2010 - YEAR OF THE BICENTENNIAL OF THE MAY REVOLUTION

COMMUNICATION “A” 5085
07/06/2010

TO THE FINANCIAL INSTITUTIONS,
TO THE EXCHANGE HOUSES, AGENCIES AND OFFICES:

Ref.: Circular
CAMEX 1 - 658

Single and Free Exchange Market. Formation of external assets by residents.

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We address you in order to inform you that the following has been provided with effect from 08.06.10 inclusive:

1. The reorganization and new rules applicable for access to the local exchange market for the formation of external assets by residents that are not entities authorized to operate in foreign exchange, which are set out in the annex that forms part of this communication.

2. This communication replaces Communications “A” 3722, “A” 3794, “A” 3826 point e), “A” 3909, “A” 4086 point 4, “A” 4306, “A” 4349, “A” 4390, “A” 4724, “A” 4786 point II, “A” 4803, “A” 4764 points I, III and IV and its amendment “A” 4822 and “A” 5058, “A” 4850, “A” 4871, “A” 4887 point b), “A” 4950, “A” 5020 point b), and all rules regarding access to the exchange market for residents that are not entities authorized to operate in foreign exchange, for the formation of external assets with or without a specific destination, that are not contemplated in the rules set out in the annex to this communication.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Jorge L. Rodríguez
Principal Manager of
Foreign Affairs and Exchange

Juan I. Basco
Deputy General Manager of Operations

ANNEX

B.C.R.A.
Annex to
Com. “A”
5085

ANNEX

Index

Foreign Trade and Exchange Rules

1. Exchange rules for access to the local exchange market by residents for the formation of external assets.................................................................. 2

2. Purchase of foreign currency for its application to specific destinations in local assets.......................................................................................................... 2

3. Purchase of foreign currency for the formation of external assets for its subsequent application to specific destinations............................................................................ 4

4. Rules for access to the local exchange market for the formation of external assets by residents, without the obligation of a subsequent specific application. ................................................................................................................ 7

5. Other requirements and rules of application for access to the exchange market for the formation of external assets by residents............................................. 9

Foreign Trade and Exchange Rules

1. Exchange rules for access to the local exchange market by residents for the formation of external assets.

Resident natural and legal persons, estates and other universalities constituted in the country and local governments may access the local exchange market to form external assets when the conditions established for each case in this rule are met.

Cases that do not fall within the established conditions must have the prior consent of the Central Bank before the entity grants the client access to the local exchange market.

2. Purchase of foreign currency for its application to specific destinations in local assets.

Residents will have access to the local exchange market for the purchase of external assets for their application to a specific destination in local assets, when it involves the following transactions:

2.1. Purchases of foreign currency made by resident natural and legal persons, estates and other universalities constituted in the country without limit of amount, which are destined on the settlement date of the exchange transaction to integrate the primary subscription in foreign currency of public securities issued by the National Government.

2.2. Purchases of foreign currency banknotes made by local governments without limit of amount for their deposit in local accounts of financial institutions under the conditions established for the disbursements of loans granted by International Organizations. The funds thus constituted, plus their interest net of account expenses, must be settled in the local exchange market at the time of use.

2.3. Purchases of foreign currency banknotes to deposit in local bank accounts under the concept “Purchases of foreign currency for allocation to investment projects” that are made simultaneously with the inflow of funds from the financings provided in Communications “A” 4785 and “A” 4970 and provided that the conditions established therein are met.

2.4. Purchases of foreign currency banknotes made without limit of amount by public companies, companies that even though constituted as private law subjects are under the control of the National State, and trusts constituted with funds contributed by the national public sector, to the extent that:

2.4.1. The funds used for the purchase of foreign currency correspond to funds contributed by the National Treasury.

2.4.2. The funds acquired are deposited on the date of access to the local
exchange market, in local accounts in foreign currency opened at the entity that processes the transaction.

2.4.3. The local accounts constituted with these funds are destined to guarantee
letters of credit or other types of guarantees issued by the aforementioned entities, to guarantee the payment of Argentine imports of goods.

2.4.4. The funds released from these accounts must be settled by the local
exchange market on the date of their withdrawal.

2.4.5. The entity through which the exchange transaction is processed shall be responsible for
carrying out the monitoring and eventual report to the Central Bank in case of non-compliance with the provisions of this rule.

2.5. Purchases of foreign currency banknotes to be deposited in local bank accounts made by companies of the non-financial private sector, provided that the following conditions are met:

2.5.1. The company records overdue and unpaid debt with foreign creditors in respect of
securities issued abroad, syndicated financial loans abroad, financial loans granted by foreign banks, and other direct debts or debts guaranteed by official foreign credit agencies.

2.5.2. On the date of access to the local foreign exchange market, the company has made an
offer to refinance its debt to foreign creditors.

2.5.3. The amounts acquired do not exceed the amount of principal and
interest services of matured debt according to the original schedule, without counting accelerations of maturities due to default clauses, nor 75% of the cash payments offered in the refinancing offer.

2.5.4. The funds deposited in local accounts plus their interest, net of expenses and
commissions affecting the account, must be re-entered through the local foreign exchange market on the date of cash payment of the offer in the case of acceptance thereof, or within the following 10 business days in the case of rejection.

2.5.5. The purchases shall be channeled through the banking entity receiving the deposit,
which shall be responsible for monitoring these transactions and the eventual reporting to the Central Bank in the event of non-compliance with the provisions of this regulation.

2.6. Purchases of foreign currency banknotes made by mutual investment funds to pay in the country redemptions of shares of clients not covered by the provisions of point 1.b. of Communication "A" 4377 and provided that they have brought in foreign currency for such purpose in the same amount.

2.7. Purchases of foreign currency banknotes made by securities agents resident in the country and provided that the funds are deposited in their name in local accounts at the same entity, up to the amount of foreign currency inflows arranged on the same date in respect of repatriations of portfolio investments, when the funds resulting from these transactions are applied within the

following 24 business hours from the foreign exchange settlement date, to cancel purchases of securities issued by non-residents with quotation in the country and abroad, made to clients not covered by the provisions of point 1.b. of Communication "A" 4377 in transactions arranged no more than 72 business hours in advance and settleable in foreign currency in the country.

This exception shall apply provided that the funds resulting from the transaction remain deposited in local accounts in foreign currency in the name of the seller of the traded securities.

The period for applying the funds to the settlement of securities shall be extended in cases of delays for reasons beyond the buyer of the securities and provided that the funds are not used for other purposes, until the causes preventing their application are remedied.

3. Purchase of foreign currency for the formation of external assets for subsequent application to specific purposes.

Resident natural and legal persons shall have access to the local foreign exchange market to constitute deposits abroad for subsequent application to specific purposes, in the following cases:

3.1. Purchases of foreign currency made until 31.08.2010 by legal persons resident in the country that are not entities authorized to operate in foreign exchange, provided that the following conditions are met:

3.1.1. The funds and their income are applied within thirty (30) calendar days from the date of access to the foreign exchange market to the payment of:

    3.1.1.1. Principal and interest services of financial debts with foreign creditors in respect of securities issued abroad, syndicated financial loans abroad, financial loans granted by foreign banks, and other direct debts or debts guaranteed by official foreign credit agencies.

    3.1.1.2. Debts for Argentine imports of goods.

    3.1.1.3. Profits and dividends.

    3.1.1.4. Argentine direct investments abroad.

3.1.2. The maximum amount of external assets that may be accumulated under the conditions set forth in the previous point, including the amount for which access to the foreign exchange market is requested, and the income received from said assets, shall be given by:

    3.1.2.1. Imports of goods: without limit.

    3.1.2.2. Financial debt services: for the principal and interest maturities with foreign creditors occurring in the next three hundred and sixty-five (365) calendar days.

3.1.2.3.
Profits and dividends: the greater amount resulting from comparing: i) the amount paid for this concept to non-residents and ADRs in the previous calendar year, or ii) the accumulated amount pending payment of results of fiscal years with annual or quarterly closed and audited financial statements, which should be applied to payments to non-residents and ADRs.

3.1.2.4.
Argentine direct investments abroad: the equivalent in US dollars of 30% of Net Equity less the book value of equity interests in companies in the country and abroad and other portfolio investments abroad, which arises from the last closed and audited annual financial statement, considering the reference exchange rate published by the Central Bank, of the immediately preceding business day of the date of access to the local foreign exchange market.

3.1.3. The funds used for access to the foreign exchange market for the formation of external assets to be applied to the payment of profits and dividends and direct investments abroad, do not have financial indebtedness with foreign creditors as their source of funding.

For these purposes, this condition shall be deemed to be met when no disbursements abroad or income from the foreign exchange market for loans or other financial indebtedness with foreign parties are recorded, excluding disbursements corresponding to loans from International Organizations, in the period of sixty (60) consecutive days prior to and following the date of access to the foreign exchange market.

3.1.4. On the date of effective application of the funds abroad to the payment of the corresponding concept, the requirements established in the foreign exchange regulations must be met in order to access the foreign exchange market for the payment of the concept for which such assets were formed.

For the purposes of corroborating the application and the classification under the regulation, the legal entity must appear before the financial institution designated for monitoring, presenting the documentation that corresponds to classify the transaction under the regulations in force on the date of application, and make the corresponding registrations.

3.1.5. In the event that the foreign currency acquired and its income are not applied to the specific destination within the established term, the corresponding funds must be re-entered into the local foreign exchange market within five (5) business days following the deadline established for their application.

The prior consent of the Central Bank must be required for the modification of the destination of the accumulated funds, and/or the extension of the term established for the application of the payments for which access to the foreign exchange market was obtained, and to process transactions for amounts greater than those foreseen when they are destined for the early cancellation of external financial debt under the conditions established in the foreign exchange regulations.

3.1.6. Comply with the following procedural and registration rules:

3.1.6.1.
The resident company must designate a local financial institution which shall be responsible for monitoring the purchases of foreign currency made and their applications, and shall be responsible for reporting to the Central Bank in cases of non-compliance with the provisions of this regulation. The designation must be communicated by the company to the Subgerencia de Estadísticas Cambiarias de la Gerencia Principal de Exterior y Cambios, by means of a note submitted through the designated financial institution. The note must be filed with the Mesa de Entradas of this Central Bank, prior to the execution of the transactions.

The designated institution shall be responsible for monitoring all transactions carried out from the date of submission of the letter to the Central Bank.

In the case of formation of external assets for the cancellation of debts with foreign parties, the note must include, under sworn declaration, the detail of the financial debt with foreign parties, which must be validated in the reporting regime of Communication “A” 3602 and complementary ones, at the different reference dates whose submission is overdue as of the date of submission of the note.

3.1.6.2. The designated financial institution shall issue the certifications that may be necessary so that the company can access the foreign exchange market through other institutions authorized to operate in foreign exchange.

3.1.6.3. Foreign exchange purchases made pursuant to the provisions hereof must be processed under the following concepts:

a. “Portfolio investments abroad for the servicing of debt service maturities with external creditors” (Code 881).

b. “Portfolio investments abroad for the payment of imports” (Code 896).

c. “Portfolio investments abroad for the payment of profits and dividends” (Code 897).

d. “Portfolio investments abroad for the making of direct investments abroad” (Code 898).

3.1.6.4. At the time of application of the funds acquired under this regime to the corresponding specific destination, a purchase ticket must be made under the concept of:

a. For the cancellation of debt with foreign parties: “Application of portfolio investments for the cancellation of debts” (Code 475) and a sale ticket under the concept of the debt service being cancelled.

b. For the payment of imports of Argentine goods: a purchase ticket must be made under the concept of “Application of portfolio investments for the payment of imports”

(Code 497) and a sale ticket under the concept of payment in cash, advance or deferred of imports of goods as applicable.

c. For the payment to non-residents and ADRs for profits and dividends: a purchase ticket must be made under the concept of “Application of portfolio investments for the payment of profits and dividends” (Code 498), and a sale ticket under the concept of “Profits and dividends paid abroad”.

d. For the making of direct investments abroad, a purchase ticket must be made under the concept of “Application of portfolio investments for the making of direct investments abroad” (Code 499), and a sale ticket under the concept of “Direct investments abroad by residents”.

The inflows of funds under the concepts “Application of portfolio investments for the cancellation of debts” (Code 475), “Application of portfolio investments for the payment of imports” (Code 497), “Application of portfolio investments for the payment of profits and dividends” (Code 498), and “Application of portfolio investments for the making of direct investments abroad” (Code 499), as they are technical tickets without movements of funds or, as the case may be, to the extent that they are applied simultaneously to the specific destinations provided for at the time of their constitution, are exempt from the constitution of the deposit established in point 6 of Communication “A” 4359.

4. Rules for access to the local foreign exchange market for the formation of external assets by residents, without the obligation of a specific subsequent application.

Residents in the country may access the local foreign exchange market for the purchase of foreign currency for the formation of external assets, without the obligation of a specific subsequent application, in the following cases:

4.1. Purchases by companies resident in the country of foreign currency without amount limit made until 31.08.2010, for the realization of direct investments abroad in productive activities of non-financial goods and services, to the extent that the following conditions are met:

4.1.1. The investment does not have financial indebtedness with abroad as a source of funding. For these purposes, this condition shall be deemed met when no disbursements abroad or income through the foreign exchange market for loans or other financial indebtedness with abroad are recorded, excluding disbursements of loans from International Organizations, in the period of sixty (60) consecutive days prior to and following the date of access to the foreign exchange market, and they have been reported to the Subgerencia de Estadísticas Cambiarias before twenty (20) business days from their access to the foreign exchange market.

4.1.2. The client does not record overdue and unpaid external liabilities as of the date of access
to the local foreign exchange market, under the terms set forth in this rule.

4.2. Purchases of banknotes and foreign currency in foreign currency made by trusts constituted with contributions from the national public sector, resident natural persons and legal persons constituted in the country, excluding entities authorized to operate in foreign exchange and local governments, for the set of the following concepts: real estate investments abroad, loans granted to non-residents, contributions of direct investments abroad by residents, portfolio investments abroad by natural persons, other investments abroad by residents, portfolio investments abroad by legal persons, purchase for holdings of foreign banknotes in the country and purchase of traveler's checks, and donations; when the following conditions are met:

4.2.1. For the total operated for the aforementioned concepts, the equivalent of two million United States dollars (US$ 2,000,000) is not exceeded in the calendar month and in the set of entities authorized to operate in foreign exchange;

4.2.2. The funds purchased are not destined for the purchase in the secondary market of securities and instruments issued by residents or representative of these, or issued by non-residents with trading in the country. For this purpose, prior conformity shall be deemed required when said destination is realized directly or indirectly with a settlement of the purchase of the securities within 20 business days following the date of access to the local foreign exchange market;

4.2.3. When the amount acquired in the set of entities authorized to operate in foreign exchange exceeds throughout the calendar year the equivalent of two hundred fifty thousand United States dollars (US$ 250,000), the intervening entity must verify that the amounts acquired are compatible with the goods declared for tax purposes as investments in local financial assets and cash holdings, and where applicable, the existence of subsequent facts that justify the patrimonial disposal of assets that generated the funds that are applied to the purchase of foreign currency, and/or that the client has income in the calendar year that justifies the holding of the funds used. For these purposes, the entity must at least have in the client's file the following information:

a. For natural persons: a) copy of the last sworn statement of personal assets with the filing date of the expired declaration; b) sworn statement from the client regarding the facts subsequent to the reference date of the personal assets declaration filed, that justify the disposal of funds for amounts greater than the total declared as assets in the country in financial assets and cash holdings, and/or income in the year that justify, where applicable, the availability of funds for amounts greater than said declared holdings, and regarding the updated actual domicile of the client; c) copy of documentation submitted by the client as support for the sworn statement.

b. For legal persons that are subjects of income tax: copy of the last income tax return with the expired declaration date and of the closed and audited accounting balance sheet

corresponding to said tax declaration, to the extent that it is applicable.

c. For legal persons that are not subjects of income tax: closed and audited accounting balance sheet and sworn statement on the origin of the funds applied to the purchase in the foreign exchange market.

This requirement shall not apply when the purchases in the calendar month in the set of entities authorized to operate in foreign exchange do not exceed the equivalent of five thousand United States dollars (US$ 5,000).

4.2.4. The client's sworn statement is available stating that they do not record overdue and unpaid debts with abroad for capital services and interest of debts of all types.

This requirement shall not apply to purchases of banknotes and traveler's checks for amounts that do not exceed the equivalent of ten thousand United States dollars (US$ 10,000) per calendar month, in the set of entities authorized to operate in foreign exchange.

For the purposes of the requirements established in this point, it shall be understood that:

i. financial and commercial obligations with abroad without maturity shall be considered as overdue debt as of 365 consecutive days from the date they were contracted;

ii. in the case of debts for imports of goods, those in which 365 consecutive days have not elapsed from the date on which, according to the agreed purchase condition, the exporter's obligation to deliver the good to the importer is considered fulfilled, whatever the due date, shall not be considered as overdue and unpaid operations.

5. Other requirements and applicable rules for access to the foreign exchange market for the formation of external assets by residents.

5.1. Authorized entities to operate in foreign exchange may only process foreign exchange transactions for sales of foreign currency to residents for the constitution of portfolio investments abroad, to the extent that the transfer is destined to an account in the name of the client carrying out the foreign exchange transaction, opened at:

i. foreign banks constituted in OECD countries whose sovereign debt has an international rating not lower than "BBB", or that consolidate balance sheet in the country with a local banking entity, or in

ii. foreign banks of the country of permanent residence of natural persons who have authorization for their stay in the country as "temporary residents" under the terms established in article 23 of the Migration Law No. 25.871, or in

iii. financial institutions that habitually carry out investment banking activities and that are constituted in OECD countries whose sovereign debt has an international rating not lower than "BBB".

CENTRAL BANK OF THE ARGENTINE REPUBLIC

The identification of the foreign entity where the account is constituted and the No. of client account must be recorded in the corresponding exchange ticket.

5.2. For purchases of foreign currency banknotes and foreign currency for the constitution of portfolio investments abroad, which in the calendar month together exceed the equivalent of twenty thousand United States dollars (US$ 20,000) in all entities authorized to operate in foreign exchange, the sale must be made with debit to a demand bank account in the name of the client, or with transfer via MEP in favor of the intervening entity of the funds from demand bank accounts of the client, or with payment by check from the client's own account.

5.3. For the purposes of computing the limits mentioned at the date of carrying out a new operation, for purchases in foreign currencies other than the United States dollar, the pesos settled for each operation at the reference exchange rate of the immediately preceding day of the new operation shall be computed.

5.4. The intervening entities must have the client's sworn declaration stating that with the foreign exchange operation to be arranged with the entity, the limits established in the regulations for their operations in all entities authorized to operate in foreign exchange are met, in the cases that are applicable. In this sworn declaration it must also state that at the date of access to the local foreign exchange market, it has complied, where applicable, with the filings with due dates operated prior to 10 business days, of the declaration regimes of: a) external debt of Communication "A" 3602, and b) the Direct Investments Survey established by Communication "A" 4237 and complementary.

5.5. Sales of external assets carried out in compliance with the obligation to re-enter funds acquired for a specific destination are exempt from the limit established in article 2 of Resolution No. 365/05 of the Ministry of Economy and Production for the constitution of the deposit established in Decree No. 616/05.

5.6. These rules are independent of those applicable in matters of prevention of money laundering and other illicit activities and terrorist financing.