New Law Governing Currency Changeover - Venezuela

On March 6, 2007, the Presidential Decree with Status of Law governing a Monetary Changeover was published in Official Gazette. This Law changes the Venezuelan official currency to a unit equivalent to Bs. 1,000.00 current Bolivars. According to this regulation, this changeover will be in force as from January 1, 2008. This decree-law states that all Bolivars resulting from this changeover will be represented by the “Bs.” symbol and will be decimalized. However, as from January 1, and as the Venezuelan Central Bank (BCV) states otherwise, payment obligations in national currency must indicate the use of the new currency by including the expression “Bolivares Fuertes”, or the “Bs. F” symbol.

Therefore, charges expressed in national currency before the effective date will be converted into the new currency by dividing it by 1,000 and then rounding the amount off. Payment Obligations In addition, this new regulation provides that, as from January 1, 2007, all payment obligations expressed in national currency must be entered into by using the new Bolivar. Prices, wages, taxes, amounts expressed in national currency and included in financial statements, other accounting documents, credit notes and, in general, any other operation or reference expressed in national currency must be reported in the new currency. Bills and coins issued by the BCV currently in force will be valid even after the effective date of the decree, until the BCV recalls them from circulation.

Checks and other credit notes payable (even issued before January 1, 2007), and those issued after the effective date of the decree will be considered as having a value corresponding to the conversion. Therefore, they will be paid according to the rules of equivalence. New Currency Any amounts expressed in national currency included in regulations, decrees, administrative orders, memos, instructions, or administrative regulations with general and/or particular effects, as well as judicial decrees issued before January 1, 2008 must be converted to the equivalent amount provided by the law. Likewise, official stationery, fiscal stamps, and/or postage stamps must be used until the stock runs out, in the understanding that their value will be converted according to the new regulations. The value of tax units (unidad tributaria) will remain the same until the National Taxation Services (Seniat) decides to order a change regarding this issue.

The new value of tax units will result from the conversion procedures stated above. Likewise, financial statements approved after the effective date of the decree will be expressed by using the new currency.
As from October 1, 2007, and until the BCV orders otherwise, all instruments used to offer goods and services will contain as reference both the amount prior to the conversions, and the amount resulting from the conversion. Obligations by the BCV and Other Relevant AuthoritiesAccording to this decree-law, the BCV will be in charge of taking all the necessary steps to issue and distribute the new bills and coins required further to the conversion.

Likewise, the BCV is authorized to regulate, by means of resolutions, any matters related to the execution of the monetary changeover, as well as to implement all necessary measures intended for the substitution of bills and coins until the new currency can be fully introduced. The BCV is also authorized to implement a spreading campaign regarding the monetary conversion aiming at informing the population in general on the scope of this new system. Based on this decree-law, The People’s Attorney’s Office, the Customer’s Defense Institute (Indecu), the Superintendence of Banks and other Financial Institutions (Sudeban), the Superintendence of Insurance Companies, and the Security National Commission (CNV) are authorized to look after the proper implementation of the conversion. In addition, any other entity with relevant jurisdiction will be also authorized to do so.

Duties and Punishments On the one hand, noncompliance with the monetary conversion contained in the decree-law will be punishable with fines that will range between 10 and 10,000 Tax Units. Fines will be enforced by Indecu pursuant to the Law for the Protection of Customers and Users, except for fines applicable to financial institutions. In those cases, fines will be enforced by a governmental entity with the relevant control and supervision over financial institutions.

On the other hand, people refusing to accept the new currency in force according to the decree-law as from January 1, 2007, will be punished with a fine equivalent to four times the amount involved. Finally, during this conversion, banks and financial institutions must adapt their systems and arrange for any change intended to convert the whole of the balances of their clients’ accounts by the effective date of the conversion.