In response to the economic crisis in Argentina, Argentina's government announced new exchange control restrictions effective 1 September 2019 that limit Argentine residents' ability to access the foreign exchange market and transfer funds abroad without prior Central Bank authorization.

Under the new restrictions, companies in Argentina (including local affiliates of foreign parent companies) must obtain prior approval from the Central Bank to access the foreign exchange market to purchase foreign currency (including USD) and to transfer funds abroad for the payment of dividends and profits, services and imports in excess of USD 2 million per month, and for certain other transactions. Individuals in Argentina may still access the foreign exchange market to purchase up to USD 10,000 per month and can transfer funds abroad without prior approval from the Central Bank, provided that any funds are transferred directly into a foreign bank account opened exclusively in the individual's name.

The new restrictions also require companies and individuals to repatriate and settle in the local foreign exchange market proceeds related to the export of goods or services as well as the disbursement of any financing granted by a non-local resident.

These new restrictions could immediately impact the ability of foreign companies to offer and administer certain forms of equity awards in Argentina. In particular, the restrictions may prevent local employers in Argentina from transferring funds offshore in connection with an employee share plan (e.g., ESPP payroll deductions). Each company’s employee share plan, as well as their local entity’s financing and banking relationships, should be reviewed to determine whether and how the new restrictions may limit the transfer of funds in and out of Argentina in connection with a particular plan.

The new restrictions are currently set to be in force through the end of the 2019 calendar year. However, the situation in Argentina continues to rapidly evolve, and it is possible that new restrictions or guidance could be released. It is also possible that restrictions remain in place after the end of the calendar year, depending on the upcoming elections in Argentina and further developments in the local financial market.l