The Law of Conservation of Cultural Goods and Heritage

On July 7, 2003, the Official Gazette published Law No 25,750, the Law of Conservation of Cultural Goods and Heritage, known as the Cultural Means Law (“CML”). The CML became effective on July 15, 2003.

The CML is part of a government policy which aims to safeguard and defend technological and scientific innovation, national defense and cultural heritage. Its object is to conserve the following:

• anthropological, historical, artistic and cultural heritage;
• businesses dedicated to science, technology and advanced research which are essential to Argentina’s progress;
• activities and industries essential to national defense; and
• radioelectric spectrum and media communication.

All of the above, without prejudice to any of the specific laws made to safeguard Argentine’s strategic interests.

In order to achieve its aims, the CML establishes that once it is in force, media communication companies must be owned by Argentine companies. Foreign companies may hold up to 30% of the corporate capital and the same percentage of stock voting rights. When a country contemplates foreign investments in their own communication media industry on a reciprocal basis, this percentage may be increased respectively.

The CML considers the following to qualify as a media communication company:

• newspapers, magazines, periodicals and publishing houses in general;
• broadcasting services and complementary broadcasting services considered as such under Law No 22,285 (subsidiary FM services, community antennae services, closed circuit radio or television services, and others authorized by the Federal Broadcasting Committee);
• digital and audiovisual content producers;
• internet access providers; and
• companies that advertise in public spaces.

The CML does not apply to the following:

• communication media companies that are owned or controlled by foreign individuals or legal entities at the moment the CML becomes effective; and
• stock or quota purchase agreements or license transfer agreements executed before the CML becomes effective, and which have not yet been approved by the relevant government instrumentality.

Likewise, the CML establishes that cultural companies (not defined by the CML) may not hand over the control of their media content work.

To aid interpretation, the CML includes a definition of Argentine and foreign companies.

The CML defines an Argentine company as follows:

• Argentine individuals or legal entities, incorporated and domiciled in the country and comprised of a majority of Argentine individuals; or
• legal entities incorporated in the country or abroad, directly or indirectly controlled by Argentine individuals domiciled in the country.

And a foreign company as follows:

• foreign individuals; or
• legal entities incorporated in the country or abroad, directly or indirectly controlled by foreign individuals.

The CML also modified Law No 24,522 of Bankruptcy and Insolvency (“LBI”), restricting creditors or third parties from proposing alternative organization plans aimed at taking control of Argentine owned media communication companies undergoing bankruptcy proceedings. Under article 48 of the LBI, if there were not sufficient legal majority to approve a preventive agreement during the so-called ‘exclusivity period’, a subsequent period would start for creditors or third parties to present alternative plans and acquire the bankrupt company if the plans were approved by a legal majority. In this case the bankrupt company would also be able to obtain support for its earlier proposal or any new plan it might make, competing on equal terms with the rest of the interested parties. With the reform that the LCM introduced in the LBI, if no agreement is reached in bankruptcy proceedings, and at the request of the bankrupt party, the Argentine Government must previously authorize the proposal of direct or indirect participation of foreign companies in the property of Argentine owned media communication companies.

The CML has provoked both negative and positive reactions. Certain legal vacuums or contradictions which emerge from close scrutiny of the CML, as well as the political context in which it comes into force, indicate that the Argentine Congress or the Government may make future modifications or regulate the same. As a consequence of the above, any conclusions or interpretation of the CML must be weighed against the application of it by the Courts and relevant government instrumentalities.