Last month we reported on the decision of certain companies to file inflation-adjusted financial statements at the risk of violating the law. (Argentine Business Law Watch: Inflation Redux—Adjusted Financial Statements Make a Comeback, July 5, 2002.) In our report, we advised you that since the demise of the Convertibility Law in January of this year, companies grappling with inflation and a peso devaluation have been forced to report substantial losses and, in some cases, negative net worth. Corporate lobbyists, we mentioned, were working to convince the government to change laws requiring companies with negative net worth to dissolve or reduce capital absent shareholder contributions of additional capital, as well as to authorize filing of inflation-adjusted financial statements.
The Argentine government has recently heeded the cries of the private sector. The executive branch issued Decree 1269/2002 (published July 17, 2002) to suspend until December 10, 2003 laws that require a company to dissolve or reduce capital due to losses that absorb reserves and paid-in capital. Until the specified deadline, the Argentine private sector has been spared the Hobson’s choice of capitalizing or dissolving a company.
Decree 1269 also resolves all doubt as to whether a company may file inflation-adjusted financial statements. The decree instructs the various government agencies charged with receiving financial statements to amend their regulations accordingly. In line with the decree, on July 31st, the Comisión Nacional de Valores (the National Securities Commission) released Resolution 415/2002 to require financial statements in constant pesos for periods as of January 1, 2002. The CNV resolution adopts the reporting methodology recommended by the Argentine financial accounting board.
If you have any questions or comments concerning the filing of financial statements or any other Argentine corporate matter, please do not hesitate to contact Juan Javier Negri or Damián Rodríguez Peluffo by by e-mail at juan_javier_negri@negri.com.ar or damian_rodriguez_peluffo@negri.com.ar.
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