RenovAr 2 Program: Extension of intermediate milestones and COD
On February 19, 2019, Resolution No. 52/19 (hereinafter, the “Resolution”), issued by the Secretary of Government of Energy, has been published in the Official Gazette, with significant relevance towards Power Purchase Agreements (“PPA”) awarded under RenovAr 2.
This Resolution states the goal to facilitate the construction and successful commercial operation date (“COD”) of all projects acting within RenovAr 2, and therefore allows for extension of dates committed under the PPA (intermediate milestones and COD) insofar certain conditions are met, as further detailed below.
In order to apply for an extension of intermediate milestones, pertaining filings before the relevant authorities must be performed no later than April 30, 2019. COD extension shall be requested 15 business days in advance as from the original date committed for such milestone.
Below you may find an outline of most relevant aspects set forth in the Resolution:
1) Extension of PPA intermediate milestones
Upon the issuance of this Resolution, owners of RenovAr 2 projects may require an extension of 180 days of each intermediate milestone under the PPA.
Said extension of time sets forth a mandatory prior increase of the PPA Compliance Bond in force at that time, on an amount equal to thirty percent (30%) of the guarantee’s original amount. Should prior increases have been performed, the guarantee may be reduced up to the original amount plus such thirty percent (30%).
The Resolution also foresees that if such intermediate milestone elapses (including 180 day-extension) the guarantee shall also be increased in a twenty percent (20%) per milestone, over the guaranteed amount at such time.
Filings in order to apply for these extensions must be performed no later than April 30, 2019, while the increase of the compliance bond shall be in place before the execution of the relevant addendum of the PPA.
2) Extension of COD
COD may also be extended pursuant to the terms of this Resolution, for a maximum term of three hundred and sixty-five (365) days further to the original date committed for such milestone. Two of the following three conditions shall be met in order to benefit from an extension in COD:
- Achieve thirty percent (30%) of Stated Local Content (“SLC”). This condition shall be considered as fulfilled for those projects that have already committed, at least, said percentage of SLC under their PPAs. Penalties equal to forty per cent (40%) of the monthly billing under the PPA shall be applied for each percentage point of deficiency in the compliance with the SLC. Additionally, a reduction of the PPA’s term and of the Incentive Factor, in accordance with the conditions settled below, shall apply.
- Reduction of the PPA tenor: accept a proportional reduction of the PPA tenor equal to six times the amount of days that COD is extended (e.g. if the new COD is 360 days after original COD was committed, PPA should be reduced in almost six years).
- Reduction of the Incentive Factor in accordance to the formula set out therein
If COD has yet not been achieved (as this date may be extended pursuant to the above), the PPA’s cure period of one hundred and eighty (180) days shall apply (notwithstanding the obligation of paying penalties under the PPA). In case the project does not achieve its COD within said cure period, an additional cure period of extra one hundred and eighty (180) days will be applicable in accordance to Resolution No. 285/18.
COD extension must be requested fifteen (15) business days in advance of the original COD before CAMMESA. For those projects which COD is on or before March 15 2019, the referred filing shall be performed no later than March 29, 2019.
3) Execution of pending PPAs
Finally, the Resolution foresees, for those RenovAr 2 projects that have not yet executed their PPAs, the possibility to do so. Two of the following three conditions must be selected:
- Achieve thirty percent (30%) of SLC. Penalties equal to fifty per cent (50%) of the monthly billing under the PPA shall applied for each percentage point of deficiency in the compliance with the SLC. Additionally, a reduction of the PPA’s term and of the Incentive Factor, in accordance with the conditions settled below, shall apply.
- Reduction of the PPA tenor: in six (6) years, resulting in a new tenor of fourteen (14) years.
- Elimination of the Incentive Factor in accordance to the form settled by the Resolution.
The PPA’s execution shall be done on or before April 30, 2019 and it shall be requested before CAMMESA ten (10) business days in advance.
For these PPAs, intermediate milestones shall be calculated since June 1, 2018, notwithstanding IPPs right to request for an extension of these dates as described above.
Finally, the Resolutions enables to change the Strategic Partner under the PPA. Said change shall be requested fifteen (15) days in advance to April 30, 2019.
New guidelines applicable to the Data Protection Act
On January 16, 2019, the Argentine Data Protection Agency (the “Agency”) enacted Regulation No. 4/2019 (the “Regulation”) which established new guidelines to be applied to the Personal Data Protection Law No. 25,326 (the “Data Protection Act”), in order to enhance its implementation.
In this sense, the main relevant provisions implemented by the Agency are as follow:
- personal data owners may access to their data acquired through video surveillance, provided that, their identity is duly certified. If their request were rejected, they shall be noticed about the possibility to file a claim with the National Direction for the Personal Data Protection;
- if the recorded image identifies any other third party, the data holder shall apply a decoupling technic in order to assure that only the data owner will be identifiable;
- the data owner shall have the right to request a disclosure regarding the applicable logic in those cases in which negative legal effects, or if any other significative negative consequence, may emerge from decisions based on automatic treatment of personal data;
- biometric data identifying a person shall be deemed sensible only if it may result discriminatory to the data owner;
- data holder shall implement valid and effective identification mechanisms;
- in relation to the assignment of personal data among public offices, certain scenarios were defined in which prior consent of the data owner shall not be necessary; and
- underage may consent the treatment of their personal data, under certain conditions.
Any further information, please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or corporate@trsym.com.
Financial Statements´ reporting in constant currency
The enactment of Law N° 27,468 on November 15th, 2018 reestablished the effectiveness of previously abrogated Section 62 (in fine) of General Corporations Law N° 19,550 that sets forth that interim and annual financial statements are required to be reported in constant currency and delegated in the Public Registry of Commerce (“IGJ”) its effectiveness date.
In such respect, IGJ´s issuance of General Resolution N° 10/2018 (the “Resolution”) on December 28th, 2018 reestablished the effectiveness of such obligation and additionally amended General Resolution Nº 7/2015 in the following related matters:
- financial statements must be filed in constant currency (except those issued by entities subject to special control regimes)
- financial statements shall be restated in accordance with the regulations issued by the Argentine Federation of Professional Councils of Economic Sciences (FACPCE) and adopted by the Professional Council of Economic Sciences of the City of Buenos Aires (CPCECABA);
- the decisions to be adopted by governance bodies must be taken with accounting information in constant currency;
- all restatements must be expressed in their actual value;
- companies subject to the Public Registry of Commerce’s control that are controlling, controlled or affiliated to other companies subject to oversight by the National Securities Commission may adopt specific regulations applicable to the latter, explaining the reasons in the financial statements.
Any further information, please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or corporate@trsym.com.
Relevant News in Renewable Energies: Implementation of Distributed Generation Law No. 27,424
On December 21, 2018, Resolution No. 314/2018 (the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”), under the Ministry of Treasury, was published in the Official Gazette of the Republic of Argentina.
The Resolution contains implementation rules of the Distributed Generation Law No. 27,424 (the “Law”) and its pertaining Decree No. 986/2018 (the “Decree”, and jointly with the Law and the Resolution, the “Distributed Energy Framework”).
Most relevant matters of the Resolution are outlined below:
1) Categories of users-generators and connection to the grid
The following categories of users-generators are contained in the Resolution:
- Small users-generators (UGpe, for its Spanish acronym): users connected to the distribution in low voltage, with an equipment of a nameplate capacity no greater than 3 kV.
- Medium users-generators (UGme, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 3 kV and 300 kV.
- Major users-generators (UGma, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 300 kW and 2 MW.
The Resolution also establishes that the equipment of any of the users-generators described above shall not exceed the total aggregate of 2 MW per each MW for each supply point and that such users are allowed to connect to the grid up to a nameplate capacity equivalent to the one actually contracted with the relevant distribution company (authorization of the pertaining regulatory agency is mandatory for greater installed capacity).
For those purposes, the procedure in order to connect to the grid will be carried out by means of a public access digital procedure, to be implemented by the Undersecretary of Renewable Energy (the “URE”).
Equipment already connected as of the date on which the Resolution is issued, must also follow the connection procedure to verify whether such equipment complies with legal and technical requirements set forth in the Distribution Energy Framework.
2) Distributed Generation Agreement
The distributed generation agreement will be entered by and between any of the user-generators described above and the relevant distribution company and shall become effective as of the date on which it is executed with no expiration date (except for those events allowing for termination, as further described below). This agreement will be ancillary in respect of the agreement already in place with the distributor.
Assignment of the distributed generation agreement is allowed upon prior consent of the distribution company.
Rights and obligations with respect of the user-generator and distribution company, as applicable, are foreseen in the Resolution, inter alia:
- distribution company’s right to verify compliance with the requirements set forth in the Distributed Energy Framework and to disconnect users-generators from the grid in case technical conditions are not complied with;
- distribution company’s obligation to purchase the electricity generated and injected to the grid by the user-generator;
- users-generators’ right to supply energy into the grid with no additional charges whatsoever; and
- user-generator’s ability to assign accumulated credits derived from surplus energy; accumulated credits by injected energy and receive payments from such credits.
Finally, the Resolution enables the pertaining distributor to suspend the distributed generator agreement should the user-generator fail to comply with the requirements set forth in the Distributed Energy Framework and in turn, terminate such agreement upon a material breach. Prior remedy stage and defense by the user-generator before the regulatory agency is foreseen.
3) Qualified Installer
Qualified installers shall verify that distributed generation systems comply with the requirements set forth in the Distributed Energy Framework. Professionals from different levels of education may participate as qualified installers and in order to act in such capacity, degree validated by the Ministry of Education, Culture, Science and Technology is required together with enrollment in the relevant professional association.
4) Payment structure
Payments under the Distributed Energy Framework shall be in accordance with the requirements set forth below:
- At the end of each billing period, users-generators shall receive an invoice detailing their consumption and energy injected into the grid, expressed in kilowatt-hour (kWh) with the corresponding prices of each unit expressed in argentine pesos/kWh.
- Energy injected to the grid shall be measured, registered and paid by distribution companies, which shall be duly reflected in the corresponding invoice.
- No additional charges from the distribution companies allowed.
- Should the energy injected into the grid be greater than the one consumed by the user-generator, the user-generator shall have a credit which will be taken into account for future billing periods.
- Credits in favor of users-generators shall not expire and remain in the corresponding account until they are compensated.
- Assignment of such credits to accounts of other users of the same distribution company shall be carried out in accordance with the procedure set forth by the corresponding regulatory agency.
5) Promotional Benefits
Promotional benefits shall be granted to users-generators acting under those jurisdictions which adhere to the Distributed Energy Framework. Local promotional benefits may also apply.
6) Pending Matters
Matters related to (i) the Distributed Generation Development Trust (Fondo Fiduciario para el Desarrollo de Generación Distribuida); (ii) the public access digital platform; (iii) the promotional benefits; and (iv) the fiscal credit certificates set forth in section 28 of the Law remain pending of implementation and are subject to future regulation by the URE.
At TRS&M we are available to provide clarifications or further information of any matter addressed above.
Eugenia Pracchia joins TRS&M as partner of the Litigation, Arbitration, Insolvency & Compliance Team Eugenia Pracchia
Tavarone, Rovelli, Salim & Miani expands its Litigation, Arbitration, Insolvency & Compliance Team through the addition of Eugenia Pracchia as a partner.
Eugenia is an 11-year experienced lawyer with a J.D. degree from the School of Law of the University of Buenos Aires. She holds a post-graduate degree in Economic & Business Law from the Catholic University of Argentina and an LL.M. from the Pompeu Fabra University of Barcelona. She is also an Ethics & Compliance Professional, certified by the Argentine Association of Ethics & Compliance (an IFCA member).
Prior to joining Tavarone, Rovelli, Salim & Miani, Eugenia worked both in the private and public sectors. While serving in renowned Argentine firms, Eugenia represented before Court first-tier companies in commercial litigation and administrative proceedings and also advised in regulatory aspects of financial, FX, capital markets and AML matters. While in the public sector, she acted as counsel to the Central Bank of Argentina’s Board of Directors, enhancing her knowledge of the financial market, banking supervision and regulation, retail payment systems and financial innovation. She has also received several academic distinctions and served as professor in business and banking law academic programs.
In joining Tavarone, Rovelli, Salim & Miani, Eugenia will contribute to the development and expansion of the Firm due to the continuous need for legal services related to domestic and international compliance and its controversies.
Tavarone, Rovelli, Salim & Miani is proud to have Eugenia among its members, who will strengthen the Firm and will contribute to maintain it as one of the most active in our legal market.
RenovAr 3 program - MiniRen
On November 15, 2018, Resolution No. 100/2018 (hereinafter, the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”) has been published in the Official Gazette.
By means of this Resolution, the SGE has launched RenovAr 3 program – MiniRen, addressed to small-medium renewable projects that, if selected as awardees, will enter into a long-term power purchase agreement (“PPA”) with the Wholesale Electric Market Management Company (“CAMMESA” for its Spanish acronym). The tender’s terms and conditions are also attached as Annex thereto.
An outline of the tender terms is summarized below:
| Schedule | • Consultation period: 14/11/2018 – 18/02/2019 • Bid submission: 27/03/2019 • First-stage qualification: 7/05/2019 • Selection of winners: 17/05/2019 • Execution of PPA: 20/05/2019 – 8/11/2019 |
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| Required Capacity by Technology | • Wind/Solar PV: 350 MW • Biomass: 25 MW • Biogas: 10 MW • Landfill Biogas: 5 MW • Small Hydro (PAH): 10 MW |
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| Requirements by Technology | |||||||
| Wind | S.P. | Biomass | Biogas | L.G. | PAH | ||
| Minimum Capacity (MW) | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | |
| Maximum Capacity (MW) | 10 | 10 | 10 | 10 | 10 | 10 | |
| Maximum COD (days) | 730 | 730 | 1095 | 1095 | 1095 | 1095 | |
| Maximum Price (USD/MWh) | 60 | 60 | 110 | 160 | 130 | 105 | |
| Qualified Bidders | • Natural persons or legal entities (onshore or offshore) • Consortiums (“UTE” for its Spanish acronym) • Trusts |
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| PPA – Payment Priority and Dispatch Priority | • 20-year term PPA as from COD. Generators are entitled to terminate the PPA for convenience upon the tenth (10) year anniversary with no associated penalties. • The PPAs shall have the same payment priority that those PPAs under RenovAr 1, 1.5 and 2. • No dispatch priority will be granted for RenovAr 3 projects. |
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| Payment Guarantees – FODER | • FODER shall provide a short-term guarantee backing up CAMMESA’s obligation to make payments under the PPA. Tenor of this guarantee shall be of ninety (90) days. Adhesion to the FODER by means of the execution of a FODER Adhesion Agreement is required. • A USD 35,000,000 bank guarantee provided by the National Bank of Argentina and BICE also foreseen. • No world bank guarantee contemplated. |
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| Integrity Policy | • Bidders shall provide an Integrity Policy Program in accordance with Law No. 27,401 of Corporate Criminal Liability. | ||||||
| Other relevant matters | • Both trusts and consortiums are authorized to act as bidders. • For wind and solar photovoltaic technologies, hybrid projects are allowed. • A Technical Connection and Commercial Agreement Letter shall be executed with the Distribution Agent and, if applies, the Provider of the Technical Transmission Function (“PAFTT”). • Except for the Province of Buenos Aires, a maximum capacity of 20 MW per province is foreseen. |
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At TRS&M we are available to provide clarifications or further information of any matter addressed above.
Thermal Generation and Fuel Procurement: New and Most Relevant Regulation
On November 7, Resolution No. 70/2018 (hereinafter, the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”) has been published in the Official Gazette, with relevant impact towards thermal generators, auto-generators and co-generators, acting within the wholesale electricity market (the “WEM” and “WEM Agents”, as the case may be), whereas by means of this Resolution, Resolution No. 95/13 issued by the former Secretary of Energy (“SE”) has been partially derogated, and therefore, WEM Agents are now entitled to procure their own fuel, whether by their own means or by private third-party fuel supply agreements.
After the enactment of Resolution SE 95/13, WEM Agents were required to receive supply directly from Wholesale Electric Market Management Company (“CAMMESA”, for its Spanish acronym, which acts an independent system operator or ISO), and generators were expected to receive sums arising only under the provisions of Resolution SE No. 95/2013.
By this Resolution that has been recently issued -with abrogating effects regarding Resolution SE 95/13 on fuel-supply matters- WEM Agents may now purchase the fuel that is necessary for their operations in such capacity-.
Because of this Resolution, CAMMESA has ceased to be the sole fuel-supplier of the WEM.
This is significant as the policy adopted by this Resolution is that the SGE has reinstated a fuel-supply market in Argentina, which is aligned with the foundations and criteria originally set forth in Law No. 24,065.
Please find below a brief summary of the Resolution, its relevance and associated business opportunities:
1. Partial abrogation of Resolution SE 95/2013
As indicated before, the Resolution abrogates former Resolution SE 95/2013 on matters regarding CAMMESA acting as sole supplier of the necessary for the WEM Agents’ operation. The former section of Resolution SE 95/13 established that fuel supply, operation and management of the WEM and dispatch of electricity were carried out solely by CAMMESA.
As of the date hereof and by means of this Resolution, WEM Agents may now procure their fuel without resorting to CAMMESA. Associated costs for self or third-party fuel supply will be calculated pursuant to CAMMESA’s variable-fee scheme.
The Resolution further states that CAMMESA shall remain as independent system operator and in charge of supplying fuel to those WEM Agents that do not (or may not) opt-out from CAMMESA’s sole-supply mechanism.
Complementary regulation is expected in the short term by the SGE -or lower-ranked authority depending from the SGE, addressing matters such as technical issues and the opt-out mechanism.
2. Business opportunities
As it is publicly known, hydrocarbon unconventional reservoirs, as Vaca Muerta have generated a big interest for investment.
Vaca Muerta is far yet from achieving its full potential despite notorious advances occurred recently. Analysts estimate that the production of natural gas will be further significantly increased. Such boost would enlarge natural gas supply and in turn, provide a proper environment for new investment and further business opportunities.
Enabling power generators to freely-negotiate the terms and conditions for their fuel-supply, without intervention from CAMMESA, together with growing natural gas production, certainly will enhance efficiency and competitiveness of the electricity markets.
At TRS&M we are available to provide clarifications or further information of any matter addressed above.
Renewable Energy: Regulation of Distributed Generation Law No. 27,424
On November 1, 2018, Decree No. 986/2018 (the “Decree”) was published in the Official Gazette of the Republic of Argentina.
The Decree contains the applicable regulation of Law No. 27,424, which approved the Distributed Renewable Energy Generation Incentive Scheme (the “Law”), passed by the National Congress on November 2017.
The Law sets forth policies and contractual conditions applicable to the distributed renewable energy generation by distribution network users (which in turn are enabled to connect their small-scale renewable energy projects to the electricity grid for purposes of supplying power remainders) and declared this activity as of national interest. Moreover, the Law is also based on open access rules, whereby the distribution companies regulated as public utilities must provide open access to the systems operated by them in this regard.
The Decree establishes that measures implemented under the Law shall be oriented towards achieving a total installed capacity of one thousand megawatts (1,000 MW) on the twelfth- year anniversary as from the date on which the Decree becomes effective (year 2030).
The most relevant aspects of the Decree are summarized below:
1) Enforcement Authority
- The Secretary of Government of Energy, under the Ministry of Treasury, is designated as the enforcement authority of the Law and the Decree (the “Enforcement Authority”), with faculties to issue clarifying and complementary regulations.
- The Enforcement Authority shall: (a) provide technical requirements which users-generators must fulfill in order to generate electric energy for self-consumption and to inject surpluses to the distribution network, and (b) define the categories of users-generators according to technical parameters.
- Further regulation containing safety and technical requirements, to be carried out by the distribution companies in order to enable connection to their grid, is differed to a later stage.
- The Enforcement Authority will approve the terms and conditions of the renewable energy contract to be entered by and between the user-generators and distribution companies. Pursuant to the Decree, the Enforcement Authority shall define the Distributed Renewable Energy Generation Contract main terms and conditions.
2) Scope
- Categories of user-generators shall be defined by the Enforcement Authority, based on power of contracted load and capacity of generation to be installed.
- The way upon the user-generators will connect to the grid, as well as procedural steps including a special authorization, are deferred to further complementary regulation.
3) Connection authorization
- In order to obtain a connection authorization, users willing to install a distributed generation equipment connected to the distribution network shall comply with the procedure to be approved by the Enforcement Authority.
- Such procedure shall include -inter alia- the following steps:
- Analysis of connection feasibility based on the distribution network and the characteristics of distributed generation equipment to be installed.
- Verification of the installations.
- Execution of a distributed electric energy generation agreement.
- Set-up of smart-grid equipment.
- Connection to the distribution network.
- When the technical and security evaluation is approved, the user-generator and the distributing companies shall execute a distributed electric energy generation agreement.
- Once such agreement is executed and the connection is allowed, the Enforcement Authority shall issue a certificate of compliance with applicable requirements and the date of connection to the bidirectional measuring equipment.
4) Invoicing system
The Decree sets forth a net balance invoicing system, whereby costs of consumed energy and produced energy are compensated between each other.
Each distribution company shall comply with the following:
- Distributing companies shall buy and pay to user-generators all energy that may be injected to the distribution network generated by renewable sources.
- The “Injection Rate” shall be the purchase price of electric energy, including the transmission rate of the Wholesale Electricity Market (the “WEM”).
- This compensation shall be valued in Argentine pesos and included in the pertaining invoice.
- If there are any surpluses in favor of user-generators, a credit for future invoices will be generated. If such credit remains, user-generators may request the distribution companies to compensate the remaining amounts. Distribution companies shall pay the remaining amounts in no less than two fixed annual payments.
- Credits may be assigned by users connected to the same grid and may be allocated for tax benefit purposes.
5) FODIS
- The Law creates a government-trust fund known as the Distributed Renewable Energy Generation Fund (the “FODIS”, for its Spanish acronym), which is regulated by the Law, the Decree, rules dictated by the Enforcement Authority, the trust agreement and further regulation. FODIS’ most relevant aspect are summarized below:
- FODIS’ parties: the Enforcement Authority shall act as FODIS’ trustor. A public financial entity shall act as trustee.
- FODIS’ beneficiaries: final beneficiaries shall be the owners of renewable energy generation projects as approved by the FODIS (the “Beneficiaries”).
- Purpose:
- The FODIS is entitled to grant non-fiscal incentives.
- The FODIS may also grant other benefits–e.g., through bonuses in the capital cost for the acquisition of distributed generation equipment–.
- Beneficiaries’ may also benefit from benefits granted by the FODIS, in their capacity of equipment supplier’s or services providers.
- Equity contributions are enabled, as well as financing facilities.
- Funding: the FODIS will be funded by means of:
- Resources from the national budget, determined from time to time by the Enforcement Authority. In this matter, the Law has allocated the sum of Argentine Pesos five hundred million (AR$ 500,000,000) for 2018.
- Capital reimbursements; interests, fines, charges, expenditures, administrative costs and any amounts which the FODIS is entitled to receive; rights, guarantees or insurance which the FODIS receives from the Beneficiaries or third parties.
- Other issues: financing facilities shall be in accordance with requirements that will be determined by the FODIS. Interest rate for repayment may also be subject to a reduced rate.
6) Promotional regime
- The granting of incentives shall be available to user-generators of jurisdictions which adhere to the Law and only if general, technical and security requirements are fulfilled.
- The Enforcement Authority shall set forth the conditions and procedures which shall be fulfilled for the granting of incentives.
- The Enforcement Authority shall set forth the procedure by which the Beneficiaries may request the fiscal credit certificate.
- The Enforcement Authority and the Federal Bureau of Public Income (the “AFIP”, for its Spanish acronym) shall regulate further conditions in this regard.
- The fiscal credit certificate shall not be designated to set off obligations arising from liability caused by third parties’ debts or from the acting of taxpayers as withholding agents.
- Credits and other incentives of the Law may be granted during the twelve (12) year period as of the entry into force of the Decree.
7) FANSIGED:
- The Ministry of Production and Work (the “MPyT”, for its Spanish acronym) shall set forth the requirements and technical regulations related to the Systems, Equipment and Inputs National Manufacturing Incentives Scheme (the “FANSIGED”, for its Spanish acronym).
- Activities of technical assistance for the investigation and development of new prototypes of the addition of improvements in products design shall be considered activities of investigation, design and development and, consequently, shall be benefited by the FANSIGED.
- The MPyT shall set forth requirements and procedures which interested parties shall comply with in order to receive incentives.
- Micro, Small and Medium enterprises which comply with requirements set forth in the Law and which wish to adhere to the FANSIGED shall obtain a PyME Certificate and shall submit documentation which shows proof of turnover and shareholding structure of the corresponding company.
8) Tax incentives
The following incentives are included in the FANSIGED:
- Fiscal certificate for the investment on investigation and development, design, capital assets and certificates for manufacturing companies. The procedure to obtain such certificate shall be jointly determined by the MPyT and the AFIP.
- Accelerated depreciation in Income Tax, for the acquisition of capital assets for the manufacturing of equipment and supplies destined for the distributed renewable energy generation, except for automobiles, in the conditions which shall be set forth by the MPyT and the Ministry of Treasury.
- VAT early reimbursement for the acquisition of assets mentioned in the immediately preceding section, pursuant to a procedure to be determined by the MPyT and the Ministry of Finance.
- Access to financing with preferential rates, in accordance with regulation which the MPyT shall set forth.
- Access to the Suppliers Developers Program, in accordance with regulation which the MPyT shall set forth.
9) Penalties
The Decree also sets forth that failure to comply with terms related to information and authorization requests, as well as to measuring systems installation and connection by user-generations, shall be penalized and shall result in a compensation in favor of the user-generator based on the penalties set forth by each regulatory authority.
Further steps regarding implementation of applicable procedures as well as other requirements mentioned above are due and expected to occur briefly.
At TRSyM we are available to provide clarifications or further information of any matter addressed above.
Improvements in Databases Registration Process
On October 22, 2018, the Public Information Agency issued Resolution No. 132/2018 (the “Resolution”), amending Provision No. 2 issued by the National Directorate for the Protection of Personal Data. These amendments are aimed at enhancing the registration of databases with the National Database Registry, not only for private but also for state-owned companies.
In this regard the Resolution sets forth that:
- all registrations, modifications and deregistration of personal databases -both private and public- must be processed exclusively through the Distance Procedures Platform (Trámites a Distancia – TAD) or through the Electronic Document Management System (Gestión Electrónica Documental – GDE).
- any and all officers responsible for of private archives, registers, databases or personal data banks registered with the National Database Registry should proceed to renew their registration through any of the abovementioned procedures by October 31, 2019. Any and all officers responsible for public databases must comply with this obligation by February 28, 2019; and
- all registration procedures to be carried-out will be free of any costs.
Finally, please note that the Resolution entered into force on October 23, 2018.
Please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or corporate@trsym.com for any further information.
Integrity Guidelines to comply with the provisions of the Criminal Liability of Legal Entities Law No. 27,401
The Argentine Anticorruption Office (“AO”) has recently published the Integrity Guidelines (the “Guidelines”), in order to comply with the provisions under sections 22 and 23 of the Criminal Liability of Legal Entities Law No. 27,401 (the “Law”). The Guidelines consist of a technical guide for the implementation of Integrity Programs (each, a “Program”) required under the Law and include, among others, the following issues:
- Accountability of the Program before the Argentine authorities
The legal entities comprised by the Law must create a Program in accordance with the dynamics of their own activities, and explain its foundations and reasonableness to the applicable authority. - Not mandatory
Notwithstanding the advantages mentioned by the AO, adopting a Program is not mandatory. The decision on its implementation will be subject to the analysis that each legal entity makes in accordance with its risk’s exposure and the framework for the development of its activities, among other factors. - Reasonableness of the Program
In case a Program is implemented, it must be made in a reasonable way, i.e., considering the Guidelines on Risk, Dimension and Economic Capacity of the legal entity. - Mandatory and optional content
In addition to the elements that are mandatorily required (Code of Ethics, Rules and Preventive Procedures and Periodic Training), the Guidelines suggest to adopt other tools such as Internal Complaint Channels, Whistleblower Protection, Periodic Risk Analysis, among others. - Steps for designing and implementing a Program
Although each Program should be created in accordance with the particulars of each legal entity, the Guidelines suggest that certain steps be followed in connection with its design and implementation. Among them, commitment of senior management regarding the development of the Program; evaluation of the legal entity and identification of its risks; definition of a risk exposure plan; implementation of such plan; evaluation of the Program in progress; communication and diffusion of the Program to the employees of the legal entity and relevant third parties. - Content
The Guidelines describe certain elements that the Program may contain, providing general parameters to facilitate its design and implementation: - Code of Ethics
The Program should group in a single document all general integrity policies applicable to the legal entity’s employees and third parties. The values of the organization, the ethical guidelines applicable to its members, prohibitions of improper behavior and sanctions in case of non-compliance should be clearly stated. - Integrity in bidding procedures and interactions with the public sector
These rules and procedures must cover all relevant interactions of the legal entity with the public sector. The Guidelines suggest to cover: (i) with respect to purchases and contracts, interactions with public officers who: (a) have decision-making capacity in the allocation of public resources; (b) prepare investment projects; (c) make tender procedures public; (d) take part in evaluation committees; (e) are in charge of inspection activities or work supervision; (f) take part in commissions that receive or express conformity to purchased services and products; (g) take part in accounting or financial sectors in charge of making payments. (ii) With respect to other potential risky interactions, officers who oversee: (a) authorizations and permits; (b) fundraising activity; (c) inspections and superintendence; (d) exercise of a regulatory activity. (iii) With respect to its own members: (a) commercial, sales, purchasing and marketing sectors; (b) managers and legal and commercial representatives; (c) areas of institutional relationships and relations with governments; (d) distributors and operational areas responsible for the delivery of goods; (e) technical representatives in works and operational areas responsible for the execution of contracted works; (f) financial areas and areas responsible for approving or making payments.Regarding rules and procedures, the Guidelines suggest to include: (i) clear identification of public officers as risky counterparties; (ii) specific reference to zero tolerance to bribery or illegal payments made on behalf, or in the interest, of the legal entity; (iii) clear intention that no act carried out on behalf, or in the interest, of the legal entity pursues, as its main purpose, to unduly influence a public officer for the benefit of the legal entity; (iv) prohibit searching or using of privileged or confidential information; (v) disincentives to any participation or collaboration in fraudulent acts conducted by public officers; (vi) clear regulation on prohibitions and exceptions to gifts to public officers; (vii) disincentives to any illegal employment, solidarity initiatives or similar actions; (viii) clear distinction between payments to organizations and payments directed to public officers that result in personal benefit; (ix) prohibition of campaign contributions on behalf of the legal entity; (x) obligation to internally communicate the existence of relationships with senior officers that ease compliance with Decree 202/17 (Conflicts of Interest) or similar.
- Trainings
With respect to periodic trainings, the Guidelines recommend the following: (i) promotion by the Board of Directors and the management of the legal entity of active participation in the activities by the employees; (ii) full participation of senior management in training activities; (iii) synchronization with the Code of Ethics and Program’s policies; (iv) combination of general trainings with personalized trainings; (v) an initial training (as part of the induction of each employee starting in the organization) and a mandatory general training at least once a year; (vi) clear incentives for training; (vii) evaluation of the trainings in terms of: (a) proper training of those receiving it; (b) through satisfaction surveys or other mechanisms;(c) evidence of existence by documenting its details; (d) projection of continuous monitoring; (e) update and continuous renewal of its contents, incorporating lessons learned; (f) incorporation of guidance stages that include advice upon queries and specific cases. - Internal Research
Internal Research should be regulated in such a way that the limitations arising from privacy rights and worker’s dignity be respected, while, as per the management of information, the provisions for obtaining and processing personal data must be complied with. The Guidelines recommend putting in place a written internal protocol to regulate on matters related to media access and devices that the employer provides to its workers informing that the information stored in those sources and devices belongs to the legal entity. Also, it is advisable to consider policies related to the chain of information custody (and the adoption of external support when dealing with electronic evidence), witnesses’ interviews, and involvement or exclusion of internal areas, depending on the potential involvement in the investigated facts. The Guidelines suggest to implement rules on how to proceed in certain special cases such as: access to employees’ corporate e-mail, access to telephone call records; vehicle satellite tracking records; access to Internet browsing history; access to stored documents; access to drawers or cabinets; video surveillance; access to entry and exit records; inspections of clothing, bags and automobiles; tests for drug consumption; interviews on internal investigations. - Due diligence to third parties
The Guidelines suggest to: (i) know the counterparties and have information about the characteristics and relationships of third parties, including their commercial reputation and the relationship, if any, with local or foreign public officers; (ii) increase the level of scrutiny to the extent that the alerts are greater; (iii) ensure an adequate understanding of the rationale of the relationship that is created with third parties. In addition, it is important to control that the third party is actually performing the work for which it was hired and that its compensation is in accordance with its work; (iv) transmit properly to third parties the integrity policies of the legal entity and demand their compliance; (v) control the actions of third parties in such activities that may be perceived as acting on behalf, for the benefit or in the interest, of the legal entity according to its usual meaning in the context of the businesses that are carried out. The following will be considered relevant counterparties: subsidiaries; partners in joint ventures; dealers; agents; commercial representatives; intermediaries; managers; lobbyists; contractors; consultants; customs’ brokers; suppliers; service providers and customers.The analysis to be applied on the third parties must include aspects such as: structure and operation; composition of the third party's business; reputation; links and relationships; potential conflicts of interest; financial solvency; technical/professional suitability; track record; existence of anti-corruption program or policies.
- Due diligence in processes of corporate transformation
The Guidelines recommend to carry out an analysis on the integrity of the acquired legal entity consisting of a broad and rigorous scrutiny. The cases include transformation, merger and split in the terms of the General Corporation Law.The M&A due diligence may include actions such as: verification of anti-corruption compliance by the target company; implementation of anti-corruption policies by the target company; providing directors with training in such policies; and post-closing audit.
- Internal Responsible Person
The Guidelines provide for rules on the functions of the Internal Responsible, listing the following, among others: analysis of ethical risks; design of internal policies; conduction of the Program; advice on ethical dilemmas; management of complaints received; whistleblower protection; leadership in internal investigations; support on self-denunciation and cooperation with authorities; Program supervision; strategic planning of the legal entity; training design; adaptation of the Code of Ethics to current regulations.
At TRS&M we remain available to provide a further analysis on the matters described herein.