Legal Update

January 17, 2020
Exception to the Current FX Restriction 
for Payment of Dividends Abroad

On January 16, 2020, the Argentine Central Bank (the "Central Bank") issued Communication "A" 6869 (the "Communication") that establishes an exception to the requirement, initially imposed by the Central Bank on September 1, 2019, of obtaining the Central Bank's prior approval to access the local foreign exchange market for payment of profits and dividends to foreign shareholders.
 
Under the new Communication such prior approval of the Central Bank will not be required provided that all of certain conditions are met, including the following:
  • The profits and dividends must correspond to closed and audited financial statements. This would exclude the payment of interim dividends under quarterly financial statements with auditors' limited review.
     
  • The total amount to be transferred abroad as of January 17, 2020 may not exceed 30% of the new contributions of foreign direct investments in the local company that were transferred and converted into argentine pesos in the foreign exchange market as of such date. Therefore, in addition to the amount limitation, the prior transfer of the contributions made by foreign shareholders and its conversion into argentine pesos is also required.
     
  • A period of no less than 30 consecutive days has elapsed since the date of conversion into pesos of the last contribution considered for the purposes of the previous point.
     
  • The documentation proving the final capitalization of the contribution needs to be submitted before the financial entity intervening in the transaction. In its absence, evidence of the initiation of the proceeding before the Public Registry of Commerce for the registration of the final capitalization of such contributions may be submitted and proof of its registration must be filed within 365 days from the date of initiation of the proceedings.
     
  • If applicable, compliance with the last overdue filing of the "Survey on Foreign Assets and Liabilities" for the transactions.
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In an environment of increased regulatory focus, our Banking & Finance practice provides practical, commercial and strategic advice to both corporate clients and financial institutions on compliance with Central Bank regulations.
 
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Natalia Rauchberger
Julio Martínez


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