Foreign exchange regulations - Transactions with securities

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FOREIGN EXCHANGE REGULATIONS – TRANSACTIONS WITH SECURITIES

On July 10, 2021, the Argentine Central Bank (the “BCRA”) issued Communiqué “A” 7327 (“Communiqué 7327”) that further restricted the access to the foreign exchange market (the “FX Market”) in connection with the so-called “blue chip swap transactions”. In addition, on July 8, 2021, the Argentine Securities Commission (Comisión Nacional de Valores or “CNV”) issued General Resolution No. 895/2021 (the “Resolution 895”), which reduced the so-called “parking” period (i.e., the minimum term during which securities must be held before their sale for foreign currency or transfer abroad), and established limits to the sale and purchase of sovereign bonds subject to foreign law.

1. General Requirements for Outflows through the FX Market

1.1. Exchange of Securities for Other Foreign Assets

Communiqué 7327 maintained the current requirement, whereby a person accessing the FX Market must (1) not have sold securities in Argentina for foreign currency or transferred securities to foreign depositary entities on the date thereof nor in the previous 90 days; and (2) commit not to perform such sales or transfers during 90 days thereafter.

Additionally, Communiqué 7327 established that such requirement will also be applicable to exchanges of securities for other foreign assets performed as from July 12, 2021 –thus including over-the-counter transactions.

1.2. Incorporation of New Requirements for Legal Entities

Communiqué 7327 established that legal entities accessing the FX Market as from July 12, 2021, in addition to the requirements discussed in Section 1.1 above, must not have transferred in Argentina pesos or other liquid assets to any natural or legal person controlling the entity on the date of access to the FX Market nor in the previous 90 days, except for the payment of goods and/or services in the ordinary course. Alternatively, if those transfers were made, the person controlling the entity must not have sold securities in Argentina for foreign currency or transferred securities to foreign depositary entities during such 90-day term.

According to the BCRA’s regulations, there is “control” when a person, directly or indirectly, (i) owns or controls 25% or more of the voting rights in other legal person; (ii) has participated with 50% or more of the voting rights in the shareholders’ meetings where the directors of the other legal person have been appointed; (iii) holds an interest in the other legal entity, so as to have the necessary voting rights to form the corporate will at shareholders’ meetings or to adopt decisions in the board of directors’ meetings; or (iv) exercises a controlling influence over the management and/or policies of the other legal entity.

2. Reduction of the Parking Period and New Limit to Transactions with Sovereign Bonds

Resolution 895 reduced from three to two business days the minimum holding period –parking– for: (i) the sales of securities (previously acquired in pesos or foreign currency in Argentina) in a foreign market with settlement in foreign currency (so called dollar “cable”) -whereas the one-business-day period for sales in Argentina (so called dollar “MEP”) remains in force-; (ii) the transfer of securities (acquired with pesos) to foreign depository entities, except for CEDEARs or the primary placement of securities issued by the Argentine Treasury; and (iii) the sale of securities deposited in the local depositary agent, originating from foreign depository entities, in a foreign market with settlement in foreign currency.

In addition, Resolution 895 reduced from 100,000 NV to 50,000 NV the weekly limit applicable to transactions involving Governmental U.S. Dollar denominated, fixed income securities bonds under Argentina law, and established a 50,000 NV weekly limit for Governmental U.S. Dollar denominated, fixed income securities bonds under foreign law.

Should you require further information, please do not hesitate to contact Fermín Caride and/or María Victoria Funes and/or Lucía Carro.