Advertising on the responsibility of head offices and controlling shareholders of foreign capital financial entities

On June 2, 2003 the Argentine Official Gazette published a law imposing foreign capital financial entities and branches of foreign financial entities authorized to operate by the Argentine Central Bank, the obligation of informing the public of their head offices and majority shareholders’ responsibility with respect to banking transactions performed in Argentina.

Specifically, Section 1 states that foreign capital financial entities and branches of foreign financial entities authorized by the Argentine Central Bank shall inform the general public when their head offices or majority shareholders are responsible for banking operations performed in Argentina, as well as the extension of such responsibility. It also states that in the event of lack of responsibility, such financial entities shall expressly inform that their banking operations are not supported by their head offices or majority shareholders.

The purpose of the law is for consumers, particularly depositors, to have clear information on the responsibility that foreign headquarters have under law with respect to the operations of their affiliates in Argentina. The law protects general consumers and does not affect the responsibility regime of foreign head offices and/or foreign majority shareholders.

The limitations on the responsibility of foreign head offices or foreign capital majority shareholders may derive, to a greater or lesser extent, from Argentine law, foreign law and contractual provisions. These limits could have effect in certain scenarios only.

According to this new law, the obligation to inform shall be complied with by advertisements in the local banks’ premises (in places where such advertisements can be easily read), on the local banks web sites and in any advertisements that the local financial entities publish by any means of communication or deliver in their premises in order to promote their services.

Violations to the law shall be sanctioned by the Argentine Central Bank, which shall be the administrative authority in charge of the application of the law, in accordance with the specific regulations that the Argentine Central Bank may issue.

This new law will be regulated by the Argentine Central Bank in the near future. However, the law expressly states that it comes into force the day after its publication in the Official Gazette.