Company: TCMFF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0001104659-25-019133
Chunk: 196

Company: TELECOM ARGENTINA SA
Filing Date: 2025-02-28
Form: 20-F
Item: Item 10
Chunk 196
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 any). Under the GCL, dividends may only be declared out of liquid and realized profits determined based on non-consolidated financial statements prepared in accordance with GAAP effective in Argentina (i.e. IFRS Accounting Standards in the case of listed companies as Telecom Argentina) and other applicable regulations issued by the CNV and other regulatory bodies. Furthermore, liquid and realized profits can only be distributed when all accumulated losses from past periods have been absorbed and the legal reserve has been constituted or reconstituted. In addition, the Telecom Shareholders Agreement includes certain provisions with respect to the payment of dividends under certain circumstances Under CNV rules, a shareholders’ meeting convened to approve the financial statements in which retained earnings are positive must make a specific decision on the use of such earnings in accordance with the GCL. The shareholders’ meeting must resolve on its distribution as cash dividends, capitalization with issuance of paid-in shares, use to create reserves other than statutory reserves, or a combination of such alternatives. In addition, the GCL requires Argentine companies to allocate 5% of any net profits to a legal reserve, until the amount of this reserve equals 20% of our capital stock. The legal reserve is not available for distribution. The remainder of net profits may be paid as dividends on common stock or retained as a voluntary reserve or other account, or a combination thereof, all as determined by the shareholders. As a result of these rules the balance of retained earnings after the allocation approved by the Annual Ordinary Shareholders’ Meeting should be zero. As provided by CNV Resolution No. 609/12, positive retained earnings generated by the mandatory adoption of IFRS Accounting Standards as from January 1, 2012, should be assigned to a special reserve that can only be utilized for its capitalization or to absorb negative retained earnings.
Furthermore, CNV Resolution No. 777/18 established that “earnings distributions shall be considered in the currency as of the shareholders’ meeting date using the price index corresponding to the previous month of said Meeting”.
Dividends may not be paid if the legal reserve has been impaired, nor until it has been fully replenished. Shareholders’ rights to collect dividends expire three years after the distribution date pursuant to Section 17 of Telecom Argentina’s bylaws.
Argentine law permits the Board of Directors of certain companies, such as Telecom Argentina, to approve the distribution of anticipated dividends on the basis of financial statements especially prepared for the purpose of paying such dividends, provided that both the external auditors and the