PRODUCTS

WHAT ARE SURETY BONDS?

Surety bonds are guarantee instruments through with an insurer guarantees the beneficiary that a third party will deliver on its obligation to supply goods or perform services.

Surety bonds are used to guarantee the insurer/obligee that the contractual obligations undertaken by a company – principal – to perform a specific task will be fulfilled. If the principal fails to deliver on its contractual obligations, the insurance company will be liable.

COVER

Surety bonds are guarantee instruments through which the insurer guarantees the obligee that the legal obligation of a third party to deliver goods or perform a service will be fulfilled. We have a wide range of cover options to meet the needs of clients in different markets.

  1. Bid Bonds 
    They are guarantees that bidders at open tenders offer project owners to ensure the validity of their bids during the period stipulated in the Bid Conditions and allows them, if they are successful, to sign the relevant contracts.
  2. Performance Bonds
    They are policies that have to be filed by parties who are awarded contracts in order to guarantee that they will meet their contractual obligations in a proper and timely manner.
  3. Maintenance Bonds
    They are guarantees that Principals offer Obligees to repair defects or hidden faults that may arise during the guarantee period covering works or supplies. These policies replace the sums that Contracting parties may withhold from Builders or Providers in order to create a Guarantee Fund as stipulated in the contract.
  4. Advance Payment Bonds 
    They are guarantees that Principals offer Obligees to ensure the correct application of advance payments received from the former. That is, that specific materials allocated to the works, supplies and/or services in question will be stored at agreed locations.
  5. Manufacturing Progress Bonds 
    They are guarantees that Principals offer Obligees when they collect payment for invoices or certificates relating to work carried out in their workshops or factories before making delivery of the subject of the contract.
  6. Goods being held for Use, Repair, Maintenance or Refurbishment.
    They guarantee custody and subsequent return of goods that Obligees plan to hand over or have handed over to Principals for use, repair, maintenance or refurbishment in accordance to the contractual obligations undertaken by the parties.
  1. Counter Injunction Bonds
    Must be filed by those who wish to challenge injunctions. The bonds protect the other party against possible damages they could suffer if the challenge is found to be unjustified.
  2. Injunction Substitution
    They are the guarantees filed to replace injunctions imposed by court order.

 

There are normally two guarantees that need to be filed in relation to concessions to ensure that obligations will be met by the grantor as well as the concessionaire.

  1. Bid Bond
  2. Adjudication Bond

Register of importers and exporters:
General Resolution Number 2220 – Adminstración Federal de Ingresos Públicos (AFIP)

To join the Register of Importers and Exporters and carry out foreign trade operations, exporters as well as importers must prove annually, among other things, a degree of financial solvency (Art. 94 of the Customs Code).

This is calculated on the basis of annual turnover – as declared on the VAT return – or on value of assets – as declared on the Capital Assets Tax return – both set at Ar$300,000.

If the above values are insufficient, applicants must file a guarantee to the value Ar$30,000.

Guarantee application requirements:

Policy application form.Asset Declaration signed by Partners, certified by Public Accountant.

Collateral form signed by Partners and their spouses (A Notary Public must certify both signatures)

Once completed, the documents should be sent to the Underwriting Department at the Company, which will give an answer based on their analysis via email or telephone.

Guarantees the Obligee that activities or professions will be carried out in accordance to the requirements established by current law or regulations.

 

 

Resolution 20/2004 and amendments
Directors of Corporations and Managers of Limited Liability Companies.
(Res.21/2005 Inspección General de Justicia - IGJ)

In February 2005 the Mandatory Guarantee Act came into force, whereby the General Inspectorate of Justice (Inspección General de Justicia) requires all Directors of Corporations, Managers of Limited Liability Companies and Administrators of Limited Partnerships to file guarantees.

Resolution 20/2004 issued by the General Inspectorate of Justice (IGJ) requires that these guarantees be made up of cash deposits, Argentine bonds or by filing surety bonds or collateral.

The policies cover Companies against failure by Directors or Managing Partners to fulfil their obligations in the performance of their duties.

Who should acquire these policies?

  • Directors of Corporations
  • Managers of Limited Liability Companies
  • Administrators of Limited Partnerships

Who are the beneficiaries of the policies?

Policies are issued in favour of Companies in which the officers perform their duties. Every Director, Manager or Administrator shall file an individual guarantee (a different policy for each individual).

Art. 76: subsection 4. is replaced by the following text:

"4. The amount of the guarantee shall be the same for all directors or managers, but the total cannot be less that sixty per cent (60%) of the value of the equity capital taking together all eligible officers. Without prejudice to the aforementioned, the amount of the guarantee shall never be – on an individual bases – for less than ten thousand Argentine Pesos (Ar$10,000) or for more than fifty thousand Argentine Pesos (Ar$50,000) per director or manager".

The policy must cover Directors or Managing Partners’ period of tenure. It will usually involve periods of one year.

Requirements to obtain Guarantees:

Send via fax to (54-11) 5554-9009 o via email to pedidosigj@fianzasycredito.com . We shall contact you shortly afterwards.

Once you have sent in the Application Form filled in with all the required information, we will contact you to pay and collect the original policy (which shall held by your company), and a copy to be filed at the General Inspectorate of Justice.

 

 

  • Land Transportation
    Guarantees customs duties on goods that enter the country on a temporary basis. The Customs Authority allows them to be transported across Argentine territory without paying customs duties that would be due if the goods were imported for internal consumption.
  • Missing Documentation
    Importers must file this guarantee when goods arrive at the port without the documentation required by Customs to prove ownership and allow the custom entry form to be completed.
  • Temporary Import and Export
    Temporary Imports. Customs allows goods to be imported temporarily for specific purposes as long as they are re-exported within a given period of time. It therefore allows the goods into the country without paying customs duties provided they is a guarantee in place that will pay customs duties due if the goods do no leave the country again. Temporary Exports is a similar guarantee to Temporary Import, but they work in reverse.
  • Customs Duties Differences
    Guarantees possible differences in customs duties established between Importers and Customs in relation to import applications being processed.
  • Bonded Warehouse Authorisation
    These guarantees have to be filed by those who wish to store imported goods in bonded warehouses. They cover customs duties due on possible shortages.

These have to be submitted by tenants who lease properties in order to guarantee that they will fulfil the obligations undertakes under a rental contract. These policies cover:

  • Unpaid rent and penalties as agreed in the rental contract.
  • It replaces the deposit that covers the remaining contractual obligations.