By means of Resolution 2, dated May 11, 2001, the Board of Directors of the Colombian Central Bank introduced substantial modifications to the exchange regime applicable to companies pertaining to the hydrocarbon sector. This Resolution 2 amended articles 48, 49, 50 and 51 of Resolution 8 of 2000 of that same entity.
Branches of foreign corporations that carry out activities of (i) exploration or exploitation of oil, natural gas, coal, ferronickel or uranium, or (ii) that are engaged exclusively to the hydrocarbon sector's inherent services, do not have to reimburse to the exchange market the proceeds from sales abroad in foreign currency.
These branches may not under any concept acquire currencies in the exchange market and must reimburse to the exchange market the currencies required to attend expenses incurred in Colombian pesos.
However the branches of foreign companies that do not wish to comply with the above mentioned regulations may exclude themselves of their application for a minimum not amendable term of ten years beginning as from the date when the relevant request is submitted to the Colombian Central Bank. If such request is made the branch will be obliged to comply with the common current exchange regime.
The Resolution establishes that the companies that are currently complying with the special hydrocarbon and mining regime established by means of Resolution 8 of 2000, may adopt the ordinary regime as established in article 50 of Resolution 8.
The Resolution additionally establishes that without prejudice to its article 79, local companies or those with foreign capital engaged in the above-mentioned activities may, within the country and among themselves, pay and enter into contracts in foreign currency with the condition that the relevant foreign currencies are derived from resources generated by their operation.
The following may also be paid in foreign currency:
(i) Sales and purchases between Colombian residents of fuel for vessels and aircraft used for international transportation;
(ii) Sales and purchases of crude oil and natural gas of national production carried out by ECOPETROL and other entities engaged in petroleum refinement; and/or
(iii) Sales by residents of the country of crude oil and natural gas of national production carried out by companies with foreign capital that carry out activities of exploration and exploitation of oil or natural gas.
Finally, paragraph b of item 2 of article 59 (Authorized Operations) of Resolution 8:
"Article 59:. The intermediaries of the exchange market may carry out exchange operations according to the following classification:
"(...) 2. Commercial financing companies and financing cooperatives whose paid capital and legal reserve is inferior to the minimum required for purposes of incorporating a financial entity, and stock brokers and currency exchange houses whose patrimony is superior to three thousand five hundred million pesos $3,500,000,000) may carry out the following exchange operations:
"(...) b. Sale and purchase of foreign currency, that correspond to import - export transactions, investments of capital abroad and Colombian investments abroad."
was modified in the following manner:
"b. sale and purchase of currency and of documents that represent them, that correspond to import - export transactions, foreign investments in Colombia and Colombian investments abroad."
This report was prepared and is copyrighted in 2001 by PARRA, RODRÍGUEZ & CAVELIER, a law firm with offices in Bogotá, Colombia. The general information herein contained does not constitute legal advice. Transcriptions and quotes are permitted citing the source.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.