Banking and Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to obligations derived from employment relationships (59.26% and 47.63% - August 2024; 59.23% and 47.62% - September 2024) and to transactions with credit cards (60.00% annual maximum lending rate and 17.00% annual minimum lending rate - September and October 2024). (Official Gazette of 10/29/2024. Official Notices. Entry into force: Upon publication in the Official Gazette). BANKING AND FINANCE TAX Bonded Warehouse Regime and not used, must be delivered to the Regional Management, Sector or Unit of Internal Taxes of the domicile of the taxpayer for destruction; 4) the liquor warranty seals identified with designation F-07-2015 or years preceding 2015 that are in SENIAT’s custody must be destroyed in accordance with the procedures established in the rules that govern the matter. (Official Gazette of 10/08/2024. Administrative Ruling SNAT/2024/000098. Entry into force: Upon publication in the Official Gazette).

Tax

The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) issued an Administrative Ruling with the purpose of regulating the use and period of effectiveness of the Warranty Seals to be placed on the Taxed Species of National and Imported Production. Said Ruling established: 1) the liquor warranty seals acquired by the producers or importers of taxed species may not be transferred, assigned or sold; 2) the liquor warranty seals the issue and circulation of which is authorized by SENIAT may be used for a period of two years as from the date of acquisition; 3) the liquor warranty seals identified with designation F-07-2015 or years preceding 2015, acquired under the Bonded Warehouse Regime and not used, must be delivered to the Regional Management, Sector or Unit of Internal Taxes of the domicile of the taxpayer for destruction; 4) the liquor warranty seals identified with designation F-07-2015 or years preceding 2015 that are in SENIAT’s custody must be destroyed in accordance with the procedures established in the rules that govern the matter. (Official Gazette of 10/08/2024. Administrative Ruling SNAT/2024/000098. Entry into force: Upon publication in the Official Gazette).

Civil Aeronautics

The Ministries of the Popular Power for Ecosocialism and for Transportation issued the rules to coordinate the environmental management in the civil aeronautics activity carried out at the national and international airfields and airports of the Bolivarian Republic of Venezuela. (Official Gazette of 10/11/2024. Joint Resolution. Entry into force: Upon publication in the Official Gazette).

Miscellaneous

The Autonomous Service of Registries and Notaries’ Offices (Servicio Autónomo de Registros y Notarías - SAREN) issued an Administrative Ruling with the purpose of regulating the implementation of electronic means in the processes carried out by the SAREN, in order to optimize the service of registries and notaries’ offices, in relation to the verification of the identity of the executing parties, through the biometric analysis of the user identification elements, in the framework of the electronic handling of the registry and notary processes carried out by said Service. The implementation of fingerprint biometry electronic means will be progressively applied, starting at the notaries’ offices located in the capital region. (Official Gazette of 10/17/2024. Administrative Ruling No. 525. Entry into force: Upon publication in the Official Gazette).

THE NEW BRAZILIAN LAW 14.995/2024: EMPOWERING SMALL BUSINESSES AND PROMOTING ECO-FRIENDLY INVESTMENTS

Brazil’s President sanctioned Law 14.995, a landmark piece of legislation aimed at permanently extending a range of programs designed to facilitate access to credit for small businesses and low-income individuals. Coming into force on October 11 after being published in the Official Gazette, this law significantly impacts the Brazilian economy by fostering entrepreneurship and sustainability.Read more

COMPLETE GUIDE FOR DIGITAL NOMAD: ESSENTIAL TAX OBLIGATIONS

The digital nomad lifestyle has become increasingly popular. The possibility of working remotely, exploring different countries, offers unique freedom. However, this freedom brings with it legal and tax responsibilities that cannot be ignored.Read more

COMPLETE GUIDE FOR DIGITAL NOMADS: ESSENTIAL LEGAL RULES

An article in the Harvard Business Review defines digital nomadism as “a lifestyle that allows you to take advantage of remote work to travel and reside in different places around the world, often in more accessible destinations”.Read more

BNDES AND US BANK SIGN AGREEMENT FOR INVESTMENTS IN BRAZIL

With the aim of improving and deepening joint investment opportunities in Brazil, the National Bank for Economic and Social Development (BNDES) and the US International Development Finance Corporation (DFC), the development bank of the United States, signed a framework cooperation agreement.Read more

"IT'S A NEW MOMENT IN BRAZIL", SAYS MINISTER DURING THE SIGNING OF THE COOPERATION AGREEMENT BETWEEN BRAZIL AND FRANCE

The Ministry of Culture (MinC) signed an important Memorandum of Understanding between Brazil and France, reaffirming the commitment to strengthen cooperation between the two countries in the cinematographic and audiovisual fields. The event took place during the Rio Market, a market space for the Rio Festival, one of the main events in the Brazilian audiovisual calendar.Read more

STARTUPS INCREASE THEIR FOCUS ON CLIMATE INTELLIGENCE

In times of increasingly frequent bad weather, climate intelligence is gaining prominence in Brazilian agribusiness. And this interest has led agtechs to increase their investment in this area.Read more

AMONG THE WORLD'S 100 MOST PROMISING FINTECHS, 5 HAIL FROM LATIN AMERICA

Last year, Latin America placed four startups on the Fintech 100, a survey by the North American market intelligence platform CB Insights. In 2024, there was an evolution: there are now five Latin names on the list that highlights the most prominent and promising fintechs in the market this year.Read more

IMF RAISES BRAZIL'S GDP GROWTH PROJECTION FOR 2024 TO 3%

The International Monetary Fund (IMF) raised its growth projection for the Brazilian economy this year from 2.1% to 3%. Despite the improvement in expectations for this year, the fund estimates a slowdown in 2025, with growth falling from 2.4% to 2.2%.Read more

Banking and Finance

Paraguay reaches investment grade for the first time in its history

The risk rating agency Moody's announced that it raised Paraguay's credit rating from Ba1 to Baa3, granting it investment grade for the first time in its history, reported the Ministry of Economy and Finance (MEF) on past July 24, 2024. Paraguay joins a select group of countries in the region to have the sovereign degree, Chile, Colombia, Mexico and Peru.

In a statement, they indicated that this stable outlook is reached after 26 years when the rating agency assigned a rating to Paraguay for the first time and after 9 years since the last upward review. "This unprecedented achievement is based on the country's solid economic fundamentals and its long history of macroeconomic stability," the MEF said.

They claim that it is the result of more than 20 years of responsible, consistent and predictable public policies. Prudent management of macroeconomic policies was able to achieve and preserve the sustainability of public finances and maintain low inflation

Tax

Agreement between Paraguay and Spain to avoid double taxation finally in force

After ratification by Paraguayan Law Nr. 7.271/2024 and publication in the Official bulletin of the Spanish Kingdom on July 29, 2024, said important agreement for the economic relationships between both countries shall be in force starting October 14, 2024, having effect for all tax purposes since January 1, 2025.

The agreement comprehends the Personal Income Tax, Corporate Tax and Non Resident income taxes in both countries (the so called IRP, IRE and IDU, and INR in Paraguay and IRPF, IS and IRNR in Spain) document observes OECD standards and includes measures to prevent tax base erosion and profit shifting (BEPS), affecting to Personal and Company income taxes in both countries (including income taxes for non-residents), which must now be ratified by the respective Congresses for its entry into force. Model Tax Convention on Income and on Capital 2017 shall be applicable for the interpretation of articles 5 (permanent establishment) and 7 (entrepreneurial benefits) of said Agreement.

Energy

Amendment of Law "On the Independent Production and Transmission of Electric Energy (PTIEE)"

On August 20224 Law No. 7299/2024 that amend Law Nr. 3009/2006 was enacted to foster private investments for the generation of renewable electricity through small hydroelectric plants (SHPs), by introducing correction of concepts that blocked the previous legislation to be applicable and improving the legal framework, by extending the threshold to grant licenses up to 50 MW and generation greater than 50MW should be subject to international public tenders, without the requirement of a risk-sharing contract with the national utility company (ANDE) as stated in the previous Law, although it retains a first call right to acquire the energy generated in case it is not exported or it is needed in the internal market.

Among other changes, the Ministry of Public Works and Communications replaced a Council of several Ministries (MOPC, Environment, Industry and Trade, Foreign Affairs) that made the procedure very bureaucratic. It must be clarified that shall Law is only applicable for the generation of electricity from the use of natural gas and/or minor hydroelectric generation, which also includes cogenerators and self-generators. This Law does not apply to other renewable energies (solar, wind) governed by Law No. 6977/2023, on Non-Conventional Renewable Energies (NCRE).

Public Procurement

Enactment of Decree Nr. 2264/2024, which regulates Law No. 7021 of December 9, 2022, "On Public Supply and Procurement".

This decree imposes a significant advance in what has to do with administrative management in public procurement. It seeks to improve efficiency, transparency and all flexibility in everything that has to do with public procurement processes. There are updates in terms of terminology, structure, facilitating reading and limiting the search for information and providing greater clarity to the management of State procurement, reducing the deadlines that have to do with protests, reconsideration appeals and deadlines for responses from public institutions to the DNCP.

A special type of bidding that he highlighted is joint procurement, which he described as an innovation in public procurement. It consists of public institutions coming together to buy goods or services, in search of efficiency through the implementation of economies of scale and administrative standardization. The annual average of the awards is USD 3.246 million, with 9.513 procedures and 3.266 suppliers.

"Argentina Under Milei: A New Landscape for Investment

12 Questions to Guide Your Opportunities"

Abstract

Javier Milei, elected President of Argentina in November 2023, has embarked on a radical economic reform agenda aimed at addressing decades of economic mismanagement characterized by high inflation, fiscal deficits, and a bloated public sector.

His administration has implemented a series of measures designed to stabilize the economy, reduce inflation, and encourage foreign investment.

Milei's leadership has significantly influenced Argentina's international relations, marking a dramatic shift from previous policies. The country has moved towards a more ideologically driven foreign policy, prioritizing alliances with Western liberal democracies while distancing itself from traditional partners in Latin America and beyond.  Milei advocates for aligning Argentina with what he terms "the free world," emphasizing support for liberal democracies and opposing authoritarian regimes. His administration promotes a doctrine of foreign relations focused on defending liberal values and fostering free trade.

Questions and answers

1. What measures has been already taken by Milei’s administration for controlling inflation and obtaining Fiscal Surplus?

Monthly inflation rates have decreased significantly from approximately 25% at the end of 2023 to about 3.5% by September 2024 (2,5% estimated October 2024). However, comparing with other economies, annual inflation remains extremely high at around 237%.

Milei projects inflation will drop to 104.4% by the end of 2024 and further to 18.3% by December 2025.

In addition, the administration has implemented severe and deep austerity measures, including slashing government spending and eliminating state subsidies. As a result of that, for the first time in years, Argentina has achieved a fiscal surplus.

2. How the currency and international trade barriers imposed by former Argentina government has been modified under Milei's leadership?

The Argentine peso was devalued by 50% shortly after Milei took office. This devaluation is part of a broader strategy to align the currency with market realities while maintaining a controlled depreciation rate.

As of October 2024, Argentina's foreign exchange control regulations remain complex and multifaceted, reflecting ongoing economic challenges and the government's efforts to stabilize the economy. The Central Bank of Argentina (BCRA) continues to enforce stringent measures aimed at controlling capital outflows and managing the value of the Argentine peso amid persistent inflation.

Argentina operates a system with multiple exchange rates for the U.S. dollar, including Official Rate, used for regulated transactions within the banking system and Blue Rate, an unofficial rate used by unlicensed money changers, typically higher than the official rate (currently + 15%)

As of today, certain bureaucracy on access to Foreign Currency still applies. It is mandatory to schedule the access to foreign exchange markets for various transactions, including payments to foreign creditors and suppliers (usually 30 days after the nationalization of the goods or services). It is expected a gradual easing of currency restrictions as the government aims for greater economic stability. A potential unification of exchange rates is planned for the first quarter of 2025, which could simplify the current system.

On the other hand, Javier Milei has implemented a series of transformative policies aimed at revitalizing and enhancing foreign trade, including but not limited to the elimination of Import Licensing.  Milei abolished the previous import licensing regime (SIRA), allowing for greater ease in importing goods. This deregulation is expected to facilitate smoother trade flows and reduce bureaucratic hurdles for foreign businesses looking to export to Argentina.

Also, by reducing Export Duties, which have historically been a barrier to trade. This move is expected to incentivize exports by improving profit margins for exporters, thereby encouraging them to expand their operations internationally.

By adjusting the exchange rate and removing artificial barriers to imports, the government aims to improve the trade balance, which is essential for restoring confidence among foreign investors and trading partners.

3. What is the status of Argentina's relationship with the IMF and other multilateral bodies?

As of October 2024, Argentina's relationship with the International Monetary Fund (IMF) and other multilateral institutions is characterized by ongoing negotiations, fiscal restructuring efforts, and a complex economic environment.

Argentina is currently under a 30-month Extended Fund Facility (EFF) arrangement with the IMF, which was initiated to support the country's economic stabilization efforts. The EFF agreement includes a total commitment of approximately $44 billion, making it one of the largest agreements ever granted by the Fund. As of June 2024, the IMF Executive Board completed its eighth review of this program, indicating that Argentina has met several of the fiscal and monetary targets set forth in the agreement.

Argentina also maintains an ongoing relationship with the World Bank, which provides financial and technical assistance aimed at promoting sustainable development. The World Bank's focus includes enhancing agricultural productivity and supporting social protection programs for vulnerable populations affected by economic instability. The World Bank has been involved in projects aimed at improving infrastructure and promoting renewable energy sources in Argentina, aligning with global sustainability goals.

Argentina also engages with regional development banks such as the **Inter-American Development Bank (IDB). The IDB has committed to financing various infrastructure projects that are crucial for enhancing connectivity and economic growth within Argentina.

4. What significant legal reforms have been enacted under Milei? How do these reforms could impact on foreign investment?

Milei's government has pushed through significant legal reforms aimed at liberalizing the economy.

The administration passed an omnibus reform bill, "Ley de Bases y Puntos de Partida para la Libertad de los Argentinos" (Law of Bases and Starting Points for the Freedom of Argentines), with the primary aim to modernize the Argentine economy by promoting deregulation and reducing public sector involvement in economic activities.

“Ley Bases” was officially promulgated on June 27, 2024, following extensive negotiations in Congress. This comprehensive law includes over 200 articles addressing various aspects of Argentine life, including taxation, labor laws, public spending, and privatization of state-owned enterprises granting broad executive powers for deregulation and privatization initiatives.

5. What are the main goals of “Ley Bases”?

Privatization Initiatives: The law facilitates the privatization of several state-owned companies, although initial proposals were scaled back significantly from a broader plan to privatize dozens of firms. Key companies like YPF (oil & gas) and Aerolíneas Argentinas (airline) were excluded from privatization efforts but could be subject to other specifics regimes allowing the participation of private investors. This move is intended to reduce the fiscal burden on the government and attract foreign investment.

Labor Law Reforms: The reforms include significant changes to labor laws intended to make it easier for employers to hire and fire employees. In detail:

Impact on workers' Rights, easier dismissals and employment elexibility, makes it easier for employers, including banks and corporations, to dismiss full-time workers at will. This change is expected to lead to a rise in the use of contingent labor, such as gig workers and temporary employees, effectively undermining job security for many workers. Limitations on collective bargaining, by including provisions that limit the right to strike, potentially weakening the bargaining power of unions. It abolishes penalties for irregular contracts and allows for longer working hours (up to 12 hours per day), which could lead to increased workloads without corresponding compensation. The law facilitates mechanisms that can suppress union activities, including restrictions on automatic dues payments from non-members (solidarity dues). This change threatens the financial stability of unions, making it harder for them to operate effectively and represent their members' interests Reprisals against strikers, including reprisals against public sector strikers, such as non-payment of wages, suspensions, and layoffs. Tax Burdens on low-income workers: The introduction of new income taxes for low-wage earners (e.g., single workers earning $2,000 annually) places additional financial pressure on already struggling workers, potentially exacerbating economic hardship and reducing their ability to organize or resist unfavorable labor conditions. Promotion of registered employment: The law encourages formal employment registration by providing incentives for businesses that comply with labor regulations.

Fiscal Package: Accompanying the Ley de Bases is a fiscal package that reinstates income taxes while lowering the taxable income floor. This measure is expected to generate additional revenue for the government amidst a backdrop of soaring inflation. Also, a new framework for taxation is established, including the modifications in personal property and internal taxes, and regularization programs for tax obligations to encourage compliance and investment.

Emergency powers: The law grants Milei special emergency powers for one year, allowing him to govern by decree in various sectors including economic and social matters. This has raised concerns about potential overreach and lack of legislative oversight.   - The law declares a state of emergency in economic, financial, fiscal, administrative, social security, tariff, health, and social matters for one year. This allows the executive branch to govern by decree until December 31, 2025, facilitating rapid implementation of reforms without extensive legislative approval.

Deregulation measures: The reforms aim to reduce bureaucratic hurdles across various sectors, particularly in oil and gas, where previous strict export quotas are being lifted. This is intended to attract foreign investment into key industries, for instance, by lifting export quotas in agriculture and simplifying regulations for businesses to foster a more favorable investment climate.

Investment Incentives: The law creates an Incentive Regime for Large Investments (RIGI for its acronymous in Spanish), which includes tax breaks and legal protections for qualifying projects deemed to be in national interest. This aims to stimulate foreign direct investment in key sectors (specifically described in next questions).

6. Which are the eligibility conditions for applying to RIGI?

RIGI has the primary objective of provide long-term legal guarantees necessary for attracting multi-million-dollar investments, by stimulating economic development and enhancing competitiveness across various sectors, as well as to promote job creation and increase exports of goods and services.

RIGI is open to both Argentine and foreign companies that commit to investing a minimum of USD 200 million in qualifying projects. The RIGI was officially published on July 8, 2024, and companies have a two-year window to apply for its benefits, with a potential one-year extension. The regime is designed to be operational immediately upon publication at the Official Gazette. Specific sectors eligible for these incentives are described below:

- Forestry

- Tourism

- Infrastructure

- Mining

- Technology

- Steel

- Energy

- Oil and Gas

- For offshore oil and gas exploration, the minimum investment requirement is set at USD 600 million.

Recent updates to the RIGI have expanded its scope to include electric and hybrid vehicle production within the technology sector. This inclusion reflects Argentina's strategic focus on sustainable industries and aligns with global trends toward electrification.

7. How RIGI protects investors?

Under the RIGI several legal protections are offered to investors (local or foreign). These protections aim to create a stable and secure environment for investment, addressing concerns that international investors may have regarding regulatory changes and potential risks associated with investing in Argentina.  The main measures are:

Regulatory Stability: 30-Year Stability Guarantee: The RIGI guarantees that the rights, protections, and incentives provided under the regime will remain stable for 30 years. This means that any newly imposed taxes or increases in existing ones will not apply to projects under RIGI, ensuring long-term predictability for investors.

Tax and Customs Incentives - secured rights over incentives: Investors have secured rights akin to ownership over tax and customs incentives. This protection ensures that these benefits cannot be altered by future regulations, providing a layer of security for financial planning.

Dispute Resolution mechanisms - International Arbitration. Choice of law and jurisdiction: In addition to the Treaties to Protect FDI already executed by Argentina, The RIGI allows disputes between Argentina and companies participating in the regime to be resolved through international arbitration freely agreed by the Parties. If a legal dispute cannot be settled within 60 days, companies can bypass national courts and go directly to independent arbitration bodies. This provision is crucial for investors who may fear biased treatment in local courts.

Protection against expropriation - guarantee against confiscation: The regime provides assurances that investments will not be subject to confiscatory or expropriation acts. This protection is vital for foreign investors who may be concerned about the security of their assets in Argentina.

Rights to repatriate profits. Free availability of funds: Investors have the right to repatriate profits, dividends, and interest without facing restrictions, if the funds have been settled through the foreign exchange market. This ensures that investors can access their returns without bureaucratic hurdles.

Legal protections for assets - Full availability of assets: The RIGI guarantees that all assets allocated to the execution of investment projects will remain fully available without restrictions, enhancing investor confidence regarding asset management.

Special provisions for Long-Term Strategic Export Projects: For projects classified as "Long-Term Strategic Export Projects," additional legal protections may apply, extending stability guarantees based on project timelines and milestones.

8 Which are other RIGI’s key benefits for investors?

Eased Currency Liquidation Requirements: Under the RIGI, foreign investors are granted flexibility regarding the liquidation of foreign currency earnings. For the first two years, projects under RIGI are required to liquidate only 80% of their dollar income in the official exchange market. This is a significant reduction compared to standard requirements, allowing investors to retain a larger portion of their earnings. After the initial period, the liquidation requirement decreases to 60% after three years and ultimately to 0% after four years. This means that after four years, projects will not need to bring any new U.S. dollars into the official exchange market, providing investors with greater control over their foreign currency.

Exempt from standard foreign currency obligation: Single Purpose Vehicles (SPVs) entities adhering to the RIGI are exempt from the obligation to enter and settle foreign currency through the foreign exchange market for specific percentages based on their operational timeline. For instance, they can retain a higher percentage of their foreign currency earnings as they progress through different stages of their investment.

Advance Collections and Financing: Advance export collections and pre-financings are also exempt from the obligation to enter and settle through the FX Market, allowing for more straightforward financial operations without stringent currency conversion requirements.

Free Availability of Foreign Currency: for local or external financing and repatriation of profits.

Reduced Corporate Tax Rate: Investors participating in projects under the RIGI will benefit from a reduced corporate income tax rate of 25%, down from the standard rate of 35%. This reduced rate is locked in for a period of 30 years, providing long-term stability for investors.

Exemptions from New Taxes. Tax Stability**: Projects under RIGI are exempt from any new taxes that may be introduced over the next 30 years. This provision ensures that investors will not face unexpected tax increases during their investment period.

Import Duty Exemptions: Capital Assets and Machinery**: Projects under RIGI are exempt from import duties on capital assets, machinery, and spare parts necessary for their operations. This exemption significantly lowers the initial costs for foreign investors.

Export Duty Exemption: Initial Period: Projects will be exempt from paying export duties for a period of 3 years, or two years for specially qualifying “strategic exports.” This exemption encourages export-driven businesses by enhancing profit margins.

Dividend Tax Reductions: The tax rate on dividends is reduced to 7% during the first three years of the project, further decreasing to 3.5% after seven years. This reduction enhances returns for investors on their profits distributed as dividends.

Accelerated Amortization and Depreciation: Depreciation Schedules: The regime allows for accelerated amortization and depreciation schedules, enabling investors to recover costs more quickly and reduce taxable income in the early years of operation.

Transfer of Net Operating Losses. Loss Transferability: Investors can transfer (sell) any remaining Net Operating Losses (NOLs) after the conventional five-year period from accrual, providing additional financial flexibility.

9. What sectors are taking advantage of RIGI?

The agriculture sector stands to gain significantly from the RIGI through enhanced export capabilities and reduced operational costs due to tax exemptions and duty-free imports of necessary equipment.

The energy sector, with Argentina's vast natural resources, particularly in oil and gas, is expected to attract substantial investments aimed at exploration and production. The special provisions for offshore projects signal a commitment to fostering growth in this critical sector. In this sense, TGS, Argentine energy company TGS presented a project seeking to invest USD 700 million in expanding a pipeline connecting Vaca Muerta with Buenos Aires, marking it as one of the first major investments under the new regime.  Also Petrona’s representatives from Malaysian oil and gas company Petronas met with Argentine officials regarding potential investments aligned with the RIGI framework.

The mining sector, particularly lithium extraction crucial for battery production, is poised for growth under the RIGI. The incentives provided can enhance competitiveness and attract foreign investment.

The inclusion of technology-related projects under the RIGI presents opportunities for innovation-driven investments in areas like biotechnology, software development, artificial intelligence, and more.

10. What can be expected in terms of deregulation of the Economy?

Minister Sturzenegger, in charge of the deregulation minister, has outlined further reforms that are anticipated to complement Milei's initial legislative agenda:

Expansion of Deregulation: Proposed measures include further deregulation across multiple sectors such as energy, finance, transport, infrastructure and agriculture, aiming to enhance competitiveness and attract international investors.

Tax Incentives for Investment: New tax incentives are being discussed to encourage both domestic and foreign investments in strategic sectors like technology and renewable energy.

Social Security Reforms: Plans are underway to reform social security systems with an emphasis on sustainability while potentially reducing benefits for future retirees as part of broader austerity measures.

Continued Labor Market Flexibility: Additional proposals may include further amendments to labor laws that would enhance flexibility for businesses in workforce management while potentially facing pushback from labor unions.

Infrastructure Investment Initiatives: To address critical infrastructure gaps, there may be initiatives aimed at public-private partnerships (PPPs) to leverage private capital for public projects.

11. What the market expects from Argentina in the coming years?

The market expects Argentina to experience a challenging economic landscape in the short term, followed by a significant recovery, with growth projections indicating a rebound of 5% in 2025 after a contraction of approximately 3.5% in 2024. This outlook is supported by various sources, including the IMF, which anticipates that structural reforms and stabilization efforts under President Milei will lay the groundwork for future growth, driven by improved agricultural production and investments in the energy sector.

The OECD also echoes this sentiment, highlighting an upturn for the Argentine economy post-2024, contingent on successful implementation of fiscal adjustments and inflation control measures.

The World Bank also forecasts a contraction of 3.5% in 2024, similar to the IMF's assessment. They predict that economic recovery will begin in 2025, with growth projected at 5% driven by better weather conditions for agriculture and normalization in production levels after a challenging year.

BBVA Research predicts that Argentina will experience an average decline of 4% in GDP for 2024 but expects a rebound starting in the second half of the year. Their outlook suggests that after the initial phase of economic adjustments, Argentina could see significant recovery as fiscal policies stabilize and inflation begins to ease.

According to Trading Economics, the GDP growth rate for Argentina is expected to be around -1% by the end of 2024, with projections indicating a gradual recovery to approximately 0.8% in 2025 and 1% in 2026. These estimates reflect cautious optimism about Argentina's long-term economic prospects following necessary reforms.

In the same understanding, several articles were already published by international media, as Financial Times and Bloomberg,[1]

In addition, significant backing has emerged from influential tech billionaires, including Elon Musk and Mark Zuckerberg. Their support is crucial for promoting investment in Argentina, particularly in sectors like technology and renewable energy.

Elon Musk, the CEO of Tesla and SpaceX, has publicly expressed interest in Argentina's potential as a hub for lithium production, essential for electric vehicle batteries. His endorsement is seen as a critical signal to other investors about the viability of investing in Argentina's burgeoning lithium sector, which is rich in natural resources.

Mark Zuckerberg co-founder of Facebook (now Meta) has also shown interest in expanding technology investments in Latin America. His company’s initiatives to enhance internet connectivity and digital services align with Milei’s goals of fostering a more robust digital economy.

Despite short-term contractions, analysts remain optimistic about Argentina's long-term growth potential due to its vast natural resources, educated workforce, and strategic position within Latin America. The country’s rich agricultural base and emerging technologies are viewed as key drivers for future economic expansion.

12. What opportunities can Argentina offers to EU countries within the framework of the EU-MERCOSUR Agreement?

MERCOSUR, or the Southern Common Market, is a regional trade bloc established in 1991, comprising Argentina, Brazil, Paraguay, and Uruguay as its founding members. Venezuela's membership was suspended in 2017, while Bolivia is in the process of ratification. MERCOSUR aims to promote free trade and the fluid movement of goods, people, and services among member countries, enhancing economic integration and cooperation.

Within MERCOSUR, Common External Tariff (CET), applies to imports from non-member countries and ranges from 0% to 35%, depending on the product category. For most products traded within MERCOSUR, tariffs are significantly lower or non-existent. Approximately 80% of products traded between MERCOSUR members are exempt from tariffs due to the CET's implementation since 1995. Sensitive products, such as textiles and automobiles, may still face higher tariffs.

The Import Taxes for products with Certificate of Origin, has Preferential Tariffs: Products originating from MERCOSUR member countries benefit from reduced or zero tariffs when imported into another member country, provided they have a valid Certificate of Origin. This certificate confirms that the goods are produced within the bloc. While many goods may be exempt from import duties under the CET, additional charges such as Value Added Tax (VAT) and statistical fees may still apply. Products exported with a Certificate of Origin to other MERCOSUR countries typically do not face additional export duties beyond national regulations.

Negotiations between MERCOSUR and the European Union (EU) for a comprehensive free trade agreement began in 2000. The agreement aims to establish a bi-regional free trade area that encompasses three main components: (i) Political Dialogue: Strengthening political ties and cooperation on global issues, (ii) Trade and Economic Issues, reducing tariffs and barriers to facilitate trade, and (iii) Cooperation: Enhancing collaboration in various sectors, including technology, agriculture, and sustainable development.

The Key Benefits of the MERCOSUR-EU Agreement are so far:

Market Access: The agreement is expected to provide MERCOSUR countries with preferential access to the EU market, which is one of the largest economies globally. This access will enhance export opportunities for agricultural products, industrial goods, and services.

Economic Growth: By reducing tariffs on goods traded between MERCOSUR and the EU, the agreement could stimulate economic growth in both regions. For MERCOSUR countries, this means increased exports of key products such as beef, soybeans, and other agricultural commodities.

Investment Opportunities: The agreement is likely to attract foreign direct investment (FDI) from EU companies looking to establish operations in MERCOSUR countries. This investment can lead to job creation and technology transfer, further bolstering local economies.

Sustainable Development: a significant component of the negotiations includes commitments to sustainable development practices. The agreement incorporates environmental standards that align with international commitments, promoting responsible production methods.

Strengthening Ties: The agreement aims to deepen political and economic ties between two major regions, fostering cooperation on global challenges such as climate change, trade disputes, and social issues.

Diversification of Trade: For EU countries, engaging with MERCOSUR allows for diversification of supply sources and reduces reliance on single markets or regions. This is particularly relevant as geopolitical dynamics shift globally.

 Status of the negotiations:

As of October 2024, negotiations between the European Union (EU) and the MERCOSUR are progressing with renewed momentum. Here are the key developments and challenges surrounding the negotiations.

Spanish Prime Minister Pedro Sánchez has indicated that the EU is "very close to closing" the long-delayed free trade agreement with MERCOSUR. He emphasized the importance of two upcoming events: the G20 summit in Rio de Janeiro on November 18-19, 2024, and a MERCOSUR summit in December 2024, as critical opportunities to finalize the agreement.  The European Commission has expressed its determination to proceed with the negotiations, highlighting the economic and geopolitical significance of sealing the deal. Olof Gill, a spokesperson for trade issues, reiterated that the agreement is crucial for both regions.

Brazilian officials remain optimistic about concluding an agreement this year, reflecting a commitment to enhancing trade relations with Europe. The Brazilian Ministry of Industry and Trade has indicated that progress is being made in discussions. While some officials suggest that a signing during the G20 in Brazil in November 2024 summit is possible, others view it as "very hypothetical" given ongoing disagreements among EU member states regarding environmental protections and agricultural impacts.

[1] https://www.bloomberglinea.com/latinoamerica/argentina/que-necesita-vaca-muerta-para-superar-el-millon-de-barriles-segun-el-presidente-de-shell-argentina

La Ley de Conciencia y Acción Climática Comunitaria en Honduras:

La Ley de Conciencia y Acción Climática Comunitaria (Decreto 61-2024) busca enfrentar los desafíos derivados del cambio climático mediante la participación de las comunidades hondureñas. Esta ley establece un marco legal para que los ciudadanos, junto con las autoridades locales, adopten medidas concretas de mitigación y adaptación al cambio climático y se enfoca en integrar el conocimiento local con estrategias nacionales para crear un impacto significativo y sostenible en el medio ambiente.

Uno de los aspectos más importantes de la ley es la promoción de prácticas agrícolas- sector clave para la economía hondureña- sostenibles y la conservación de los recursos naturales. La ley incentiva a los pequeños productores, agricultores, ganaderos, entre otros a adoptar técnicas que reduzcan las emisiones de gases de efecto invernadero y mejoren la resiliencia frente a eventos climáticos extremos, como sequías e inundaciones que tanto afectan al país. Estas acciones se acompañan de programas de capacitación y apoyo técnico para garantizar su implementación efectiva.

La Ley también fomenta la reforestación y la protección de áreas naturales vulnerables. A través de esta normativa, las comunidades locales son incentivadas a participar en proyectos de reforestación que no solo contribuyen a la captura de carbono, sino que también fortalecen la biodiversidad y protegen las fuentes de agua. Las autoridades locales están obligadas a diseñar y ejecutar planes de manejo forestal en conjunto con las comunidades, asegurando un enfoque participativo en la conservación del medio ambiente.

Además, el Decreto 61-2024 establece un sistema de financiamiento para proyectos comunitarios relacionados con la acción climática. El Fondo de Acción Climática Comunitaria canalizará recursos para apoyar iniciativas locales que busquen reducir los impactos del cambio climático. Esto incluye desde proyectos de infraestructura verde, hasta programas de educación ambiental con especial atención en las zonas rurales y aquellas más afectadas por los efectos climáticos.

Al integrar a las comunidades en el proceso de toma de decisiones y acción, la ley no solo promueve una mayor conciencia ambiental, sino que también garantiza una mayor equidad y sostenibilidad en los esfuerzos nacionales para proteger el medio ambiente y mitigar los efectos del cambio climático en Honduras.

Escrito por: Marcela Barralaga, Asociada

Ley para el Control y Regulación de Bebidas Energizantes en Honduras:

La Ley para el Control y Regulación de Bebidas Energizantes (Decreto 46-2024) tiene como objetivo principal proteger la salud de los consumidores, especialmente de los jóvenes, al establecer controles más estrictos sobre la venta y consumo de estas bebidas. La preocupación por los efectos adversos de las bebidas energizantes, como el aumento de la presión arterial, problemas cardíacos y adicción a la cafeína, llevó a la creación de este decreto que busca mitigar estos riesgos a través de regulaciones claras.

Una de las principales disposiciones de la ley es la prohibición de la venta de bebidas energizantes a menores de 18 años. Esto responde a estudios que han mostrado los peligros del consumo de altos niveles de cafeína y otros estimulantes en adolescentes, cuyo sistema nervioso es más vulnerable. Además, esta ley establece que las bebidas energizantes no podrán ser comercializadas en instituciones educativas o deportivas donde asisten menores, con el fin de reducir su acceso y prevenir problemas de salud debido a la gran demanda actual en estos centros.

El decreto también regula por medio de la Agencia de Regulación Sanitaria (ARSA) el etiquetado de las bebidas energizantes. Las empresas deben incluir advertencias visibles sobre los posibles riesgos para la salud, indicando de forma clara los efectos que el consumo excesivo puede tener en el organismo. Esto incluye advertencias sobre los niveles elevados de cafeína y otros ingredientes estimulantes, con el propósito de que los consumidores tomen decisiones informadas sobre su consumo.

Otro aspecto importante e innovador para Honduras de esta ley es la limitación de la publicidad de bebidas energizantes. El decreto prohíbe que estas bebidas se promocionen como productos saludables o que mejoren el rendimiento físico o mental, ya que estas afirmaciones suelen ser engañosas. Además, las campañas publicitarias no podrán estar dirigidas a menores de edad, y se restringirá el uso de figuras públicas que promuevan el consumo irresponsable de estos productos.

En resumen, la Ley para el Control y Regulación de Bebidas Energizantes (Decreto 46-2024) en Honduras representa un esfuerzo significativo para proteger la salud pública. Al regular el acceso, la publicidad y el etiquetado de estas bebidas, el gobierno hondureño busca reducir los riesgos asociados con su consumo y fomentar una mayor conciencia sobre sus posibles efectos negativos, especialmente entre los grupos más vulnerables, como los jóvenes.

Escrito por: Marcela Barralaga, Asociada

Ley para la Regularización de las Aportaciones y Cotizaciones del IHSS: Fortaleciendo la Seguridad Social en Honduras

La Ley para la Regularización de las Aportaciones y Cotizaciones del Instituto Hondureño de Seguridad Social (Decreto 48-2024) tiene como propósito central la mejora y sostenibilidad del sistema de seguridad social en Honduras. Ante los desafíos financieros y operativos que enfrenta el Instituto Hondureño de Seguridad Social (IHSS), este decreto busca garantizar que tanto empleadores como trabajadores cumplan con sus obligaciones de manera transparente y oportuna, asegurando la protección social de los ciudadanos.

Uno de los puntos clave de la ley es la regularización de las cotizaciones atrasadas. Se establece un mecanismo para que las empresas y los trabajadores puedan ponerse al día con sus aportaciones pendientes sin enfrentar sanciones severas, siempre y cuando se adhieran a los plazos establecidos para la regularización. Esta disposición ofrece incentivos para que los empleadores se pongan al día con sus pagos, lo que contribuye a estabilizar financieramente al IHSS.

Además, el Decreto 48-2024 establece medidas más estrictas para el control y la fiscalización de las aportaciones. El IHSS ahora tiene mayor autoridad para supervisar y auditar las contribuciones de los empleadores, con el objetivo de evitar la evasión de las obligaciones de seguridad social. Este control también incluye sanciones más severas para aquellos que no cumplan con la ley, lo que se espera que aumente la transparencia y garantice el acceso de los trabajadores a los beneficios del seguro social.

Otro aspecto importante de la ley es la ampliación de la base de cotizantes. Con el fin de asegurar la viabilidad a largo plazo del sistema de seguridad social, la ley busca incorporar a más trabajadores al IHSS, incluyendo a aquellos en sectores informales o independientes. Esto no solo permitirá que más personas accedan a beneficios como atención médica y pensiones, sino que también fortalecerá el financiamiento del sistema al aumentar el número de cotizantes.

En conclusión, la Ley es un paso crucial para fortalecer y modernizar el sistema de seguridad social en Honduras. Al mejorar la fiscalización, facilitar la regularización de aportaciones y expandir la cobertura, esta ley asegura que más hondureños puedan acceder a la protección que ofrece el IHSS, contribuyendo así al bienestar general, ofrecerle a la ciudadanía una mejor calidad en el servicio para el goce del derecho humano de la salud y contribuyendo a la estabilidad social del país.

Escrito por: Marcela Barralaga, Asociada

Reglamento para El Control Sanitario de Dispositivos Médicos

La Agencia de Regulación Sanitaria de Honduras (ARSA), siendo la autoridad encargada de la regulación, supervisión y control sanitario de productos de interés sanitario dentro de los cuales se incluye los Dispositivos Médicos, ha aprobado el “Reglamento Para El Control Sanitario De Dispositivos Médicos Y Otros Dispositivos De Interés Sanitario”, mediante acuerdo No. 0631-ARSA-2023, publicado en el diario oficial la Gaceta el pasado 21 de septiembre de 2024.

El reglamento es aplicable para todas las empresas y personas naturales que se dedican a las actividades de fabricación, repotenciación, reparación, acondicionamiento, importación, exportación, almacenamiento, transporte, distribución, alquiler, comodato, comercialización, investigación, publicidad, servicios de mantenimiento y/o cualquier otra actividad relacionada con los dispositivos médicos y otros dispositivos de interés sanitario, así como también a las actividades de tecnovigilancia desarrolladas por la Agencia de Regulación Sanitaria. La Coalición Interamericana de Convergencia Regulatoria define dispositivo medico como cualquier instrumento, aparato, implemento, maquina, implante, reactivo para uso in vitro, software, material u otro artículo similar o relacionado, destinado por el fabricante a ser utilizado, solo o en combinación, en seres humanos, para uno o varios fines médicos[1].

Los puntos principales de este reglamento son la autorización de fabricación, importación, exportación de dispositivos médicos, mecanismos de control, y responsabilidad de fabricante. Entre los mecanismos de control se incluyen Licencias Sanitarias, Clasificación de Dispositivos por Riesgo, Registro Sanitario, y Certificaciones de Buenas Prácticas en fin de afirmar la calidad y seguridad de los productos. Los fabricantes deben cumplir con estándares de calidad, seguridad y eficacia, en fin de mitigar riesgos y garantizando la buena función de los dispositivos.

Con este reglamento las autoridades tienen como principal objetivo asegurar la calidad, seguridad y eficacia establecidos por la Organización Mundial de la Salud (OMS). Así mismo, busca la mejora continua de las condiciones sanitarias y salud de la población hondureña, estableciendo las directrices, disposiciones y requisitos necesarios para obtener autorización de Exoneraciones, Informe por Riesgo, Registro Sanitario y Licencia Sanitaria en todas sus modalidades. Dichas autorizaciones son de carácter obligatorio para el desarrollo de actividades anteriormente citadas y su incumplimiento es motivo de sanciones por parte de la autoridad sanitaria.

[1] https://www.interamericancoalition-medtech.org/regulatory-convergence/wp-content/uploads/sites/4/2021/06/Def.Disp_.Med_.-ESPANOL-1.pdf

This newsletter provides a selection of regulatory news and comments from our SPANISH legal experts on interesting policy developments, recent case law, and new regulatory directions of major industry practices. The aim is to provide an up-to-date tool for quick and easy consultation on the most current and important topics at a SPANISH level.

What is the Golden Visa?The Golden Visa is a residence permit granted to non-EU citizens who make a real estate investment in Spain. This permit offers the opportunity to live and work in the country, providing a fast and efficient way to obtain legal residency.Benefits

It is the fastest method for obtaining residency. It greatly facilitates real estate investment and the ability to start businesses in Spain. With the Golden Visa, you can travel within the Schengen Area as easily as European Union citizens. The direct relatives of the Golden Visa holder can also obtain residency quickly.Requirements for obtaining itThe conditions for obtaining the Golden Visa vary depending on the type of investment made by the applicant.For real estate investments, it is granted to those who purchase property worth 500,000 or more euros.

For capital investments, a minimum of one million euros must be invested in investment funds, venture capital funds, bank deposits, or shares in a Spanish company. The Golden Visa will also be granted to those who undertake business projects that generate employment, have a significant socio-economic impact, or involve scientific advances.Lastly, those who invest more than two million euros in Spanish government bonds will also be eligible to apply for the Golden Visa.The acquisition processThe process for obtaining the Golden Visa is simple and easy to follow. and can be completed by following these steps:

All necessary documents, such as proof of investment, passport, and criminal record certificate, must be gathered. The application must be submitted to the apporpiate spanish agency. The Spanish authorities will review the provided documentation and, if the requirements are met, grant the Golden Visa.

When will the Golden Visa be eliminated?The Spanish government believes that foreign investment hinders residents’ access to housing. Therefore, in order to “guarantee the right to decent and affordable housing,” it plans to eliminate the Golden Visa. However, there is currently no set date for this proposal. For this reason, we suggest that those interested in acquiring residency proceed with the application process as soon as possible.

In Mercantile and Commercial Matters, the First Chamber of Mexico’s Supreme Court of Justice rules favourably of exceptionally lifting the “Corporate Veil” between partners and the Company, when it is being used with the purpose of defrauding third parties.

On September 13th of 2024, the First Chamber of Mexico’s Supreme Court of Justice resolved upon an “amparo” trial (a specific legal mechanism within Mexican legislation that seeks the protection of constitutional rights against governmental overreach and other judicially mandated violations), filed by a legal entity against the local judges order in interim injunctions, to freeze their bank accounts and suspend any payments they were due to receive. These actions on the local judges' part, were taken in lieu of a financial institution's request to have the legal separation between the company and its partners, including the one that filed for amparo, be disregarded, so that the same measures could be applied to them as well.

After the District Jury dismissed part of the appeal filed against the local judge’s decision, and denied constitutional protection to the other, the plaintiff filed for a revision of the resolution, a measure that was subsequently taken on by the Supreme Court for the case to be decided upon.

In its ruling, the Chamber reflected upon the notion of the “corporate veil”, given that one the fundamental principle of corporate law is the separation of assets that in turn infers the separation between a company’s assets and responsibilities regarding their partners. This separation becomes a sort of guarantee that the company / commercial entity provides to its members to assure them that they will not be responsible for paying the company´s dues with their own money. On the contrary, the very company will do so with its own goods and if it were unable to do so due to insolvency, that partners would only be responsible up until the amount of capital they had contributed.

Having considered the aforementioned, the Chamber conceded that, while denying the guarantee of the asset separation between partners and company was to dismiss the autonomous legal nature of the commercial entity, impacts the law and the States main tool to strengthen growth and development as fundamental pillars of an economy, it is possible, though exceptionally and upon the foundation of good faith, to lift said corporate veil upon abusive and fraudulent use in the eyes of the law. This in order to avoid exploitation of a commercial entity’s legal personhood to the end of eluding legal obligations, setting asset separation aside, in order to understand the company’s authentic corporate and economic identity and its objectives, whether general or particular.

The Court does clarify however, that, given that it is a restrictive measure that can jeopardise a guarantee set up to protect the entity, its partners and in some cases, other companies with whom it may form a corporate group, lifting the veil must be understood as an exceptional measure, one of restricted application and secondary use. That is to say, setting the corporate veil aside is a measure that must be applied with extreme discretion with enough justification to overrule the founding principles that rule over a company. Furthermore, the decision to lift the corporate veil must take subjective elements into account, specifically factual context that can give away if a company’s intention is to hide it´s defrauding of third parties behind the veil.

As such, the Court ruled that the general rule would stay as it was, the corporate veil cannot be lifted in a preliminary injunction proceeding, since this shall only be an exceptional measure there must be reliable evidence (including factual context) of the need to disregard fundamental principles safeguarding the legal personhood of the company.

Imminent Labor Reform in Mexico

At the beginning of the year, Mexican president Andrés Manuel López Obrador proposed a series of legislative reforms, just months away from the end of his six-year term as head of the executive branch of government in Mexico. In total, 20 initiatives were presented, while 18 are constitutional and 2 secondary, their nature has been widely debated both on the national, as well as international stage. While certain aspects of the reforms remain under heavy scrutiny, other elements of the change have passed relatively unnoticed by comparison. Such are the constitutional reforms pertaining to the rights of indigenous and Afro-Americans communities, welfare, universal health care, prohibition of toxic substances found in vapes and unauthorized synthetic drugs, amongst others.

One aspect of this package that has captured the people’s attention is undoubtedly the reforms relating to labor and workers’ rights. As such the reforms seek to modify articles of the Federal Labor Law (Ley Federal del Trabajo) as follows: a) Reduce hours within the working week, taking day shifts from 48 to 40 hours a week and likewise night shifts from 42 hours to 35 hours a week; b) increase bonuses to be calculated upon 30 days instead of 15; c) prohibit practices that force workers to stay on their feet throughout their entire shifts by implementing mandated resting periods; d) increase seniority bonus from 12 to 15 days of salary per year of employment and lower the minimum eligibility period for said bonus upon termination of the work relationship from 15 to 13 years; e) create a housing system for workers through the Worker’s Housing Institute (Infonavit) so that said body can directly build real estate and place it at the disposal of its beneficiaries; f) increase paternity leave from 5 to 20 days of paid working days for workers who have recently had or adopted a child.

There are multiple additions to the catalog of benefits available for Mexican workers with formal employment. These measures are aimed at all workers, both those who work in office or in person in general, as well as workers who operate through telecommuting. For example, when workers carry out around 40 percent of their work remotely then the company is required to grant a monthly payment to each employee in the “home-office” modality to cover their internet service expenses and the proportional part of the electricity consumption. Similarly, companies must guarantee that said workers enjoy the same rights as if they were working in an office, such as breaks for breastfeeding or the right to disconnect once they have finished their workday.

Legislation surrounding occupational diseases also saw significant changes, as 88 new afflictions were included. This catalog allows physicians to diagnose work-related ailments in order to extend incapacities. This reform marks the first time in five decades that the list is updated and stands out for recognizing for the first time mental disorders (such as stress, anxiety, depression and insomnia), incorporating women's diseases such as endometriosis or infertility, increasing from four to 30 the types of cancer recognized as occupational risk, and increasing infectious and parasitic diseases, among which the inclusion of Covid-19 is noted.

As it stands, we are yet to see the full effects these reforms will have throughout the country. Nonetheless, the legal community remains steadfast in their endeavor to understand and shape the future of our constitutional framework as it develops and is actualized before our eyes.

The Importance of Corporate Governance for Business Longevity in Mexico

Recent data from Mexico’s National Institute of Statistics and Geography (INEGI) highlights that the country is home to 5.54 million businesses, with 98.7% classified as micro, small, and medium-sized enterprises (MSMEs). This represents a significant 28% growth since 2010 when 4.33 million businesses were recorded.

Despite this growth, challenges persist. INEGI reports that almost 52 out of every 100 businesses in Mexico shut down within their first two years of operation. In light of these figures, ensuring long-term viability is a major concern for most companies. Key to overcoming these obstacles is the implementation of effective Corporate Governance practices, particularly when it comes to managing internal relationships among stakeholders, family members, and employees.

A study by the CIFEM|BBVA Family Business Research Center at IPADE Business School, titled “Progress Levels of Family Businesses in Achieving Continuity and Harmony,” reveals that generational succession remains one of the toughest issues facing family-owned businesses. According to the research, half of these companies are at risk of instability because they lack clear succession plans. An additional 45% still have unresolved succession-related challenges, while only 5% of businesses surveyed in 2022 had an explicit strategy for transitioning leadership.

The introduction of Corporate Governance structures could help prevent companies from failing due to unclear responsibilities or succession processes. Setting well-defined rules and roles for everyone involved in the business is critical, especially for MSMEs aiming to thrive in the long run. Such governance strategies allow companies to separate family interests from business operations, which is essential for their continued success across generations.

Experts recommend several steps for implementing effective Corporate Governance. One of the top priorities is developing a robust succession plan that addresses future leadership transitions for second and third generations. This process should ideally be supported by external consultants who can help establish clear rules defining relationships between the company, its employees, and the family owners.

Establishing a Board of Directors and institutionalizing processes that align with governance principles—whether related to profitability, investment, diversification, or innovation—are also key strategies for strengthening Corporate Governance.

The benefits of such governance are wide-ranging. By creating structured decision-making bodies, companies can clearly define the roles and responsibilities of employees with measurable goals tailored to each individual’s performance. Furthermore, Corporate Governance promotes transparency, ensures better management of finances, and documents processes to create a well-defined organizational structure. Importantly, this approach fosters data-driven decision-making, reducing the influence of emotions on critical business choices.

Incorporating these measures will help prevent internal conflicts and encourage decisions that benefit the business as a whole rather than advancing individual interests.

Ultimately, implementing effective Corporate Governance plays a vital role in a company’s growth and continuity. It safeguards the interests of shareholders, ensures transparency in operations, and facilitates communication between family members, employees, and the company itself, making it an indispensable tool for long-term success.

RULES RELATING TO THE REGISTRATION OF FOREIGN REINSURANCE COMPANIES IN VENEZUELA

The Superintendence of the Insurance Activity (Superintendencia de la Actividad Aseguradora - SUDEASEG) established the guidelines for registration with the registry of foreign reinsurance companies seeking to operate in Venezuela. These rules, published in Official Gazette No. 6.835 Extraordinary of September 3, 2024 and effective as from the same date, describe the necessary steps and documentation required for their compliance. 

From now on, requests for registration with said registry must be made through the SUDEASEG’s online system Sistema Único de Trámites. Exceptions for physical submissions will only be allowed under justified circumstances.

The information that foreign companies must file for the aforesaid registration include:

Key information, such as their name, corporate domicile, address, contact details, and a notarial authenticated power of attorney for their representative. A certificate of the competent authority of the country of their domicile evidencing that the reinsurance company is legally organized in said country and that it has an authorization issued at least five years before to carry out reinsurance and/or refinancing operations abroad,  indicating the lines of business in which it may operate and that it has no impediments to payment of reinsurance technical accounts in freely convertible currencies Report and financial statements of the last three years, together with audit reports from recognized firms. A minimum equity of USD 10 million is required. Documents evidencing that the company is organized and registered in countries, dominions, jurisdictions, territories, or associate, cooperative states in the frame of the global fight against the crimes of risk management of Money Laundering, Terrorism Financing, and Financing of Proliferation of Weapons of Mass Destruction and other unlawful acts, as per the guidelines issued by the Financial Action Task Force (FATF). International credit ratings prepared by the providers of credit ratings mentioned in the Rules.

For purposes of the registration with the registry of foreign reinsurance companies, the Lloyd’s of London insurance and reinsurance market will be considered as a single reinsurer. Lloyd’s of London must send SUDEASEG a list of the syndicates that are members of Lloyd’s.

The SUDEASEG will be allowed a period of twenty (20) business days in order to answer the request for registration. The right to correct information or documentation is provided.

The registration must be renewed every three (3) years and the information presented in the request for registration must be updated. Any change in the information provided for registration or renewal must be sent to the SUDEASEG in a period of thirty (30) business days as from the time when such change occurs.

All documents filed in a language other than the Spanish language must be translated by a public interpreter. The powers of attorney and the certifications must have been issued no longer than six (6) months before the date when the request is filed and they must be legalized or apostilled, as appropriate.

The rules became effective upon publication in the Official Gazette.

The Corporate Transparency Act (the "CTA") took effect January 1, 2024.

Executive Summary The CTA requires every reporting company that is not exempt to file a beneficial ownership report (a "Report") with FinCEN – the Financial Crimes Enforcement Network of the U.S. Treasury. The Report must include five discrete items of information for each Beneficial Owner of your Company. We may require to collect from you documents and information needed to help determine whether your company needs to file a FinCEN Report and, if so, who are the Beneficial Owners to be identified in that report. You will then be responsible for preparing your Report and filing it with FinCEN by the applicable deadline. The CTA imposes a $500 per day fine on reporting companies that fail to file on time. In addition, a willful failure to file can be punished as a felony. If you have any questions, please contact one of our attorneys. Background and Resources Because the CTA is a new law that will require more than 30 million U.S. businesses to file a Report that they have never filed before, there is a great deal of concern is the market. The CTA applies to any corporation, LLC or other legal entity formed by the filing of a document with a Secretary of State (or any entity formed outside the U.S. that is registered to do business in the U.S. by filing a document with a Secretary of State) (each, a "reporting company"). Some reporting companies are exempt from the CTA's requirements and the resources cited below can help you determine if your company may be exempt. The CTA will require every non-exempt reporting company in existence prior to January 1, 2024, to file its initial Report with FinCEN by January 1, 2025. Any company formed on or after January 1, 2024 (and before January 1, 2025), will need to file its first report within 90 calendar days after the date of formation (or the date of registration, in the case of a foreign reporting company). Every non-exempt reporting company will need to identify its beneficial owners and, for each of them, provide their (a) full legal name, (b) residential address, (c) date of birth, (d) a "unique identifying number" (which can be a driver's license or passport) and (e) an image of the document that provides the unique identifying number. Entities formed (or registered to do business in the U.S.) on or after January 1, 2024, will also need to provide this same information for the entity's "company applicant." Importantly, after a reporting company files its initial Report, the reporting company will need to amend that Report within 30 calendar days after any change in its beneficial owners or their reported information. As a result, every reporting company should review its constituent documents and adopt a compliance policy to ensure that the company is able to comply with this requirement. A great source of background information is the Small Entity Compliance Guide (available online) published by FinCEN to educate the market. Assistance in Preparing Your Report Under the CTA.