Extension of the suspension of mandatory capital reduction and liquidation in the event of capital loss

The Government issued Decree No 1293/2003 (the “Decree”) in order to extend until December 10, 2004 the suspension of the application of Sections 206 and 94 par. 5 of the Argentine Companies Law No 19,550 (“Companies Law”) which respectively provide the mandatory capital reduction and liquidation of companies in the event of capital loss. The Decree was published in the Official Gazette on December 23, 2003 and will be in force on December 24, 2003.

The suspension of the application of Sections 206 and 94 par. 5 of the Companies Law had been established by Decree No 1269/2002, issued in July 16, 2003. For further information on Decree No 1269/02 please refer to “Suspension of mandatory capital reduction and liquidation in the event of capital loss”, published in Marval News # 8, of July 31, 2002.

The Decree provides that corporations and limited liability companies that are obliged to file the financial statements with the pertinent authority must fulfill certain requirements in order to be entitled to benefit from the extension granted by the Decree. The requirements are as follows:

(i) to have all the filings or otherwise to fulfill with the required fillings within 120 days after Decree No 1293/03 comes into force;

(ii) to file in due time the financial statements ending after the Decree comes into force;

(iii) the financial statements closed after Decree No 1293/03 comes into force and the minutes whereby the financial statements are analyzed must express the company situation regarding the suspension of Sections 206 and 94 paragraph 5 of the Argentine Companies Law No 19,550, provided by Decree No 1293/03.