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.

The Superintendence of Corporations eases certain requirements for holding remote corporate meetings

As anticipated in our newsletter published last March 25th, the Superintendence of Corporations (the “Superintendence”) published today in the Official Gazette General Resolution No. 11/2020 (“Resolution 11/2020”), by means of which it introduced lower requirements regarding remote corporate meetings, as a consequence of the social, preventive and compulsory quarantine imposed by the Executive Branch through Decree No. 297/2020 (published on 03/19/20).

Resolution 11/2020 amends Section 84 of General Resolution 7/2015, and includes the possibility of holding remote corporate meetings, for both management (e.g., boards) and governing bodies (previously, only meetings of the management bodies were allowed to be held remotely). In this same sense, the requirement to fulfill quorums with the physical presence of the majority of the members at the meeting venue was also suppressed, and it can also be met remotely.

Additionally, and although the by-laws should provide with the necessary mechanisms for holding remote meetings of the corporate bodies, it was provided that while the quarantine lasts as a consequence of the state of health emergency, companies and non-profit organizations may hold the meetings of their administrative and governing bodies remotely even if their by-laws do not include an express provision on this matter.

In any case, all meetings to be held remotely -during the quarantine or not-, must comply with all the following procedures:

  1. full access for all participants of the meetings;
  2. the possibility of participating through a platform that allows simultaneous transmission of both audio and video;
  3. to allow the participation with voice and vote for all the members and of the syndic, if applicable;
  4. meetings must be digitally recorded;
  5. the legal representative shall keep a digital record for a period of five (5) years, and shall make it available upon request of any shareholder;
  6. the meeting shall be transcribed to the corresponding book, indicating the participants, and shall be signed by the legal representative; and
  7. when summoning any meeting, the digital platform to be used must be specified in detail.

Finally, it should be noted that -concurrently with the provisions for other type of corporations- the requirements and possibility to hold remote meetings was also authorized for non-profit organizations (Asociaciones Civiles).

Should you require additional advice regarding the different alternatives to carry out remote meetings, do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, Pablo Tarantino, or Agustín Griffi, or

COVID-19 – Restriction to public utilities’ interruptions and LPG price caps

On March 25th, 2020, Decree No. 311/2020 (the “Decree”) was published in the Official Gazzete, which has imposed certain restrictions over public utility operators’ ability to interrupt the supply of services such as electricity supply, gas, running water and sewage, fixed or mobile telephone and internet, and cable television, linked by satellite or radio-electricity, to certain users (which are further detailed below), in case of delay or lack of payments up to (3) consecutive or alternated invoices with due dates since March 1st, 2020. In turn, the Decree has enforced price caps for liquefied petroleum gas (LPG) by fixing prices for 180-days.

The Decree is framed within Emergency Decree No. 297/2020, which has declared social, preventive and compulsory isolation for citizens and inhabitants of Argentina since March 20, 2020) due to the breakout of COVID-2019.

  1. Scope of the Decree

The Decree foresees that companies which provide services involving electrical power supply, gas, running water and sewage, mobile or fixed telephony and internet, and cable television, whether linked by satellite or radio-electricity, are refrained from interrupting the aforementioned services based on lack or non-timely payments of up to (3) consecutive or alternated invoices, with due dates starting on March 1st, 2020. This obligation will be maintained for 180 running days counting from the Decree’s effective date (term that would elapse on September 25th, 2020).

Companies that provide the previously mentioned services are bound to provide payment facilities for users which fail to make timely payments, in accordance to the rules to be enacted by the regulatory authority.

  1. Parties included

The Decree establishes that the measures referred to in the previous subheading will apply for the following residential and non-residential users:

(i) Universal Income by Son (AUH) and Pregnancy Income beneficiaries.

(ii) Non-contributive pension owners that perceive monthly gross income which does not exceed (2) times the minimum wage.

(iii) Users registered in the Mono-tax Social Regime.

(iv) Retirees and pensioners, and workers in relationship of dependence who perceive a gross salary equal or less to (2) times the minimum wage.

(v) Mono-tax workers registered in a category whose annual income turned into months do not exceed in (2) times the minimum wage.

(vi) Users who perceive an employment insurance.

(vii) Electro-dependents, beneficiaries of Law No. 27,351.

(viii) Users incorporated to the Social Security Special Regime for Particular Households Employees (Law No. 26,844).

(ix) Users exempted of paying the Lightning, Sweeping and Cleaning (ABL) service, or local taxes of the same nature.

(x) Micro, Small and Medium Size Companies (MiPyMES) in accordance with Law No. 25,300;

(xi) Working Cooperatives or Recovered Companies registered in the National Institute of Associativism and Social Economy (INAES) affected during the emergency, depending on the regulatory rules;

(xii) public or private health institutions affected during the emergency;

(xiii) the Public Welfare Entities which either produce or distribute food.

  1. LPG price cap

Furthermore, the Decree has set forth LPG price caps by fixing LPG price cap for the local markets for a 180-day term.

  1. Enforcement authority and invitation to adhere

Finally, the Decree appoints the Ministry of Productive Development as enforcement authority, which in turn is entrusted to issue complementary rules of the Decree; and invites the Provinces and the Autonomous City of Buenos Aires to adhere to the terms of the Decree.

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


In the following link, you can access The Firm’s statement on Coronavirus.

Remote Corporate Meetings

Due to the social, preventive and compulsory quarantine imposed by the Executive Branch through Decree No. 297/2020 (published on 03/19/20), it is of particular interest to consider the alternatives by which companies may hold their corporate meetings during this extraordinary situation.

Civil and Commercial Code

Companies often include special provisions in their by-laws to allow remote meetings of their different bodies. Hence, the provisions set forth in the by-laws of each company should first be reviewed in order to determine if such meetings can be held. According to Section 158 of the Civil and Commercial Code ("CCC"), members of a company can determine special provisions on this matter. Notwithstanding the foregoing, and in the absence of any by-laws regulations, the CCC provides that in order to hold remote partners’ meetings:

  1. all participants must consent the use of such means allowing simultaneous communication among themselves;
  2. the corresponding minutes must be signed by the chairman together with another member of the board or corresponding corporate body; and
  3. the minutes shall duly note the remote method adopted for the meeting.

Although Section 158 of the CCC only regulates meetings of corporate governing bodies (e.g., shareholders’ meetings), it is inferred that the rule also applies to meetings of other corporate bodies (e.g., board of directors, managers).

Provisions of the Superintendence of Corporations

Conversely, for those companies registered in the Autonomous City of Buenos Aires, Section 84 of the General Resolution of the Superintendence of Corporations No. 7/2015 established a more restrictive standard than the one provided by the CCC. The Superintendence established that by-laws must expressly grant faculties to the management body to hold remote meetings, while expressly forbade remote shareholders’ meetings. In this regard, requirements to hold remote meetings are as follows:

  1. in all cases, quorum must be fulfilled by the physical presence of the majority of members required at the venue previously established;
  2. the by-laws must guarantee the security of the meetings and the access for all members of said body (these requirements can be met with the presence of a syndic or a notary public at the venue, although in the past, the Superintendence has not objected acts in which these officials had not participated); and
  3. the corresponding minutes must be signed by the participants.

Note that, considering the prevailing circumstances due to the COVID-19 pandemic, alternative measures could be evaluated if companies are prevented from complying with said requirements if their by-laws do not provide for meeting to be held remotely.

Companies Admitted to the Public Offering Regime

In relation with companies in which the Securities Exchange Commission (“CNV”) performs duties of registral supervision -both admitted in the public offering regime and domiciled in jurisdictions that delegate said faculty to the CNV (Autonomous City of Buenos Aires, Tucumán, Mendoza, Tierra del Fuego, and Chubut)-, Section 61 of Law No. 26,831 (Capital Markets Law) provides that, to hold board meetings remotely:

  1. issuer's by-laws must include a specific provision on this matter;
  2. the quorum will only be considered with members physically present, unless by-laws establish for a different provision;
  3. meetings’ minutes must be signed within the following five (5) business days of the meeting, by the members physically present and the representative of the Supervisory Committee (Comisión Fiscalizadora).

Law No. 26,831 also establishes that the by-laws of an issuer may provide for shareholder’s meetings to be remotely held.

It is worth noting that prior to the Decree that imposed the quarantine, the Comission ordered that issuers resolving to hold such meetings (as a result of the sanitary measures then in place), would be granted, exceptionally, an extension for the holding their annual ordinary meetings (which should be held within 4 months as of the closing of the financial year).

In this respect, issuers must communicate any impediments to the Commission and file the request for an extension in a well-founded manner, so that it is immediately merited for definition. For those issuers that would still carry on with their meetings, the Commission requested that the parameters recommended by the Ministry of Health be taken into special consideration and that all preventive measures be arbitrated to avoid the spread of the virus. Likewise, the Commission recommended stimulating as much as possible the attendance of shareholders’ at the meeting by proxy, to minimize the number of attendees.

Given that the measure was adopted by the Commission prior to the mandatory quarantine, a new resolution is expected to confirm whether or not an extension is granted to hold the shareholders’ meeting, regardless of their characteristics or the possibility to hold them remotely.

Simplified Corporations

With respect to Simplified Corporations (sociedades por acciones simplificadas), Law No. 27,349 for the Support of the Entrepreneurial Capital, allows meetings of both the board and shareholders to be held remotely. The corresponding minutes shall be digitally signed by the legal representative.

Should you require additional advice regarding the different alternatives in order to carry out remote meetings, please do not hesitate to contact Juan Pablo Bove, Federico Salim, Julián Razumny, Julieta de Ruggiero, or Agustín Griffi, or

Modifications introduced to the Personal Assets Tax

Decree No. 99/2019, published in the Official Gazette last Saturday, December 28, 2019, introduced implementing regulations to Law No. 27,541 (please refer to the following link for comments on the referred law). Therefore, the principal modifications introduced to the Personal Assets Tax (PAT) are the following:

1.- Applicable Rates

Law No. 27,541 has modified the rates to determine the PAT corresponding to the 2019 (and following) tax periods, which now range within a progressive scale between 0.50% and 1.25%, applicable over the total value of the levied assets located in Argentina.

Through Decree No. 99/2019, the Executive Power has exercised the powers delegated by Law No. 27,541 so as to establish, until December 31, 2020, differential rates to levy assets located abroad, which may exceed in up to 100% those that apply over assets located in Argentina. In such sense, the Executive Power established a progressive scale ranging between 0.70% and 2.25% over the total value of the assets located abroad. A sole tax rate applies over the total value of such assets, therefore dismissing the system -that currently applies only to assets located in Argentina- under which different portions of the taxpayer’s levied estate is taxed under increased rates as its value arises.

It is worth noting that the non-taxable minimum threshold continues in the figure of two million Argentine pesos (AR$ 2,000,000), and that such amount should be first deducted against the value of the assets located in Argentina. Under Decree No. 99/2019, the non-taxable minimum threshold amount would be irrelevant for purposes of establishing the applicable rate within those included in the differential rate scale corresponding to assets located abroad. Indeed, the non-taxable minimum threshold would only be relevant for purposes of establishing the taxable base of the differential rate.

Furthermore, the rate applicable to the following assets has been risen from 0.25% to 0.50%:

  • Shares or participations in the equity of Argentine companies, held by individuals or undivided estates domiciled in Argentina or abroad, and/or by foreign companies or by any other foreign entity (the applicable tax should be assessed and paid by the Argentine company whose equity is levied).
  • Levied assets belonging to foreign aliens that are held, custodied, guarded, administrated, possessed, used, enjoyed, disposed of, or co-owned by Argentine individuals, entities or undivided estates.

2.- Benefits on Fund Repatriation

Law No. 27,541 also empowered the Executive Branch, until December 31, 2020, to reduce the differential rates in cases of repatriation of funds arising from the sale of financial assets located abroad.

In such context, the Decree has established that those who, as of March 31 of every year, repatriate financial assets representing at least 5% of the total value of their assets located abroad, will be exempted from the application of the differential rate.

For the purposes foreseen in the preceding paragraph, the following assets will be deemed as financial assets located abroad: The holding of foreign currency deposited in banking and/or financial and/or similar entities located abroad; company participations and/or equivalents (private securities, shares, quotas and other participations) in any type of entities, corporations or companies, with or without legal status, incorporated, domiciled, based or located abroad, including sole proprietorships (“empresas unipersonales”); rights inherent to the status of beneficiary, fideicommissary (or similar) of any kind of trusts (or similar structures) established abroad, or in foreign private interest foundations or in any other type of similar affected-estate (“patrimonio de afectación”) located, based, domiciled or established abroad; any kind of financial instrument or security, such as bonds, private securities, representative securities (“valores representativos”) and share depositary receipts, quotas in common investment funds and other similar structures, independently from their denomination; credits and any type of foreign right with economic value and any other type of asset that may be foreseen in the implementing regulations.

The benefit will be maintained to the extent the repatriated funds stay deposited under the owner’s name in entities comprised within Law No. 21,526, until December 31 (inclusive), of the calendar year in which the repatriation took place.

The Decree establishes that where reimbursement applies, it will be made up to an amount equivalent to the one that exceeds the increase in the obligation that would have to be paid in case the foreign assets were levied under the progressive scale applicable to the assets located in Argentina.

3.- Residence Criteria

Law No. 27,541 has established, with effects as of 2019 tax period, that the levied subject will be ruled by the residence criteria under the terms and conditions foreseen in sections 119 (and following) of the income tax law (text 2019), hence disregarding the previously applicable domicile criteria. In such context, Decree No. 99/2019 establishes that any reference made by legal, implementing or complementary regulations to the “domicile” connecting nexus should be understood as referred to “residence”. However, it is worth pointing out that unlike Law No. 27,541, and in what could imply a regulatory excess, Decree No. 99/2019 does not refer to sections 119 (and following) of the income tax law (text 2019) but to sections 116 (and following) of the income tax law (text 2019).

4.- Matters of Uncertain Interpretation

Due to the defective wording of the regulations commented herein, or to the omission of their treatment, there is uncertainty as to the actual scope of the following matters, which we expect be clarified by the implementing regulations to be issued by the National Tax Authority:

Validity of the benefit on funds repatriation: There is no certainty as to whether the funds repatriation benefit applies to the 2019 tax period, considering that the repatriation period elapses on March 31 and there is an obligation to maintain the repatriated funds deposited in an Argentine financial entity up to December 31.

Under a reasonable interpretation that considers the spirit of the tax reform, the differential rates will not apply to the 2019 tax period to the extent the funds are repatriated before March 31, 2020 -i.e., before the filing date of the 2019 affidavit- and held in Argentine financial entities up to December 31, 2020. The benefit would fall upon breach of this last requirement, and the related consequences would hence apply (liability on tax differences, interests and fines).

Scope of the reimbursement benefit: Neither Law No. 27,541 nor Decree No. 99/2019 clarify what is reimbursed. In principle, and under the current regulatory status of the matter, we understand that this benefit would apply if a taxpayer files the affidavit and pays the differential rate before its due date, and further repatriates the relevant funds before March 31. In such case, the amounts paid under the differential rate would be reimbursed, as well as the difference of the advanced payments corresponding to the following tax period.


For additional information on the matters commented herein, please contact Gastón A. Miani, Ana Do Nizza, or Juan Pablo Baumann Aubone.

Impact on Tax Matters of the Social Solidarity and Productive Reactivation Act

Below please find a brief summary of the principal tax aspects of the law No. 27,541, enacted by the Senate last Saturday, December 21, 2019, known as “Social Solidarity and Productive Reactivation Act”, as it arises from the promulgation made through Decree No. 58/2019 (with a partial veto related to aspects not addressed herein) and its publication in the supplement of the Official Gazette dated December 23, 2019:

1.- Tax regularization regime: The law establishes a tax regularization regime for debts resulting from tax, customs and social security matters accrued as of November 30, 2019 (inclusive), or from infringements committed as of the same date, and only applicable to Micro, Small and Medium Companies. The law foresees the extinction of criminal actions, the waiver of penalties arising from formal or substantial infringements, and the waiver of compensatory or punitive interests in different proportions depending on the circumstances of the case, among other benefits. The concepts incorporated into the tax regularization regime may be cancelled through offset against certain credits existing against the tax authority, cash payment (in which case a 15% reduction over the consolidated debt would be awarded) or payment plans of up to 120 installments depending on the circumstances of the case. The term to perform the incorporation into the tax regularization regime elapses on April 30, 2020 (inclusive).

2.- Employer social security contributions: The rate of the employer social security contributions corresponding to the subsystems arising from Laws No. 19,032 (Social Security National Institute for the Retired), No. 24,013 (National Employment Fund), No. 24,241 (Argentine Integrated Social Security System) and No. 24,714 (Family Allowances) is established on 20.40% for the employers of the private sector whose principal activity qualifies under the “services” or “commerce” categories and to the extent their total annual sales exceed the limits for qualifying as a “Medium Company – Second Category”, and on 18% for the rest of the employers of the private sector. The law awards the possibility to compute a given percentage of the referred employer social security contributions as a tax credit against VAT, and further establishes a monthly non-taxable minimum threshold over each workers’ salary of AR$ 7,003.68 (with particularities on certain cases) and an additional monthly discount of AR$ 10,000 over the total taxable base for those employers with a payroll including no more than 25 employees.

3.- Personal Assets Tax: The progressive rate scale ranging between 0.25% and 0.75% applicable to Argentine individuals and undivided estates is replaced by a new one ranging between 0.50% and 1.25% and with effects as of the 2019 tax period. In addition, the Executive Power is authorized to establish higher differential rates of up to 2.50% to levy assets located abroad, as well as to reduce them in case of repatriation of the product of the sale of financial assets located abroad. The rates applicable to substitute taxpayers for the holding of shares or participations in the equity of companies ruled under Law No. 19,550 and for the administration or disposition of assets belonging to foreign aliens are increased from 0.25% to 0.50% with effects as of the 2019 tax period. Furthermore, the law establishes that with effects as of the same tax period the subject of the personal assets tax will be ruled by the residence criteria on the terms foreseen in the income tax law, hence disregarding the previously applicable domicile criteria.

4.- Income tax: The reduction to 25% of the corporate income tax rate applicable to the subjects comprised within subsections a) and b) of section 73 of the income tax law (text 2019) as well as the increase to 13% of the rate applicable to dividend distributions foreseen in the second paragraph of subsection b) of section 73 of the income tax law (text 2019) and in section 97 of the same act, is suspended up to the financial years starting as from January 1, 2021. The so called “cedular tax” applicable on the Argentine sourced net income obtained by Argentine individuals and undivided estates over interests arising from term deposits (“depósitos a plazo”) made in institutions subject to the financial entities regime, public securities (“títulos públicos”), tradable securities (“obligaciones negociables”), stakes in common investment funds (“cuotapartes en fondos comunes de inversión”) and debt securities (“títulos de deuda”) of financial trusts, is abrogated as of the 2020 tax period. Furthermore, an exemption is established over interests arising from deposits in saving accounts (“cajas de ahorro”), special saving accounts (“cuentas especiales de ahorro”), term deposits (“depósitos a plazo fijo”) in Argentine pesos, and third party deposits or other forms of gathering funds from the public as determined by the Argentine Central Bank, in all cases to the extent they are made in institutions subject to the financial entities regime, whilst interests arising from deposits subject to clauses of adjustment are excluded from the exemption. The law further re-establishes the exemptions foreseen in section 36 bis of Law No. 23,576, in subsection b) of section 25 of Law No. 24,083 and in subsection b) of section 83 of Law No. 24,441. Finally, exemptions are also established as from tax period 2020 over (i) income obtained by Argentine individuals and undivided estates from the disposition of the assets foreseen in section 98 of the income tax law (text 2019) but not comprised within the first paragraph of subsection u) of section 26 of the referred norm (text 2019), and to the extent they are listed in exchange markets authorized by the CNV, and (ii) income obtained by foreign beneficiaries on the assets not comprised in the fourth paragraph of subsection u) of section 26 of the income tax law (text 2019), to the extent they do not reside in non-cooperative jurisdictions or the invested amounts do not come from non cooperative jurisdictions. Argentine individuals and undivided estates will not be subject to the so-called “cedular tax” over interests corresponding to the 2019 tax period arising from public securities (“títulos publicos”) and tradable securities (“obligaciones negociables”) to the extent they choose to affect such interests to the computable cost of the security from which they arise.

5.- The new PAIS Tax: A new levy denominated as the PAIS tax (Spanish acronym for the phrase “For an Inclusive and Supportive Argentina”) is created for a term of 5 tax periods computed as from the moment in which the law comes into force. The PAIS tax levies (a) the purchase of foreign currency made by Argentine residents for saving purposes or without other specific purpose, (b) foreign currency exchanges made by financial entities on account of the purchaser aimed at paying the acquisition of assets or services made abroad (or of services rendered in Argentina by non-resident parties) that are cancelled through the use of credit, debit or purchase cards, (c) the purchase of services rendered abroad made through Argentine travel or tourism agencies, and (d) the purchase of land, air or aquatic passenger transport services with foreign destination, to the extent that access to the MULC (Spanish acronym for the “Sole and Free Foreign Exchange Market”) is needed for cancelling the transaction. The rate of the PAIS tax is established on 30%, that will apply on the total value of the transaction in the cases foreseen in points (a) to (c) above, and over the value of the transaction net of taxes and government fees in the cases foreseen in point (d) above. The tax applies over Argentine residents that make any of the transactions foreseen in points (a) to (d) above, whilst those entities specifically indicated as such shall act as perception and liquidation agents.

6.- Tax on debits and credits: The tax rate applicable over debits arising from any form of cash extraction is duplicated. The referred increment does not apply on accounts belonging to individuals or entities qualifying as Micro or Small Companies.

7.- Internal taxes: The internal taxes regime applicable over the assets comprised in section 38 of Law No. 24,674 (including different type of vehicles, motorcycles, etc.) is modified through the establishment of new limits for exemptions and new taxable basis, as well as through the incorporation of new value categories and incremented tax rates depending on the case.

For more information, do not hesitate to contact Gastón A. Miani, Ana Do Nizza or Juan Pablo Baumann Aubone.

Natural Gas Exports: Regulatory Updates

On July 26, 2019, Resolution No. 417/19 (the “Resolution”), issued by the Secretary of Government of Energy of the Ministry of Treasury has been published in the Official Gazette with important implications regarding natural gas exports. This Resolution approves a new procedure that must be complied with by those interested in exporting natural gas.

The Resolution revokes prior Resolution No. 104/18 issued by the former Ministry of Energy on August 22, 2018.

This Resolution also entrusts the Undersecretary of Hydrocarbons and Fuels to: (i) enact the applicable framework that shall rule mechanisms for energy substitution for natural gas exports on a firm basis - notwithstanding Resolution’s applicability until such mechanisms are enacted-, and (ii) the elaboration and further approval of the mechanisms applicable for natural gas exports which shall apply upon shortage of natural gas in the local market.

The Resolution’s most relevant aspects are outlined below:

  1. Type of authorizations: The Resolution foresees four (4) kinds of authorizations:
  • Firm or uninterruptible: natural gas purchase agreements which contemplate delivery and reception of gas by the contracting parties that are mandatory and cannot be carved-out except for force majeure events;
  • Interruptible: natural gas purchase agreements which do not contain mandatory delivery and/or reception provisions which bind the contracting parties;
  • Operational exchanges: agreements executed for purposes of attending operational requirements (back-up fuel) and/or emergency scenarios and others of similar nature, to the extent the enforcement authority requires the exporting party to reimport equal amounts of natural gas (or equivalent electricity quantities) within twelve (12) months as of the first event of exportation;
  • Assistance agreements: for providing support to neighboring countries under critical situations and/or declared states of emergency. The exporter shall not be required to import equivalent volumes of the exported natural gas nor its equivalent in power. These exports are excluded from the procedure provided in the Resolution.
  1. Simplification of the procedure to request the authorization: The export filing request shall be made digitally through an online remote platform.
  1. Unconventional natural gas: The volume of exported natural gas produced by a project benefited from the Government’s Incentive Program will be offset from the project’s total production, prior to the determination of the project’s Included Production volumes. Former Resolution No. 104/18 provided that exported gas could not be employed within the Government’s Incentive Program approved for unconventional gas.

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

Public-Private Partnership Agreements. Indicative terms – Power transmission works

The Secretariat of Public-Private Partnership (the “SPPP”) has just outlined the tender terms for the first-high voltage power transmission lines (the “Executive Summary” and the “Project”, respectively), under the new public-private partnership scheme (“PPP”).

The Project comprises the construction and further operation and maintenance of: (1) the 500 kV high voltage line, between ET Río Diamante and the future ET Coronel Charlone; and (2) the future ET Coronel Charlone, along with the 132 kV connections in Laboulaye, Rufino, General Villegas, General Pico Sur and Realicó, and complementary works (hereinafter, referred as the “Main Works”).

The non-binding Executive Summary also foresees the provision of the O&M Services, during the O&M Period (as both terms are defined below).

The Project is designed under the PPP scheme, pursuant to Law No. 27.328 and its regulatory Decree No. 118/2017, which provides an alternative contracting structure to the Public Works and Public Works Concession frameworks (ruled by Laws No. 13,064 and 17,520, respectively).

The awarded bidders will execute a PPP Agreement (the “PPP Agreement”), with the Secretariat of Energy Politics Coordination, currently under the Federal Ministry of Energy (the “Contracting Entity” and the “ME”, respectively), for the execution of the Main Works and the performance of the O&M Services (as defined below).

Transmission projects must be up and running within thirty-three (33) months from the signing of the PPP Agreement (the “Construction Period”), while O&M Services will be provided for up to 15 years (the “O&M Period”) as from commercial operation date.

Please find below a summary of the most relevant aspects of the Project, as per indicated in the non-binding Executive Summary.

Main Works and O&M Services comprised by the Project

As indicated before, the Project involves the expansion of the current high-voltage transmission grid, by means of the execution of the Main Works -which shall be executed within the Construction Period-. The Construction Period is capped at a maximum of thirty-three (33) months from the execution of the PPP Agreement.

Following the Construction Period, the PPP Contractor shall provide the O&M Services within the O&M Period –capped at maximum fifteen (15) years-, comprised by the provision of O&M Services of the Main Works, pursuant to the terms and conditions set forth in the PPP Agreement, electricity regulatory framework, The Procedures and applicable regulations.

Applicable regulatory framework

The PPP Agreement will be governed and construed by (1) Law No. 27,328 and its regulatory Decree No. 118/2017, (2) Law No. 27,431, which approved the national budget for the current 2018 year, and (3) specific regulations of the electricity regulatory framework, such as (a) Laws No. 15,336 and 24,065; (b) their respective regulatory decrees (i.e Decrees No. 1398/1992 and 186/1995), and (c) “The Procedures”, which is a compilation of many resolutions that rule the electric market’s operation (comprised by Resolution No. 61/1992 of the former Secretariat of Electric Energy, as further complemented and amended).

The obligatory and direct application of specific electricity regulations, turns out to be innovative, in comparison with similar projects under the same PPP scheme.

Project’s structure

The PPP Contractor shall (1) execute the Main Works, within the Construction Period, and (2) provide the O&M Services, within the O&M Period. Repayment of investments incurred both during construction –CAPEX- and operation (OPEX) of the Project will be split and subject to different provisions, in order to mitigate the typical risks to which the PPP Contractor is exposed during those stages.

PPP Contractor’s payment

Main Works Payment

When placing its bid, the PPP Contractor will have to choose within two different payment arrangements concerning the Main Works’ execution, whether by (1) Investment Payment Titles Fee and Remaining Compensation, or (2) by a Monthly Compensation.

Such structure is new and differs from those previously adopted for other Argentine PPP Projects, whereas the repayment of PPP Contractor’s CAPEX was linked to long term recoverable TPIs (for its Spanish acronym: Título de Pago por Inversión) or TPDs (for its Spanish acronym, Título de Pago por Disponibilidad) exclusively.

TPI Compensation and residual Compensation

Under the first option, the PPP Contractor will receive a part of the TPIs total amount –which will not exceed the maximum of 80%- as from the fourth (4) year of the PPP Agreement’s term, through TPIs, nominated in US dollars, unconditional and irrevocable, according to the actual Main Works’ progress. These TPIs are linked to the Construction Period phase only.

The remaining 20% of the required total amount will be due and payable as from the Project’s commercial operation date –after the end of the Construction Period-, on a monthly basis, and within the O&M Period, through the residual Compensation (the “Residual Compensation”).

Under this structure:

  • The bidder shall indicate the TPI required percentage –equal or lower than 80% of the required total amount-.
  • Each TPI –that, as mentioned, will be nominated in US Dollars and fixed, unconditional, irrevocable and transferable- will involve thirty (30) biannual payments in US Dollars, being TPI’s first payment date at the thirty-ninth (39) month as from the date on which the PPP Agreement is executed. Non-timely TPIs (either by delays on its issuance or in its payment) will accrue interests.
  • TPIs will be issued by the Electric Transmission Individual Trust (please, see below), by instruction of the Contracting Entity, which shall also be responsible for TPIs payment.
  • In connection with the Residual Compensation, it will also be due under the same terms of the Monthly Compensation (See below).

Payment under Monthly Compensation scheme

Under the second option, the PPP Contractor will receive the total required amount through a monthly compensation (the “Monthly Compensation”), as from the Main Works’ commercial operation date and during the O&M Period.

Such Monthly Compensation will be invoiced by the PPP Contractor to the Contracting Entity, and will be payable by the Electric Transmission Individual Trust in one hundred and eighty (180) US Dollars equal and monthly installments.

Electric Transmission PPP Individual Trust

The Parties to the PPP Trust (the “Electric Transmission PPP Individual Trust”), will be (i) the Republic of Argentina, through the ME, as trustor; (ii) the Governmental Bank for Investment and Foreign Trade (in Spanish: Banco de Inversión y Comercio Exterior S.A., hereinafter, the “BICE”, for its Spanish acronym), as trustee; (iii) Banco de Valores S.A., as administrative agent of the trust; and (iii) PPP Contractor, as beneficiary.

The Electric Transmission PPP Individual Trust will operate as a single trust for the Project, for the administration of the allocated funds to the Project, and will be the obligor in respect to all payments due and payable to the PPP Contractor.

The Electric Transmission PPP Individual Trust will be funded by (1) contributions made by the Wholesale Electric Market Management Company (In Spansh: Compañía Administradora del Mercado Mayorista Eléctrico S.A, hereinafter “CAMMESA” for its Spanish Acronym), by means of Resolution of the former Secretariat of Electric Energy No. 1085/2017- and, (2) contingent contributions of the Federal State. The trust’s reserve account must be funded, at all times, in an amount equal or greater than the yearly PPP Contractor’s required amount. Such eventual contribution will be included in every year’s national budget law.

Bidding process and bidder’s selection

The selection process will be implemented through a national and international tender process, of multiple stages, on which bidders shall: (1) make their technical bid and comply with all the requirements set forth in the bidding terms and conditions (i.e. having experience on constructing high voltage lines in Argentina and abroad); and (2) indicate its selected payment option, as well as the required amount for the Main Works and O&M Services.

The awardee shall be the bidder which indicates the lower total required amount.

Incumbent transmission companies are entitled to place bids within the bidding process, as part of their non-regulated activity.

Required guarantees

The following guarantees are mandatory and therefore required by the Executive Summary (1) a bid bond (the “Bid Bond”), (2) the financial close bond (the “Financial Close Bond”, further to the PPP Agreement’s execution), and (3) the Main Works Bond (the “Main Works Bond”, further to the PP Agreement’s execution), which all of them shall be payable on demand by the issuer.

The term for the Financial Close Bond will be of six (6) months, extendable at the PPP Contractor’s request for additional two consecutive periods of three (3) months each, financial close is achieved. Financial Close shall occur no later than twelve (12) months as from the date on which the PPP Agreement is executed.

It is not required to provide an O&M guarantee during the O&M Period.

PPP Contractor’s constitution - SPV

Before the PPP Agreement is executed, the awarded bidder shall establish a sole purpose vehicle, in the form of a corporation (Sociedad Anónima), which will act as PPP independent transmission company, under the terms of Annex 16 of The Procedures.

Other relevant matters:

  • Risks related to the execution of the Project will be allocated pursuant to a risk matrix, to be agreed by both parties.
  • The early termination of the PPP Agreement for any reason will in no event affect the repayment of unamortized investments incurred by the PPP Contractor.
  • PPP Contractor will be in charge of obtaining all necessary permits and constituting the required power line easements, pursuant to Law No. 19,552.
  • The PPP Agreement will provide for an initial stage for dispute resolution in relation for matters of a technical or financial nature, or related to the interpretation of the PPP Contract, by a dispute board. The PPP Agreement will also establish a further stage of arbitration, whether locally or abroad, which foreign venue may be set forth in accordance with the PPP Contractor’s controlling parties.

At TRS&M, we are following these matters with great interest and are available to discuss any query regarding the above.

PPP News – Stage I Safe Roads Network and LED Luminaires

  1. Highways – Final Documents and Contracting Schedule Publication

    On January 29, 2018, Resolution No. 147/2018 issued by the National Highway Administration (hereinafter, “DNV”, for its Spanish Acronym), was published in the official gazette, which: (i) initiated the national and international procedure applicable to “Highways and Safe Roads Network – Stage 1” (the “Project”), (ii) approved the final documents for the Project, and (iii) sets forth April 3, 2018, as deadline for bid submission.

    As previously indicated in the newsletter “Public-Private Partnership Agreements. Preliminary Bidding Terms of the National and International Tender: Highways and Safe Roads Network- Stage 1”, dated as of December 21, 2017, the Project is the first procedure under the PPP regime, an innovative modality in Argentina, creating a high expectative and interest in its development.

    In addition, final documents are also available in the Undersecretariat of Public-Private Partnership’s (the “UPPP”) website.

  2. LED Luminaries Program

    Additionally, on January 22, 2018, a preliminary document in connection to the Public Lighting Energy Efficiency Program (hereinafter, the “Program”) was published on the web site of the UPPP. This Program is the second project under the PPP regime, and its main aspects are described below:

    1. Object of the Program

      The Program seeks to develop the energy efficiency and illumination quality of the public lighting, by means of the replacement of existing luminaries, for brand new LED technology luminaries. Therefore, the energy saved by using this new technology will have a positive impact in the maintenance costs of the public lighting network, whereas these will be ultimately reduced. This saving allows to afford the new LED luminaries installation and maintenance, as the cash flow related to such energy saving will be destined -either partially or totally- to the Program.

    2. Scope of the services

      The services to be provided by those awardees comprises:

      • Design of the LED luminaries, in accordance to high-quality standards.
      • Provision of the LED luminaries.
      • Installation and commissioning of such luminaries.
      • Waste disposal.
      • Training of municipal employees.
      • Public lighting service provision during the whole term of the PPP Contract.
    3. Contractual scheme
      • The Ministry of Energy and Mining is set forth as the entity in charge of the Program.
      • The Ministry of Energy will also act as contracting party thereof, by means of the Secretariat of Strategic Planning. Different agreements will be entered by and between the respective Governmental spheres involved in the execution of the Program.
      • The PPP Contractors will be those selected bidders.
    4. Program Stages and PPP Contractor’s works and services

      Upon selection as winner in this Program, the PPP Contractors will enter into a PPP Contract, for a total term of ten (10) years from its execution thereof. This PPP Contract will comprise two different stages: (i) Main Works construction and, (ii) Main Services provision.

      During the Main Works stage, the PPP Contractor will undertake all necessary works for the construction and commercial operation of the LED Luminaries. During the Main Works construction stage, the PPP Contractor shall conduct all the necessary works and tasks to put the luminaries into operation. The term for this stage is for a term of one (1) year, following the PPP Agreement execution.

      After the Main Works stage is completed, the Main Services provision stage will take place, for a term of nine (9) years. During the Main Services provision stage, the PPP Contractor is bound to comply with the following services: (i) LED luminaries’ maintenance; (ii) municipalities and citizens queries and claims, and (iii) elaboration of daily reports.

      In addition of these Main Works and Main Services, the Program also foresees the execution of: (i) Mandatory Additional Works –in light of public interest reasons-, and (ii) Voluntary Additional Works -proposed by the PPP Contractor-. Terms and conditions in regards to the payment of these additional works and services will be subject of regulation in the final bid documents.

    5. PPP Contractor’s income

      The PPP Contractor’s income comprises the Public Contribution (Spanish: Contraprestación Pública), which includes: (i) Availabilty contribution (Spanish: Contraprestación por Disponibilidad), linked to the Main Services during the Main Services Stage (OPEX); and (ii) Investment Contribution (Spanish: Contraprestación por Inversión), linked to the Main Works during the Main Works Stage (CAPEX).

      In regards to the Availability Contribution, Payment Availabilty Titles (“TPD”, for its Spanish acronym), will be issued in favor of the PPP Contractor, on a monthly-basis, whereas with respect to the Investment Contribution, Payment Investment Titles (“TPI”, for its Spanish acronym), will be issued in favor of the PPP Contractor. This TPI will represent the actual works executed during the respective investment period.

    6. Risk mitigation

      The PPP sets forth a risk-mitigation matrix, where the different risks that comprise the Program are assigned to each contracting party. As the PPP will be executed in EDENOR’s and EDESUR’s concession areas, these companies will act as collectors of the municipal taxes that will be affected to the Program, as a way to reduce the PPP Contractors’ payment risk. Therefore, the Program foresee that such distribution companies will collect the municipal taxes in favor of the Program, and these amounts will be then allocated to the Program.

      Additionally, for those cases where the exceeding cash flow results insufficient for the payment of the respective amount, the trustee will require the Province to allocate amounts resulting from the federal co-participation quota.

    7. Expected investment

      The Program contemplates the installation of around a hundred thousand (100,000) luminaries per year, with an expected initial investment of approximately US Dollars fifty millions (US$ 50,000,000) and annual operative costs (operation and maintenance) of approximately US Dollars two millions (US$ 2,000,000).

    8. PPP Trust

      As in the Highways Project, Stage 1, a separate PPP Trust will be created in order to administrate the necessary flows to perform the corresponding payments by the emission of the TPIs and TPDs. The trust will be funded with: (i) local municipal taxes, and (ii) contingent public contribution. The PPP Trust parties are not detailed, but it may be assumed that the National Estate – through the Ministry of Energy and Mining – will act as trustor; a financial entity as trustee; and every PPP Contractor as beneficiary.

    9. Other relevant matters
      • A risk matrix where the risk distribution between the contracting parties is available, in accordance to Section 9, subsection b) and c) of Law No. 27,328.
      • With regards to dispute resolution mechanism, a first technical instance is prescribed, following which arbitration will take place.

From TRS&M, we are following this process with much attention and we are available to expand any point developed above.

Bureaucracy Reduction in the Public Administration

On January 11th, Necessity and Urgency Decree No. 27/2018 (hereinafter, the “Decree”) was published on the Official Gazette. The Decree introduces a great number of amendments to current rules in order to reduce bureaucracy and simplify the procedures before the National Public Administration. The declared aim of the Decree is to promote investment, productivity, employment and social inclusion.

Decree´s main amendments

  • SENASA: Certain rules regarding food safety and quality service were abrogated in order to avoid duplicate regulation.

    • Digital Registries are established for account and corporation books as prescribed for Simplified Corporations (“SAS”, for its Spanish acronym)
    • Section 34 of Law No. 19,950 was replaced, forbidding the performance of a hidden or pretended partner. Joint liability of the pretended partner is also established.
    • The digitalization of Public Registries is also settled.
  • FONCDE: The object of the Development of Entrepreneur Capital Fund is modified, introducing the possibility to finance micro, small and medium companies.
  • ARGENTINEAN GUARANTEE FUND (FOGAR): this fund replaces the Micro, Small and Medium Company Guarantee Fund (FOGAPYME). FOGAR´s object is: (i) to grant guarantees on behalf of the ones issued by reciprocate guarantee corporations and (ii) offer direct and indirect guarantees in order to facilitate credit access for developers of economics or productivity activities.
  • EANASE: the National Air Transit Control Direction is dissolved and the Air Navigation Argentinean Company State Corporation is created under the National Ministry of Transport´s orbit, transferring the jurisdiction of the first to the latter.
  • ROAD SECURITY AND TRANSIT: The requirements that owners of vehicles destined to passenger and load transport need to comply with are amended. National Road Direction is assigned as the Enforcement Authority of road concession agreements.
  • TRADEMARK AND PATENTS: Trademark and patents’ registration procedure is amended and simplified, by the introduction of e-government systems.
  • RECIPROCATE GUARANTEE CORPORATIONS: It is strictly forbidden to grant guarantees higher than five per cent (5%) of the risk fund total value to one partner or third parties.
  • DIGITAL SIGNATURE: Electronic official documents digitally signed have the same effectiveness and probative value than their equivalents in paper format.
  • FOSSIL FUELS: the National Ministry of Energy and Mining is assigned as the Enforcement Authority of Hydrocarbons Law No. 17,319. Additionally, the Decree entitles the National Executive Branch to delegate certain powers to the Enforcement Authority.
  • GAS: Section 66 of Law No. 24,076 is amended, introducing the possibility to appeal the National Gas Regulatory Agency´s (ENARGAS, for its Spanish acronym) jurisdictional resolutions before the pertaining Federal Court of Appeal.
  • STATE´S PROPERTY ADMINISTRATION: Certain sections of Decree 1023/01 regarding public auctions as the Administration´s contracting procedure are amended. It is also foreseen the preferential application of public auction rather than direct contracting.
  • PUBLIC WORKS: Section 10 of Law No. 13,064 referred to public tenders´ publicity is amended.
  • SUSTENTABILITY GUARANTEE FUND: ANSES is now authorized to issue any financial and trading market operation allowed by regulatory authorities.
  • SECURITIES: Amendments are introduced regarding digital deliverance, endorsement, guarantee and acceptance of securities.
  • INSURANCES: Related to insurance agreement´s proof, amendments to Law No. 17,418 are introduced. Mandatory Collective Life Insurance Law No. 13,003 is abrogated prior issuance of a regulation regarding National Public Sector employee’s life insurance by National Insurance Superintendence.
  • PORTS: The authorization can now be granted by the pertaining Ministry, and not only by the Executive Branch. Regulations are issued in order to regularize the situation of existing ports and penalties are updated.
  • FINANCIAL INFORMATION UNIT: Certain sections of Law No. 25,246 are amended, settling new information obligations.
  • SOCIAL CAPITAL FUND: The idea of “extraordinary incomes” is included in the definition of “Annual Rent” settled by section 1 of Annex II of the Trust Agreement executed between the National State and FONCAP S.A. Additionally, Financial Services Secretariat is authorized to re-arrange the Trust Agreement.
  • PAINTINGS: Certain aspects related to the importation of paintings are amended.
  • METRIC SISTEM: The necessity to register in a specific registry is established.

Please, do not hesitate to contact us for further information