The Comisión de Administración de Divisas (CADIVI) (Foreign Currency Administration Commission) by Provisions Nos. 29 and 056 dated April 22, 2003, and August 23, 2004, published in Official Gazette Nos. 37.674 and 38.006, respectively, established the regulations which shall govern the foreign currency administration related to international investments and the payments derived from contracts pertaining to technology importation, and the use and exploitation of patents, trademarks, licenses and franchises.
These Provisions define the scope of application by restricting the motives for which foreign currency will be given to the following items or cases:
a) Repatriation of initial capital investment;
b) The amounts necessary for investment maintenance, extension, and development;
c) Remission of investment benefits, profits, revenues, interests and dividends;
d) The amounts necessary for indemnification of international investors due to expropriation for cause of public and social interest, in accordance with the laws in force concerning this matter;
e) Remission of sales proceeds or for the partial or total payment of the investment;
f) Payments resulting from dispute resolution settlements;
g) Payments derived from contracts pertaining to technology importation, or to royalties or any other fee originated from the exploitation and/or use of trademarks, patents, licenses and franchises.
h) The reductions of capital in any form.
Likewise, these provisions identify a number of offices within the public administration that will be in charge of regulating matters related to foreign investment by reference to the interested parties economic activity: (i) The Superintendencia de Inversiones Extranjeras (SIEX) (Superintendent of Foreign Investment); (ii) The Ministry of Energy and Mining; (iii) La Superintendencia de Bancos y otras Instituciones Financieras (SUDEBAN) (Superintendent of Banks and other Financial Institutions); and (iv) The Superintendencia de Seguros (Insurance Superintendent). None the less, these Provisions specifically state that SIEX shall be the competent body when it comes to issues related to the payment of services and technological assistance, royalties, use and exploitation of patents, trademarks, licenses and franchises.
Interested parties who wish to carry out any of the activities described in these provisions shall apply to and register their enterprises before the Registro de Usuarios del Sistema de Administración de Divisas (RUSAD) (Registry of Users of Foreign Currency Administration System) and to this effect, they shall submit the following documentation:
a) Original and copy of the Certificate of Incorporation and Bylaws, including amendments in force, that contain a description of the social structure, the powers of the managers and their designations.
b) Original and copy of authenticated document certifying the legal representation.
c) Original and copy of the Venezuelan Identification Card or passport of the legal representative.
d) Original and copy of the Certification of “Company Classification” issued by the competent national government office.
e) Original and copy of document of the Direct Foreign Investment Registration, whenever it applies, duly updated, and issued by the competent national government office.
f) Original and copy of the Registro de Información Fiscal (R.I.F.) (Fiscal Information Registration).
g) Original and copy of the following documents: property deeds or documents related to leasing, use or usufruct of premises where the economic activity is carried out.
h) Audited Financial Statements, with their complementary notes, opinions and management letters, endorsed by a Certified Public Accountant, corresponding to the last three (3) fiscal years.
i) Original and copy of income tax statements and payments and corporate assets of the last three (3) tax periods.
j) Original and copy of statements and payments of the added value tax of the last six (6) tax periods.
k) Original and copy of the Affidavit containing the Gross Income filed with the competent municipal authority of the principal domicile, corresponding to the last tax period.
l) Original and copy of Municipal Solvency issued by the corresponding Mayor’s Office.
m) Original and copy of solvency from the Instituto Venezolano de los Seguros Sociales (I.V.S.S.) (Venezuelan Institute of Social Security) and from the Instituto Nacional de Cooperación Educativa (I.N.C.E.) (National Institute of Educational Cooperation).
k) Original and copy of receipt for the payment of obligations deriving from the law regulating the Housing Subsystem and Housing Policy.
The application for foreign currency acquisition destined for international investment should be accompanied by the following documentation:
a) Certified Copy of the minutes of the companies Shareholders’ Meeting where it the foreign investment related profits, dividends, interests, rentals or capital gains are determined.
b) Original of the financial statements audited by a certified external auditors for the corporation for the companies receiving foreign investment corresponding to the year when the remission of profits, dividends, capital gains or interests were made.
For the application of foreign currency destined to make payments for imports related to technology, royalties, the use and/or exploitation of patents, trademarks, licenses and franchises, the following documentation should be enclosed:
a) Original and copy of the “Registration Certification of Technology Importation Contract or for the Use and Exploitation of Patents and Trademarks” with their respective modifications that may be in force.
b) Original and copy of invoices issued pursuant to the respective contract.
c) Original of the Income Statement or whatever Statement is currently serving as the basis to make calculations of the respective contract, executed by the legal representative of the user.
When the user has been previously registered with RUSAD, they must only make delivery of the corresponding application for foreign currency, and accompany it with those documents that have not yet been presented before, together with those that have expired or that may no longer be valid.
Lastly, the language contained in prior provisions is repeated stating the Authorities within CADIVI may request additional information and could subject the authorizations to the availability of foreign currency, as determined by the Central Bank of Venezuela.
Should you desire additional information on any of the matters contained herein, please contact us at your convenience.
De Sola, Pate & Brown