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Regulation

New Law

Regulating Capital Markets in Argentina

On November 29, 2012, the Argentine Congress passed a new law regulating all the relevant aspects of capital markets and public offerings, thus terminating former Law 17,811 that regulated the same issue. The executive branch promulgated the law on December 28, 2012. We will briefly analyze the main aspects of such a new law on capital markets and public offerings ...

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Private Equity in Brazil

Crowd funding still not a replacement

Brazil has a modest crowd funding scene, with less than a dozen famous websites in the area. The amounts those websites are capable to process is estimated in less than a couple million dollars per year. Like anywhere else in the world, Brazilian crowd funding operations are focused in a few basic areas: artistic events, including movies; innovative business ventures (often related to technology and internet); and nonprofit initiatives, usually humanitarian in nature ...

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Tax & Estate Planning

From Argentina: Part 2

We introduce news on questions of tax and estate planning in Argentina in order to understand the current regulatory framework and possible changes in the not-so-distant future. In the previous edition of ALI we reviewed the gift tax in the Province of Buenos Aires and new reporting requirements for foreign trusts.  In this edition, we will analyze new developments on double taxation treaties (treaties to avoid double taxation or DTT) in Argentina ...

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The Brazilian Law on Money Laundering

And the Precautions Investors Must Take when Investing in Brazil

Brazil has recently altered its money laundering law. The new bill has tightened the government’s grip on most of the investment operations and has significantly broadened financial institutions’ and investment brokers’ duties to report suspicious activities. Since the reporting of suspicious activities may trigger an investigation, it is important for foreign investors to understand how they can, at the same time ...

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Tax & Estate Planning in Argentina

Part One

We will present a series of articles on developments in tax and estate planning in Argentina, in order to understand the current regulatory framework and possible changes to come to Argentina in a not so distant future. In this first piece, in terms of taxes and reporting regimes, we have news on inheritance tax and the trusts reporting regime ...

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Software Importation

By End Users in Brazil

As Brazil watches the growth and professionalization of the retail industry, especially regarding big players such as supermarket chains and drugstores, a second phenomenon can also be noticed: the use of management, ERP, logistics and financial software is also growing. The reasons are many, but above all are the need for gains of scale and efficiency ...

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Florida Law

Threatens Investors In LatAm

The Freedom Tower is a building located in Miami, Florida, that was used by the government in the 1960s to assist recently arrived Cuban refugees and, for that, has become a memorial to Cuban immigration to the United States since then. On May 1, however, the building attracted special attention from all over the world when Florida Governor Rick Scott signed House Bill 959 in such a symbolic place for Cuban refugees ...

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I Can't Get no Satisfaction.

Nationalization in Argentina

Last April the Argentine government decided to nationalize 51% of the largest oil company operating in Argentina, YPF. The controlling stake (51%) will be nationalized from the holdings of the Spanish company Repsol, that will continue to own 7%. The balance will remain held by a local Argentine shareholder, Grupo Ezkenazi, and publicly traded in New York and Buenos Aires. In this process, the Argentine government has not complied with the rules for expropriation under Argentine law ...

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Benefits of the Colombian Free Trade Agreement

For Foreign Investors

Contrary to what one might initially think, imports and exports are not the biggest benefit from a Free Trade Agreement (FTA) between a developing country and a developed country.  The biggest benefit is the push for improvement in the ease of doing business, i.e., efficiency and effectiveness throughout the economic system.  We saw this happen as a result of the U.S.-Chile FTA and we will see the same with the U.S.-Colombia FTA ...

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State Monopolies

In the Brazilian Mining Market

Foreign investment in mining is legal in Brazil.  Let's start from the basics: The Brazilian Federal Constitution provides for several rules on Mining Law, which include the following: (i)The mineral resources, including the ones found underground, are property of the Union (article 20); (ii) The Union has the capacity to issue laws and rules on mineral deposits, mines, other mineral resources and metallurgy (article 22, XII); ...

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Unconstitutional regulation in Brazil

Purchase of rural land by foreigners

The end of 2011 was not a good time for foreign investment regulation in LatAm. As predicted many times during 2010 and 2011, Brazil finally issued rules that severely restrict the purchase of rural land by foreigners, foreign companies and Brazilian companies with a majority of shares or quotas under the control of non-residents ...

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Is This Just Nativism?

Argentina's Rural Land Law

On December 22, 2011, the Argentine Congress passed Law No. 26,737. This new regulation aims to protect national domain over the property, possession or tenancy of rural land.  The Agrarian Federation of Argentina estimates that nearly 7% of the country’s productive arable land, which represents twenty million hectares, belongs to foreigners. Through the adoption of this new rule, Argentina joined several agricultural nations, such as Brazil and Canada, which have adopted similar measures to restrict foreign ownership of arable soil ...

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FDI regulation and Public-Private Partnerships

In Brazil

It is mandatory for every foreign investment made in Brazil, either direct productive investments or investments in the stock market, to be registered under the Central Bank of Brazil. Upon registration and issuance of the “Foreign Capital Registration Certificate”, the non-resident investor will be granted three specific rights: I) remittance of profits; II) repatriation of the capital, at its free will; and III) right to reinvest the capital in Brazil. Those specific rights do not exclude to the private property rights, which are currently constitutionally protected in Brazil, as well as extensively covered by the Civil Code and other regulations ...


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Argentina

Tightens Foreign Currency Controls

The Argentine government has imposed new restrictions on the purchase of foreign currency (although the vast majority of the transactions are in U.S. dollars). The measure formally aims at reducing tax evasion and money laundering; arguably, it also aims at reducing capital flight. Individuals and companies wanting to exchange Argentine pesos for foreign currency (for hoarding and not for transactional purposes) must now explain the source of their funds and be current with their tax obligations – according to the Argentine Tax Authorities (“Tax Authorities”). As a result of these measures, currency trading in Buenos Aires has been very much reduced ...

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Regulation in Argentina

Tax Incentives for Software Development

These laws were aimed at promoting the activities of creation, design, development, production and implementation of software systems and their technical documentation, including the developed software to be incorporated into various processors. Software development for personal use is excluded from this system. These laws cover individuals and legal entities incorporated in Argentina whose principal activity is to develop software.  The incentives granted at the federal level are the following: Fiscal stability - for all federal taxes ... 

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New Anti-Money Laundering Law to be passed

Regulation in Argentina

 After a dramatic report issued by the Financial Action Task Force (“FATF”) on October 2010 analyzing compliance of Argentina with the 40+9 recommendation of such FATF, Argentina has been trying to avoid being categorized by the FATF as a non-collaborative jurisdiction. For these purposes, Argentina’s Anti Money Laundering (“AML”) authority, the Financial Information Unit (“FIU”) – lately seen as a political tool for the Argentine government to receive information of political adversaries- has issued more than fifteen new regulations on the prevention of money laundering since January 2011 up to date ...

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Argentina's Legal Update

Regulation in Argentina

 In the last quarter of 2011, legal agenda has been set forth.  This is an election year in Argentina and many projects that could be considered somewhat populist (which would otherwise not be considered) are likely to be treated by the Argentine Congress. The majority of the projects that will be treated by the Congress in 2011 will affect potential and current investors in Argentina. In addition, following an adverse report from the Financial Action Task Force[1](“FATF”), Argentina is looking to promote drastic amendments in its current Anti Money Laundering (“AML”) regulations in order to pass future reports and … 

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Brazil: Steering clear of potholes

Infrastructure preparation in Brazil

 Traveling by air, land or sea in Brazil can be a feat of epic proportions. The Federation of International Football Association’s (FIFA) Secretary General told the country’s authorities that airport facilities and connections between host cities are the Federation’s greatest concerns for the 2014 World Cup. The apprehension is well-founded:  although the World Economic Forum’s Travel & Tourism Competitiveness Report 2009 ranked Brazil 45th out of 133 countries overall, its airport infrastructure was rated 101st.

The country is also home to some of the world’s worst automobile traffic: São Paulo, the largest city, regularly endures traffic jams of over 100 miles long ... 

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New Bills Proposed to Amend the Law on Financial Entities in Argentina

Three bills to modify the Law on Financial Entities in Argentina

 The Argentine National Congress is currently analyzing three amendments to law No. 21,526 that regulates the activities and functioning of Financial Entities since 1977 (the “Law on Financial Entities”). Three bills are being discussed by the Financial Committee of the House of Representatives in order to modify the Law on Financial Entities. The bills were introduced by the following deputies, Carlos Heller, member of the political party Encuentro Popular, closer to the current administration, Gerardo Milman, member of Generación Encuentro Nacional (GEN); and Federico Pinedo, member of Propuesta Republicana (PRO).We will analyze the main characteristics of the three bills … 

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Due Diligence - You Bought the Company. Now What?

Discussing the importance of due-diligence when embarking on a business or financial deal in LatAm

 With M&A activity surging in Latin America, it’s worth remembering that there’s only so much due diligence you can do prior to acquiring a company; the real investigation begins after the deal closes. And the key to catching crooks is to have a crooked mindset. As anyone who has faced a 30-day deadline in a company buy-out knows, there is only so much due diligence that can be conducted prior to closing the deal. Normally, the target firm’s management provides a detailed financial review of receivables, payables, assets and liabilities to the buyer’s due diligence team pre-transaction … 

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Business Focus: Argentina, Panama and Mexico

This brief compares basic entity formation and banking practices among three LatAm countries

 Be it a manufacturing facility, a winery or a small hotel off the beaten path, Investments in onshore assets in Latin American countries can have widespread appeal to foreign investors. In addition to offering the possibility of a good return on investment, such ventures may also provide intangible benefits, such as being the possible means of supporting a life abroad, and can also form part of a larger asset-diversification/risk-mitigation strategy. This brief compares basic entity formation and banking practices among three Latin American countries; Argentina, Mexico and Panama, noting some special requirements and features of each jurisdiction … 

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Finding Your Financial Freedom in Latin America

Peter Macfarlane investigates the hidden benefits of Latin Investing

 When checking out investments in Latin America, don't miss intangible benefits that might not contribute directly to the bottom line, but that could make you freer, wealthier and happier as a person. Peter Macfarlane investigates the hidden benefits of Latin Investing such as tax benefits, asset protection and even a new passport... For most investments, the bottom line is of course the most important. But one of the very attractive advantages of alternative investments is that they are not just digits on a screen. Frequently, they also carry significant fringe benefits that, while not contributing directly to the bottom line … 

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Brazils improving Corporate Governance

How corporate governance is affecting the private equity market in Brazil

 From the mid 1990’s until 2000 the Brazilian equity market was characterized by poor corporate governance, weak enforcement, little minority investor protection, shallow liquidity and low valuations. This challenging situation provoked de-listings and forced a migration of companies seeking the greater protection that the NYSE could offer. Fast-forward to the period between 2004 and 2007 and the scenario had changed completely, with a record number of IPO’s coming to the market raising a total of US$45 billion from foreign and domestic investors. So how can such a turnaround be explained? Alternative Latin Investor was fortunate to attend the recent … 

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Multimercado:Funds Go Global

Hedge fund regulations in Brazil provide local funds with global access

 As Brazilian hedge fund managers prepared to take advantage of the long-awaited issue of a resolution that would allow them to access offshore markets in 2008, the global financial crisis hit just in time to set back their hopes. Indeed, local fund managers had waited years for the Commissão de Valores Mobilários (CVM), Brazil’s regulator of investment funds and capital markets, to issue Instructions 450 and 456, which provided long-awaited access to international financial instruments. Essentially, CVM 450 and 456 allowed multimercado funds (the local term used to describe onshore hedge funds) … 

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