The Central Bank of the Argentine Republic (the “Central Bank”), through Communiqué “A” 7168 dated November 9, 2020 (the “Communiqué 7168”), eased the access to the foreign exchange market (the “FX Market”) for transactions entered and settled as of November 16, 2020 addressed to financing projects within the framework of the Plan to Promote Argentine Natural Gas Production – Supply and Demand Scheme 2020-2024 established in Section 2 of Decree No. 892/2020 (Plan de Promoción de la Producción del gas Natural Argentino- Esquema de Oferta y Demanda 2020-2024, the “Natural Gas Plan”)
In this regard, through Communiqué 7168 the following was established:
(i) Distribution of dividends and profits in foreign currency to non-resident shareholders
The access to the FX Market to transfer foreign currency abroad for profits and dividends to non-resident shareholders, will be granted by the financial entities, without the prior approval from the Central Bank, when the following conditions are met:
(a) profits and dividends correspond to closed and audited financial statements;
(b) the aggregate amount paid to non-resident shareholders for this concept does not exceed the corresponding amount of Argentine pesos, pursuant to the distribution approved by the shareholder´s meeting. The financial entity shall obtain a signed affidavit from the legal representative of the local company or attorney-in-fact with specific powers to assuming such commitment; and
(c) access to the FX Market takes place at least two years after the settlement of the transaction addressed to financing projects within the framework of the Natural Gas Plan and such transaction is declared in the last due filing of the External Assets and Liabilities Survey.
(ii) Cancellation of principal and interest derived from financial indebtedness abroad
Entities may provide access to the FX Market, without the prior approval of the Central Bank, for cancellation at maturity of principal and interest derived from financial indebtedness abroad addressed to financing projects within the framework of the Natural Gas Plan to the extent that such indebtedness (i) has an average life of not less than two years; (ii) ; the funds received were settled through the FX Market to Argentine pesos; and (iii) be declared in the last due filing of the External Assets and Liabilities Survey.
(iii) Repatriation of direct investments made by foreign investors
Entities may provide access to the FX Market, without the prior approval of the Central Bank, for repatriation of direct investments made by foreign investors addressed to financing projects under the Natural Gas Plan up to the amount of the funds of such investment settled through the FX Market and converted to Argentine pesos as of November 16, 2020, if the following conditions are met:
(a) the entity must provide the documentation evidencing the inflow of funds into the local company;
(b) access to the FX Market takes place at least two years after the settlement of the investment addressed to financing projects within the framework of the Natural Gas Plan;
(c) in case of capital stock reduction and/or return of irrevocable contributions made by the local company, the entity must provide the documentation evidencing compliance with the legal mechanisms provided and verified, if applicable, that the local company had declared in the last due filing of the External Assets and Liabilities Survey, the liability in Argentine pesos generated from the date of the non-acceptance of the capital stock reduction and/or return of irrevocable contributions.
In all cases, the entity must provide with (i) all the documentation verifying the genuineness of the transaction to be carried out; (ii) that the funds were applied to financing projects within the framework of the Natural Gas Plan; and (iii) the compliance with the any other requirement set forth in the exchange control regulation established by the Central Bank.
Access the full text of Communiqué 7168 here.
This publication does not constitute a legal opinion on specific matters. If necessary, specialized legal advice should be sought.
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