New Regulation Concerning Repatriation of Direct Investments

On October 28, 2011 the Argentine Central Bank (“ACB”) issued the Communication “A” 5237 (the “Communication”) setting forth the following:

1. As from such date (date as from which the Communication is enforceable) in order for a direct investment to be repatriated by the foreign investor the funds corresponding to all new investment originated in new contributions and acquisition of stakeholdings in local companies and properties must have been settled (i.e., brought into Argentina and exchanged for pesos) in the Argentine Single and Free Foreign Exchange Market (Mercado Único y Libre de Cambios).
2. In cases of transferences of rights of the direct investment between foreign residents the requirement of the prior settlement of the pertinent funds shall be considered fulfilled if its fulfillment by the transferor is evidenced, as long as such fulfillment is required because the direct investment have been made as from the enforceability date of the Communication.
3. Same treatment shall apply to direct investments in the country due to acquisitions by foreign residents of local assets to foreign companies directly or indirectly controlled by local residents, as long as such local assets have been acquired by the selling company as from the enforceability date of the Communication.
4. Lack of fulfillment of the requirements referred to above shall subject all repatriation of foreign direct investments to the prior approval of the BCRA.

Direct investment is, basically, the ownership of 10% or more of the capital stock or votes of a local company and the investment in real estate.

Before the issuance of the Communication the only requirement for the repatriation of direct investments was the evidencing that the investment has been made no less than 365 days in advance.