Repeal of the Exchange Regime and its Unlawful Acts
The Constituent Decree for Repeal of the Foreign Exchange Regime and its Unlawful Acts, issued by the National Constituent Assembly, was published in Official Gazette No. 41.452 of August 2, 2018 (the “Decree”). The purpose of the Decree is to establish the repeal of the foreign exchange regime and its unlawful acts, with the aim of granting the broadest guarantees to private parties, national and foreign natural and legal persons, for performing their best participation in the model of productive socioeconomic development of the country.
The most significant provisions of the Decree are:
- The following are repealed: (i) the Law of the Foreign Exchange Regime and its Unlawful Acts, published in Official Gazette No. 6.210 Extraordinary of December 30, 2015; (ii) article 138 of the Law of the Venezuelan Central Bank, published in Official Gazette No. 6.211 Extraordinary of December 30, 2015, only in regard to the unlawful act referred to the activity of negotiation and trade of foreign currency in the country; and (iii) all regulatory provisions that conflict with the provisions of the Decree.
- The exception of retroactivity of the most favorable law will not be applied to serious cases occurred until the date of publication of the Decree in the Official Gazette, by reason of the harmful nature in relation to public property of the economic crimes prescribed in the Law of the Foreign Exchange Regime and its Unlawful Acts (Articles 21 and 23) and with the aim of preventing their impunity.
- The penalties prescribed in articles 21 and 23 of the Law of the Foreign Exchange Regime and its Unlawful Acts will be reduced by two thirds if the totality of the transactions made by the same person does not exceed the amount of USD 10,000.00 in the aggregate or its equivalent in another currency; the foregoing is without detriment to the actions of the State intended to obtain a compensation for the damage caused to public property.
- The civil liability derived from the unlawful acts committed up to the date of entry into force of the Decree survives and will be demanded from the liable parties by the Republic, in order to guarantee the restoration, reparation, and indemnification for the damages caused to public property.
Although the Decree is titled “Repeal of the Exchange Regime” (“Derogatoria del Régimen Cambiario”), the content of the same is not clear about the exchange legislation/rules that are being repealed, except for those expressly identified in the Decree. Therefore, there is the expectation of knowing the new possible rules that will regulate and adapt to this recent change that, undoubtedly, seems to establish greater foreign exchange and economic freedom in Venezuela.
For the moment, considering the terms in which the Decree has been drawn up and unless provisions establishing limitations or requirements are issued again in the future, we believe that the Decree authorizes private parties to make transactions of exchange of Bolivars for foreign currency and vice versa.
Finally, there are juridical arguments for sustaining the unconstitutionality of the Decree issued by a Constituent Assembly that is national and internationally considered illegitimate and, therefore, without legal competence to issue or repeal laws at the expense of a National Assembly that is the constitutional entity for making laws. However, it has to be assumed that under the present circumstances of the country, the courts and other governmental offices of Venezuela will apply this Decree.
The Decree became effective on August 2, 2018.
In order to access the Decree, please click here.
“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.”