Film Industry Law

LAW FOSTERING NATIONAL FILM ACTIVITIES

Executive Order No. 1248/2001

The wording of the Law Fostering National Film Activities No. 17741, as amended, is hereby approved. Instituto Nacional de Cine y Artes Audiovisuales (National Institute of Cinema and Audiovisual Arts). National movies. Screen quota. Movie theaters classification. Screening and distribution. Film industry fund. Subsidies. Industrial credit. Short films. Documentaries. External trade. National film archive. National film registry.

Buenos Aires, October 10, 2001



UPON revision of file No. 00903/00 of the NATIONAL INSTITUTE of CINEMA and AUDIOVISUAL ARTS and Law No. 17741 and WHEREAS:

Que la citada Ley Nº 17.741 ha sido sucesivamente modificada por las Leyes Nros. 20.170, 21.505 y 24.377.

The abovementioned Law No. 17741 has been amended by Laws No. 20170, 21505 and 24377.

The relevant wording is drafted pursuant to the provisions of Law No. 20004.

Now, therefore THE PRESIDENT OF THE ARGENTINE REPUBLIC ORDERS AS FOLLOWS:

Section 1

— The wording of the Law Fostering National Film Activities No. 17741, as amended, is hereby approved and attached to this Executive Order as Exhibit I.

Section 2

—The body of laws appearing on Exhibit I pursuant to the table of contents attached hereto as Exhibit II shall be “Law No. 17741 (as amended 2001)"

Section 3

— Be it communicated, published, given to the National Directorate of Official Record and filed. — DE LA RUA. — Chrystian G. Colombo. — Jorge E. De La Rúa.


EXHIBIT I

VALID WORDING FOR THE LAW FOSTERING NATIONAL FILM ACTIVITIES No. 17741 AS AMENDED

CHAPTER I

NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS

Section 1

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall be a non-government public entity regulated by the SECRETARIAT OF CULTURE OF THE FEDERAL GOVERNMENT (Paragraph substituted by Section 1 of Executive Order No.1536/2002 published in the Official Gazette on August 21, 2002)

The abovementioned Institute shall foster and regulate national cinematographic activities throughout the Argentine Republic and overseas pursuant to the provisions of this Law.

Section 2

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall be governed and managed by:

a) a Chairperson and a Vice Chairperson;
b) a Federal Assembly;
c) an Advisory Council.

The Chairperson shall preside over the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS and the Vice Chairperson shall replace the Chairperson in case of absence or if so expressly requested. Both of them shall be appointed by the FEDERAL EXECUTIVE BRANCH and they shall not have any interest in any producer, distributor and/or exhibitor company of the audiovisual sector.

The Federal Assembly shall be presided over by the Chairperson of the Institute and made up by the Secretaries and Deputy Secretaries of the Secretariats of Culture regulated by the Provincial Executive Branches and the Government of Buenos Aires City.

The Federal Assembly shall meet at least once a year at any such venue as determined from time to time. The resolutions passed by such Assembly shall be approved by majority votes of its members, and its internal regulations shall be drafted at the first Assembly meeting.

The Advisory Council shall consist of ELEVEN (11) members appointed by the FEDERAL EXECUITVE BRANCH, FIVE (5) of whom shall be well-known figures from the cultural arena –ONE (1) per each cultural region– as recommended by the Federal Assembly and the remaining SIX (6) shall be well-known figures of the film industry recommended by legal entities or trade unions representing different cinematographic sectors. Should there be more than one legal entity or trade union in one sector, they shall jointly agree on one candidate and the relevant position shall be left vacant until consensus is reached between them. Such legal entities or trade unions shall recommend TWO (2) film directors; TWO (2) producers, one of whom shall engage in the production of series, miniseries, TV films or movies produced for television or videocassettes; ONE (1) technician from the film industry and ONE (1) film actor.

The term of office of the advisors recommended by the Federal Assembly shall be ONE (1) year. They may be reelected only once for another year, and they may join the Advisory Council again after a term equal to the term spent in office has elapsed.

Section 3

— The National Chairperson of Cinema and Visual Arts shall have the following duties and powers:

a) engaging in promotion activities intended to develop the Argentine film industry as recommended by the Federal Assembly, including sponsoring contests, granting awards, awarding study and research scholarships and engaging in any other necessary activity for such purpose;

b) disseminating the Argentine film industry, including negotiating and entering into agreements with different public or private, national or foreign entities of the film industry; offering free exhibitions with the prior approval of the relevant producers; and hosting or attending regional, national or international festivals so as to contribute to the distribution of Argentine films abroad.

c) negotiating and entering into agreements to exchange and co-produce films with other countries;

d) getting involved in the studies performed and advising other Governmental agencies on issues related to the film industry;

e) managing the Film Industry Fund;

f) promoting the trade of national films abroad;

g) preparing and approving the annual budget, estimation of resources and investments, drafting an annual report and approving the balance sheet and the statement of income to be submitted for consideration of the FEDERAL EXECUTIVE BRANCH. (Paragraph substituted by Section 10 of Executive Order No.1536/2002 published in the Official Gazette on August 21, 2002).

h) having duly authorized officers inspect and verify compliance with the laws, regulations and resolutions governing film activities and exhibition, including inspecting the books and records held by the persons in charge, drafting records of breach, making demands, promoting investigations, requesting submission of all necessary documentation, filing legal actions, and requesting search warrants and support of law enforcement authorities;

i) imposing the fines and sanctions provided for by law;

j) producing films that contribute to the national community development at governmental, semi-public and private agencies;

k) enforcing the obligation to process, dub, subtitle and make national copies of foreign movies as required by the national market;

l) appointing juries, commissions or delegations as required to enforce this Law;

m) requesting advice from specific areas as necessary and putting together working teams with representatives of each area, as the case may be;

n) presiding over and calling for General Meetings of the Federal Assembly and the Advisory Council and reporting all provisions that may be of interest for the Institute;

ñ) signing payment orders, official releases, resolutions, deeds and any other documents necessary for such purposes;

o) appointing, promoting and dismissing the personnel of the Institute;

p) submitting the necessary regulations for the enforcement of this Law for consideration of the Federal Assembly;

q) performing all activities set forth herein and in other applicable laws and provisions regulating the film industry;

r) performing all activities related to the powers granted by Section 7.

s) acquiring, encumbering and selling property, requesting and taking loans, entering into any type of arrangements, memorandums of understanding and service agreements with national, provincial and municipal entities of Buenos Aires City or private entities; (paragraph added by Section 10 of Executive Order No.1536/2002 published in the Official Gazette on August 21, 2002).

t) accepting subsidies, grants and donations; (paragraph added by Section 10 of Executive Order No.1248/2002published in the Official Gazette on August 21, 2002)

u) dealing with the remedies to which the personnel of the Institute or third parties resort against the Chairperson decisions (paragraph added by Section 10 of Executive Order No.1536/2002 published in the Official Gazette on August 21, 2002).

v) Entender en los recursos que el personal del Instituto, o terceros interpongan contra sus decisiones. (Inciso incorporado por art. 10 del Decreto N°1536/2002 B.O. 21/8/2002)

Section 4

— The Federal Assembly shall have the following duties and powers:

a) engaging in promotion activities intended to develop the cultural, artistic, technical, industrial and commercial aspects of the Argentine film industry;

b) protecting and fostering cultural spaces for audio visual exhibition, especially promoting the preservation of movie theaters;

c) holding accountable the Advisory Council and the Chairperson of the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS on an annual basis;

d) submitting for consideration of the NATIONAL GENERAL AUDIT OFFICE the financial statements, balance sheets and other documents as provided by the National Public Sector Financial Administration and Control Systems Act;

e) appointing FIVE (5) members to the Advisory Council on an annual basis;

f) performing other roles expressly set forth herein and in other applicable laws and provisions regulating the film industry;

g) regulating the advertising of commercial films and the screening of advertising plates at movie theaters;

h) promoting and encouraging regional film production by entering into agreements with universities or other specialized educational institutes that teach audio visual production in order to create regional agencies to provide counseling services, receive and deal with requests for credits and subsidies and perform any other activities entrusted to the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

Section 5

— The Advisory Council shall be entrusted with approving or rejecting the measures taken by the Chairperson pursuant to the powers granted under Section 3, paragraphs a), g), k) and m), and appointing committees to classify the projects to be considered under this law, which shall be made up of public figures from the culture, film and audiovisual sector.

Section 6

— The relationships between the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS and third parties, as well as the industrial and commercial activities performed by such Institute, shall be governed by the private law.

Section 7

— The National Chairperson of Cinema and Visual Arts shall be the legal representative of the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS and shall be vested with the powers provided for by Section 3 herein.

CHAPTER II

NATIONAL MOVIES

Section 8

— For the purpose of this law, such films produced by physical persons with legal address in the Argentine Republic or Argentine legal persons shall be regarded as national movies, provided that they meet the following conditions:

a) Their language is Spanish;

b) they are produced by artistic and technical teams made up by Argentine citizens or foreign citizens with legal address in Argentina;

c) they are shot and produced in Argentina;

d) their gauge is THIRTY-FIVE (35) millimeters or more;

e) they do not contain commercial advertising.

Potential exceptions to the provisions of paragraphs a), b) and c), such as the use of archival material, may be authorized before shooting only by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS in the event it is so required by the setting or if the impossibility to access a technical or human resource would hinder production levels and the availability of such resource would contribute to raising quality standards and artistic levels.

Any such films as produced pursuant to co-production provisions shall also be deemed as national movies.

Those films under SIXTY (60) MINUTES length shall be deemed as short films, whereas those with a longer running time shall be considered feature films.


CHAPTER III

SCREEN QUOTA

Section 9

— The movie theaters and other screening rooms of the country shall comply with the screen quota for national, feature and short films as provided for by the FEDERAL EXECUTIVE POWER in compliance with this law and any other regulations as may be passed by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

Section 10

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall consider the screen quota of those feature films that meet the conditions set forth in Section 8 within FIVE (5) business days upon receipt of the relevant request and the projection copy.

Section 11

— When prior reports from competent authorities are required, the term set forth in the Section above shall be calculated upon receipt thereof.

Section 12

— The screen quota granted to each movie shall appear on its screening certificate.


CHAPTER IV

MOVIE THEATERS CLASSIFICATION

Section 13

— For all purposes of this law and other provisions consistent herewith, the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall classify all movie theaters in the country on an annual basis according to their operation, usage, location, capacity, quality of the projection and sound equipment, comfort and decoration.


CHAPTER V

SCREENING AND DISTRIBUTION

Section 14

— The price to screen national feature films shall be determined nationwide based on the box office percentage after deducting the taxes directly levied upon screening.

The minimum percentages payable by exhibitors to screen national feature films shall be set forth hereunder. The resulting amounts shall become due and payable by exhibitors within FIVE (5) days after the end of each week during which the film is screened.

Section 15

— Feature films that are eligible to any of the benefits provided for hereunder shall not be shown on TV within the Argentine territory during a TWO (2)-year term after their first commercial screening.

Section 16

— Failure to comply with the provisions of Section 15 may cause the producer to sustain the following:

a) Loss of screen quota;

b) Expiration of the term allowed for credit repayment;

c) Obligation to immediately reimburse the total amount of any subsidy received for the movie.

Section 17

— In order to ensure compliance with the provisions of paragraphs b) and c) of Section 16, the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS may dispose of the benefits payable to the producer for the work done in other productions.

Section 18

— The importation and exportation of movies shall be reported to the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS with the relevant documentation.

Section 19

— Any breaches to Section 18 shall be punished pursuant to Section 64 herein, except for customs-related breaches or offenses, which shall be punished pursuant to the provisions of the Customs Code.

Section 20

— No Argentine or foreign feature film shall be screened at any movie theater without the relevant certificate issued by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

For screening by audiovisual, terrestrial or satellite means, film traders shall obtain the relevant authorization required by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

Upon request for classification of a movie by the relevant production team, the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall demand submission of a debt release certificate evidencing compliance with their labor and union obligations in relation to the relevant movie.


CHAPTER VI

FILM INDUSTRY FUND

Section 21

— The Film Industry Fund, which shall be managed by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS, shall be raised from the following:

a) a tax equal to TEN PERCENT (10%) of the basic price of every free or paid ticket to watch motion pictures throughout the country, regardless of the place where they are screened.

Such tax is payable by the audience, so the film companies and exhibitors shall add this tax to the basic price of each ticket.

b) a tax equal to TEN PERCENT (10%) of the sales or rental price of any type of recorded video intended for public or private screening, regardless of its genre.

This tax is payable by the purchaser or renter, so the persons who sell or rent recorded videos pursuant to the above paragraph shall be responsible for paying such tax in their capacity as collection agents. If they are registered for the payment of Value Added Tax, such tax (VAT) shall be deducted from the taxable base.

The transactions entered into between physical or legal persons registered as video editors and/or distributors and/or owners of video rental shops referred-to in Section 57 shall be excluded from the foregoing provisions.

c) an amount equal to TWENTY FIVE PERCENT (25%) of all of the funds collected by the COMITÉ FEDERAL DE RADIOFUSIÓN (FEDERAL RADIO COMMISSION) by way of charge created pursuant to Section 75, paragraphs a) and d) of Law No. 22285.

Such funds shall be automatically transferred to the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS on a daily basis pursuant to the fund transfer method provided for in applicable regulations.

The percentage applicable on the amounts to be transferred by the FEDERAL RADIO COMMISSION may be adjusted by the FEDERAL EXECUTIVE BRANCH only if the charges set forth in Law No. 22285 are modified. In such event, the relevant percentage shall be adjusted in such a way that the absolute value of the amounts to be transferred equals the applicable amount at the time of such modification;

d) the interests, recharges, fines and any other sum payable by way of penalty pursuant to this law or Act No. 11683 passed in 1998, as amended;

e) the gifts and donations received;

f) the interests and revenues resulting from own funds;

g) the funds resulting from the reimbursement of credits granted pursuant to this law;

h) unappropriated earnings of the Film Industry Fund from previous fiscal years;

i) any other income not provided for hereinabove arising from the activities of the organization;

j) the funds collected from services provided to third parties and grants received in connection with events related to the film industry.

(Infoleg Note: Pursuant to Section 1 of Executive Order No. 2278/2002 B.O. 4/8/2004 se fija en un CINCUENTA POR CIENTO (50%) la parte de la recaudación impositiva que establece el presente artículo incisos a), b) y c), la que se destinara en cada ejercicio financiero para atender los subsidios a la producción de películas nacionales).

(Nota Infoleg: Pursuant to Section 1 of Executive Order No. 2278/2002 published in the Official Gazette on November 13, 2002, the funds to be transferred to the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS pursuant to paragraph c) herein, wording passed in 2001, shall amount to FORTY PERCENT (40%) of all amounts collected by way of charge created pursuant to Section 75, paragraphs a) and d) of Law No. 22285, as amended. The foregoing shall become effective as from the date on which Executive Order No. 1522/01) enters into force).

Section 22

— The ADMINISTRACION FEDERAL DE INGRESOS PUBLICOS (FEDERAL TAX BUREAU) shall be entrusted with collecting and controlling the taxes provided for in paragraphs a) and b) of Section 21, pursuant to the provisions of Law No. 11683 passed in 1998, as amended, and Law No. 24797, as amended.

Section 23

— AUDIOVISUAL ARTS the funds collected for the Film Industry Fund automatically and on a daily basis, pursuant to the provisions herein and without the involvement of any other centralized or decentralized Federal Administration agency or any other entity, except for the relevant control and surveillance bodies and the provisions of Section 5 regarding operation and capital expenses. The free availability of funds set forth herein shall not be restricted and the resources of the Film Industry Fund shall not be allocated to any other purpose different from those provided for herein.

The BANCO DE LA NACIÓN ARGENTINA and the FEDERAL TAX BUREAU shall not receive any compensation for the services provided pursuant to this law.

Section 23

— Pursuant to the provisions herein, the Film Industry Fund shall be allocated to the following:

a) personnel costs, general expenses and investments arising from the management of the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS;

b) subsidies granted for the production and screening of national movies;

c) credits granted for film production;

d) participation of any such national movies as determined by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS at film festivals;

e) contributions made by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS to national and international film festivals held in the Argentine Republic;

f) the promotion of activities performed in Argentina or abroad to improve the broadcasting, distribution and screening of national movies, such as holding Argentine films weeks, sending delegations and making advertising campaigns for that purpose, and financing the trade of national movies abroad;

g) the maintenance of the ESCUELA NACIONAL DE EXPERIMENTACION Y REALIZACION CINEMATOGRAFICA (NATIONAL SCHOOL FOR CINEMATOGRAPHIC EXPERIMENTATION AND DIRECTION), the CINEMATECA NACIONAL (NATIONAL FILM ARCHIVE) and a specialized library;

h) the production of films;

i) the submission of copies and delivery expenses, advertising and advance distributions to foster the trade of national movies abroad;

j) the organization of contests and granting of awards for the promotion of screenplays;

k) the granting of prizes to works of art of national production;

l) financiar la producción a que se refiere el inciso

j) the finance of the productions referred to by paragraph j) of Section 3 herein;

m) social welfare benefits for those engaged in the film industry through government-run healthcare acknowledged by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS;

n) all activities entrusted to the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS pursuant to its duties and powers as provided for hereunder;

ñ) subsidies granted at the interest rate of credits for film production granted by government-run or private banks.

Any surplus of the Film Industry Fund recorded at the end of a fiscal year shall be carried over to the next one.

Section 25

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS is hereby empowered to use available funds, if applicable, to purchase government bonds, treasury bonds or any other similar bonds provided that the funds are not required for the purposes set forth herein.

CHAPTER VII

SUBSIDIES TO NATIONAL FEATURE FILMS PRODUCTION AND SCREENING

Section 26

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall grant a subsidy to feature film provided that they contribute to the development of the national film industry in cultural, artistic, technical and industrial terms, especially excluding those films depicting aberrant behavior or situations related to sex or drugs whose purpose is not favorable to the community.

Section 27

— The following movies shall be deemed national feature films of special interest:

a) those of good quality with significant moral, social, educational or national values;

b) those especially intended for children;

c) those with topics that are deemed of interest and the resolution of which has an unquestionable artistic value.

Section 28

— Within THIRTY (30) days upon request of the subsidy referred-to in Section 26, the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall inform the producer of the relevant film about the decision made, which shall be justified and put in writing.

Section 29

— The subsidy for national production films shall be funded with the revenues obtained from the tax rate determined by the FEDERAL EXECUTIVE BRANCH pursuant to the provisions herein; provided, however, such percentage shall not exceed the FIFTY PERCENT (50%) of the revenues.

The abovementioned subsidy shall be available for all national production or co-production films screened throughout the country by different means. The rate of the subsidies granted pursuant to applicable regulations shall be determined according to the following criteria:

a) firstly, contributing to recovering the cost of a national movie with an average budget as determined by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS on an annual basis;

b) secondly, upon recovery of the abovementioned cost, the rate of the subsidy shall decrease until it reaches the cap set forth by Section 31.

Section 30

— Subsidies shall become due and payable every quarter during TWENTY-FOUR (24) months as from the first commercial screening of the movie and after having been granted according to the rate provided for by the FEDERAL EXECUTIVE BRANCH calculated on the gross revenue reported by exhibitors under oath, after deducting the taxes that are directly levied on shows and when such show programs only contain national movies. Those movies of special interest shall receive a supplementary percentage.

The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall issue the standards regulating the granting and means of payment of the subsidies related to other types of screening.

Section 31

— The maximum amount to be granted by way of subsidy shall be the rate determined by the FEDERAL EXECUTIVE BRANCH on the production costs acknowledged by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS for each movie.

As regards co-productions, only the cost incurred by the Argentine co-producer shall be taken into account for this purpose. Those movies of special interest shall receive a supplementary percentage.

All costs shall be acknowledged pursuant to the regulations set forth by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS and the examination of the expenses incurred.

Section 32

— Upon each due date, FIFTY PERCENT (50%) of the payable amount shall be paid, and the remaining balance shall become part of the funds that the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS may use at any time during the fiscal year for the same purpose; provided, however, they do not exceed the tax revenues allocated to such subsidy. Otherwise, it shall be paid on a pro rata basis, and no balances or differences shall become payable in such event.

The FEDERAL EXECUTIVE BRANCH shall determine the amount of the subsidy that shall be reinvested to produce a new film or to purchase industrial equipment.

Section 33

— The exhibitors shall be entitled to a subsidy for the movies screened in excess of the screen quota, which shall be equal to the percentage determined by the FEDERAL EXECUTIVE BRANCH. Such percentage shall be calculated on the gross revenue reported by exhibitors under oath, after deducting the taxes that are directly levied on shows.

Section 34

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall enjoy a special privilege on the subsidies granted and shall be empowered to withhold any subsidies to set off any amount owed by the beneficiaries to the institute. The subsidies shall not be assigned, in whole or in part, without the prior approval of the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

The right to receive a subsidy shall expire if such subsidy is not requested by the relevant producer or exhibitor within ONE (1) year after the due date and if it has not been reinvested within TWO (2) years. In such event, the relevant amounts shall become part of the Film Industry Fund as a surplus of previous years.

The percentages and rates to be determined by the FEDERAL EXECUTIVE BRANCH may be adjusted on an annual basis. The new percentages and rates fixed pursuant to Sections 30 and 31 shall be applicable to the subsidies granted after the effective date of the relevant law providing for the new percentages and rates.


CHAPTER VIII

INDUSTRIAL CREDIT

Section 35

— The credits granted by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall be managed by a bank with presence throughout the country, which shall be selected following a bidding process for such purpose. The award shall be granted for a THREE (3)-year term, after which a new bidding process shall be carried out.

The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS may agree on the interest rate applicable to the credits to be granted with the government-run or private banks selected.

Such selection shall be made based on the lower interest rates and on the number of credits to be financed by the intermediate bank pursuant to the bidding processes carried out, at least, THREE (3) times a year.

Section 36

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall determine the funds to be used for film production financing out of its own resources on an annual basis.

Such funds shall not be used for any other purposes but those set forth in Section 37.

Section 37

— The funds annually set aside by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS, pursuant to Section 36, as well as all the revenues resulting from the amortization of the relevant credits, shall be allocated as follows:

a) to credits for the production or co-production of national feature films and their commercialization abroad;

b) to special loans granted to national producers, exhibitors and film laboratories to purchase machinery, equipment, instruments and accessories for the film industry;

c) to credits granted to improve movie theaters.

Section 38

— Until full payment of the credits granted pursuant to paragraph a) of Section 37, the movies in connection with which such credit was granted shall not be commercialized abroad without the prior consent of the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS pursuant to screening conditions or the distribution agreement.

Section 39

— The success of a movie shall not release the obligations assumed regarding the terms and repayment of the credits received.

Section 40

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall approve the relevant projects and determine the amount of the credit to be granted pursuant to Section 37. National movies shall be given priority for this purpose.

The amount of the credit shall not exceed FIFTY PERCENT (50%) of the cost of production acknowledged by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS. In the event of projects of special interest, such amount may be increased to the SEVENTY PERCENT (70%).

As regards co-productions, the only cost taken into account for this purpose by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall be the contribution made by the Argentine co-producer.

Section 41

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS may endorse before the BANCO DE LA NACIÓN ARGENTINA any such credits as those to be granted for special interest projects.

CHAPTER IX

SHORT FILMS

Section 42

— The screen quota for national short films shall consist of movies with a length between EIGHT (8) and TWELVE (12) minutes and a gauge of THIRTY-FIVE (35) millimeters or more. Any short films that are longer but meet all of the requirements set forth hereinabove may be part of the screen quota provided that they are screened pursuant to a private agreement.

Documentaries and any films with a special content or treatment intended for advertising purposes shall be excluded from the above provision.

The names of commercial companies may appear only in the titles and credits, provided that they were involved in the production of the relevant film.

The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall draft the relevant standards intended to regulate the credit system for national short movies, and their mandatory screening and distribution at movie theaters and the applicable compensation rights.

Section 43

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS may produce short films and any other films after choosing the relevant preliminary projects in sessions held for such purpose.

Section 44

— The ministries, under-secretariats, secretariats, centralized and decentralized agencies, and the companies and agencies of the NATIONAL GOVERNMENT shall allocate the necessary resources out of their budgets to produce short films and copies thereof to promote the activities performed by their relevant areas. In the bidding processes for the promotion of national development, the bidding documents shall include the production of short films to evidence progress and social projection.

Section 45

— The SECRETRIAT OF CULTURE AND MEDIA of the ARGENTINE PRESIDENT’S CABINET shall provide the necessary advice through the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

In addition, production and broadcasting plans may be put in place within the country and abroad through the relevant agency.

CHAPTER X

DOCUMENTARIES

Section 46

— Documentaries shall be screened throughout the country as agreed between the relevant parties, provided they meet the following criteria:

a) their length shall be between EIGHT (8) and TWELVE (12) minutes;

b) they shall not contain foreign stories, unless the topics covered are of special interest for the country and their inclusion has been authorized by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

For this purpose, the treatment of Argentine documentaries by the foreign country where the abovementioned story originated shall be taken into account

c) express advertising may account for one third of their length;

d) each edition may be screened for a maximum term of ONE (1) week at each movie theater.

All movie theaters may screen foreign documentaries; provided, however, there is a national documentary screened at the same section or show.

CHAPTER XI

EXTERNAL TRADE

Section 47

— In order to foster and regulate national cinematographic activities abroad as provided for in Section 1 herein, the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS, as advised by representatives of the production sector, shall set forth the regulations that will govern external trade of national movies. If any movie fails to abide by the abovementioned regulations, its producer shall not be entitled to the economic aid provided for herein and paragraphs b) and c) of Section 16 and Section 17 shall become applicable.

The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall, therefore, be empowered to:

a) totally or partially release any producer from compliance with the regulations passed by it when it is deemed convenient due to market conditions;

b) get involved in sales and distribution agreements;

c) make repayable advance payments for distribution; provided, however, foreign productions agree;

d) pay or repay up to ONE HUNDRED PERCENT (100%) of the costs incurred to make advertising, copies and deliveries abroad.


CHAPTER XII

JOINT PRODUCTION EFFORTS

Section 48

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall make joint production efforts with artistic crews, technicians and third parties whereby the former shall make capital and property contributions and the latter shall contribute with capital, property and services. Any preliminary projects chosen by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS at the sessions held for such purpose shall fall within the scope of the foregoing provisions.

The contributions made by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall not exceed the SEVENTY PERCENT (70%) of the production budget of each movie. The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS may allocate up to THIRTY PERCENT (30%) of the funds for credits to this joint production projects.

Section 49

— The joint production projects shall involve a distributor, who shall commit to make the advance payments corresponding to advertising costs and the copies of the movie for screening purposes at national movie theaters. The distributor shall also distribute the box office revenues among the parties, in an equal proportion to the contributions made, after deducting the advance payments made and distribution costs incurred.

All other revenues resulting from the screening of the movie in Argentina and abroad shall be distributed in the same fashion among the relevant parties.

Section 50

— Any amounts payable to the production by way of subsidies shall be deducted on a pro rata basis from the contributions made by the parties, except for the contribution made by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

Any amounts payable for contributions made in property and services shall not be required to be reinvested.

Section 51

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall become involved in all transactions related to the production and screening of movies in Argentina and abroad.

CHAPTER XIII

CO-PRODUCTION

Section 52

— — In the absence of international agreements, co-productions shall be authorized by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS on a case-by-case basis.

Section 53

— The negatives, duplicate negatives, lavender, internegatives and the transportation of equipment and material for co-production purposes shall be exempt from import or export duties.

Similar exemptions shall be allowed to temporary imports for shooting in Argentina or to process or make copies at national laboratories.

Section 54

— Co-produced films shall be granted the final certificate after verifying that they were produced pursuant to the provisions of this law and the project approved by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS.

After being granted such certificate, co-produced films shall be subject to the requirements and shall enjoy all the benefits provided for herein.

CHAPTER XIV

NATIONAL FILM ARCHIVE

Section 55

— The NATIONAL FILM ARCHIVE, which shall be managed by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS, is hereby created.

Section 56

— The owner of any feature film which is granted a subsidy pursuant to the provisions hereunder shall deliver a copy of the film to the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS to be filed with the NATIONAL FILM ARCHIVE. Moreover, another copy of the film shall be delivered to the GENERAL NATIONAL ARCHIVE if such film is of special interest and it is considered useful to accomplish its mission. The owners of feature films produced pursuant to Sections 43 and 44 hereunder shall deliver a copy thereof to the NATIONAL FILM ARCHIVE and another copy to the GENERAL NATIONAL ARCHIVE.

The producers of short films that are not regulated by Sections 43 and 44 but are eligible to quota screen benefits shall irrevocably and permanently allow the distribution of copies thereof to the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS and the GENERAL NATIONAL ARCHIVE.

In addition, the GENERAL NATIONAL ARCHIVE shall be entitled to make copies of any such documentaries as deemed of interest at its own discretion.

National movies owned by the NATIONAL FILM ARCHIVE shall be used for campaigns intended to promote and disseminate the Argentine film industry at national and international festivals, shows and exhibitions; whereas those movies filed with the GENERAL NATIONAL ARCHIVE shall be used for similar actions with educational and cultural purposes.

The owner of all of the movies that are granted the benefits provided for hereunder shall authorize the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS and the NATIONAL FILM ARCHIVE to make any such copies of the relevant movies as needed by them for compliance with the abovementioned purposes.

The screening of “reserved” or “secret” movies filed with the NATIONAL FILM ARCHIVE and the GENERAL NATIONAL ARCHIVE shall be authorized by the producer.


CHAPTER XV

NATIONAL FILM REGISTRY

Section 57

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall keep a list with all of the companies from the film and audiovisual industry; cinema, television and video producers, distributors, exhibitors, laboratories and film studios. Moreover, all video editors and distributors, video rental shop owners and/or any other store or company engaged in selling, renting or showing movies in videocassette or any other means or systems.

It shall be necessary to be recorded in such list in order to perform any of the abovementioned activities.

Section 58

— Owners or holders of the rights to use movie theaters and other screening rooms shall request the debt release certificates corresponding to the payment of the taxes provided for in paragraph a) of Section 21 herein, recharges and fines to the FEDERAL TAX BUREAU, which shall remain in force for TEN (10) business days.

Anyone who fails to comply with the above requirement shall be jointly responsible, together with the new owner, for any due amounts which shall be paid within TEN (10) business days. The FEDERAL TAX BUREAU shall issue the relevant certificate within THIRTY (30) business days upon request. If the abovementioned term elapses and the FEDERAL TAX BUREAU fails to issue such certificate, the transfer or sale may be performed without it.

Section 59

— Any purchasers, brokers or notary publics who are involved in the transfer or sale of a movie theater shall be deemed as collection agents of the debt shown in the certificate issued by the FEDERAL TAX BUREAU. They shall make the relevant payment within FORTY-EIGHT (48) hours after collection the funds, either in cash or by deposit in the BANCO DE LA NACIÓN ARGENTINA to the order of the bank.

Section 60

— The provisions in Sections 58 and 59 shall also apply to any such transfers as those made by a person who should be recorded in the list held by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS as a film production company, video editors and distributors and/or video rental shop owners and TV companies.


CHAPTER XVI

INVESTIGATIONS AND SANCTIONS

Section 61

— The sanctions provided for herein shall be enforced by the NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS. The FEDERAL EXECUTIVE BRANCH shall put a procedure in place to safeguard the right to defense.

The resolutions passed by the National Chairperson of Cinema and Audiovisual Arts may be challenged within FIVE (5) days upon notification before the FEDERAL COURT OF APPEALS IN ADMINISTRATIVE MATTERS

Section 62

— The exhibitors who fail to comply with the provisions regarding the screen quota of national movies shall be subject to fines, the amount of which shall be equal to the gross income earned from ONE (1) to FIFTEEN (15) screening days.

For the purpose of this Section, the gross income for ONE (1) screening day shall mean the daily average of the quarter when the breach occurred. Notwithstanding the foregoing, national movies shall be screened in the same proportion of the breach.

If the breach is repeated, the movie theater may be closed for up to THIRTY (30) calendar days; and any further repetition shall result in the closing of the movie theater for up to SIXTY (60) calendar days.

Section 63

— Any breach of Sections 56 and 57 shall be punished with a fine equal to SIX HUNDRED AND SIXTY (650) tickets.

In the event of breach of sections 20, 52 and 58 the fine shall be equal to ONE THOUSAND TWO HUNDRED AND FIFTY (1,250) tickets.

The breach of Sections 3, paragraph k), 12, 13, 14 and 59 shall be punished with a fine equal to TWO THOUSAND FIVE HUNDRED (2,500) tickets.

If the breach is repeated or in the event of agreement, covenant or collusion to prevent or avoid compliance with the abovementioned Sections, the penalty may be increased up to five times.

Section 64

— If the breaching party is entitled to any of the benefits provided for hereunder, they may lose them in the future, regardless of the payment of the relevant fine and other applicable penalties.

If as a result of the breach committed the breaching party or any third parties become entitled to an illegal benefit, the total amount of the fine payable shall be increased by an amount equal to the illegal benefit obtained by such breaching party or third parties, regardless of whether the resulting fine is higher than the maximum fine provided for herein for the breach committed and in addition to any applicable criminal actions.

Section 65

— The NATIONAL INSTITUTE OF CINEMA AND AUDIOVISUAL ARTS shall enforce the relevant penalties, upon investigation. The alleged breaching party shall be summoned TEN (10) business days in advance so that a defense may be put up and the relevant evidence may be produced. This procedure shall be governed by the provisions of Title VI of the Administrative Procedure Regulations, Decree No. 1759/72, effective wording 1991.

Notifications shall be served pursuant to Section 41 of the Administrative Procedure Regulations, Decree No. 1759/72, effective wording 1991.

Section 66

— Upon acceptance of the evidence produced, the interested party shall have a TWENTY (20) day-term to offer the relevant argument and, upon compliance with Section 60 of the Administrative Procedure Regulations, Decree No. 1759/72, effective wording 1991 and with the corresponding legal advice, a resolution shall be passed.

Section 67

— Any actions for breach of laws, decrees and resolutions regulating the film industry shall become barred by the statute of limitations FIVE (5) years after the date on which the breach occurred.

Section 68

— The actions to demand payment of the applicable fines shall become barred by the statute of limitations after one year.

The term shall start running after the resolution has the force and effect of a final decision.

Section 69

— The statute of limitations for enforcing penalties and fines shall be interrupted upon the commission of a new breach and any other judicial proceedings.

Section 70

— For the breaching party to be considered a repeater, the previous offense shall not be considered if FIVE (5) years have elapsed since then.

Artículo 71º

— The provisions of Sections 67, 68, 69 and 70 shall not be governed by the tax levied pursuant to Section 21 herein, but according to the provisions of Section 22.

Section 72

— Unfavorable resolutions resulting from administrative investigations may be challenged with an appeal filed with the Federal Court of Original Jurisdiction in Economic and Criminal matters within TEN (10) business days upon notification of the judgment with devolutive effect. In the event that there is not any criminal economic jurisdiction, the appeal may be filed with the Federal Court corresponding to the jurisdiction of the defendant.


CHAPTER XVII

MISCELLANEOUS

Section 73

— For all purposes of this law, the following terms shall mean as follows:

a) “Movie” shall mean any record of sound or silent motion picture, in any type of format, for screening, broadcasting or any other purpose.

Soap operas and TV programs shall be expressly excluded from this section.

b) “Video editor” shall mean anyone who acquired and exercises the right to trade movies by transcribing them to any type of format.

c) “Video distributor” shall mean a wholesaler who trades copies of movies, either in the capacity of editor or not.

d) “Video rental shop" shall mean a retail store engaged in selling or renting movies.

Section 74

— The screening of all feature films classified as “A” on the date of enactment hereof shall be mandatory pursuant to this law.

Short films classified as “A” on the date of enactment hereof shall be submitted for reclassification within NINETY (90) days so as to become eligible for the benefits regarding mandatory screening pursuant to the provisions hereof.

Section 75

— Law No. 17502 shall not apply to the subsidies and aids granted pursuant to the provisions hereof.

Section 76

— The Decree-Laws Nos. 62/57, 3772157, 3773/57, 16384/57, 16385/57, 16386/57, 4488/58 and 2.979/63, and Laws Nos. 14.226, 15.335 y 16.955, Decree No. 6.739/58 and any other regulations that are not consistent with the provisions hereof shall be hereby revoked.

Section 77

— The first paragraph of Section 11 of Law No. 14789 shall be substituted by the following paragraph upon enactment of this law:

"Section 11

— As from November 1, 1958, the following provision shall be added to the Decree-Law No. 8718/57 (Section 12, paragraph 3)".

Section 78

— The third paragraph of Section 1 of Law No. 6066/58, amending paragraph a) of Section 6 of the Decree-Law No. 1224/58, shall be substituted by the following upon enactment of this law:

"Section

...including the resources provided for in Section 19 of the Decree-Law No. 15460/57. Pursuant to the provisions of Section 2, paragraph c), the National Arts Fund shall allocate to the CONSEJO NACIONAL DE RADIODIFUSION Y TELEVISION (FEDERAL TELEVISION AND RADIO BROADCASTING COMMISSION) the necessary resources to meet the goals set forth in Section 21, paragraphs c) and d) of the Decree-Law No. 15460/57".

Artículo 79º

— Any amendments to Law No. 17741, as amended, pursuant to Section 1 of Law No. 24377 shall become effective upon publication in the Official Gazette, except:

a) in relation to the tax provided for in paragraph a) of Section 21, which shall be entrusted to the FEDERAL TAX BUREAU as from the first day of the month that follows the publication; and

b) in relation to the taxes set forth in paragraph b) of Section 21, which shall become effective as from the FEDERAL RADIO COMMISSION;

c) in relation to the funds allocated to the Film Industry Fund, pursuant to the provisions of paragraph c) of Section 21, which shall become effective with connection to the income collected by the FEDERAL RADIO COMMISSION as from the first day of the month that follows the publication of this law in the Official Gazette.

EXHIBIT II

Effective Wording

SOURCE

24377 (Section 1º p. 1)

24377 (Section 1º p. 3)

24.377 (Section. 1º p. 4)

24377 (Section 1º p. 4)

24377 (Section 1º p. 5)

24377 (Section 1º p. 6)

24377 (Section 1º p. 7)

20170 (Section 1º, 7º amended)

20170 (Section 1º, 10 amended); 24377 (Section 1º p. 8)

10

20170 (Section 1º, 11 amended)

11

20170 (Section 1º, 12 amended)

12

20170 (Section 1º, 13 amended)

13

17741 (Section 14)

14

20.170 (art. 2º, 15 modif.)

15

20 170 (Section 2º 16 amended)

16

20170 (Section 2º, 17 amended)

17

20170 (Section 2º, 18 amended)

18

20170 (Section 2º, 19 amended)

19

20170 (Section 2º, 20 amended)

20

24377 (Section 1º p. 10)

21

24377 (Section 1º p. 11)

22

24377 (Section 1º p. 11-24 bis)

23

24377 (Section 1º p. 11-24 ter)

24

17741 (Section 28); 20170 (Section 5º); 24377 (Section 1º p. 12)

25

17741 (Section 29)

26

20170 (Section 6º, 30 amended) 24377 (Section 1º p. 13)

27

20170 (Section 6º, 31)

28

24377 (Section 1º p. 14)

29

24377 (Section 1º p. 15)

30

24377 (art .1º p. 16); 20170 (Section 6º, 34 amended)

31

20170 (Section 6º, 35 amended)

32

21505 (Section 1º, 36 amended)

33

20170 (Section 6º, 37 amended)

34

20170 (Section 6º, 38 amended); 21505 (Section 2º, 38 amended)

35

24377 (Section 1º p. 17)

36

17741 (Section 40)

37

17741 (Section 41)

38

17741 (Section 42)

39

17741 (Section 43)

40

17741 (Section 44)

41

17741 (Section 45)

42

20170 (Section 7º, 46 amended); 24377 (Section 1º p. 18)

43

20170 (Section 7º, 47 amended)

44

20170 (Section 7º, 48 amended)

45

20170 (Section 7º, 49 amended)

46

20170 (Section 7º, 50 amended)

47

20170 (Section 7º, 51 amended)

48

20170 (Section 7º, 52 amended); 24377 (Section 1º p. 19)

49

20170 (Section 7º, 53 amended)

50

20170 (Section 7º, 54 amended)

51

20170 (Section 7º, 55 amended)

52

17741 (Section 56)

53

17741 (Section 57)

54

17741 (Section 58)

55

17741 (Section 59)

56

20170 (Section 9º, 60)

57

24377 (Section 1º p. 20)

58

20170 (Section 10, 62)

59

17741 (Section 63)

60

24377 (Section 1º p. 22)

61

24377 (Section 1º p. 23)

62

20170 (Section 10, 64)

63

24377 (Section 1º p. 24)

64

17741 (Section 68)

65

20170 (Section 10)

66

20170 (Section 10)

67

17741 (Section 71)

68

17741 (Section 72)

69

17741 (Section 73)

70

17741 (Section 74)

71

24377 (Section 1º p. 25)

72

20170 (Section 10)

73

24377 (Section 1º p. 26)

74

17741 (Section 77)

75

17741 (Section 78)

76

17741 (Section 79)

77

17741 (Section 80)

78

17741 (Section 81)

79

24377 (Section 2º)