LEGAL AND BUSINESS OVERVIEW OF ARGENTINA

Legal & Business Overview of Argentina North Carolina Bar Association, May 6, 2008 Carlos Gabriel Kaplan JD University of Buenos Aires LLM Duke University Argentina Facts  Legal system   Business  law Vehicles available  Regulations on foreign investment  Taxation  Business Opportunities Facts Location  Mercosur  Facts 23 provinces + City of Buenos Aires  Territory:   1,068,302 sq mi  8th largest country in the world  2nd in the region  40 million inhabitants Economic Growth  Economy  Crisis in 2001/2002  Growing ~8.5% for 5 years Trade (2006) Main destinations of exports Brazil Chile US (~$4bn) China % 16.8 8.8 8.3 7.2 Main origin of Imports % Brazil US China Germany 37.2 15.4 6.5 5.2  RTP:  (At least!) 4 Companies Foreign Direct Investment (2005) Spain  United States (~15%; $13.2bn)  France  Brazil  Canada  Mexico  Legal System   Democratic Republic Federal Constitution 3 Levels of Government    Federal Provinces + City of Buenos Aires Municipalities  Each   with  Executive Legislative Judicial powers: Civil law  Legislative powers of the Federal Government:  Delegated  by the Provinces: Enact codes  Regulate international and inter-provincial commerce: Companies Law 19,550  Foreign Investment Act 21,382  Foreign Investment Act  Foreign investors  Same rights than local investors  May use any type of business organization  Free access to local and international financing  Allowed repatriation at any time of revenues and investment, now subject to regulation Areas of investment  No restriction to foreign investors  Exceptions:  Media: Limit 30% Federal Companies Law  Types  of Business Organizations  Jurisdiction Provincial / City of Buenos Aires Incorporation  Control   Federal  Public offerings Business Organizations       Branch: Sucursal Corporation: Sociedad Anónima (S.A.) LLC: Sociedad de Responsabilidad Limitada (S.R.L.) Trust: Fideicomiso Partnership: Sociedad de Hecho Joint Venture: Unión Transitoria de Empresas (UTE) Branch Same entity  Separate accounting  Parent responds with assets  Registration   Domicile  Representative resident in Argentina  Additional requirements Corporation: Sociedad Anónima    At least 2 shareholders Limited liability Capital  Minimum  Par requirements value  Classes of shares  Purpose  “Unique and determined” Corporation: Sociedad Anónima  Governance  Shareholder  meetings Ordinary  Extraordinary  Board  of Directors President  Control  Registry of commerce Corporation: Sociedad Anónima  Control Registry of commerce  Statutory supervisor  Supervisory Commission, if  Capital > A$2,100,000  Public offering  Public concessions  LLC: Sociedad de Responsabilidad Limitada (S.R.L) Limit 50 partners  Limited liability  No capital requirement  Pass Thru  Start as S.R.L. convert to S.A.  Trust: Fideicomiso Widely used in real estate financing  Allows to   Isolate risks  Securitization of funds  Fiscal benefits Foreign Investor  Activity in Argentina  Branch: Regular activity  Shareholder in S.A. / Partner in S.R.L. (Art. 123)  Registration and information requirements  Articles of incorporation, by laws  Shareholders  Non off shore  Principal purpose out of Argentina  No prohibition to act in place of incorporation  Activity and assets in other jurisdiction  Exception: part of a corporate group Central Bank Regulations  Capital inflows  Minimum term for loans: 365 days  Subject to mandatory 30% non - interest local Bank deposit  Exceptions: Direct investment  Real estate operations  Portfolio investments in publicly traded securities  Federal Taxation  Income Tax  Residents: World Wide Income  Non residents: Argentine source income  Treaty with US not in force     Value Added Tax  Sale of goods, provision of services and imports or assets located in Argentina Personal assets  Residents Tax on Credits and Debits in Bank Accounts Tax on Exports Local Taxation  Provinces tax “Gross Income”  Stamp Tax  Turnover  Municipalities  Service fees Risks  Inflation  Official: ~ 8%  Unofficial: ~ 20%?  Legal uncertainty Business Opportunities  Agriculture: machinery, genetics  Financial services  Information technologies  Telecommunications  Airport and ground support equipment  Residential building materials and supplies  Travel and tourism Thank you very much! Carlos Gabriel Kaplan carlos.kaplan@law.duke.edu