COVID-19: Mandatory Change of Maturities with Local Banks

As part of the national sanitary emergency imposed due to the Coronavirus (COVID-19), the Argentine Central Bank published today Communication “A” 6949 (the “Communication”), mandatorily extending the payment dates of financings granted by local financial institutions due between April 1st, 2020 and June 30, 2020.

The Communication establishes in point 4 that:

  1. Banks are prohibited to charge default interests during said period, and those financings will only accrue compensatory interests at the expected contractual rate.
  1. Amortizations and maturities that fall within that said period, excluding credit card payments, shall be postponed to the month immediately following the month in which the final maturity of the financing is due. In this case, it is our understanding that if the final maturity date of the financing occurs within the above-mentioned period, then such final maturity will be postponed to the same day of the immediately following month, even if such month is part of the above-mentioned period.
  1. Credit card payments due between April 1, 2020 and April 12, 2020 may be cancelled on April 13, 2020 for the same amount and without any surcharge.
  1. This Communication excludes any credit facilities granted to the financial sector entities.

Notwithstanding the foregoing, the Communication does not affect the bank's right to accelerate payments and/or initiate legal collection actions, once each financing can be considered past due according to the regulation described above.

For further information, please contact Marcelo R. Tavarone, Federico Salim, or Julieta De Ruggiero.


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 corporate@trsym.com.


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.

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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 corporate@trsym.com.


Legal issues related to the execution of documents and social distancing

It is public knowledge that the preventive and mandatory social distancing established by Presidential Decree No. 297/2020 due to the COVID-19 (Coronavirus) pandemic limits the mobility of people in Argentina and affects operative issues related to the execution of documents, including contracts.

With technology as a key ally and due to the inability to execute documents or contracts on site, it is worth mentioning that digital signatures have been regulated in Argentina by section 288 of the Argentine Civil and Commercial Code, the Digital Signature Law No. 25,506 (the “Digital Signature Law”), as regulated by Decree No. 182/2019.

The Digital Signature Law provides for two different signatures: (i) digital signatures (section 2 of the Digital Signature Law) and (ii) electronic signatures (section 5 of the Digital Signature Law).

A digital signature is the result of applying mathematic procedures to a digital document with information known to the signatory only, information which will later be verified by a third party (certifying licensee) licensed to verify digital signatures.

The requirements for a digital signature to be valid are set forth in section 9 of the Digital Signature Law. In order to use an Argentine digital signature, the signatory must be previously registered with a certifying licensee (by means of a personal interview that requires a scheduled appointment). In turn, the certifying licensee must be previously authorized by the Argentine Government.

An electronic signature is any electronic data associated to other electronic data produced by a signatory in order to identify itself that does not meet all the requirements of a digital signature.

Electronic documents signed with a digital signature are presumed to have been signed by the signatory. The enforceability of electronic documents signed with electronic signatures is weaker, as the enforcing party will be required to prove the authorship of the signature.

Although both tools are extremely useful to continue with business activity during the pandemic, if a party denies the authorship of an electronic signature, the enforcing party will be required to prove the validity of that signature.

Those digital tools are additional alternatives to execute documents.

Should you need further advice on the requirements to execute documents remotely using alternative methods, please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, Pablo Tarantino, or Agustín Griffi, or also corporate@trsym.com.


CORONAVIRUS (COVID-19) OUTBREAK: economic and legal impact

The Coronavirus outbreak (COVID-19) is affecting the economy and the due fulfillment of existing obligations.

In order to anticipate the legal consequences that may arise from said event, our Firm suggests implementing the following actions:

  • Analysis of regulation and public policy on this matter and its effects on business and obligations. Design of legal remedies and potential claims.
  • Identification of essential clauses on contracts, termination and force majeure and unforeseen events provisions. Assessment of the consequences arising from the breach of contract and potential defenses and legal actions.
  • Restructuring of assets and liabilities, temporary suspension of activities and business continuity.

For further information, please contact Mariano Rovelli, Eugenia Pracchia, Marcelo Tavarone, Juan Pablo Bove, Nicolás Eliaschev and Gastón Miani.


Interventions in the Electricity and Gas Agencies

On March 17th, 2020 Decrees No. 277/2020 and 278/2020 (the “Decrees”) were published in the Official Gazette, which have ordered the intervention of the Electricity Regulatory Authority—in spanish Ente Nacional Regulador de la Electricidad—(“ENRE”) and the Gas Regulatory Authority—in spanish Ente Nacional Regulador del Gas—(“ENARGAS”) and designated Lic. Federico José Basualdo Richards and Lic. Federico Bernal as intervenors.

The Decrees have been enacted in the context of Law No. 27,541 of Social Solidarity and Productive Reactivation, passed by the National Congress, which declared a public emergency in economic, financial, fiscal, administrative, pension market, rates, energy, health care and social matters for a 1-year term, and entrusted the National Executive to intervene the energy and gas agencies.

Such bill also authorized the National Executive to freeze natural gas and electricity rates under federal jurisdiction and to carry out an extraordinary review of the current rate structure of those activities regarded as public utilities, in the terms of Laws No. 24,065 and 24,076 -which foresee the regulatory frameworks applicable to electricity and natural gas-, tending to a reduction in rates during the current 2020 year.

  1. Term of the interventions

The interventions of the ENRE and ENARGAS will remain in force until December 31, 2020.

  1. Powers of the intervenors

The intervenors are entrusted to:

(i) Conduct an audit and a technical, economical and juridical review in order to further assess the current rate structure for transportation and distribution of electricity and gas within the framework of Law No. 27,541, and are in turn enabled to carry out an renegotiation of such rates and/or undertake an extraordinary review, pursuant to Law No. 24,065 and 24,076, as applicable. Should the intervenors detect anomalies in the context of such revision, they shall inform the National Executive, providing all information and corresponding documents, and suggest the actions and measures which may deem necessary.

(ii) Review the public tendering procedures carried out in order to designate the former board members of the ENRE and the ENARGAS and thereafter, initiate a new selection procedure.

  1. Current members of the ENRE and ENARGAS boards discharged

Current board members of such agencies have been discharged by means of the Decrees.

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

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In the following link, you can access to the publication made by Nicolás Eliaschev regarding certain energy matters of Law No. 27,541.

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


Coronavirus - Important notice

Considering the outbreak of the Coronavirus pandemic, we would like to reinforce our commitment to the provision of our legal services while also prioritizing the safety, health and well-being of our staff and clients.

The Firm has adopted al necessary steps, including, without limitation, cancellation of in-person meetings, trips and events, personnel rotation and home-office options.

At the same time, our technological resources ensure permanent availability of all of the members of our Firm and this enables us to continue providing our clients with the legal service of the highest quality that they deserve, supporting them, as well, in the new challenges the existing situation has created.

We are following-up on all developments and we hope these hard times are overcome as soon as possible.


News in the Energy Sector: New Remuneration Structure for Legacy Power Generators, Co-generators and Self-generators

Resolution No. 31 issued by the Secretary of Energy (“Resolution 31”) and published in the Official Gazette on February 27, 2020: (i) has repealed former Resolution No. 1/2019 issued by the former Secretary of Renewable Resources and Electricity Market; and (ii) approved a new remuneration structure for legacy power generators, self-generators and co-generators of the Wholesale Electricity Market (“WEM”). The new regime applies to legacy facilities which do not sell their energy under a power purchase agreement (“PPA”).

The purported aim of Resolution 31 is to adjust the remuneration criteria for generators to ensure the sustainability of the WEM under economically reasonable and efficient conditions. To this regard, the resolution states that energy generation costs must be passed through to final users.

The rationale that Resolution 31 invokes as grounds to its issuance is the abrupt change in the exchange rates which negatively impacted the remuneration structure that was stipulated by the former Resolution No. 1/2019.

The most relevant aspects of the Resolution 31 are outlined below:

  1. Scope of Resolution 31

A new remuneration mechanism for conventional and renewable generation, cogeneration and self-generation, operating without a PPA, has been approved, effective as of February 1, 2020.

  1. Remuneration in Argentine pesos

The new remuneration structure, unlike the repealed Resolution 1, provides that the amounts paid to the WEM agents identified above will be nominated and paid in Argentine pesos.

Former Resolution 1 determined that the remuneration of such was calculated in US dollars and the payment was in Argentine pesos, using for its conversion the exchange rate published by the Central Bank of Argentina "Reference Exchange Rate Communication 'A' 3500 (Wholesale)", of the day before the due date of the economic transactions.

  1. Remuneration adjustment mechanism

Remuneration shall be adjusted on a monthly basis according to a formula based on the Index of Consumer Prices (IPC) and the Index of Internal Wholesale Prices (IPIM), both published by INDEC (the Argentine Statistic Agency).

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


The Superintendence of Corporations reinstates control regime of foreign companies

On February 21, 2020, the Superintendence of Corporations of the City of Buenos Aires (“IGJ”) issued General Resolution 02/2020 (“RG IGJ 02/2020”) which expanded the registration and information requirements in connection with the companies incorporated overseas.

RG IGJ 02/2020 repeals General Resolution IGJ 06/2018, reinstating the articles of the General Resolution IGJ 07/2015 (“RG IGJ 07/2015”) included under provisions of Title III, Book III regarding companies incorporated abroad. In that regard, the resolution restores the obligation to prove that the main economic activity of the company is carried out outside of the Argentine Republic through the submitting of documentation signed by a company officer, for all companies that intend to register in the Argentine Republic under Articles 118 or 123 of the General Companies Law No. 19,550 (“LGS”).

In turn, as provided in article 218 of the RG IGJ 07/2015, the prohibition of the registration of an offshore company from jurisdictions of that nature is also restored.

In addition, the RG IGJ 02/2020 incorporates the obligation of foreign companies registered in Argentina to submit the Annual Information Regime (“AIR”), within 120 calendar days after the closing date of the financial statements of the corresponding branch or representation office.

Finally, the RG IGJ 02/2020 establishes that the legal representatives of the companies incorporated abroad must keep until the cancellation of their registration as representatives plus an additional term as from such cancellation equal to that of the statute of limitation applicable to claims for non-contractual liability (i.e., three years), a guarantee in accordance with the provisions of subsections 2 and 3 of article 76 of the RG IGJ 07/2015. The amount of such guarantee for each legal representative will be five times the minimum capital required for corporations, which would correspond to AR$500,000. Legal representatives in office at the time of issuance of the RG IGJ 02/2020, must file the aforementioned guarantee with the next immediate filing of the AIR of the company.

For further information, please contact Juan Pablo Bove, Federico Otero, Julián Razumny, Pablo Tarantino or Agustín Griffi.