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The Central Bank of Argentina has issued a communication establishing new requirements on the indebtedness of Argentine residents with regard to advances and pre-export financings. The Central Bank also issued a communication introducing a new regime for the financing of investment projects aimed at increasing export capacity.

New regulations on the transfer of funds into and out of Argentina reinforce some existing obligations (eg, the minimum period for which funds entering the country must remain before being transferred out again), but also impose new restrictions (eg, a 30% reserve requirement on funds transferred into Argentina).

The Central Bank of Argentina has set out a framework to determine the requirements and frequency for the filing of reports on direct and real estate investments held by Argentine residents abroad, and by non-Argentine residents in Argentina.

The Central Bank of the Argentine Republic has issued a new regulation which states that Argentine residents holding 10% or more in foreign companies and real estate properties abroad, and non-Argentine residents holding 10% or more in Argentine companies and real estate properties in Argentina, must declare such information to the Central Bank.

On June 1 2004 details of the debt restructuring proposal for the reduction of Argentina's public external indebtedness were announced. Under the proposal, the principal amount of defaulted debt is $81.2 billion and the reduction of principal under nominal terms is 75%. Debt restructuring will be carried out by the issue of par bonds, quasi-par bonds and discount bonds.

Until June 30 2004, Argentine individuals and legal entities in the private non-financial sector may purchase foreign currency on the foreign exchange market in order to make portfolio investments abroad for an amount exceeding the normal $1 million per calendar month limit. However, restrictions exist on the use of such funds.

Under certain conditions, non-residents in Argentina can now access the local exchange market to make portfolio investments abroad in excess of the previous maximum of $500,000, as long as funds are used to repurchase or pay foreign debts. The regulatory regime governing the repatriation of investments by non-residents has also been liberalized.

A new government decree requires the registration of transfers of funds to and from Argentina, with certain exceptions. The decree also provides that once foreign funds have entered Argentina, they may not be transferred abroad for at least 180 days. These measures were passed to prevent the eventual departure of speculative capital which may be entering Argentina.

A New York district court recently declined to grant stays requested by Argentina in actions brought by individual bondholders seeking repayment of Argentina's defaulted foreign debt. However, several class action motions were denied on procedural grounds, including failure to define the class with sufficient precision in the motion.

The Supreme Court recently declared that Section 2 of Decree 214/02, which converts dollar bank deposits into pesos, is unconstitutional. Among other things, the court held that the rule is invalid as an emergency decree and involves an unconstitutional curtailment of individual property rights.

Tight exchange controls were imposed by the Argentine Central Bank (CBRA) in early 2002, including a requirement to obtain prior CBRA approval for many overseas payments. A new regulation creates exemptions from these requirements for certain payments of loan principal and interest. Argentine companies may also now purchase foreign currency to pay dividends or profits abroad.

The Antitrust Commission recently ruled that it is the only government agency authorized to analyze the competitive effects of bank restructurings undertaken by the Central Bank. As these restructurings often result in market consolidations under the Antitrust Law, the parties involved must now report them to the Antitrust Commission.

Due to the social, economic and political crisis in Argentina, the government has resolved to devaluate the peso and 'pesify' debts denominated in US dollars or other foreign currencies.

A new decree addresses sovereign debt restructuring, the liquidity of the banking system and the restructuring of financial entities. It provides measures to help the banking system and financial entities undergoing liquidity crises.

Including: Legal Framework; Establishing a Bank in Argentina; Legislation on Consumer Credit; Loan Agreements; Privacy and Data Protection; Bank Secrecy; Anti-Money Laundering Regulations

The Argentine Money Laundering Law has been regulated by the government through Decree 169/01. This update discusses some of the implications of the new law.

A recently enacted law has created a new tax on credits and debits. This update discusses how the tax will work, as well as other aspects of the new law.

A new law designed to reduce tax evasion and prevent unregistered operations has recently been enacted. Among the new measures it will introduce are the limitation of cash operations and the creation of a new type of payment instrument.