29 Dic 23 Creation of the Incentive for Large Investments Regime

Agustin Cerolini, Matías Ferrari, Natalia Artmann and Dana König

On December 27, 2023 the Bill for Bases and Starting Points for the Freedom of Argentines (the “Bill”) was introduced to the Argentine National Congress by the Executive Power (the “PEN” for its acronym in Spanish). In Chapter II of Title IX proposes to create a new regime to encourage investments in certain sectors called «Incentive for Large Investments Regime” («RIGI«, for its acronym in Spanish), by means of which the holders and/or operators of large investments in new projects or expansions of existing ones that adhere to such regime are granted incentives, certainty, legal security and efficient protection of the rights acquired under such regime.

In this regard, the Bill indicates that the RIGI will be applicable throughout the territory of the Argentine Republic and will be in force with the scope and limitations established therein and, in the regulations issued by the PEN, as a consequence.

In turn, the Bill explains that those projects involving the acquisition, production, construction and/or development of assets that will be affected to activities of the sectors included in the RIGI, i.e. (i) agribusiness; (ii) infrastructure; (iii) forestry; (iv) mining; (v) oil and gas; (vi) energy; and (vii) technology (the «Included Sectors«) will be considered as «Large Investments«.

On the other hand, as indicated in the Bill, single project vehicles (the «VPU«, for its acronym in Spanish) holding a project that qualifies as a Large Investment in the Included Sectors may request the registration to the RIGI, and their sole and exclusive purpose must be to carry out a single investment project admitted in the RIGI. Accordingly, the VPU shall not develop activities or hold any assets that are not allocated to such project, except for temporary investments of their working capital for the prudent management of the company’s funds.

The following entities shall be considered as VPU:

(i) Corporations (including sole member corporations and limited liability companies).

(ii) Branches established by companies incorporated abroad in accordance with Article 118 of the Companies Law.

(iii) Transitory unions and other associative contracts.

(iv) Dedicated branches (those corporations or limited liability companies that wish to join the RIGI and carry out one or more activities that will not be part of the investment project, or own one or more assets that will not be allocated to such project, may opt – for the sole purpose of joining – to establish a branch that must comply with certain requirements detailed in the Project).

On the other hand, it is worth mentioning that among the main objectives of the RIGI are the following:

(i) To encourage large domestic and foreign investments in order to ensure the prosperity of the country.

(ii) To promote economic development.

(iii) To develop and strengthen the competitiveness of the various economic sectors.

(iv) Increase exports of goods and services abroad.

(v) Promote job creation.

(vi) Generate conditions of predictability and stability for Large Investments.

(vii) To create a regime for Large Investments that provides certainty, legal security and special protection in the event of possible deviations and/or non-compliance by the public administration and the State.

On the other hand, it should be clarified that, according to what is mentioned in the Bill, these Large Investments must have, among many other things, a minimum amount of investment that will depend on each sector.

Finally, the Bill specifies that the deadline to adhere to the RIGI is 2 years as from the entry into force of the reforms and clarifies that the PEN may extend the term for a single period of up to 2 years only.

The enforcement authority shall be determined by the PEN.