Approval of the updated Rules of the Public Registry of Commerce

On August 23, 2005, the Public Registry of Commerce of the City of Buenos Aires (hereinafter “PRC”) issued PRC General Resolution 7/05 (hereinafter “Resolution 7/05”), published in the Official Gazette on August 25, 2005 (B.O. No 30,724)

Resolution 7/05 consists of 11 articles and one Annex A (the “Rules”), which consists of 464 articles.

The contents of these 11 articles of Resolution 7/05 entered into force the following day after its publication in the Official Gazette, namely on August 16, 2005, while the Rules will enter into force 180 days after the publication of Resolution 7/05 in the Official Gazette. Therefore, the Rules will be effective as of February 21, 2006.

The main aim of Resolution 7/05 is to reorganize all resolutions issued by the PRC since 1980, including General Resolution PRC 6/80 (“Rules from 1980”), and to prepare a complete consolidated text of them, in order to unify all the applicable legislation. Once effective, Resolution 7/05 will replace the Rules from 1980, except for those general resolutions that refer to capitalization and saving for specific ends (“sistemas de capitalización y ahorro para fines determinados”).

Please note that, although Resolution 7/05 includes all general resolutions issued after 1980, some of them have suffered amendments.

1.   Foundations

The main foundations for the issuance of Resolution 7/05 are:

a)   the necessity of an updated and organized version of the Rules from 1980;

b)the judicial and administrative precedents, related to important subjects such as the substantial plurality of partners, the sufficiency of the registration under Section 118 of the Argentine Companies Law (“ACL”) in order to allow a company to be a shareholder in a local corporation, among others;

c)   the recognition of technical and professional regulations issued by the Argentine Federation of Expert Councils on Economics (“Federación Argentina de Consejos Profesionales de Ciencias Económicas”) and by the Argentine Securities Exchange Commission (“Comisión Nacional de Valores”); and

d)   the necessity to rule new administrative procedures, not regulated in the Rules from 1980

2.    Enforcement of Resolution 7/05

All those procedures that have been already initiated or that are in course and all those procedures that will be initiated before the Rules enter into force, will continue to be ruled by the Rules from 1980, even if they conclude after the Rules are effective. However, Resolution 7/05 allows the possibility to ask for the application of the Rules in case the applicant considers that their application is more favourable.

3.   Temporary Provisions

Resolution 7/05 sets forth certain temporary provisions, which refer to the following matters:

(i)   Corporate directors and managers’ guarantees: those corporations and limited liability companies that have not amended their By-Laws according to PRC General Resolution No 1/05 (“Resolution 1/05”), (please refer to “New restrictions on registration of ‘off-shore’ companies in the City of Buenos Aires” published in Marval News #36 of February 28, 2005) before the effectiveness of Resolution 7/05, shall amend their By-Laws or agreements of incorporation in the first opportunity of their amendment after the enforcement of the Rules.

(ii)   Filing of financial statements: general resolutions that set forth formal requirements for the filing of certain financial statements corresponding to fiscal years closed before the enforcement of the Rules that have not been filed yet, will continue to be applicable.

(iii)   Irrevocable Capital Contributions: Resolution 7/05 extends the term set forth in Resolution 1/05 to capitalize irrevocable capital contributions made before December 22, 2004 until February 21, 2006. Notwithstanding, in order for the company to postpone the capitalization of the irrevocable capital contributions until February 21, 2006, the party who has made the irrevocable capital contribution shall expressly consent in writing as to the delay in the capitalization.

Resolution 7/05 does not mention irrevocable capital contributions made after December 22, 2004. Therefore, the capitalization of those irrevocable capital contributions shall be performed within the term set forth in PRC General Resolution 25/04, (please refer to “New regulations regarding capital variations, financial statements and irrevocable capital contributions” published in Marval News # 34 of November 30, 2004) meaning that they shall be capitalized within 180 days from the date of their acceptance by the management body.

(iv)   Adaptation to Argentine law: in those procedures ruled by PRC General Resolution 12/2003 (please, refer to “Foreign companies - General Resolution PRC No 12/2003” published in Marval News #24 of December 23, 2003), evidence of the cancellation of the foreign company’s registration in its place of incorporation or registration, shall not be required. Therefore, the effects of the non compliance of this requirement shall not be applicable.

4.   Issuance of documentation

Rules from 1980, although replaced by the Rules, shall continue to be applicable when they refer to security requirements for the issuance of documentation (legalization of registrations; copies of particular resolutions, registration evidences, etc.)

Finally, Resolution 7/05, like its predecessor, General Resolution 6/80 sets forth that, the future resolutions to be issued in accordance with the ACL, Law No 22,315, Decree No 1493/82 and any other legal or administrative regulation, shall establish its corporation to the Rules.