New extension of the term of public emergency

1. Extension of public emergency and delegation of powers to the Executive Branch

Law No 25,972 extends the term of public emergency and delegation of extraordinary powers to the Executive Branch referred to in article 1 of Law No 25,561 (as amended), untilDecember 31, 2005.For more information relating to such extraordinary powers, we suggest reading the article “Law No 25,820 extends the term of public emergency”, published in Marval New # 24 on December 23, 2003.

The state of public emergency declared by Law No 25,561 was originally set to expire on December 31, 2003 and was then extended until December 31, 2004 by means of Law No 25,820.

The term of the complementary Law No 25,790 (that establishes the term to carry out the renegotiation of public works and services agreements set forth by article 9 of Law 25,561) is also extended. Law No 25,972 also extends the state of federal sanitary emergency established by Decree No 486/02, its complements and amendments, including the terms determined by Decree No 756/04.

The extension decided by Law No 25,972 does not comprehend the loss of corporate capital as a cause for dissolution of commercial companies (articles 94, subsection 5, and 206 of Law 19,550 as amended) that was extended until December 10, 2004 by Decree No 1293/03.Up to this day, the application of this suspension has not been extended.

Law No 25,972 also empowers the Executive Branch to declare the total or partial cessation of the state of public emergency in one, several and/or all the subjects and basis comprehended in article 1, Law No 25,561 as amended.

2. Court tax applicable to in-court and out-of-court restructuring agreements

Law No 25,972 states that, in the case of in-court restructuring agreements (“acuerdos concursales judiciales”) and out-of-court restructuring agreements (“acuerdos preventivos extrajudiciales”) judicially endorsed in the terms of Laws No 24,522; 25,561; 25,563; 25,589 and their extensions, the “court tax shall be calculated on the final amount of such proceedings using the following rates: 0.75 per cent and 0.25 per cent, respectively”. Law No 25,972 imposes on the Tax Authority (AFIP) the obligation to grant extensions and/or mechanisms of extension of payment terms of the court tax, for a period of up to ten years. This reduction of court tax rates shall not be applicable in the provinces unless approved by them.

It can be reasonably understood that the rate of 0.75% shall be applicable to in-court restructuring agreements and the rate of 0.25% to out-of-court restructuring agreements. However, the confusing language of Law No 25,972 generates certain doubts as to the basis on which the court tax rate is applied.