Law N° 27.742 set forth a large, varied and important set of provisions and amendments to current legislation, including -among others- matters related to:

• Reforms of State
• Privatizations
• Administrative Proceedings
• Publc Employment and Contracts
• Labor Modernization
• Energy
• Incentive Regime for Large Investments (RIGI)

LEGISLATION

Law 27.742 – “Ley de Bases”

Law N° 27.742 (the “Law”), referred as “Bases and Starting Points for the Freedom of Argentines”, set forth a very large, broad and varied set of provisions and amendments to current legislation, being the following the most relevant:

1. Declaration of Emergency and Reform of the State:
   i.- Declaration of public emergency regarding administrative, economic, financial and energy matters for a period of one (1) year.
   ii.- Delegation of powers from Congress to the Executive Branch regarding said matters, for the
   a) improvement of the State,
   b) reduction of the oversized structure of the State in order to reduce the deficit of balance of public accounts, and
   c) ensure internal control of the national public administration in order to guarantee transparency in the administration of public finances.
2. Privatization:
   i.- Certain public and majority owned public companies provided therein shall be subject to privatization, within the limitations and conditions also provided therein.
3. Administrative Proceedings:
   Amendments to Law N° 19.549, which regulates administrative proceedings within public administration and in relation to individuals. Among others:
   i.- Inclusion of core principles which shall govern administrative proceedings, such as legality, reasonableness, proportionality, good faith, legitimate trust, transparency, effective administrative protection, administrative simplification and good administration, which shall guarantee individual´s rights to be heard, offer evidence, obtain well-funded resolutions to their claims within a reasonable period of time.
   ii.- Seeking for bureaucratic efficiency within administrative proceedings, interested parties shall not be obliged to file documents issued by public administration.
   iii.- Express exclusion of the application of Law N° 19.549 to public companies and companies partially owned public companies, which shall be regulated by private law.
   iv.- Administrative proceedings shall expire in case of paralysis for 60 days attributable to the individual, previous to an additional 30 days notice.
   v.- the silence of the administration within administrative proceedings requiring the authorization for the individual to perform a specific activity regulated by the administration, shall be interpreted as if the authorization has been granted, with the exclusions provided therein.
   vi.- the statute of limitation for the annulment of an administrative act shall be of 10 years (absolute nullity) or 2 years (relative nullity).
4. Public Employment:
   i.- Amendments to Law N° 25.164, which regulates public employment, regarding the stability of public officers, causes for warnings, suspensions, termination and exemption, statutes of limitation, etc. The Law also provides the prohibition of public officers to perform tasks related to election or political campaigns during working hours.
   ii.- Amendments to Law N° 24.185, by providing that public officer´s right to strike shall be subject to a discount on their salaries proportional to the time out of work.
5. Public Contracts and Concessions:
   i.- The National Executive Branch shall be entitled, as per the declared emergencies acting herein as force majeure, to renegotiate or terminate public construction, concessions or service contracts exceeding the amount equivalent to 10 millions units celebrated before December 10th, 2023, as long the purpose of the contract have not reached at least 80% of completion; excluding contracts celebrated under privatization process Law 23.696 or celebrated under any activity promotion or investment regime.
   ii.- Amendments to Law N° 17.520, which among others, include the provision according to which during the term of concession contracts, the administration shall guarantee the maintenance of balance in the economic-financial equation considered at the time of execution, which shall be originally included in the bidding documents. In case of distortion, the parties shall be entitled to a renegotiation process.
6. Promotion of Registered Private Employment:
   Employers of the private sector shall be entitled, during a determined period of time, to regularize their existent labor relationships with their employees initiated before the issuance of the Law, including both unregistered relationships and/or deficiently registered relationships, according to the regulations to be issued for said regard by the Executive Branch. Regulations may provide the extinction of the criminal liabilities provided under law 27.430 and the condonation of labor fines, among others.
7. Labor Modernization:
   i.- Elimination of labor fines, by the abrogation of:
   A) fines applicable to unregistered or deficiently registered labor relationships under Law N° 24.013 and Law N° 25.323;
   B) fines applicable to breach of deliverance of work certificates and payment of social security contributions under Law N° 25.345; and
   C) the aggravation of labor fines in case having the employee initiated a judicial claim, provided under Law N° 24.323.
   ii.- Amendments to Law N° 20.744, which regulates labor contracts, by:
   A) the exclusion from the scope of said law all relationships arising from construction, service and agency agreements, which shall be governed by the terms of the National Civil and Commercial Code;
   B) the exclusion of the presumption of labor relationship from the hiring of professional services by the issuance of service invoices;
   C) the expansion of the probation period for new labor relationships up to 6 months, which could be expanded to 8 or 12 months by the collective bargaining agreements;
   D) the recognition of the validity of the labor relationship between the contracting company and their employees despite the fact their services are meant to be rendered in favor of a third company;
   E) active participation in blockades or takeovers of work establishments could be considered as labor injury and cause for labor termination;
   F) the faculty of judges to increase severance from 50% to 100% in case of termination of labor relationship as per discriminatory causes, but not the reinstalment of the employee.
   iii.- Within the corresponding collective bargaining agreements, employers and employees shall be entitled to replace the severance system provided under Law 20.744 for fund or system of termination of employment in accordance with the parameters to be established by the National Executive Branch.
   iv.- An independent worker shall be entitled to hire up to 3 independent workers for a productive entrepreneurship, as an autonomous relationship not considered as a labor relationship, in accordance to the special regimen to be regulated by the Executive Branch.
8. Energy:
   i.- Amendments to Hydrocarbons Law N° 17.319, including -among many others- the following:
   A) adding as one of the principal objectives of the law, the maximization of the income obtained from the exploitation of the resources;
   B) including storage and process of hydrocarbons among the activities already included and regulated within the law, providing that the Executive Branch shall grant the corresponding authorizations and/or habilitations for such purposes;
   C) companies shall transport, industrialize and commercialize their hydrocarbons freely according to applicable regulations, not being able the Executive Branch to intervene or fix internal market prices for said regards;
   D) companies shall be able to export hydrocarbons or its derivatives freely with no authorization, as long there is no objection from the Secretary of Energy, which in any case shall be issued no later than 30 days and in accordance to the regulations to be issued by Executive Branch;
   E) the requirement for prior approval issued by enforcement authority shall no be longer needed for the performance of superficial recognitions;
   F) abrogation of previous section 27 bis referred to unconventional areas, now providing that concessionaries shall request the subdivision of their existing areas and reconvert from conventional to unconventional for a 35 years term according to an exploitation pilot plan, no later than December 31th 2028;
   G) transportation of hydrocarbons shall be subject to the granting of authorization for said regard, and no longer a concession, even though transportation concessions granted before the Law shall continue to be ruled by the terms of their granting;
   H) owners of projects and/or facilities for the industrialization process of hydrocarbons, may request an authorization for transportation, which shall not be subject to an expiration term;
   I) regulation of underground storages of natural gas, for which an authorization shall be granted in order to store natural gas in depleted natural hydrocarbon reservoirs -including the process of injection, deposit and withdrawal of natural gaswhich can be granted in favor of any subject with technical experience and financial capacity that has the consent of the holder of the exploration permit and/or exploitation concession and agrees to build, at its own cost and risk, the facilities necessary to carry out the storage activity for its own benefit, not being obliged to store gas from third parties;
   J) new calculation method for payment of annual exploration and exploitation canon;
   K) royalties to be paid during exploration and/or exploitation periods shall be those provided under the adjudication process of the area, and for contracts in force at the date of issuance of the Law the royalty shall be the one agreed with enforcement authority;
   L) Any award of permits or concessions upon expiration of the original deadlines, without a public and open bidding process, shall be considered null;
   M) update of the amounts of sanctions;
   N) abrogation of section 51 which prohibited public foreign legal entities to qualify for permits and concessions.
   ii- Amendments to Gas Law N° 24.076, including -among many others- the following:
   A) exports of natural gas shall be regulated by the Executive Branch in accordance to the principle that companies shall be able to export freely with no need of authorization, as long there is no objection from the Secretary of Energy;
   B) exports of Liquified Natural Gas (GNL) shall be authorized by the Secretary of Energy within 120 days as of the request in accordance to the regulations to be issued by Executive Branch. If granted, said authorizations shall be considered irrevocable for a period up to 30 years, granting the right to export the authorized volumes with no interruptions or deductions;
   C) the granting of GNL export authorization shall not require the existence of purchase and sale contracts for the entire volumes and terms included in the request, and may be totally or partially assigned with prior authorization from enforcement authority;
   D) this new amendments to the law or regulations to be issued by the enforcement authority shall have no effect regarding the firm export authorizations of GNL already granted at date, except these were more favorable to export;
   E) transporters and distributors shall have the right to acquire, build, operate, maintain and manage natural gas storage facilities, subject to the limitations herein provided.
   iii.- Amendments to Law N° 26.741, by -among others-:
   A) abrogating “self-supply” of hydrocarbons as one of the main principles of the national hydrocarbons policy, referring instead just to the “supply”;
   B) abrogating reference to “price” of hydrocarbon´s derivatives from state protection;
   C) inclusion of “export” of hydrocarbons as one of the main principles of the national hydrocarbons policy.
   iv.- Empowers Executive Branch to collectively celebrate with Provinces a harmonized environmental legislation regarding exploration, exploitation and transport of hydrocarbons activities.
9. Incentive Regime for Large Investments (RIGI):
   i.- The Waw brings up a chapter that deals with major investments ("RIGI"), which are qualified as those performed in excess of USD 200 million or such higher figure (up to 900 million) that the Executive Branch may require for specific projects. The Law seeks for large investments in the areas of oil & gas, infrastructure, mining, tourism, technology, energy, steel and forestation. Companies that want to apply, need to form a special purpose vehicle ("VPU") that can only be involved with the specific project approved by the government and can apply within a term of 2 years counted as from the date the regime is in force and effect. If an already existing company wishes to apply, it may do so through the creation of a branch ("Dedicated Branchs") which shall have the same rights and obligations as a VPU.
   ii.- The incentives granted to the RIGI VPUs consist on significant tax (i.e. reduction from 35% to 25% on income tax), foreign trade, foreign exchange and fiscal stability benefits, as provided in the Law and subsequent regulation. These granted benefits are qualified by the Law as property rights, which are protected by Argentine National Constitution.
   iii.- Investments encompassed by the Law are those that are aimed to the acquisition, production, construction and/or development of assets affected to the activities included in the RIGI, for the development of a project authorized to a VPU, excluding financial and/or portfolio assets and inventories. The purchase of the stock of a company can be considered as an included asset insofar the acquired company merges with the VPU within a term of 180 days and the company holds assets included in the RIGI purpose, which must compute as part of the investment in a percentage to be determined by the regulation. As to fulfill with the required minimum amount to qualify for the RIGI and besides the above mentioned stock, the acquisition of the following assets are considered as an investment: Real Estate, Usufruct rights over real estate, mining and oil & gas concessions and in some exceptional cases which the applicant has to mention when requiring approval, the cancellation of no more than 20% of services considered essential for the RIGI project, without which the investment would not be possible.
   iv.- There are certain conditions that an applicant must meet to qualify as a RIGI (i.e. it must be a long-term investment) but it will be the Executive Branch the one enabled to determine whether a project is qualified or not in order to enjoy the benefits of the RIGI regime.
   v.- The Law brings up a provision that requires that at least 20% of the supply for a RIGI project must be local. Suppliers (either goods or services) of a RIGI approved Project may register as such and will thereafter be able to enjoy the incentives granted to the VPU only in terms of Custom matters.
   vi.- A province that wishes to participate has to adhere to the RIGI law and if adhered it may not issue any regulation/taxes affecting the RIGI project. The RIGI law must be regulated by the Executive Branch within a term of 30 days since it was published in the Official Gazette.
10. Final Provisions:
    The Law invites the provinces to issue all necessary regulations for establishing the procedures consistent with the purposes of the Law, and provides that regulations to the Law shall be issued within a 90 days term.

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