newsletter published on March 23, 2020.

On the contrary, RG IGJ 17/2020, construing that RG IGJ 8/2017 contradicted both the provisions of Law No. 27,439 and the National Civil and Commercial Code, established that all partners must digitally sign the incorporation of the SAS. Also, for SAS already registered -without any digital signature of all its members-, provided a maximum period of 90 days  to comply with said requirement, under notice of proceeding in accordance with what current regulations enable.

In order to carry out said regularization, all partners must digitally execute a private instrument together with the legal representative of the SAS -whose signatures must be certified- in which those who have electronically signed the instrument establishing the company together with whoever has done it digitally: (i) expressly and reciprocally acknowledge their status as partners and their shareholding in the company, along with the individualization of the shares corresponding to each one of them; and (ii) ratify the provisions of the incorporation instrument and, when appropriate, those of any subsequent social agreement (in both cases with retroactive effect to the date thereof). Additionally, a one (1) day notice must be published in the Official Gazette, expressing the identification of its grantors and their shareholdings.

Finally, it should be noted that the Superintendence will not register any act without the prior or simultaneous registration of the required rectification.

Despite RG IGJ 17/2020 regulation, also on April 23, 2020, Provision 86/2020 was issued by the National Directorate of National Registers of Automotive Property and Pledge Credits, which extended the term of suspension for granting digital signatures until May 31 of the current year.

For further information please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, Pablo Tarantino, Agustín Griffi, or corporate@trsym.com.

In the following link, you can access The Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.


Province of Chubut’s Series XLIV Treasury Notes Issuance for AR$ 380,000,000

 

 

Legal counsel to Banco del Chubut S.A., as arranger, placement and financial agent, and to Puente Hnos. S.A. as placement agent, in the issuance of Province of Chubut’s Series XLIV Treasury Notes. The Treasury Notes Series XLIV are secured by certain rights of the Province of Chubut to receive amounts under the federal tax co-participation regime and were issued for AR$ 380,000,000 fixed rate equivalents to 22.85% annual nominal, due on May 26, 2020.


Coronavirus (COVID-19) and the fulfillment of contracts

As it has become widely known, the spread of Coronavirus COVID-19 and the regulations issued as a consequence by the Executive Branch have threatened the normal development of economic and production activities, making it difficult or even impeding the normal fulfillment of different contractual obligations.

In this context, we understand that is vital a thorough analysis of the provisions agreed among the parties, and of the facts and circumstances that affect each agreement in particular, to allow its adequate assessment under the legal framework provided by the Civil and Commercial Code (“CCC”).

1. Main legal concepts

  • Force Majeure/act of God: the CCC equalizes both concepts and defines them as the fact which could not be foreseen or that, if foreseen, could not be prevented.
    When the force majeure/act of God is final, its occurrence exempts the debtor of the obligation from liability and sets forth the termination of the obligation, unless agreed otherwise.
    When the impossibility to fulfill an obligation as a consequence of an event of force majeure/act of God is temporary, the obligation will terminate only if time is of the essence or when its duration frustrates irreversibly the intention of the creditor.
  • Unforseeability and readjustment: the CCC allows total or partial termination or adequation (readjustment) of an agreement as a consequence of an extraordinary change in the circumstances, prevailing at the time the contract was executed, that turns the obligation excessively burdensome, to the extent beyond the control of the parties and the risk assumed by the damaged party.
    Those remedies can be invoked under the scope of commutative contracts of permanent or deferred execution.
  • Frustration of the purpose of the contract: the CCC also authorizes the damaged party to terminate the agreement if the frustration is due to an extraordinary change in the circumstances, prevailing at the time the contract was executed, beyond the control of the parties and that exceeds the risk assumed by the injured party. If the frustration is temporary, the injured party will only have the right to terminate the agreement only if the fulfillment of an obligation is prevented within a certain timeframe that is of the essence.

Despite specific cases and what has been agreed in each contract, we consider that both the COVID-19 spread and the governmental measures that have been adopted as a consequence, could determine the existence of a force majeure/act of God event, as long as it can be demonstrated that the impossibility to fulfill is derived directly from the occurrence of those events.

As regards unforeseeability and frustration of the purpose due to COVID-19 and/or the legal regulations issued as a consequence, they could also be validly invoked by the damaged parties, if there is a link between those facts and the supervening burden or frustration, to the extent beyond the risk inherent to the agreement.

Effectiveness of the contractual provisions agreed between the parties and/or the application of one or more of the legal concepts described above may vary in each case.

Some of the issues that may have an impact are, among others, the existence of provisions limiting the liability of a party and/or waiving rights, public policy regulations that may affect a contract, and an eventual imbalance in the bargaining power of each party.

The contractual rights and obligations must be exercised and fulfilled, respectively, in good faith and, hence, any reasonable measure that may prevent or reduce or limit any damage must be adopted.

In any case, the exercise of a contractual right shall not be abusive and may be subject to judicial review to obtain its reparation or re-adequation.

2. Possible causes of action.

Any of the legal alternatives described in 1. above can be invoked both judicially and extrajudicially.

In cases of final or temporary force majeure, the CCC allows to suspend contractual obligations on one part until the other party is in a condition to perform under the contract.

Depending on the specific case and the relationship among the parties, a preventive measure could be filed to preserve a determined law or factual situation or to suspend certain acts or the exercise of certain rights, until the issue is solved in the judicial process.

There are already some precedents under which for purposes of preventive measures the COVID-19 spread has been considered as a force majeure/act of God event, outside of the control of the parties. This criterion may be expanded while the courts resume their intervention in the different cases that are pending to be solved as well as the cases that will be initiated as a consequence of the pandemic.

For further information, please do not hesitate to contact Mariano Rovelli, Eugenia Pracchia, Juan Pablo Bove, Federico Otero, Pablo Tarantino, Julián Razumny, and/or Agustín Griffi, or litigios@trsym.com y corporate@trsym.com.

In the following link, you can access The Firm’s statement on COVID-19.

For information concerning COVID-19 legal implications, please refer here.