Financing to the Non-Financial Public Sector: State Companies

2006 - Year of tribute to Dr. Ramón CARRILLO

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION “A“ 4527
25/04/2006

TO FINANCIAL INSTITUTIONS:

Ref.: Circular
OPRAC 1 - 591

Financing to the non-financial public sector. State Companies.

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We address you to inform you that this Institution adopted the following resolution:

“-Establish that the Central Bank of the Argentine Republic may grant to State Companies governed in accordance with Law 20.705, the general treatment provided for persons of the non-financial private sector, for all purposes of the rules applicable in that matter, provided they comply with the following requirements:

a) Not require to develop their activity resources from the state budget -national, municipal, provincial, or of the Autonomous City of Buenos Aires- as transfers, capital contributions -except those corresponding to the constitution as a company- or repayable financial assistance destined to cover expenses and/or investments of their normal and usual business, with the only exception of those that could have been contemplated in the budgets corresponding to fiscal years 2001 and 2002.

b) Technical and professional independence of their managerial cadres for the implementation of corporate policies.

c) Market their goods and/or services at market prices.

d) Have fixed assets whose use in the activity is not subject to any conditioning by its shareholders.

e) No distribution of dividends among its shareholders.

f) Compliance with all the above conditions must have been verified -uninterruptedly- during at least the ten years immediately prior to the date of granting the financial assistance.

For the purposes of obtaining the general treatment provided for private sector companies, State Companies must:

i) Prior to the first financial assistance they request from financial institutions under this regime, they must petition by note signed by their legal representative and addressed to the Central Bank of the Argentine Republic, the general treatment provided for private sector companies, attaching for that purpose a sworn statement signed by all members of its board of directors stating compliance with the above conditions and a commitment to provide the information requested for that purpose, as well as to notify in a reliable manner to the Central Bank of the Argentine Republic and to the lending financial institution any modification of the circumstances taken into account for their assimilation to private sector companies.

ii) In case the Central Bank of the Argentine Republic grants the general treatment provided for private sector companies, the State Company, when requesting any type of financing from a financial institution, must present before it an authentic copy of the resolution granting it, together with a sworn statement signed by all members of its board of directors stating that it continues to comply with the conditions taken into account to grant it such treatment.

iii) The sworn statements referred to in paragraphs i) and ii) above must be accompanied by a public accountant's certification with signature legalized by the Professional Council of Economic Sciences competent in which that professional rules on compliance with the requirements established in subparagraphs a), d) and e) during the term referred to in subparagraph f).

It will be the responsibility of the lending financial institutions to verify, prior to granting each credit assistance, the required intervention of this Institution, the maintenance at all times of the requirements set for the purposes of the treatment established above and the existence of the corresponding authorization by virtue of the provisions of article 25 of Law 25.917, granted by the competent authority in that matter.

When a State Company ceases to observe conditions taken into account to grant the general treatment provided for private sector companies, the provisions applicable to the non-financial public sector will be applied to new financings granted to it, from the moment that circumstance is verified.

Consequently, State Companies that receive the treatment established in this communication will be excepted -for all their effects- from the application of the provisions regarding financial assistance to holders of the non-financial public sector.”

In due course, we will send you the pages of the ordered text that must be updated.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Darío C. Stefanelli
Issuance Manager of Norms a/c
José I. Rutman
Deputy General Manager of Norms