Amendments to Argentine residents’ foreign investments - Authorization to release mandatory deposits when the funds are allocated to invest in inventory

Through Communication “A” 4,863 the Argentine Central Bank (the “Central Bank”) revoked, as of November 3, 2008, the amendments introduced by section I of Communication “A” 4,850, and reinstated section II of Communication “A” 4,786, reestablishing:

(i)    the requirement that the accounts to which Argentine residents transfer foreign currency purchased in the foreign exchange market as portfolio investments have to be maintained in financial entities or investment banks located in OECD countries (Organization for Economic Co-operation and Development countries) with an international rating of at least ‘BBB’;

(ii)   possibility of transferring the funds to off-shore sub-accounts of Argentine residents;

(iii)   the possibility that the foreign account has to be registered in the name of the Argentine resident making the transfer; and that purchases of foreign currency over the equivalent of US$ 10,000 can be made either through current or savings accounts registered in the name of the person making the transaction, through an electronic transfer made to the intervening entity from the bank account of the person making the transaction, or by check; and

(iv)  the possibility for people with authorization as “temporary resident” according to the Argentine Immigration Law No. 25,871 to transfer funds to financial entities located in their country of residence.

Through Communication “A” 4,871 the Central Bank established, as of November 14, 2008, that the limit to the purchase of foreign currency by Argentine residents to make foreign investments should be of the equivalent to US$ 2,000,000, without exceptions; thus removing the possibility to exceed that limit when the amount of foreign currency purchased is not more than the total in Pesos of export duties plus 3 times the amount paid in credit and debit taxes in current or savings accounts, paid to the Federal Tax Agency (AFIP) in the month previous to the last month.

Through Communication “C” 52,208 complementing Communications “A” 4,804 and “A” 4,762 (which regulates foreign indebtedness allocated to invest in non-financial assets) the Central Bank established that mandatory deposits funds made since May 15, 2008 may be released before the term of 365 days has elapsed provided that:

(i)    the funds had been allocated to the purchase of goods registered as inventory in the company’s balance statements, and supporting documentation is provided;

(ii)   the loan had been agreed and repaid at an average life of no less than 2 years (including payments of principal and interest); and

(iii)   the released funds were allocated to invest in non-financial assets according to Communication “A” 4,762.