Archivos de la categoría: Berke Report (en)

Recently, the Ministry of Public Works and Communications (MOPC), published the call for International Public Tender of “Construction Companies for Rehabilitation and Maintenance Works of Route No. 9 and Accesses, Segment 3 Lot 5 and 6 Ad Referendum to the Budget Planning”, known as the Trans-Chaco Highway. 

The call for tender is composed by two Lots, Lot 5 (km 326 – km 390) and Lot 6 (km 390 – km 450), whose estimated amounts for total implementation are USD 96,833,000 and USD 88,058,000, respectively, including taxes.  The source of the funds are loan contracts with the Inter-American Development Bank (IDB) and the Andean Development Corporation (CAF).  

Offerors for the call can be physical entities (sole proprietorship), legal entities or any combination of these, such as a Joint-Venture, Consortium or Association (APCA), and must necessarily be from IDB member countries. 

The offerors shall be able to present a bid in one Lot, or both Lots, but in this case, only one contract shall be awarded.  In case an Offeror were to present the lowest Bid in more than one lot and fulfill the established evaluation and qualification criteria, the Lot will be awarded to the bid where the difference with the second lowest bid is greatest.  Nevertheless, the winner of any of the lots shall not be able participate in the following tenders for the remaining lots. 

The Implementation term planned in the Contract is of 72 months, establishing a partial term of 24 months for the implementation of the Construction Works (with maintenance for the existing highway), and a term of 48 months to maintain the Service Index (Maintenance Term of the new highway once construction is concluded).  

Bid delivery and bid opening is foreseen for July 29th of the current year, at 09:00 and 09:30 respectively, and consultations to the Book of Basis and Conditions can be presented until July 8th 2019 at 15:00.  

The duplication and maintenance of Road No. 9 in all its extension is considered by the Ministry of Public Works and Communications as a whole and the realization of the works will be carried out through three calls for tender, this one being the first of three, establishing that the winner of this tender shall not be awarded any further tenders for the remaining lots, either individually or as a Consortium. 

For more information contact Martin Carlevaro – martin.carlevaro@berke.com.py –  or Sofía Suárez – Sofia.suarez@berke.com.py – . 

Financial close involved 2 transactions: (i) the issuance of notes (144A / REG S  bonds) under New York law by an SPV, for which UBS A.G. participated as the structuring agent of the 15 years term notes that amounts to USD 430 million plus interests (interest rate ended up in 5.375%, despite the round has started at a price of 5.75%) and BONY acted as indenture trustee (issuance was a success with an oversubscription of 2,6); and (ii) a revolving syndicated loan for working capital in which local banks Banco Atlas S.A., Banco Regional, Sudameris Bank and Banco Nacional de Fomento, participated as lenders of the USD 50 Million short term credit facility and Finexpar as trustee for a local collateral trust.

For more information on the transaction please visit:
https://www.inframationnews.com/public/open/M3YwQzdSRjlFa3plb28wVGxzVndFV0k9.thtml

Martin Carlevaro, in charge of the BKM infrastructure practice, spoke on the 5 Días TV channel about Project Financing through international financial structures designed for the issuance of project bonds (under foreign law).

The Trademark Office of the National Direction of Intellectual Property (DINAPI) issued a communication and publication in local newspapers stating that it will no longer be possible to use certain terms that are Denomination of Origin (DO), pursuant to the Agreement of Strategic Association MERCOSUR-European Union.

Some of the DO have been deemed generic, so it is possible to continue to use them, provided that the user is registered as a “Prior User”, which means that the term should have been used before in terms and conditions specified in the Communication, namely:

1. Parmesano: having used the term prior to November 2017 in Argentina, Paraguay or Uruguay.

2. Parmesao: having used the term prior to November 2017 in Brazil.

3. Reggianito: having used the term continously for at least 5 years prior to November 2017 in Paraguay or Uruguay.

4. Reggianito: having used the term prior to November 2017 in Argentina

5. Fontina: having used the term continously for at least 5 years prior to November 2017 in Argentina, Brazil, Paraguay or Uruguay.

6. Gruyere/Gruyere: having used the term continously for at least 5 years prior to November 2017 in Argentina, Brazil, Paraguay or Uruguay.

7. Gruyerito/Gruyer: having used the term continously for at least 5 years prior to November 2017 in Uruguay.

8. Queso Manchego (Manchego Cheese) (maede with cow milk): having used the term continously for at least 5 years prior to November 2017 in Uruguay.

9. Grappameil/Grapamiel: having used the term prior to November 2017 in Uruguay.

10. Grana: having used the term continously for at least 5 years prior to November 2017 in Brazil.

11. Gorgonzola: having used the term prior to November 2017 in Brazil.

12. Steinhager: having used the term prior to November 2017 in Brazil.

13. Ginebra: having used the term continously for at least 5 years prior to November 2017 in Argentina.

14. Genebra: having used the term continously for at least 5 years prior to November 2017 in Brazil.

Please feel free to contact us in case these DO affect your trademarks and are interested in being added to the list of Prior Users of the Denominations of Origin to continue using them.

Kindly bear in mind that this declaration must be prepared and filed before Friday July 3, 2020.

Please contact us at law@berke.com.py for any clarification

Our compliments to the Executive Power for the issuance of Decree No. 3708 on June 15, 2020, whereby the Bill that modified a number of articles of Law 5033/2013, which establishes the mandatory requirement for public officials to submit sworn statements. The Decree rejected said Bill that, among other provisions, attempted to decriminalize the submission of false and incomplete sworn statements by public officials, based on principles of transparency, publicity, and fight against corruption.

Therefore, Law No. 6355/2019, which regulates said constitutional article, remains in force. Within the framework of said law, we have obtained precautionary measures for several private sector clients to suspend the effects of the referred law, regarding submission of sworn statements.

Law No. 6.542/2020 was recently enacted to regulate Factoring, Exchange Invoice and Electronic System of Guaranteed Operations (SEOG). Said Law will be effective on December 17, 2020. Regulation and definition of certain topics by the Central Bank of Paraguay and the Ministry of Finance are pending, as identified below.

This newsletter addresses each of the topics that form the purpose of the law, namely: (1) factoring; (2) exchange invoice and (3) SEOG.

1. Factoring

• What is Factoring?

Law defines factoring as a legal transaction in which a person (the assignor) transfers totally or partially, for sale or administration, to a third party (factor or assignee), the receivables arising from commercial activities or provision of services in exchange of a valuable consideration. This valuable consideration may be, for instance, a proportional discount on the sums advanced by the factor, a commission or a percentage calculated on the amount of the assigned receivables.

This newsletter addresses each of the topics that form the purpose of the law, namely: (1) factoring; (2) exchange invoice and (3) SEOG.

• Operations

In a factoring contract, the factor may:

a) Grant funds in advance on account of the receivables, object of the assignment, to the assignor.

b) Be assigned with a credit supported by an obligation to pay certain amount within a specified period, with or without discount.

c) Manage a portfolio of receivables.

d) Send a notice to the debtor of the receivables, object of the contract, to inform about the assignment or discount of the receivables.

e) Collect the assigned receivables, in his own name, or in the name of the assignor.

f) Protect or manage the protection of the assignor against default of the debtor.

g) Carry out operations with the receivables, object of the factoring contract.

h) Provide the assignor with services additional to the provision of liquid resources, in exchange for a global valuable consideration or to be agreed for each additional service. These services may consist of commercial research and information, accounting services, market research, comprehensive advice and others of a similar nature.

2. Exchange Invoice

• Concept

Law introduces the exchange invoice as a title payable to order. This title will be used for selling products or services for a specified term (under credit-sales modality) which may later be the subject of a factoring operation.

The interesting and innovative part is the fact that Law delegates the regulation of electronic exchange invoices as a credit title to the Ministry of Finance, which will further facilitate business flow.

• Elements or Requirements

Exchange invoice must meet the following:

a) The name «exchange invoice» must be inserted in the heading text

b) Place and date of issuance.

c) Due date of the payment obligation expressed as a fixed day.

d) Description of the charges.

e) Amount due, expressed in numbers and letters, currency and breakdown into gross sales or services amount, applicable VAT and clearly indicating the total net amount payable.

f) Name or company name, and Taxpayer ID (RUC) of Identity Card Number of the issuer.

g) Name or company name, and Taxpayer ID (RUC) of Identity Card Number of the debtor or person in whose name it is issued

h) Debtor’s domicile and place of payment.

The regulatory decree may establish other additional requirements to those mentioned above.

• Issuance, copy and acceptance

In order to get the acceptance of the debtor, the issuer of an exchange invoice must present the original invoice. Acceptance must appear on the invoice by means of the word «I accept» and the signature of the debtor, if a natural person, or its representative, if a legal person.

Once the exchange invoice has been accepted by the debtor, this must return it to the issuer and keep a copy.

In case the issuer delivers the exchange invoice to the debtor and this does not express the acceptance or rejection in the following 10 days, then the invoice will be considered as accepted and the issuer may, at the expiration date stated therein, bring enforcement proceedings against the debtor. In such case, the receipt of the invoice signed by the debtor will be considered an enforceable document.

• Endorsement

Once the exchange invoice has been accepted, the original invoice may be assigned by means of an endorsement to the order, with express identification of the endorsee, clarification of signature, ID number, if a natural person, or RUC, if a legal person.

The Ministry of Finance must define and regulate the form of registration and endorsement of electronic invoices.

• Enforceability

In order to make an exchange invoice enforceable, debtor’s signature must be recognized before courts or certified by a notary public

3. SEOG

• Creation

Law creates the SEOG to operate as an electronic database in which forms will be registered in order to report on ordinary credit assignments not contained in receivables and made under a factoring contract.

It would work as a public registry for declarative rather than representative purposes

• SEOG Administrator

The Central Bank of Paraguay will oversee the administration of the SEOG and the organization of the database contained by the same.

To this end, the Central Bank of Paraguay must approve a regulation with all necessary provisions for the effective operation of the SEOG

4. Conclusion

This law arrives on such a very suitable moment in which many companies, especially MSMEs, are seriously affected in their finances by the health crisis caused by the COVID-19 pandemic. Its mission is to facilitate liquidity, boost the economy and contribute to financial inclusion.

For more information, do not hesitate to contact:

Manuel Arias: manuel.arias@berke.com.py

Federico Valinotti: federico.valinotti@berke.com.py

Paola Sapienza: paola.sapienza@berke.com.py

[Public-Private Association] 🎥 Our partner Martín Carlevaro, in charge from the infrastructure and PPP practice, is interviewed by Juan Pablo Fernández of 5días TV regarding the current situation of PPPs and their impact on public accounts

Through notice dated September 7, 2021, the Directorate General of Legal Persons and Structures and Final Beneficiaries (DGPEJBF) has announced that the first bimonthly communication, which listed the companies that are in good standing according to Decree No. 5895/2017, is set aside in view of Decree No. 5871/2021. This last Decree establishes a number of impairments, prohibitions and consequences for non-compliant companies, such as blocking of the RUC and prohibition to operate with entities that make up the financial system.

Said first communication was released by the DGPEJBF on August 26, 2021 and did not include companies that were incorporated with registered shares. For this reason, the mentioned Office will release a new communication on October 8, showing the list of companies in good standing. In view of this, the 5 business days period for the entities to apply sanctions will be counted as of that date.

At BKM | Berkemeyer we remain available to answer all your questions.

For more information please contact:

Bruno Lafarja bruno.lafarja@berke.com.py

Mauro Mascareño mauro.mascareno@berke.com.py

The House of Representatives will be debating on a recently filed bill to amend Art. 52 of Emergency Law No. 6524/2020, whereby relations between civil and commercial landlords and tenants are regulated, in the framework of the COVID-19 pandemic.

The first three paragraphs of the new Art. 52 of the Emergency Law, according to the Bill, replicate and extend the general financial rule for rental fees and limitation of evictions until September of this year. The fourth – and last – paragraph presents, on the other hand, a novelty with respect to the law currently in force, since it refers exclusively to commercial rental or lease and also regulates termination of contracts due to force majeure.

Modifications refer to the financing term of the unpaid fees’ percentage, they must be completely cancelled within the following ten months after October 2020, thus increasing the repayment term of the prorated debt since the current Law 6524/2020 sets the same at 6 months. The legislator expressly establishes that during this period the landlord (creditor of the royalties) will not have the right to receive interest over the owed difference; a provision that does not exist in the current Emergency Law.

Indeed, it is the last paragraph of the Bill the most novel. There are no traces of said section in the Emergency Law. The same, which applies exclusively to commercial rentals, providing «commercial rentals related to activities suspended since March 10, 2020, and not authorized during the various phases of the smart quarantine, may choose to pay only the 40% or, where appropriate, to terminate the contract, when the purpose of the contract is not fulfilled, due to force majeure».

This last paragraph should be approached with great caution, and brought to the legislators’ attention, since it concerns core issues regarding the obligations and contracts system outlined by the Civil Code.

On one hand, a partial and ex lege exemption from paying part of rents is established in favor of tenants who meet the requirements listed in the proposed legal document, namely: a) it must be a commercial rental; and, b) the concerned commercial activity must be included among those suspended and not reactivated by the health emergency laws. That is, commercial tenants would only be required (if the Bill is approved) 40% of the contractually agreed rental fee.

Additionally, tenants may choose not to pay said reduced fee and terminate the bond, thereby terminating the contract. It is understood that this right to terminate the rental contract would be reserved solely for the tenant, although it is not clear in the current text whether both parties would have such right, so it is expected that this issue is clarified at the congress debate prior to the enactment of the law.

The basis of the options made available to the tenant is the casus; that is to say, fortuitous event or force majeure. It is here, however, where legislators must proceed with caution so as not to generate an inconsistency in the private law system. In fact and in strict accordance with principles, force majeure as a means of extinction of obligations (provided by Art. 628 et seq. of the Civil Code) does not apply to gender obligations, as the obligation to give sums of money is, by the simple rule according to which «gender never perishes.»

However, and despite the difficulties that terminological inaccuracy could lead to, the last section of the Bill in terms of modifying the contractual economy by reducing rental payments could be framed within the figure of unforeseen due to supervening causes; typically contractual filiation remedy, provided for by Art. 672 of the Civil Code. Unlike the casus, it is not a question of the impossibility of fulfilling an obligation, but rather that it is disproportionately burdensome for one of the parties. It is here where the so-called «adequacy of the contract» comes into the scenario as a possibility, which the doctrine also often calls «shared effort». In this case, the adequacy of the contract will no longer be the result of a fair negotiation on the distribution of obligations and rights, but it is the law itself that would provide the solution by establishing a discount of 60% of the rental price. Notwithstanding this, by application of the autonomy of will, the parties could agree other adjustments to the commercial rental contract (which could include renegotiation of prices, extension of terms, changes in scope, etc.) in an attempt to reestablish the performance balance (which includes the economic equation) that the parties took into account when originally entering into the contract

Unlike common regulations, where the party damaged by unforeseeable and extraordinary events that constitute force majeure can only demand the resolution of the contractual relationship, the Bill gives the tenant (presumed damaged party) the power to choose between the modification of the contract (substantially reducing the rental price) and the termination of the bond due to force majeure. Moreover, the article as written seems to deprive the landlord from the possibility of offering an equitable modification of the contract to prevent a resolution claim by the tenant -a faculty that, it is worth mentioning, is provided by the Civil Code.

Another issue of interest that the proposed legislative amendment raises is the classification of the event qualifying as force majeure, thereby exempting whoever invokes it from the burden of proof. In other words, any doubts about the application of the figure of force majeure to commercial rentals and under the conditions described are erased, without the need for prior interpretation by the intervening judge regarding facts and applicable law (and their caused relationship).

Besides the above stated, there are other aspects that the Bill leaves without solution, and that could bring practical problems of applicability. A striking omission, which directly concerns the exercise of the power provided for in the last section of said article, is related to the state of default. In fact, it is not established whether tenants in default before the entry into force of the law would be able to invoke the exception rule; an issue that should be clarified given that the regime outlined by the civil code prevents defaulters from invoking either the casus or unforeseen facts.

Also, the issue regarding past debts, assumed under the current Emergency Law, which is intended to be modified, is not resolved. It does not regulate, and it would be good if it does, if the proposed benefit (reducing the commercial rental fee to 40% of the value) is applied for the entire period of the health emergency (that is, from March until the quarantine ends), or just from the date in which the Bill entered into force onwards. Similarly, there is no mention of the destination given to the financing granted by the Emergency Law for the percentage of unpaid rents; would they continue to enjoy this financing, or debits should be fully cancelled to use the power established in the new fourth paragraph of Art. 52? All these under the principle of non-retroactivity of the law, so we consider prudent that those who took the benefit provided by the Emergency Law must return to the landlord the unpaid 60% within the deadlines established by law and, if after the enactment of the new Bill, they choose the reduction of the rental fee, this will apply in the future and not retroactively.

These aspects, which make the executive part of current lease contracts, must be clearly resolved by the legislator, in order to achieve legal certainty, avoid disputes, and facilitate the application of the law.

Briefness of the modifications proposed by the legislators would seem to suggest their irrelevance. However, and as indicated, appearance could not be more deceptive; since the reform would affect core elements of the contractual system. In view of this, legislators are advised to be prudent, and the reform will certainly be the subject of further studies and certain clarifications are expected to be mentioned prior to its approval.

For further clarifications, our specialists may be contacted at the following email addresses: Carla.Sosa@berke.com.py; Martin.Carlevaro@berke.com.py

BKM Berkemeyer

Recently, Decree No. 3988/2020 was issued to regulate Law No. 6480/2020 which created Simplified Joint Stock Companies (EAS). Said Decree establishes the process for opening EAS, registration and recordal procedures, and determining issues such as subscription and integration of capital stock.

The incorporation of this new legal figure in our legislation constitutes an additional option for investments in the country. The innovative aspects of this new tool include the possibility of having a single partner, short time for the establishment of the company, and a broad corporate purpose since it allows the creation of EAS to be engaged in any legal activity.

In this sense, we believe it is pertinent to mention that the procedure for opening an EAS can be carried out entirely via the web, through the SUACE portal and by filling out a single registration form. A pro forma bylaw can be used, or different bylaws, which must be approved. In both cases, speed in the opening process is guaranteed; setting a period of 3 business days in case the pro forma bylaws are used.

Additionally, notice on the approval of the file, and further start of the EAS, will be made via email to the user.

It is important to mention that, for the process of opening, closing, dissolving, liquidating and transforming an EAS, as well as any other modification that affects its structure, an electronic signature or digital signature may be used.

Regarding the limitations, it is important to bear in mind that the shares and other securities issued by the EAS may not be registered or traded at the Stocks and Products Exchange of Asuncion or at any other Stock Exchange entity.

Finally, we mention that Resolutions of the Ministry of Industry and Commerce and the Ministry of Finance that will establish the internal mechanisms to process the first EAS opening files are pending.

It will be a pleasure for the BKM team to assist you through the required legal advice.

For further information, please contact:

Carla Sosa: carla.sosa@berke.com.py

Leyla Apud: leyla.apud@berke.com.py