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The ruling confirms that when an administrative authority denies a tax incentive on technical grounds, it must substantiate its conclusion in the administrative decision itself.

Vouga Abogados secured a favorable ruling on behalf of Alcogreen S.A. in administrative litigation challenging Joint Ministerial Resolutions No. 93/2023 and No. 115/2023, issued by the Ministry of Industry and Commerce and the Ministry of Economy and Finance.

The First Chamber of the Tribunal de Cuentas upheld the claim, set aside the exclusion of six vacuum distillation columns from the tax incentive regime under Law No. 60/90, which was in force at the time, and ordered that the incentives be granted for those assets (Acuerdo y Sentencia No. 120 of April 15, 2026, as clarified by Acuerdo y Sentencia No. 258 of August 19, 2026).

The administrative authorities had excluded the equipment on the grounds that “similar domestic production exists.” The Court found that this assertion lacked technical support and that the administrative decision therefore lacked adequate reasoning.

The project

Alcogreen is developing a USD 100 million industrial project to produce ethanol from corn, with a projected annual milling capacity of 424,000 tonnes and estimated bioethanol production of 165 million liters per year.

The project includes imports of technological equipment worth approximately USD 30 million. Among these assets, six vacuum distillation columns valued at PYG 18.552 billion (approximately USD 2.6 million) were excluded from the incentive regime by the challenged administrative decision. The equipment uses specialized, patented technology designed to reduce energy consumption and achieve thermal integration of the production process.

The Tribunal’s reasoning

Relying on Article 12(e) of Law No. 6715/2021 on Administrative Procedures, which requires a statement of reasons for an administrative decision to be valid, the Court held that the administrative resolution “lacks sufficient grounds to be considered adequately supported by the factual and legal considerations required for its lawfulness.”

The Court further held that merely reciting the background and applicable provisions is insufficient: the decision must result from a “reasoning process that is both demonstrable and demonstrated,” yielding a reasonable position supported by a “clear and reasoned statement of grounds.”

The Court did not find that similar domestic production did not exist. Rather, it held that the administrative authorities had not sufficiently substantiated that assertion to provide a lawful basis for the exclusion.

Why the ruling matters

The ruling is a significant precedent for administrative practice and investment projects in Paraguay because it:

Reaffirms that adequate reasoning is a condition of the lawfulness of an administrative decision, rather than a mere formality.

Requires administrative authorities to explain and substantiate the technical considerations on which they rely, particularly when those considerations form the basis for denying a tax incentive.

Although the case was decided under Law No. 60/90, subsequently replaced by Law No. 7,548/2025, the requirement for adequate reasoning remains fully relevant under the new investment incentive regime.

Administrative authorities have the power to decide; however, when an adverse decision rests on a technical consideration, they must demonstrate in the decision itself the reasoning process that reasonably leads to that conclusion.

Case reference: “ALCOGREEN S.A. C/ RES. BIMINISTERIAL N° 93 DEL 31/08/2023 Y RES. BIMINISTERIAL N° 115 DEL 16/10/2023 DICTADAS POR LOS MINISTERIOS DE INDUSTRIA Y COMERCIO Y MINISTERIO DE ECONOMÍA Y FINANZAS”. Case No. 576/2023.

The Securities Superintendency of the Central Bank of Paraguay (BCP) has opened a public consultation on draft Regulations on Liquidity Risk Management for Investment Funds.

The initiative, announced through Circular SV.SG. No. 015/2026, forms part of the development of implementing regulations under Law No. 7,572/2025 on the Securities and Products Market.

The draft addresses a key challenge in investment fund management: ensuring that obligations to investors can be met appropriately, including under financial stress.

What does the proposal cover?

The main areas covered include liquidity risk governance, alignment between asset liquidity and redemption terms, valuation criteria, liquidity management tools and stress testing.

These matters are particularly relevant for funds that offer periodic redemptions while investing in assets that may take longer to liquidate.

Managing this mismatch appropriately is essential to protecting investors and maintaining the stability of investment vehicles.

What could this mean for fund managers?

If adopted, the new regulations could require fund managers to review their internal policies, risk measurement methodologies, control procedures and arrangements for managing exceptional liquidity conditions.

It will also be important to assess whether the characteristics of portfolio assets are consistent with the terms offered to unitholders.

These matters may have both operational and contractual implications, particularly for funds’ internal rules and the information provided to investors.

A capital markets law perspective

The development of the investment fund market requires a regulatory framework that supports its growth and adequately protects market participants’ interests.

Liquidity rules should therefore be viewed not only as prudential obligations but also as tools to strengthen transparency, governance and investor confidence.

It is particularly important for the future framework to reflect the characteristics of the Paraguayan market, including the depth and liquidity of the instruments available for investment.

The Superintendency has opened the public consultation until October 30, 2026, allowing supervised entities and other interested parties to submit comments before the regulations are approved.

The Securities Superintendency of the Central Bank of Paraguay (BCP) has issued Circular SV.SG. No. 016/2026, setting out specific criteria for updating the identifiers used by supervised entities in the BCP’s database of persons (Base de Personas).

The measure forms part of the implementation of the Regulations on the Identification and Registration of Persons in the Securities and Products Market, approved by Resolution SV.SG. No. 0013/2026.

Although primarily operational, the measure has significant implications for regulatory compliance and the management of client information.

What does the circular provide?

The Superintendency reiterates that the BCP’s database of persons is the single source of identification and that each person must have only one record.

The circular establishes an order of priority for the documents used to identify individuals: first, the identity card; second, the permanent residence certificate; and third, the non-resident person code.

Entities must therefore review their internal records and update identifiers where a person holds a higher-priority document than the one originally used.

They must also avoid creating duplicate records and use updated identifiers in the information submitted to the Superintendency.

What are the implications for the market?

The measure directly affects brokerage firms, investment fund management companies and securities depositories.

In practice, entities must review the consistency of their client databases, identify potential duplicate records and ensure that their regulatory reporting systems use the appropriate identifiers.

This may require coordination among compliance, operations, technology and client service teams.

A regulatory law perspective

Information quality has become a fundamental component of financial supervision.

Consistent identification of clients and market participants improves transaction traceability, reduces discrepancies and strengthens the integrity of the information systems used by the regulator.

Implementing these changes also requires clear internal procedures for updating data, retaining supporting documentation and avoiding errors during record migration.

Entities should therefore treat identifier updates as part of their compliance and corporate governance systems, rather than solely as a technology requirement.

What does this mean for Paraguay’s financial system?

The Central Bank of Paraguay (BCP) has introduced a significant amendment to the rules governing foreign exchange transactions by financial institutions.

Under Resolution No. 5 of October 6, 2026 (Board Meeting Minutes No. 44), the BCP Board increased the limit on the daily net operational foreign exchange position from USD 10 million to USD 15 million, for both net long and net short positions.

The amendment represents a 50% increase over the limit established in December 2024 and, according to the reasons set out in the resolution, reflects structural developments in Paraguay’s foreign exchange market. Central Bank of Paraguay

Why does this change matter?

Paraguay has seen sustained growth in foreign currency purchases and sales in recent years. The BCP notes that average trading volumes in 2026 are twice the levels recorded a decade ago.

This growth, together with the country’s greater integration into international financial markets, highlights the need to review the prudential parameters applicable to financial institutions periodically.

The new limit gives banks and finance companies greater scope to manage their daily foreign currency positions within a framework of regulatory oversight.

Implications for financial institutions

In operational terms, the amendment may provide greater flexibility to meet clients’ foreign exchange needs, manage foreign currency flows and manage proprietary positions within the permitted limits.

However, the increase in the regulatory limit does not remove the need for sound foreign exchange risk management policies.

Institutions must continue to comply with other applicable prudential limits and their internal monitoring, control and reporting procedures.

A banking law perspective

This amendment illustrates an important aspect of financial regulation: prudential limits must strike a balance between mitigating risk and supporting the system’s operational capacity.

Regulation that fails to keep pace with market developments may impose restrictions that no longer adequately reflect economic conditions.

At the same time, greater regulatory flexibility calls for internal risk management mechanisms that ensure the additional scope is used responsibly.

Financial institutions should therefore review their treasury policies, foreign exchange risk manuals and internal control systems to ensure they are consistent with the new framework.

A common scene in Paraguayan family businesses: when it comes time to approve the year's results and assess management's performance, those who must make these decisions are often the very same people who ran the company. This model usually works well in the early stages of a business. However, as the company grows, the concentration of the shareholder and director roles can raise legal and corporate governance challenges that are worth anticipating.

The Backbone of the Economy

Family businesses account for between 80% and 85% of the country's companies (ABC Color, 2025), produce around 65% of goods and services, and are one of the main sources of formal employment (ÚH, 2025). These figures reflect their structural importance and confirm the central role they play in the Paraguayan economy.

This prominence now places them in a setting of transformation and growth. Paraguay's business environment is increasingly sophisticated and is attracting growing interest from foreign investors across a range of sectors. This context opens up new opportunities and, at the same time, calls for structures capable of keeping pace with the evolution of the business and facilitating relationships with new partners, investors and sources of financing.

This is where institutionalization takes on strategic importance. Clear and appropriate governance structures help drive the company's growth, professionalize its management, facilitate generational succession, strengthen its capacity to attract investment and open access to new financing alternatives.

The Director-Shareholder: A Common Structure with Legal Implications

In closely held companies and, especially, in family businesses, it is common for shareholders to also sit on the board of directors. In the early days of a company, this is usually the most practical structure, as it brings agility to decision-making.

However, being both a shareholder and a director means taking on two distinct roles: as an owner, participating in the company's major decisions; and as an administrator, assuming responsibility for the conduct of the business. This distinction becomes particularly relevant when shareholders must rule on matters relating to management carried out by themselves, as occurs at the close of each fiscal year.

In Paraguay, the corporate law framework imposes certain limitations to prevent those who sit on the board from taking part, in their capacity as shareholders, in decisions that involve evaluating their own performance. Recent court rulings have reopened the debate on the scope of these restrictions and the difficulties they can create in companies where ownership and management are concentrated in the same individuals. This remains a matter that calls for caution and a careful case-by-case analysis.administración se concentran en las mismas personas. Se trata de una cuestión que todavía requiere cautela y un adecuado análisis de cada caso.

This scenario underscores the importance of anticipating these situations and having governance structures that evolve with the company, bring clarity to decision-making and prevent corporate issues from hampering its operations.

Toward Stronger Corporate Governance

Against this backdrop, family businesses can adopt a range of measures to properly manage the coexistence of the shareholder and director roles while moving toward stronger, more professionalized governance structures.

One practical option is to establish rotation mechanisms among the shareholders who sit on the board, so that, when key matters are considered, there are shareholders eligible to participate in those decisions. For example, siblings who jointly participate in management can provide for this dynamic in a shareholders' agreement or family protocol, setting out clear rules for the appointment and rotation of positions. These instruments can also regulate other aspects of the family-business relationship, such as decision-making mechanisms or the entry of new generations, helping to anticipate and prevent potential conflicts.

A more structural step, generally associated with a stage of greater corporate maturity, is the appointment of directors from outside the family group. This option becomes especially relevant when new partners or investors come on board, as it brings objectivity, experience and a technical perspective that complements the shareholders' vision. It also allows the company to move toward a gradual separation of ownership and management, distinguishing more clearly among the roles of shareholder, director and executive.

An Opportunity, Rather Than a Formal Requirement

Rather than a formal requirement, moving toward greater institutionalization represents an opportunity to professionalize management, facilitate the entry of new generations and prepare the company for new partners and investors. Reviewing the composition of the board in relation to the shareholding structure is a first step toward identifying potential challenges and anticipating solutions. Strong corporate governance thus becomes a cornerstone for family businesses to grow sustainably, preserve their legacy and endure across generations.

Through Resolution SV. SG. No. 013/2026, dated August 3, 2026, the Superintendence of Securities (“SIV”) mandated the use of the Persons Database of the Central Bank of Paraguay as the sole source of identification for individuals and legal entities in the securities market and approved the Regulation on the Identification and Registration of Persons in the Securities and Products Market (the “Regulation”).

The Regulation applies to brokerage firms, investment fund management companies, stock exchanges, securities depositories, and other entities and market agents participating in the Securities Market Information Center. These entities must use the unique identifier assigned in the Persons Database to identify the individuals covered by the Regulation in regulatory information submitted to the SIV.

Before requesting the registration of a person, the responsible entity must verify whether such person is already registered in the Persons Database. The registration must be approved before the person or their account becomes operational, their first transaction is executed, or they are included in a regulatory report. Likewise, any modifications must be initiated within two (2) business days after the entity becomes aware of the change or inconsistency and has the necessary supporting documentation.

Finally, the SIV will establish an initial phase for the registration and regularization of pre-existing records, the terms and conditions of which will be determined by Circular. The Regulation has been in force since the publication of the Resolution, while the date from which all identifiers included in information submitted through the Information Center must correspond to valid records in the Persons Database will be determined by the SIV.

Through Resolution No. 435/2026, dated August 20, 2026, the Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD) approved the implementation of a new functionality within the Integrated Transaction Reporting System (“SIRO”) for update and/or confirmation of the general and contact information of obliged entities and their authorized users (the “Resolution”).

The information must be updated or confirmed annually, even if no changes have ocurred. In adittion, any changes to the registered information must be updated within five (5) business days following such change. The information submitted will have the status of a sworn statement, and the obliged entity will be responsible for ensuring its truthfulness and accuracy.

Finally, the Resolution establishes SIRO as the mandatory channel for these updates. Failure to update or confirm the information may result in restricted access to certain system functionalities until the information is duly updated, without prejudice to any other applicable legal, regulatory, or administrative consequences.

Through Resolution G.G. No. 100/2026, dated July 17, 2026, the Central Bank of Paraguay (“BCP”) approved the Operating Regulations for the issuance, custody, placement, recording of transactions, clearing and settlement of Digital Certificates of Deposit (“CDA-d”) held in custody by the BCP’s Securities Depository.

The Regulations establish the operational framework applicable to CDA-d, defined as digital savings deposits issued by banks or finance companies through the CDA-d System and represented by book entries instead of physical certificates. The CDA-d System is administered by the BCP and enables the issuance, registration, custody, clearing and settlement of these instruments through an online, real-time connection and integration with the Real-Time Gross Settlement (“RTGS”) system.

In addition, custodians must register beneficial holders through the Unique Depositor Registry (“RUA”) and open and manage their respective securities subaccounts. For purposes of creating the RUA, individuals will be identified using their identity document, legal entities using their Taxpayer Identification Number (RUC), and foreign individuals using their Non-Resident Person Code or passport number. Beneficial holders must also be previously registered in the BCP’s persons database.

With respect to transactions, the Regulations govern both the primary and secondary markets for CDA-d. Issuance and placement may be carried out through the CDA-d System’s graphical user interface or through messaging and must be settled on the same business day. In the secondary market, custodians must record transfers of ownership and settle them on the same day as the transaction. The Regulations also contemplate other transactions involving CDA-d, including repurchase agreements (repos), pledges and other security interests, as well as early redemption, attachment and immobilization.

Finally, the Regulations establish the main obligations applicable to custodians and provide that their provisions will become effective upon the CDA-d System becoming operational.

Vouga Abogados advised Accial Capital in connection with a financing facility of up to USD 30 million granted to Finanex, aimed at expanding access to financing for small and medium-sized enterprises in Paraguay's agribusiness sector.

The transaction marks Accial Capital's first investment in Paraguay and includes an asset-backed financing structure linked to agricultural activities.

As part of the transaction, Vouga Abogados provided legal advice in Paraguay, including the review of the security package structure and assistance with its implementation and formalization under Paraguayan law.

The Vouga Abogados team was led by partner Carlos Vouga, with the participation of associate Alejandra Aguilar.joe

1. Client Background and Transaction Objective

We advised the investor consortium of a low-carbon fertilizer project on the acquisition of an equity interest in the entity carrying out the project, in connection with the project's USD 665 million financing.

The project is the world's first large-scale industrial plant dedicated to the production of low-carbon fertilizers, with a projected annual capacity of 260,000 tons, positioning Paraguay as a global pioneer in the production of low-environmental-impact agricultural inputs.

Our work consisted of advising the investor consortium on all matters of Paraguayan law related to the project's financing, providing legal certainty to the institutional investors and development entities involved throughout the structuring, negotiation and closing stages of the transaction.

2. Our Role and Scope of Advice

Our advice included:

1. Conducting comprehensive legal due diligence under Paraguayan law on the SPV and the assets related to the project, identifying legal risks relevant to the consortium's investment decision.
2. Analysis of the corporate and transaction structuring for the acquisition of the equity interest by the consortium's investors, taking into account the particular requirements of each of the participating entities (investment funds, international development finance institutions and local banking).
3. Review and negotiation of the transaction documents, including the subscription and investment agreements, the SPV's corporate documents and other instruments related to the acquisition of the equity interest.
4. Regulatory analysis applicable to the project and to the acquisition transaction under the Paraguayan legal framework, including corporate, foreign exchange, environmental and sector-specific aspects relevant to the project's industrial activity.
5. Advice on local aspects related to the project's USD 665 million financing, providing support in coordinating with the financial and legal advisors of the other jurisdictions involved.
6. Comprehensive support during the closing of the transaction, including coordination of conditions precedent, review of closing documentation and follow-up on formal requirements under Paraguayan law.
7. Advice on the negotiation of the project's Power Purchase Agreement (PPA), analyzing its regulatory and commercial implications under the Paraguayan energy framework.
8. Design of, and advice on, the project's management incentive scheme (Management Incentive Plan), aligning the interests of the management team with the objectives of the consortium's institutional investors.

3. Main Legal Challenges

The transaction presented significant legal complexity on several fronts:

Multijurisdictional investor consortium. The investment structure brought together a hydrogen infrastructure fund, a Danish impact fund, two international development finance institutions and a local bank, each with its own regulatory, fiduciary and governance requirements, which required a corporate structure capable of accommodating diverse interests and standards.

Scale and complexity of the financing. The project's USD 665 million financing required coordinating Paraguayan law aspects with the international financing structures typically used in large-scale project finance transactions, including the interaction between the acquisition of the equity interest and the project's financing conditions.

Pioneering nature of the project. As the world's first large-scale industrial plant dedicated to the production of low-carbon fertilizers, the project had no directly comparable regulatory or transactional precedents in Paraguay, requiring careful legal analysis on corporate, environmental and sector-specific matters.

PPA negotiation. Negotiation of the project's Power Purchase Agreement raised specific issues related to the energy supply required for the plant's operation, requiring a coordinated analysis between the commercial aspects of the contract and the applicable energy regulatory framework.

Alignment of management incentives. Designing the incentive scheme for the management team required reconciling local management's retention and performance objectives with the corporate governance standards demanded by the institutional investors and development entities participating in the consortium.