Exchange Agreement No. 22
Exchange Agreement No. 22, enacted by the Central Bank of Venezuela (“CBV”) (the “Agreement”), was published in Official Gazette No. 40,199, dated July 2, 2013. The most important aspects of said Agreement are detailed below:
Acquisition and sale of currency. The special auctions of foreign currency made through the Complementary System of Administration of Foreign Currency (“SICAD”) may be made with positions maintained by individuals and corporations of the private sector that wish to make offers, by the Republic and by the CBV, as well as by any other entity expressly authorized by the Board of Directors of said Institute. The positions for the acquisition of foreign currency in special auctions may be tendered by the individuals and corporations that are determined in each call. Said persons must be registered with the special registry that is determined in the corresponding rules. Rates lower than the official rate of exchange established for the sale according to what is prescribed in Exchange Agreement No. 14 of February 8, 2013 will not be admitted. Individuals and corporations that sell foreign currency through SICAD must do so through the institutions authorized by the CBV.
Purchase and sale of Securities in Foreign Currency (“TVME”). The special auctions for operations of purchase and sale in national currency of TVME issued by the Republic, its non-centralized entities, or by any other entity will be made through SICAD. Operations of purchase of TVME through SICAD may only be made for the final purpose of obtaining balances in foreign currency by the sale of the same in international markets, in order to settle the expenses in foreign currency for which the same were acquired. Individuals interested in selling TVME through SICAD must do so through institutions authorized by the CBV. In the purchase of TVME through SICAD, tenders for the special auctions may be made by individuals and corporations that are determined in each call. The implicit rate of exchange that arises from the tender for the purchase and sale in Bolivars of the TVME may not be lower than the official rate of exchange for the sale established in accordance with what is prescribed in Exchange Agreement No. 14 of February 8, 2013.
Special sale of foreign currency arising from income of the Republic. The difference in Bolivars between the rate of the tender made and the official rate of exchange established in Exchange Agreement No. 14 of February 8, 2013 will be delivered to a fund of the National Executive intended for expenses in national currency, the distribution of which will be decided by the President of the Republic.
Role of the CBV. The CBV will regulate the terms and conditions of the special auctions of foreign currency to which the Agreement refers, through the rules issued for such purpose and will announce the calls of the acts that will be held to such end, the terms and conditions of which will be determined by the issuing institution. In the regulation issued by the CBV according to the provisions of the Agreement, the issuing institution will determine the methodology of the corresponding allocations. The minimum and/or maximum amount for tender of purchase to be channeled through SICAD will be determined in the calls published for each act.
The allocation. At the close of each event, the CBV will make the process of allocation and will inform the results to the financial market, through the specialized and/or public information systems, according to the terms of the call. The tenders that are allocated in the auctions determined in the Agreement will be paid by the CBV at the value date indicated in the call, through the authorized institutions that have presented said tenders.
The Agreement became effective as of the date of its publication in the Official Gazette.
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“NOTE: THIS INFORMATION SHOULD NOT BE CONSTRUED AS LEGAL ADVICE ON ANY SPECIFIC MATTER AND ITS CONTENT ARE INTENDED AS A MANAGEMENT ALERT AS TO CURRENT DEVELOPMENTS IN VENEZUELA, ANY SPECIFIC LEGAL QUESTIONS REGARDING THE POSSIBLE APPLICATION OF NEW OR PROPOSED LEGISLATION TO PARTICULAR SITUATIONS SHOULD BE ADDRESSED TO TRAVIESO EVANS ARRIA RENGEL & PAZ.”