|May 29, 2012|
Previously published on May 2012
The savings fund law
On May 4, 2012, the President of the Republic enacted Decree No. 8.896 issuing the Decree with Rank, Value and Force of Organic Law on the National Savings Fund of the Working Class and the People’s Savings Fund (Savings Fund Law). We will set forth below the most relevant aspects of the Savings Fund Law:
The National Savings Fund of the Working Class (National Fund) is created as an instrument for paying the debt arising from the social benefits of public administration employees.The People’s Savings Fund (People’s Fund) is also created as an alternative means of promoting national savings and productive investment.
The obligations and commitments of the Funds shall be understood to be fully guaranteed by the Republic.The Funds may, for the purpose of meeting such ends, manage resources, assume commitments in foreign currency and decide upon their investment and disposal.
The People’s Fund will operate through a State company in the form of a corporation; it will encourage the national savings of the workers associated with the following sectors: (i) hydrocarbons; (ii) petrochemical; (iii) mining; (iv) construction; (v) infrastructure; and (vi) any other sectors determined by the National Executive.
The People’s Fund may issue securities in Bolivars or foreign currency. It may also make investments, offer securities associated with national productive sectors such as hydrocarbons and their associated activities, and also publicly offer variable-return participation accounts, deriving from the dividends of a portion of the shares of the mixed companies created pursuant to the Organic Hydrocarbons Law. Conditions will be created such that the securities can be easily interchangeable in the secondary securities market.
The National Executive may order Corporación Venezolana del Petróleo S.A. (CVP) to grant participation in the profits of the mixed hydrocarbons companies to the People’s Fund.
The Institutions of the National Banking Sector shall set aside a mandatory credit portfolio for the acquisition of participation rights in the People’s Fund. The National Executive, through the Ministry with jurisdiction over Financial Affairs, will establish the conditions of such mandatory portfolio, and also the applicable interest rate and the amount of funds to be set aside.
A corporation will be created, attached to the Ministry with jurisdiction over Financial Affairs, whose purpose will be to generate and manage financial and investment instruments to assist in the payment of the State’s debts for workers’ social benefits.
The National Fund will issue so-called Petro-Orinoco securities and real estate securities that will serve to pay the social benefits obligations owed to public administration workers. Such securities may only be denominated in Bolivars and may be negotiated on the Bicentennial Public Securities Exchange (Bolsa Pública de Valores Bicentenaria).
The National Fund income will come from, among other sources, a 2.22% payment that mixed companies shall pay as a Special Advantage to the Republic and a 3.33% Extraction Tax paid by mixed companies.
The creation of PDVSA Social S.A. is planned in order to help in the operation of the National Fund.