Putting the Rules in Order (and Releasing Some Pressure) - Slight Changes on Currency Controls for Non-Residents
- Argentina
- 05/17/2007
0n May 11th 2007 the Argentine Central Bank (“BCRA”) released Communication “A” 4662. It compiles certain dispersed rules concerning the foreign exchange transactions that non residents in Argentina are allowed to perform, rules now listed in one single Communication which also brings some slight changes or clarifications.
Communication “A” 4662 enumerates the foreign exchange transactions that non residents in Argentina may perform without the previous approval of BCRA.
You will find below some highlights on this “new order” of rules:
Recovery of distressed assets
It is now clearly established that non residents are allowed to purchase foreign currency – for its further remittance abroad – with the proceeds of distributions made under local creditor’s compositions agreements, provided the non-resident’s credit had been duly admitted to such proceedings. Formerly, this option was only admitted for monies collected in bankruptcy proceedings.
Various collections
Non-residents are also allowed to purchase foreign currency: (i) to remit payments owed under Argentine imports; (ii) with monies received as payment of foreign loans, for further remittance abroad; and (iii) to remit dividends paid by Bonds and Guaranteed Loans issued in local currency by the Argentine Government.
Repatriation of investments
With express exclusion of investments made in local financial institutions or in other companies controlling financial institutions, and provided that 365 running days have elapsed from the disbursement of the initial investment, foreign investors (or local residents acting on their behalf) may now purchase the foreign currency needed to repatriate the proceeds arising from:
- the sale of their direct investment;
- the winding up of their direct investment;
- the reduction of their investment in a local company, or
- the refund of irrevocable capital contributions made in a local company.
Previous existing limits for such transactions have now been eliminated.
Portfolio proceeds
Interest payments and proceeds from the saie of local portfolio investments can be converted into foreign currency by non residents, provided (a) a ceiling of US$ 500.000 per month is not exceeded and (b) the initial investment has stayed in the country for no less than 365 running days.
Purchase of cash
Non-residents (other than international organizations, embassies, diplomats or representatives of courts, special missions or agencies created by international treaties to which Argentina is party) are still banned from purchasing over US$ 5,000 per month in cash and, as well as local residents, are not allowed to change foreign cash for wire transfers (“operaciones de canje”). An exception is made for non-residents remitting foreign currency coming from the payment of interest or amortization of foreign-currency bonds issued by the Argentine government.
Source: Díaz Valdez Abogados
