Legal issues related to the execution of documents and social distancing
It is public knowledge that the preventive and mandatory social distancing established by Presidential Decree No. 297/2020 due to the COVID-19 (Coronavirus) pandemic limits the mobility of people in Argentina and affects operative issues related to the execution of documents, including contracts.
With technology as a key ally and due to the inability to execute documents or contracts on site, it is worth mentioning that digital signatures have been regulated in Argentina by section 288 of the Argentine Civil and Commercial Code, the Digital Signature Law No. 25,506 (the “Digital Signature Law”), as regulated by Decree No. 182/2019.
The Digital Signature Law provides for two different signatures: (i) digital signatures (section 2 of the Digital Signature Law) and (ii) electronic signatures (section 5 of the Digital Signature Law).
A digital signature is the result of applying mathematic procedures to a digital document with information known to the signatory only, information which will later be verified by a third party (certifying licensee) licensed to verify digital signatures.
The requirements for a digital signature to be valid are set forth in section 9 of the Digital Signature Law. In order to use an Argentine digital signature, the signatory must be previously registered with a certifying licensee (by means of a personal interview that requires a scheduled appointment). In turn, the certifying licensee must be previously authorized by the Argentine Government.
An electronic signature is any electronic data associated to other electronic data produced by a signatory in order to identify itself that does not meet all the requirements of a digital signature.
Electronic documents signed with a digital signature are presumed to have been signed by the signatory. The enforceability of electronic documents signed with electronic signatures is weaker, as the enforcing party will be required to prove the authorship of the signature.
Although both tools are extremely useful to continue with business activity during the pandemic, if a party denies the authorship of an electronic signature, the enforcing party will be required to prove the validity of that signature.
Those digital tools are additional alternatives to execute documents.
Should you need further advice on the requirements to execute documents remotely using alternative methods, please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, Pablo Tarantino, or Agustín Griffi, or also corporate@trsym.com.
CORONAVIRUS (COVID-19) OUTBREAK: economic and legal impact
The Coronavirus outbreak (COVID-19) is affecting the economy and the due fulfillment of existing obligations.
In order to anticipate the legal consequences that may arise from said event, our Firm suggests implementing the following actions:
- Analysis of regulation and public policy on this matter and its effects on business and obligations. Design of legal remedies and potential claims.
- Identification of essential clauses on contracts, termination and force majeure and unforeseen events provisions. Assessment of the consequences arising from the breach of contract and potential defenses and legal actions.
- Restructuring of assets and liabilities, temporary suspension of activities and business continuity.
For further information, please contact Mariano Rovelli, Eugenia Pracchia, Marcelo Tavarone, Juan Pablo Bove, Nicolás Eliaschev and Gastón Miani.
Interventions in the Electricity and Gas Agencies
On March 17th, 2020 Decrees No. 277/2020 and 278/2020 (the “Decrees”) were published in the Official Gazette, which have ordered the intervention of the Electricity Regulatory Authority—in spanish Ente Nacional Regulador de la Electricidad—(“ENRE”) and the Gas Regulatory Authority—in spanish Ente Nacional Regulador del Gas—(“ENARGAS”) and designated Lic. Federico José Basualdo Richards and Lic. Federico Bernal as intervenors.
The Decrees have been enacted in the context of Law No. 27,541 of Social Solidarity and Productive Reactivation, passed by the National Congress, which declared a public emergency in economic, financial, fiscal, administrative, pension market, rates, energy, health care and social matters for a 1-year term, and entrusted the National Executive to intervene the energy and gas agencies.
Such bill also authorized the National Executive to freeze natural gas and electricity rates under federal jurisdiction and to carry out an extraordinary review of the current rate structure of those activities regarded as public utilities, in the terms of Laws No. 24,065 and 24,076 -which foresee the regulatory frameworks applicable to electricity and natural gas-, tending to a reduction in rates during the current 2020 year.
- Term of the interventions
The interventions of the ENRE and ENARGAS will remain in force until December 31, 2020.
- Powers of the intervenors
The intervenors are entrusted to:
(i) Conduct an audit and a technical, economical and juridical review in order to further assess the current rate structure for transportation and distribution of electricity and gas within the framework of Law No. 27,541, and are in turn enabled to carry out an renegotiation of such rates and/or undertake an extraordinary review, pursuant to Law No. 24,065 and 24,076, as applicable. Should the intervenors detect anomalies in the context of such revision, they shall inform the National Executive, providing all information and corresponding documents, and suggest the actions and measures which may deem necessary.
(ii) Review the public tendering procedures carried out in order to designate the former board members of the ENRE and the ENARGAS and thereafter, initiate a new selection procedure.
- Current members of the ENRE and ENARGAS boards discharged
Current board members of such agencies have been discharged by means of the Decrees.
For further information, please contact Nicolás Eliaschev and/or Javier Constanzó.
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In the following link, you can access to the publication made by Nicolás Eliaschev regarding certain energy matters of Law No. 27,541.
In the following link, you can access The Firm’s statement on Coronavirus.
Coronavirus - Important notice
Considering the outbreak of the Coronavirus pandemic, we would like to reinforce our commitment to the provision of our legal services while also prioritizing the safety, health and well-being of our staff and clients.
The Firm has adopted al necessary steps, including, without limitation, cancellation of in-person meetings, trips and events, personnel rotation and home-office options.
At the same time, our technological resources ensure permanent availability of all of the members of our Firm and this enables us to continue providing our clients with the legal service of the highest quality that they deserve, supporting them, as well, in the new challenges the existing situation has created.
We are following-up on all developments and we hope these hard times are overcome as soon as possible.
MSU S.A.'s USD 13,857,742 Series VII Notes
Legal counsel to Banco de la Provincia de Buenos Aires, Balanz Capital Valores S.A.U., INTL CIBSA S.A. and Banco de Galicia y Buenos Aires S.A.U. acting as placement agents in MSU S.A.’s issuance of series VII notes for U$S 13,857,742 under the global program of notes for an amount of up to U$S 50,000,000. The Series VII Notes were issued on March 10, 2020 at a 9% fixed rate and due fifteen months from the date of issuance.
News in the Energy Sector: New Remuneration Structure for Legacy Power Generators, Co-generators and Self-generators
Resolution No. 31 issued by the Secretary of Energy (“Resolution 31”) and published in the Official Gazette on February 27, 2020: (i) has repealed former Resolution No. 1/2019 issued by the former Secretary of Renewable Resources and Electricity Market; and (ii) approved a new remuneration structure for legacy power generators, self-generators and co-generators of the Wholesale Electricity Market (“WEM”). The new regime applies to legacy facilities which do not sell their energy under a power purchase agreement (“PPA”).
The purported aim of Resolution 31 is to adjust the remuneration criteria for generators to ensure the sustainability of the WEM under economically reasonable and efficient conditions. To this regard, the resolution states that energy generation costs must be passed through to final users.
The rationale that Resolution 31 invokes as grounds to its issuance is the abrupt change in the exchange rates which negatively impacted the remuneration structure that was stipulated by the former Resolution No. 1/2019.
The most relevant aspects of the Resolution 31 are outlined below:
- Scope of Resolution 31
A new remuneration mechanism for conventional and renewable generation, cogeneration and self-generation, operating without a PPA, has been approved, effective as of February 1, 2020.
- Remuneration in Argentine pesos
The new remuneration structure, unlike the repealed Resolution 1, provides that the amounts paid to the WEM agents identified above will be nominated and paid in Argentine pesos.
Former Resolution 1 determined that the remuneration of such was calculated in US dollars and the payment was in Argentine pesos, using for its conversion the exchange rate published by the Central Bank of Argentina "Reference Exchange Rate Communication 'A' 3500 (Wholesale)", of the day before the due date of the economic transactions.
- Remuneration adjustment mechanism
Remuneration shall be adjusted on a monthly basis according to a formula based on the Index of Consumer Prices (IPC) and the Index of Internal Wholesale Prices (IPIM), both published by INDEC (the Argentine Statistic Agency).
For further information, please do not hesitate to contact either Nicolás Eliaschev and/or Javier Constanzó.
The Superintendence of Corporations reinstates control regime of foreign companies
On February 21, 2020, the Superintendence of Corporations of the City of Buenos Aires (“IGJ”) issued General Resolution 02/2020 (“RG IGJ 02/2020”) which expanded the registration and information requirements in connection with the companies incorporated overseas.
RG IGJ 02/2020 repeals General Resolution IGJ 06/2018, reinstating the articles of the General Resolution IGJ 07/2015 (“RG IGJ 07/2015”) included under provisions of Title III, Book III regarding companies incorporated abroad. In that regard, the resolution restores the obligation to prove that the main economic activity of the company is carried out outside of the Argentine Republic through the submitting of documentation signed by a company officer, for all companies that intend to register in the Argentine Republic under Articles 118 or 123 of the General Companies Law No. 19,550 (“LGS”).
In turn, as provided in article 218 of the RG IGJ 07/2015, the prohibition of the registration of an offshore company from jurisdictions of that nature is also restored.
In addition, the RG IGJ 02/2020 incorporates the obligation of foreign companies registered in Argentina to submit the Annual Information Regime (“AIR”), within 120 calendar days after the closing date of the financial statements of the corresponding branch or representation office.
Finally, the RG IGJ 02/2020 establishes that the legal representatives of the companies incorporated abroad must keep until the cancellation of their registration as representatives plus an additional term as from such cancellation equal to that of the statute of limitation applicable to claims for non-contractual liability (i.e., three years), a guarantee in accordance with the provisions of subsections 2 and 3 of article 76 of the RG IGJ 07/2015. The amount of such guarantee for each legal representative will be five times the minimum capital required for corporations, which would correspond to AR$500,000. Legal representatives in office at the time of issuance of the RG IGJ 02/2020, must file the aforementioned guarantee with the next immediate filing of the AIR of the company.
For further information, please contact Juan Pablo Bove, Federico Otero, Julián Razumny, Pablo Tarantino or Agustín Griffi.
Argentine Central Bank relaxes requirements to make advance payments of imports of goods
Pursuant to Communication “A” 6903, dated February 14, 2020, the Argentine Central Bank revised the requirements to make advance payments of imports of goods. The new regulatory framework relaxes the requirements for importers with delays registered in the SEPAIMPO Information System.
Pursuant to current regulation, clients who register delays in the SEPAIMPO do not have access to the foreign exchange market to make new advance payments of imports.
Pursuant to the new regulation passed today, from March 2020, clients with registered delays will have access to the foreign exchange market to make new advance payments, subject to the following:
- The client does not register delays with respect to advance payments made as of 02.09.19.
- Prior Central Bank´s approval shall be required when the client registers, for transactions prior to 02.09.19, a judgement in the last 5 years or an open proceeding for violations of Article 1(c) of Law 19,359 with respect to import transactions.
- In the event that the client is not an individual and has been incorporated up to 365 calendar days prior to the date of access to the exchange market, prior approval of the Argentine Central Bank will be required to process new payments when the amount pending regularization for advance payments of imports is more than the equivalent of US$ 5 million (five million US dollars), including the amount for which access to the exchange market is requested. In the case that the client is a joint venture, the date of incorporation of the oldest company will be taken into account.
For more information, do not hesitate to contact Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero or Francisco Molina Portela.
Province of Chubut’s Series XLII Treasury Notes class 1, class 2 and class 3 Issuance for AR$ 402,850,000
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 XLII Treasury Notes class 1, class 2 and class 3, under the Province of Chubut’s Treasury Notes Issuance Programme. The transaction settled on February 6, 2020 and the payments due under the Treasury Notes Series XLII are secured by certain rights of the Province of Chubut to receive amounts under the federal tax co-participation regime. Class 1 was issued for AR$ 350,850,000 due on March 11, 2020. Class 2 was issued for AR$ 16,000,000 due on April 8, 2020. Class 3 was issued for AR$ 36,000,000 due on May 6, 2020. The Treasury Notes Series XLII Class 1, Class 2 and Class 3 were issued at a 40% fixed rate.
Extension of regulations applicable to “Payment Service Providers” (PSPs)
On January 30, 2020, the Argentine Central Bank issued Communication “A” 6885 providing for regulations applicable to the activity of Payment Service Providers (PSPs). Below you will find a brief description of the most important features.
Communication “A” 6885 has excluded from the PSP legal framework the payment schemes that are governed by the rules of the Argentine Securities and exchange Commission (CNV) (among them, agents, markets and clearing houses’ operations) as well as such activities which main purpose is to retain and/or receive and make payments to the public sector.
Communication “A” 6885 also prohibits entities governed by the CNV (markets, clearing houses and agents) to operate as PSPs.
PSPs must be registered with the “Registry of Payment Service Providers that offer payment accounts” within 30 days since March 1, 2020. Since registration date, the PSP falls within the supervision of the Argentine Central Bank and will be liable, together with its authorities, under Sections 41 and 42 of the Financial Entities Law 21,526.
In order to register, a PSP must provide, among other information, the operational and commercial description of its payment structure and the identification of any person who holds at least 20% of share capital and/or votes of the entity or who, by other means, exercises final control, directly or indirectly, of the PSP (final beneficiaries).
Regarding customers cash management, Communication “A” 6885 made no changes, and the obligation to have the cash deposited in a local bank account (except for the sums invested in money market funds) remains.
Finally, Communication “A” 6885 creates obligations in connection with financial transparency. PSPs must indicate in all advertising that they are not financial entities and that the cash deposited (as it is not a deposit in a financial entity), does not fall within the argentine deposit guarantee system.
For further information, please do not hesitate to contact either Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero, Juan Pablo Bove, Federico Otero, Julián Razumny, Agustín Griffi, or Pablo Tarantino.