Argentina: Partial foreign exchange deregulation and implications for stock options/ESPPs

07 May 2025    2 minute read
Argentina ESPP Employee Stock Purchase Plan Stock Options Currency Control

In brief

Argentina has recently relaxed its currency control restrictions for individuals, which should allow optionees to exercise their stock options other than through a cashless exercise method, as it is now possible to remit funds out of Argentina to purchase foreign shares. There has not been a similar relaxation of the exchange control restrictions for local entities. Consequently, it appears that there are still substantial limitations on offering Employee Stock Purchase Plans (ESPP) to employees in Argentina. The changes have no impact on RSU/PSU awards as those awards have been viable under the prior set of exchange control rules since there is no outward transfer of funds from Argentina in connection with those award types.

Contents

Background

Prior to this development, Argentina's currency control restrictions imposed a USD 200 monthly limit on foreign currency purchases which significantly limited the ability of individuals remitting funds out of Argentina to purchase foreign shares. Accordingly, it was generally not possible for employees to exercise stock options by remitting the exercise price out of Argentina, and they were instead limited to using a cashless exercise method (such as a broker-assisted sell-all exercise). Additionally, the restrictions effectively made ESPP offerings impossible, as local subsidiaries were unable to remit contributions on behalf of employees without prior approval from the Argentine Central Bank.

What's New

Recent changes have relaxed foreign exchange restrictions for individuals, allowing them to purchase USD and transfer funds to foreign accounts for share purchases without the previous monthly USD 200 limit. This means optionees can now acquire foreign currency and remit such funds outside of Argentina to pay the exercise price of their options. 

However, while certain other foreign exchange restrictions have also been eased, these changes still do not appear to make it possible for local entities to remit ESPP contributions out of Argentina on behalf of employees. In theory, employees could now contribute to an ESPP by directly remitting contributions to the parent company, but this does not reflect the typical contribution process of almost all ESPP sponsors and is administratively challenging.

More changes are anticipated following the mid-term elections later this year, which may further relax exchange control rules.

Next Steps/Actions to Consider 

Clients should consider the following actions: 

  • Consider lifting any previously imposed restriction to exercise option only by way of a cashless exercise.
  • Consider if offering an ESPP through direct contributions by employees is feasible under the terms of the ESPP and administratively viable.
  • Monitor ongoing developments in foreign exchange regulations, particularly following the mid-term elections, to determine if offering an ESPP will become possible in the future.
Contact Information
Gabriel Gómez Giglio
Partner
Buenos Aires
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gabriel.gomez-giglio@bakermckenzie.com
Narendra Acharya
Partner
Chicago
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narendra.acharya@bakermckenzie.com
Barbara Klementz
Partner
San Francisco
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barbara.klementz@bakermckenzie.com

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