Capital Controls in Argentina: Relevant Updates on Payments of Imports of Goods

Pursuant to Communication "A" 6818 dated October 28, 2019, the Argentine Central Bank updated the foreign exchange regulations applicable to payments of imports and other purchases of goods. The new regulatory framework introduces relevant improvements, such us the regulation of import financings, which until now were not specifically contemplated in the regulation, and the reimplementation of the SEPAIMPO, a monitoring regime of payments of imports.

Below are the key takeaways of the new regime:

  1. General Provisions

The general rule is that Argentine importers may access to the local foreign exchange market to make payments of imports of goods and other purchases of goods, subject to certain conditions provided in the regulation (for further detail, see points 3 and 4 below). The payment includes any concept that is part of the purchase condition registered in the invoice issued by the foreign supplier.

Payments of imports of goods are divided in two types: (i) payments of imports that have customs clearance and (ii) payments of imports with customs clearance pending. In both cases, the access to the foreign exchange market includes the payment of commercial debt incurred to finance such imports of goods, including, among others: (a) financing provided by the foreign supplier, (b) financing provided by a foreign export credit agency, and (c) financing provided by a local or foreign financial entity where disbursements are used, net of costs and expenses, to pay to the foreign supplier directly.

The regulation of import financing is a positive aspect of the new regime. Until now, the foreign exchange regulations did not distinguish between financial indebtedness and commercial indebtedness, and the direct application of the disbursement to pay the exporter was not allowed. From now on, disbursements of import financings may be used to pay to the foreign supplier directly, and the requirement to repatriate and convert the loan to Pesos will not be applicable, as it occurs with financial indebtedness.

  1. Tracking System of Payments of Imports (“SEPAIMPO”)

The SEPAIMPO is a system implemented by the Argentine Central Bank to track the payments of imports, as well as to monitor the nationalization of the goods associated with advance payments of imports. For each import, the importer shall appoint a financial institution as monitoring entity. The monitoring entity shall verify the conditions to make payments and track the nationalization of the goods associated with an advance payment.

  1. Payments of Imports with Customs Clearance

The importers may purchase foreign currency in the local exchange market for the payment of imports with customs clearance registered in the SEPAIMPO, as long as the monitoring entity verifies the following requirements, among others:

  1. Proof of customs clearance, copy of the invoice, copy of the shipping document, and verifies that the beneficiary of the payment is the foreign supplier or the financial institution or export credit agency that financed the purchase.
  2. The sale of foreign currency is made against debit to a local account of the importer.
  3. The payment is not made before the due date of the obligation. Prepayments require prior approval by the Argentine Central Bank.
  1. Payment of Imports with Customs Clearance Pending

4.1. Advance Payments

The monitoring entity may grant access to the foreign exchange market for advance payments, provided that the following requirements are met, among others:

  1. Receives documentation to determine the existence of the purchase and the requirement of advance payment prior to the date of delivery of the goods.
  2. The beneficiary of the payment is the foreign supplier.
  3. The sale of foreign currency is made against debit to a local account of the importer.
  4. Receives an affidavit from the client in which it undertakes to obtain customs clearance of the goods within 90 calendar days from the date of payment, or to repatriate and convert the payment to Pesos within such period. Prior Argentine Central Bank approval shall be obtained for advance payments to affiliates or if longer periods are required.
  5. The amount to be paid is reasonable.
  6. The client has not defaulted previous advance payments.

4.2. Payment at Sight against Shipping Documents

The monitoring entity may grant access to the foreign exchange market for payments at sight, provided that the following requirements are met, among others:

  1. Receives copy of the invoice.
  2. Receives copy of the shipping documents.
  3. Receives documentation setting forth the obligation to pay at sight against the presentation of shipping documentation.
  4. The beneficiary of the payment is the foreign supplier, the foreign financial entity or the official credit agency that financed the advance payment to the exporter.
  5. The sale of foreign currency is made against debit to a local account of the importer.
  6. Receives an affidavit from the client in which it undertakes to obtain customs clearance of the goods within 90 calendar days from the date of payment, or to repatriate and convert the funds to Pesos within such period.

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

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Province of Chubut’s Series XL Treasury Notes Issuance for AR$ 500,000,000

 

Legal counsel to Banco del Chubut S.A., as arranger, placement and financial agent, in the issuance of Province of Chubut’s AR$ 500,000,000 fixed rate Series XL Treasury Notes due 2019 (the “Treasury Notes”), under the Province of Chubut’s Treasury Notes Issuance Programme, secured by certain rights of the Province of Chubut to receive amounts under the federal tax coparticipation regime.

DLA Piper Argentina counseled the Province of Chubut, as issuer of the Treasury Notes under the transaction.

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Argentine Central Bank Tightens Capital Controls

In order to preserve the international reserves, the Argentine Central Bank implemented new restrictions on the purchase of foreign currency. It did so through Communication "A" 6815 dated October 28, 2019.

Below are the key takeaways of the new restrictions:

  • Creation of External Assets: The limit for the creation of external assets by individuals is reduced from US$ 10,000 to US$ 200 per calendar month. The transaction must be carried out with debit to an account in a local financial institution of the client, admitting the use of cash up to US$ 100 per month. These limits are not cumulative and include all transactions already performed in October. According to point 1.4 of Communication "A" 6776 and the press release issued by the Argentine Central Bank on October 28, 2018, we understand that credit cards are not subject to this limit.
  • Debit Card Cash Withdrawals: Withdrawals of foreign currency outside Argentina using local debit cards may only be made against deposits in foreign currency in local financial institutions.
  • Import Advances: Importers may access the foreign exchange market for the payment of import advances to non-affiliates. Customs clearance shall be obtained within the following 90 days. Prior Argentine Central Bank approval shall be obtained if the supplier is an affiliate of the importer. Note that, prior to this new regulation, advance payments were allowed, provided that customs clearance was obtained within the following 180 days, without any distinction between affiliates and non-affiliates.
  • New Information Regime for Transactions Over US$ 2,000,000: Financial institutions and exchange agencies shall report to the Argentine Central Bank on a daily basis of the foreign exchange transactions to be carried out in the following three (3) business days for amounts higher than US$ 2,000,000. In this regard, clients requesting such transactions shall inform their financial institution or exchange agency the proposed transactions with reasonable anticipation. On the day of the transaction, the client may use a different entity.
  • Non-residents: The limit to purchase foreign currency by non-residents, originally set at US$ 1,000, is reduced to US$ 100 per calendar month. Payments by ANSES (National Social Security Agency) to beneficiaries of old age pensions are exempt from that limit.

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

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Pablo Tarantino and Agustín Griffi join Tavarone, Rovelli, Salim & Miani as partners of the Mergers and Acquisitions and General Corporate Department

Pablo Tarantino and Agustín Griffi have joined Tavarone, Rovelli, Salim & Miani as partners. In this way, the Firm continues with the expansion and growth of its Mergers and Acquisitions and General Corporate Practice with a team of more than 20 lawyers working full-time in this practice group. The Firm reaffirms its commitment to expansion and once again invests in what has been its main distinctive feature: a young and talented team of lawyers led by partners highly committed to both clients and their team.

Pablo Tarantino is a lawyer specialized in corporate law, area in which he has 15 years of experience. He graduated from the School of Law of the University of Buenos Aires (2004). He began his career at Remaggi, Pico, Jessen & Associates in 2004. He has assisted clients in general corporate law, mergers and acquisitions, as well as in the design of corporate structures for the consummation of domestic and international business. In 2007 he joined Grupo Werthein as Senior Legal Counsel.

Agustín Griffi is a lawyer specialized in corporate law, area in which he has almost 15 years of experience. He graduated from Torcuato Di Tella University School of Law (2005) and obtained an LL.M. degree in corporate and financial law from Fordham University in New York (magna cum laude, 2012). During his career, Agustín distinguished himself in well-known law firms, having worked for 10 years at Bruchou, Fernández Madero & Lombardi. In 2008, he worked as a foreign lawyer at Barbosa, Müssnich & Aragão (Rio de Janeiro) and in 2012 as an international visiting attorney at Dechert LLP (New York). He has assisted clients in general corporate law, mergers and acquisitions, as well as in the design of corporate structures for the conduct of business in Argentina and abroad. In the last 6 years he served as Senior Legal Counsel of Grupo Werthein.

Both lawyers join the Firm after leading the in-house legal team of Grupo Werthein, the Argentine private family holding that totally or partially owns, among others, the following Companies: Experta Seguros (P&C, workers’ compensation and retirement insurance), La Estrella Seguros de Retiro, Gregorio, Numo y Noel Werthein (agribusiness company), Cachamai (food, mass consumption), Transportadora de Gas del Sur S.A., Bodega Riglos-Huarpe (vineyards) and Fideicomiso Buenos Aires Landmark (the successful bidder of the "Tiro Federal" auction designed for its real estate development). Pablo and Agustín will continue advising Grupo Werthein and its subsidiaries in all aspects of corporate law.

In joining Tavarone, Rovelli, Salim & Miani, together with partners Juan Pablo Bove, Federico Otero and Julian Razumny, Pablo and Agustin will contribute to the development and expansion of the M&A and Corporate Practice, an area in which the Firm has experienced remarkable growth, increasing its share in mergers and acquisitions deals, as well as further expanding the client base to which the Firm renders corporate legal advice.

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

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Capital Controls: Important Updates on Export Regime

Pursuant to Communication “A” 6788, dated September 19th, 2019, the Argentine Central Bank (the “BCRA”, per its acronym in Spanish) updated -again- the capital control regime imposed almost three weeks ago. In this case, the new regulation reformulates the deadlines for the settlement (repatriation and conversion to Argentine Pesos) of proceeds from the export of goods, provides for extensions and exceptions of the deadlines, and establishes a tracking regime of export transactions by financial institutions, among other updates. It is expected that the BCRA will issue further regulations in the near future.

Please find below a summary of the main amendments made by Communication “A” 6788:

  1. General Provisions

1.1. Settlement Obligation

The regulation provides for new settlement deadlines of 15, 30, 60 or 180 calendar days from shipment, up to the invoiced amount, depending on the type of good. The deadline for settlement of proceeds from exports between affiliates was extended to 60 calendar days, except a shorter deadline applies as a result of the type of good. Moreover, transactions conducted under the “EXPORTA SIMPLE” regime shall be settled within 365 calendar days from shipment.

Regardless of the new deadlines, the BCRA maintained the obligation to settle export proceeds within 5 business days from the date of collection. In addition, exporters shall select a financial institution to track each export transaction.

1.2. Exports Formalized Before September 2, 2019

The BCRA maintained the deadline of 5 business days from the date of collection for the settlement of proceeds from exports of goods formalized before the reinstitution of the capital controls.

1.3. Extension of Settlement Deadline

The new regulation establishes that the tracking bank may grant extensions to the settlement deadlines under certain circumstances, such as: (i) when the country of destination has a minimum settlement period which is longer than the deadline, the longer period shall apply; and (ii) when the transaction was prefinanced, the settlement deadline may be extended up to the maturity of the export loan.

1.4. Payment Delays by Importer

An important amendment is that an export transaction may be marked by the tracking bank as “nonperforming due to payment delay” when it has been verified that the delay on the settlement obligation of export proceeds was due to a delay on the payment by the importer, as a result of: (i) capital controls in the importer’s country; (ii) foreign importer insolvency; and (iii) debtors default.

Except for the case of capital controls in the importer’s country, export transactions may not be marked as “nonperforming due to payment delay” when exporter and importer belong to the same corporate group. Once the importer was able to make the payment, the exporter or the export credit insurance company, as the case may be, shall settle the proceeds within 5 business days from the date of collection.

1.5. Allocation of Settlements to Export Transactions

The BCRA clarified that the following settlements may be allocated to export transactions: (i) proceeds of exports; (ii) self-settlements made by the exporter; (iii) settlements made through payment processing companies; and (iv) settlements made through the Sistema de Monedas Locales.

1.6. Export Advances, Pre-export Loans and Post-export Loans

The obligation to settle new export advances, pre-export loans and post-export loans is maintained. Export financings by foreign entities shall be settled within 5 business days from the disbursement date, while export financings to foreign importers by local financial institutions shall be settled on the disbursement date. Payments of exports of goods may be allocated to repay principal, interest and costs and expenses of export financings. Also, exporters may apply the proceeds of export advances to the cancelation of local and/or foreign pre-export loans.

  1. Tracking Regime of Export of Goods

2.1. Scope of the Regime

The BCRA established a monitoring regime to track the settlement of proceeds of exports of goods formalized as from September 2, 2019, except for export transactions exempted from the tracking regime (diplomatic, samples, promotional material, baggage, deficiencies, assistance and rescue, brokers, organ donation and other special regimes). The fact that an export is exempted of tracking does not mean that the proceeds of such exports are exempted from the obligation to settle the proceeds.

2.2. Tracking Entity

The exporter shall select a financial institution to track each export transaction through the SECOEXPO system provided by BCRA. The tracking entity must determine the amount and deadline to settle the export proceeds and shall register in the system the amounts allocated to each transaction.

2.3. Compliance Certificate

The tracking entity shall issue a compliance certificate for each export transaction whose settlement allocations fulfilled the required amount within the relevant deadline. The compliance certificate shall be required by the tax authority to release export promotional payments.

2.4. Non-Performing Transactions

When the exporter does not comply with the obligation to settle export proceeds within the relevant deadline, the tracking entity shall report the nonperforming transaction through the SECOEXPO system.

2.5. Admitted Allocations

The tracking entity may consider the settlement obligation as totally or partially fulfilled in the following cases and amounts: (i) concepts included in FOB value that are no part of the agreed sale condition; (ii) banking expenses associated to collections procedures; (iii) exports that by their nature are not able to generate a proceeds (EXPONOTITONEROSO or EXPOSINVALORCOM); (iv) rejected merchandise in destination or reimported; (v) missing goods, losses and deficiencies; (vi) wrecked merchandise; (vii) discounts and expenses fees payable abroad; (viii) expenses related with the placement of the goods abroad; (ix) penalties for exporter´s delay in the delivery of the goods; (x) tax withholdings in the country of destination; among others.

  1. Tracking Regime of Export Financings

The BCRA also implemented a tracking regime of export financings. The following financings are covered by this regime: (i) all settlements performed as of 02.09.19 corresponding to advance payments, pre-export loans and other financings for which the allocation of export proceeds are allowed; (ii) pre-export loans and financings of exports pending on 31.08.19 provided or guaranteed by domestic financial institutions; (iii) export advances and pre-export loans from abroad pending on 31.08.19, whether or not settled through the foreign exchange market and for which the exporter requests its allocation to exports formalized as of 02.09.19; (iv) financial indebtedness instrumented before August 31, 2019, which conditions foresee the earmarking of export proceeds and for which the exporter requests its allocation to export transactions formalized as of 02.09.19.

In the case of financings provided by domestic financial institutions, the tracking regime will be in charge of the financial institution that provided the financing. Otherwise, the tracking regime will be initially in charge of the entity that performed the settlement of the financing in the local exchange market. The exporter may subsequently change the tracking entity.

The tracking entity shall register each allocation of export proceeds and shall be responsible for the issuance of the allocation certificates that enables the allocation of export proceeds to export transactions.

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

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News in the Upstream Sector: Subsidies to Oil Companies, Biofuel Producers and Provinces

On September 16th, 2019, Resolution No. 552/2019 issued by the Secretary of Governmental Energy (in Spanish, Secretaría de Gobierno de Energía and hereinafter, the “Resolution” and “SGE”, as applicable), under the Ministry of Treasury (in Spanish, Ministerio de Hacienda), was published in the Official Gazette. In summary, the Resolution has approved budgetary transferences in favor of: (i) oil producers, (ii) provinces which act as oil-concession grantors, and (iii) biofuel producers. As further explained below, the bill will be footed by the National Treasury throughout specific budgetary allocations in the 2019 budget law.

The Resolution is enacted in the context of Decree No. 566/2019 (as complemented by Decree No. 601/2019) which enforced fuel price caps by fixing crude prices for the local market until November 13, 2019 (90-day freeze), and by setting the Brent price of US$ 59/bl and currency exchange rate of AR$ 46.69 pesos per US$.

Most relevant aspects of the Resolution are singled out below:

  1. Amounts of the subsidies

Oil producers are entitled to receive subsidies in an amount of 116.10 pesos (approximately US$ 2.06 at the current exchange rate) per barrel delivered to the local market in the month of September pursuant to the following break-down: (i) 88% will be destined to the oil companies, whereas (ii) the remainder 12% to the oil-producing provinces acting as concession grantor.

With regards to biofuel producers which act as beneficiaries under regimes set forth in Laws No. 26,093 and 26,334, these will receive subsidies in an amount equal to 6% of the price established by the SGE for the month of August, to be applied for their local production corresponding to the month of September.

  1. Request by the companies and waivers to be performed

In order to benefit from the Resolution, oil producers as well as the provinces acting as grantors, are requested to waive any and all claims that that these may have regarding Decrees No. 566/19 and 601/19, whether administrative, judiciary and/or an arbitral proceeding, in Argentina or abroad.

Furthermore, such companies must also submit an affidavit providing specific indemnity provisions in favor of the Republic of Argentina against any and all local or foreign administrative, judiciary or arbitral proceedings that may be initiated by those companies, their shareholders, controlling entities and/or affiliates, regarding Decrees No. 566/19 and 601/19.

Waivers of that nature are also mandatory for biofuel producers.

  1. Enforcement authority and budgetary allocations

The Undersecretary of Hydrocarbons and Fuel of the SGE is entrusted with all actions that may be necessary in order to implement the Resolution, and also establishes that the amounts corresponding to the subsidies foreseen in the Resolution will be footed by Treasury funds of the SGE pursuant to the 2019 budget law.

For further information, please do not hesitate to contact either Nicolás Eliaschev or Javier Constanzó.

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Argentina Reinstitutes Capital Controls: Key Points

Please find below a summary of the main foreign exchange restrictions imposed by the Argentine Central Bank on September 1, 2019:

  1. Export of Goods

1.01. General. Proceeds from exports shall be settled (repatriated and converted to Argentine Pesos) through the Argentine foreign exchange market (the “FX Market”), subject to the below.

1.02. Exports as of September 2, 2019. Proceeds from exports of goods corresponding to customs declarations dated as of September 2, 2019 shall be settled through the FX Market within the following time frames: (i) 15 calendar days from the shipment date, in case of export transactions with affiliates or exports of commodities; and (ii) 180 calendar days from the shipment date, for any other transaction. In all cases, any payment shall be settled within 5 business days from the date of collection.

1.03. Exports before September 2, 2019. Proceeds from exports of goods corresponding to customs declarations dated before September 2, 2019 and not yet collected shall be settled within 5 business days of the date of collection.

1.04. Export Financing. Advances and export financing loans shall be settled within 5 business days of the disbursement date. Payments of exports of goods may be allocated to repay trade financings, without prior approval, in the following cases: (i) export loans and financings provided or guaranteed by domestic financial institutions; (ii) export loans, export advances and financings settled through the Argentine foreign exchange market and duly registered with the central bank under the External Assets and Liabilities Reporting Regime of the central bank (Relevamiento de Activos y Pasivos Externos); and (iii) financial indebtedness instrumented before August 31, 2019, which terms provide for the earmarking of export proceeds.

  1. Export of Services

2.01. Proceeds from exports of services shall be settled through the FX Market within 5 business days from the date of collection.

  1. Import of Goods and Services

3.01. General. Argentine importers may access the FX Market, without prior approval, for the payment of imports of goods and services, subject to the below.

3.02. Imports of Goods with Affiliates. Prior central bank´s approval is required to access the FX Market for the payment of imports of goods to affiliates in excess of US$ 2 million per month.

3.03. Import of Services with Affiliates. Prior central bank´s approval is required to access the FX Market for the payment of imports of services with affiliates, except for credit card issuers for tourism and travel expenses.

3.04. Prepayment of Imports. Prior central bank´s approval is required to access the FX Market for the prepayment of imports of goods and services.

3.05. Import Advances. Importers may access the FX Market for the payment of import advances, provided that the payment is made to the supplier. Customs clearance shall be obtained within the following 180 days.

3.06. Registration. In all cases, the import debt shall be registered with the central bank under the External Assets and Liabilities Reporting Regime (Relevamiento de Activos y Pasivos Externos).

  1. Formation of External Assets 

4.01. Companies and others. Companies, local governments, mutual funds, trusts and other pools of assets residing in Argentina shall require prior central bank´s approval to access the FX Market for: (i) offshore deposits, (ii) other external investments; (iii) debt instruments with affiliates, (iv) investments in real estate located offshore, (v) other foreign direct investments, (vi) purchase of debt securities, (vii) loans to persons residing offshore, (viii) travel checks and notes, (ix) transactions of clearing houses, (x) notes related to transactions between Argentine residents, (xi) transfers from/to a foreign country between Argentine residents, and (xii) posting of collateral on derivatives transactions.

4.02. Individuals. Individuals residing in Argentina may purchase up to US$10,000 per month, without prior central bank´s approval, for the same concepts listed in the previous paragraph.

4.03. Non-residents. Non-residents shall require prior central bank´s approval to access the FX Market in excess of US$ 1,000 per month, exception made for: (i) official export credit agencies; (ii) diplomatic and consular delegations for official expenses, (iii) representatives of courts, special missions, commissions or bilateral bodies established under treaties or international agreements, in which Argentina is a party thereto, for official expenses.

4.04. Swaps and Arbitrages. Swaps and arbitrages shall be permitted to the extent the client would be allowed to access the FX Market for the same amount should the transaction had been settled in Pesos.

  1. External Financial Indebtedness

5.01. Funds disbursed as of September 1st, 2019 under financing agreements entered into between an Argentine resident and creditors residing offshore shall be settled through the FX Market (there is no specific deadline). Access to the FX Market for the repayment of such loan shall be subject to compliance with such settlement obligation.

5.02. Prior central bank´s approval shall be required to access the FX Market to prepay external financial indebtedness earlier than three (3) business days to the payment date.

5.03. In all cases, the external financial indebtedness shall have been registered with the central bank under the External Assets and Liabilities Reporting Regime (Relevamiento de Activos y Pasivos Externos).

  1. External Indebtedness between Residents

6.01. Residents shall not have access to the FX Market to repay financial indebtedness among residents, except for debt agreements instrumented by public deed or registered in public registries before August 30, 2019.

  1. Dividends

7.01. Prior central bank´s approval shall be required to access the FX Market to pay dividends and profits offshore.

  1. Limitations Applicable to Exchange Agencies

8.01. The central bank suspended the authorization of new exchange agencies (financial institutions and other authorized agencies) that files for authorization as of September 1, 2019.

8.02. Exchange agencies shall not perform blue chip swaps or make payments to their local suppliers with their foreign currency net position.

8.03. Exchange agencies shall not increase their foreign currency holdings, without the central bank´s prior approval, in excess of the greater of: (a) their average holdings in August 2019, and (b) their stock on August 31st, 2019.

8.04. Foreign exchange transactions shall be instrumented in handwritten or electronic sworn affidavits in which the client shall represent and warrant the compliance with the capital controls regime.

The breach of the foreign exchange restrictions imposed by the central bank shall be subject to criminal liability under the Foreign Exchange Criminal Regime (Law No. 19,359).

For further information, please do not hesitate to contact Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero, Matías Otero or Francisco Molina Portela.

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“Crescere VIII” Financial Trust for U$S 40.710.907

 

Legal counsel for Banco de Galicia y Buenos Aires S.A.U. in the issuance and placement in Argentina of trust securities for U$S 40.710.907 issued under the “Crescere VIII” Financial Trust, in which Banco de Galicia y Buenos Aires S.A.U. acted as arranger, placement agent and trustee, TMF Trust Company (Argentina) S.A. acted as financial trustee, Syngenta Agro S.A. acted as trustor and servicer and Banco de la Provincia de Buenos Aires as placement agent.

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Province of Chubut’s Series XXXVIII Treasury Notes Issuance for AR$ 500,000,000

 

Legal counsel to Banco del Chubut S.A., as arranger, placement and financial agent, in the issuance of Province of Chubut’s AR$ 500,000,000  fixed rate Series XXXVIII Treasury Notes due 2019 (the “Treasury Notes”), under the Province of Chubut’s Treasury Notes Issuance Programme, secured by certain rights of the Province of Chubut to receive amounts under the federal tax coparticipation regime.

DLA Piper Argentina counseled the Province of Chubut, as issuer of the Treasury Notes under the transaction.

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The Argentine Central Bank Restricted Access to Financing in AR$ to Large Exporting Companies

Through Communication “A” 6765, issued on 08/28/2019 and effective immediately, the Argentine Central Bank established that prior consent of the Central Bank will be required for financial entities to grant new financing in Argentine pesos to all clients that fit the definition of "Large Exporting Companies" as provided by said Communication.

In accordance with the Communication, clients that belong to the non-financial private sector whose exports of goods and services of the past year represent at least 75% of their total sales and, in turn, have a total amount of financing in Argentine pesos greater than AR$ 1.5 billion will be considered Large Exporting Companies.

To determine such percentage of total sales, the Communication excludes sales made in the domestic market to related customers -except in the case of sales of goods to distribution companies for sale in the domestic market- and industrial exports made under international complementation agreements to which Argentina is a party.

The different types of financing that fall under the regulation are, namely, all financings that involve disbursements of funds -whatever the modality used- and/or the extensions of limits of credit in the form of advance on an account, renewals, extensions or any other form of refinancing.

For further information, please do not hesitate to contact Mariano Rovelli and Eugenia Pracchia.

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