Regulation of the law on the advertising on the responsibility of head offices and controlling shareholders of foreign capital financial entities

By exercising the powers conferred by article 4 of Law No 25,738 and as administrative authority in charge of the application of such law, the Argentine Central Bank issued Communication “A” 3974 (the “Regulation”) by which it regulated the compliance of certain aspects thereof. Please refer to the article “Advertising on the responsibility of head offices and controlling shareholders of foreign capital financial entities”, published in Marval News #18 – June 30, 2003.

The Regulation reproduces certain provisions of Law No 25,738 and provides that in those cases in which the financial entities inform to the public that their head offices or majority foreign shareholders are not responsible for their banking operations, this will happen without prejudice to the applicable law on the subject-matter.

In connection with its effectiveness, the Regulation provides that it will become effective as from the 90th calendar day from the date of issuance with regard to every written advertising that financial entities publish or deliver at their premises in order to promote their services, and as from the 10th business day with regard to any other type of advertising. Further, the Regulation states that such advertising shall comply with article 4 of the Consumer Protection Law which requires the provision in a true and objective manner of detailed, efficient and sufficient information as to the essential characteristics of the services that are being offered.

Applicable sanctions in case of non-compliance are those set forth in article 41 of the Financial Entities Law, which are (i) warnings, (ii) cautions, (iii) fines, (iv) temporary or permanent disqualification to operate with checking accounts, (v) temporary or permanent disqualification to continue as promoters, founders, directors, executives, members of the statutory supervisory committee, syndics, liquidators, managers, auditors, partners or stockholders of the entities reached by the law, and (vi) revocation of the authorization to operate.

Finally, the Regulation establishes the inclusion in the financial statements of the information published pursuant to Law No 25,738.