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Irsa Investments & Representations (IRS)

Filed: 9 Nov 21, 10:21am
 
As filed with the U.S. Securities and Exchange Commission on November 9, 2021
 
Registration No. 333- 260383  
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM F-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
IRSA Inversiones y Representaciones Sociedad Anónima
(Exact name of registrant as specified in its charter)
 
IRSA Investments and Representations Inc.
(Translation of registrant’s name into English)
 
Argentina6552Not Applicable
(State or other jurisdiction of incorporation or organization)(Primary Standard Industrial Classification Code Number)(I.R.S. Employer Identification No.)
 
Carlos Della Paolera 261
(C1001ADA) Ciudad Autónoma de Buenos Aires, Argentina
Tel. +54 (11) 4323-7400
(Address and telephone number of registrant’s principal executive offices)
 
Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19711
Telephone: +1 (302) 738-6680
(Name, address, and telephone number of agent for service)
 
Copies to:
 
Jaime Mercado
Juan M. Naveira
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
+1 (212) 455-2000
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
 
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
 
Exchange Act Rule 13e-4(i) (Cross Border Issuer Tender Offer)
Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer)
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
 
Emerging growth company ☐
 
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act . ☐
 
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
 
 
 
 
CALCULATION OF REGISTRATION FEE
 
Title of Each Class of Securities to be Registered Amount of Securities to be Registered (1) Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee (3) 
Common shares, par value ARS 1.00 per share, of IRSA Inversiones y Representaciones Sociedad Anónima(4)
 
 
152,158,215
 
 
Not applicable
 
 
U.S.$74,992,262.91
 
 
U.S.$6,951.78
 
 
 
(1)
Represents the maximum number of Common Shares, par value ARS 1.00 per share, of IRSA Inversiones y Representaciones Sociedad Anónima estimated to be issuable upon consummation of the merger contemplated herein in exchange for outstanding Common Shares, par value ARS 100.00 per share, of IRSA Propiedades Comerciales S.A.
(2)
Estimated solely for the purpose of calculating the registration fee and computed pursuant to Rule 457(f)(1) under the Securities Act of 1933, the aggregate offering price of the common shares was calculated as follows: (a) 108,684,439.00, the estimated number of IRSA CP common shares to be exchanged and cancelled for the Registrant's common shares, multiplied by (b) USD 2.76, the average of the high and low sale prices per IRSA CP ADS (representing 4 IRSA CP common shares) as reported on NASDAQ on November 3, 2021, divided by 4.
(3)
Computed in accordance with Rule 457(f) under the Securities Act as the proposed maximum offering price of USD 74,992,262.91 multiplied by 0.0000927.
(4)
GDSs representing Common Shares of IRSA Inversiones y Representaciones Sociedad Anónima registered hereby are registered pursuant to a separate registration statement on Form F-6 (File No. 333-134633).
 
 The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective time until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 
 
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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission, in which this prospectus is included, is declared effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities, in any jurisdiction where the offer or sale of these securities is not permitted. The proposed Merger has not yet been authorized by the Argentine National Securities Commission.
 
 
SUBJECT TO COMPLETION, DATED NOVEMBER 9, 2021
 
 
IRSA INVERSIONES Y REPRESENTACIONES SOCIEDAD ANÓNIMA
 
To the Shareholders of IRSA Propiedades Comerciales S.A. and Holders of American Depositary Shares Representig Shares of IRSA Propiedades Comerciales S.A.:
 
MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT
 
Shareholders of IRSA Propiedades Comerciales S.A. (“IRSA CP”) are cordially invited to attend the extraordinary general shareholders’ meeting of IRSA CP scheduled for                , 20      , either in person at            or remotely through a virtual platform. At the extraordinary general shareholders’ meetings, you will be asked to adopt the decision to merge IRSA CP and its direct and indirect wholly-owned subsidiaries into IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA” or, indistinctly, the “Company”, “we”, “us”), as contemplated by the preliminary merger agreement (compromiso previo de fusión) entered into by IRSA and IRSA CP as of September 30, 2021 (the “Preliminary Merger Agreement”), pursuant to which IRSA CP intends to merge into IRSA by way of absorption, with IRSA being the surviving company (the “Merger”). The surviving company will continue to be known as “IRSA Inversiones y Representaciones Sociedad Anónima.”
 
                Holders of American Depositary Shares (“IRSA CP ADSs”) representing IRSA CP common shares are not entitled to attend the extraordinary general shareholders’ meeting but are invited to give instructions for voting the IRSA CP common shares at the meeting.
 
Upon effectiveness of the Merger, each common share, with par value of ARS 100.00 per share and entitled to one vote per share, of IRSA CP (an “IRSA CP Share”) that IRSA CP shareholders (other than us) own (including those represented by ADSs (“IRSA CP ADSs” and, together with IRSA CP Shares, “IRSA CP Securities”) at the effective time of the Merger will be converted into 1.40 common shares, with par value of ARS 1.00 per share and entitled to one vote per share, of IRSA (“IRSA Shares”), and each IRSA CP ADS that holders of IRSA CP ADSs own (other than IRSA CP ADSs owned by us) at the effective time of the Merger will be converted into 0.56 Global Depositary Shares, each representing ten IRSA Shares (“IRSA GDSs” and, together with IRSA Shares, “IRSA Securities”). Any IRSA CP Securities owned by us will not be exchanged for IRSA Securities and will be cancelled in connection with the consummation of the Merger. All IRSA Shares and IRSA GDSs outstanding at the effective time of the Merger will remain outstanding following effectiveness of the Merger. Based on the number of IRSA CP Shares issued on the date hereof, IRSA expects to issue 152,158,215 IRSA Shares to IRSA CP shareholders (including holders of IRSA CP Shares represented by IRSA CP ADSs) in the Merger and expects a total of 890,834,675 IRSA Shares (including IRSA Shares represented by IRSA GDSs) to be outstanding following the consummation of the Merger on a fully diluted basis. Under these circumstances, after the effective time of the Merger, former IRSA CP shareholders will hold on a fully diluted basis approximately 17.1% of the then-issued IRSA Shares. The IRSA Shares and the IRSA CP Shares are listed on the Buenos Aires Stock Exchange (Bolsas y Mercados Argentinos S.A., or “ByMA”). The IRSA GDSs and the IRSA Shares underlying them are registered under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the IRSA GDSs are listed on the New York Stock Exchange (“NYSE”) under the symbol “IRS.” The IRSA CP ADSs and the IRSA CP Shares underlying them are registered under the Exchange Act, and the IRSA CP ADSs are listed on NASDAQ under the symbol “IRCP.”
 
 
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The Merger cannot be effected unless each of IRSA CP and IRSA shareholders adopt the decision to merge as contemplated by the Preliminary Merger Agreement (among other conditions set forth in this prospectus), which requires in the case of each of IRSA and IRSA CP, the approval of at least a majority of the votes of the total issued and outstanding shares. Assuming that all conditions precedent are satisfied or waived (where legally permissible), IRSA and IRSA CP currently expect that the Merger will be consummated as promptly as possible following the shareholders’ meetings of IRSA and IRSA CP, but, if approved, will be retroactively effective for Argentine tax and operating purposes from July 1, 2021 (the “Merger Effectiveness Date”). As of the date of this prospectus, IRSA’s board of directors has not decided whether IRSA will vote the 432,545,580 IRSA CP Shares owned by IRSA, representing 79.92% of the total outstanding capital stock of IRSA CP at IRSA CP shareholders’ meeting.
  
The Board of Directors of IRSA CP has carefully reviewed and considered the terms and conditions of the Preliminary Merger Agreement. Based on their review, the Board of Directors of IRSA CP has determined that the Preliminary Merger Agreement and the transactions contemplated thereby are in the best interests of IRSA CP’s shareholders. The Board of Directors of IRSA CP recommends that IRSA CP shareholders vote “FOR” the decision to merge as contemplated by the Preliminary Merger Agreement.
 
The accompanying disclosure documents (including the Preliminary Merger Agreement, included as Annex A to this prospectus) contain detailed information about the Merger and the extraordinary general shareholders’ meeting of IRSA CP. This document is also a prospectus for the IRSA Shares that will be issued in the Merger. This is not a proxy statement. We are not asking you for a proxy and you are requested not to send us a proxy. If you are a holder of IRSA CP ADSs, you will be contacted by the depositary for your IRSA CP ADSs (The  IRSA CP ADS Depositary) with further instructions on how you can instruct such depositary to vote the shares underlying your ADSs. We encourage IRSA CP shareholders to read this prospectus carefully before voting, including the section entitled “Risk Factors” beginning on page 41. Any holder of IRSA GDSs who does not give their voting instructions to The Bank of New York Mellon (or its successor), as the IRSA GDS depositary (the “IRSA GDS Depositary”), may have their shares underlying their IRSA GDSs voted in favor of the Merger, subject to the conditions of the Amended and Restated Deposit Agreement dated as of May 24, 1994, as amended on November 15, 2000 (the “IRSA Deposit Agreement”), among IRSA, the IRSA GDS Depositary and owners and beneficial owners from time to time of IRSA GDSs issued thereunder.
 
Your vote is very important. You are encouraged to vote.
 
By the order of the Board of Directors of IRSA CP,
 
By:/s/ Eduardo S. Elsztain
Name: 
Eduardo S. Elsztain
Title:
Chairman of the Board of Directors
 
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this prospectus or determined if this prospectus is accurate or adequate. Any representation to the contrary is a criminal offense. IRSA Shares to be issued as a result of the Merger may not be sold unless and until (i) the Argentine Merger prospectus is approved by the Argentine National Securities Commission (Comisión Nacional de Valores, or the “CNV”), (ii) the shareholders of IRSA and IRSA CP approve the Merger at their respective shareholders’ meetings, (iii) the definitive merger agreement and the dissolution of IRSA CP is registered with the Public Registry of Commerce (as defined below) and (iv) the deposit of the newly issued IRSA Shares on each of the corresponding accounts. The Argentine Merger prospectus is in a different format than this prospectus in accordance with CNV regulations but contains substantially the same information included in this prospectus.
 
This prospectus is dated            , 20      and is first being mailed to IRSA CP shareholders on or about, 20     .
 
 
 
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TABLE OF CONTENTS
 
 
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8
9
10
12
13
16
25
38
39
40
41
58
61
72
76
83
88
94
98
99
230
235
236
237
238
A-1
B-1

 
 
 
5
 
  CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
 
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this prospectus contains information that is forward-looking, including, but not limited to:
 
our expectations for our and IRSA CP’s future performance, revenues, income, earnings per share, dividends, liquidity and capital structure;
 
the synergies expected from the Merger;
 
the implementation of our and IRSA CP’s business strategy;
 
the effects of operating in a competitive environment;
 
industry conditions;
 
regulatory and legal developments; and
 
other factors identified or discussed under “Item 3. Key Information. Risk Factors” in the IRSA 2021 Form 20-F and under “Risk Factors” below.
 
This prospectus contains certain forward-looking statements and information relating to us and IRSA CP that are based on current expectations, estimates and projections of IRSA’s and IRSA CP’s management and information currently available to IRSA and IRSA CP. These statements include, but are not limited to, statements made in any reports on Form 6-K or annual reports on Form 20-F that may be incorporated in this prospectus by reference or a prospectus supplement. In the IRSA 2021 Form 20-F, these statements include, but are not limited to, statements made in “Item 3—Key Information—Risk Factors,” “Item 5—Operating and Financial Review and Prospects” under the captions “Critical Accounting Policies” and “Trend Information,” “Item 8—Financial Information—Legal Proceedings” and other statements about IRSA’s strategies, plans, objectives, expectations, intentions, capital expenditures and assumptions and other statements contained that are not historical facts. When used in this document, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “will,” “may” and “should” and other similar expressions are generally intended to identify forward-looking statements.
 
The statements contained in this prospectus and in any documents incorporated by reference reflect the current views of the management of IRSA and IRSA CP with respect to future events. They are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. In addition, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate.
 
Many factors could cause actual results, performance or achievements of IRSA to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These factors include, among others:
 
the ongoing COVID-19 pandemic and government measures to contain the virus;
 
our and IRSA CP’s ability to successfully implement our and IRSA CP’s business strategy;
 
the challenges in integrating the operations of IRSA CP and IRSA;
 
the possibility that the Merger does not close when expected or at all because of the required regulatory or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all;
 
 
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the integration of IRSA CP’s business and operations with those of IRSA may take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to IRSA CP’s or IRSA’s existing business;
 
potential litigation relating to the Merger;
 
risks associated with the acquisition of properties;
 
uncertainties relating to political and economic conditions in Argentina;
 
inflation, the devaluation of the Argentine peso and exchange rate risks in Argentina;
 
restrictions on the ability to exchange Argentine pesos into foreign currencies and transfer funds abroad;
 
our inability to obtain additional financing;
 
the creditworthiness of IRSA and IRSA CP’s actual or potential customers;
 
nationalization, expropriation and/or increased government intervention in companies;
 
the impact of legal, corporate or regulatory matters, changes in the interpretation of current or future regulations or reform and changes in the legal or regulatory environment in which we and IRSA operate; and
 
the effects of increased competition.
 
Many of these factors are macroeconomic and regulatory in nature and therefore beyond the control of IRSA and IRSA CP’s management. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, planned or projected. We do not intend and do not assume any obligation to update the forward-looking statements contained in this prospectus.
 
These forward-looking statements are based upon a number of assumptions and other important factors that could cause our and IRSA CP’s actual results, performance or achievements to differ materially from our and IRSA CP’s future results, performance or achievements expressed or implied by such forward-looking statements. Readers are encouraged to consult any report on Form 6-K or the annual reports on Form 20-F of IRSA that may be incorporated in this prospectus by reference or a prospectus supplement.
 
 
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
This prospectus incorporates important business and financial information about IRSA that is not included in or delivered with the prospectus. The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and certain later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the following documents:
 
IRSA’s annual report on Form 20-F for the year ended June 30, 2021, filed with the SEC on October 20, 2021 (SEC File No. 001-13542) (as it may be amended, the “IRSA 2021 Form 20-F”);
 
any of IRSA’s future annual reports on Form 20-F filed with the SEC after the date of this prospectus and prior to the consummation of the Merger; and
 
any of IRSA’s future reports on Form 6-K furnished to the SEC after the date of this prospectus and prior to the consummation of the Merger that are identified in such reports as being incorporated by reference in this prospectus.
 
Any statement contained in the IRSA 2021 Form 20-F shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
 
The information incorporated by reference is available on the SEC’s website at www.sec.gov and from other sources. You may request a copy of any and all of the information that has been incorporated by reference in this prospectus and that has not been delivered with this prospectus, at no cost, by writing or telephoning us at Carlos Della Paolera 261 (C1001ADA) Ciudad Autónoma de Buenos Aires, Argentina, Tel. +54 (11) 4323-7400 or ir@irsa.com.ar
 
Neither IRSA CP nor IRSA has authorized anyone to give any information or make any representation about the Merger or their companies that is different from, or in addition to, that contained in this prospectus or in any of the materials that have been incorporated by reference into this prospectus. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this prospectus or the solicitation of proxies pursuant to this prospectus is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this prospectus does not extend to you. The information contained in this prospectus is accurate only as of the date of this prospectus unless the information specifically indicates that another date applies.
 
 
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WHERE YOU CAN FIND MORE INFORMATION
 
This prospectus is part of a registration statement, including exhibits, of the IRSA Shares that has been filed with the SEC on Form F-4 under the U.S. Securities Act of 1933 (the “Securities Act”). This prospectus does not contain all of the information set forth in the registration statement. Statements made in this prospectus as to the contents of any contract, agreement or other document are not necessarily complete. Certain of these documents have been filed as exhibits to IRSA’s registration statement, and we refer you to those documents. Each statement in this prospectus relating to a document filed as an exhibit is qualified in all respects by the filed exhibit.
  
IRSA is a “foreign private issuer” as defined under Rule 405 of the Securities Act. As a result, although IRSA is subject to the informational requirements of the U.S. Securities Act of 1933, as amended, as a foreign private issuer, IRSA is exempt from certain informational requirements of the Exchange Act which domestic issuers are subject to, including the proxy rules under Section 14 of the Exchange Act, the insider reporting and short-profit provisions under Section 16 of the Exchange Act and the requirement to file current reports on Form 8-K upon the occurrence of certain material events. IRSA is also subject to the informational requirements of ByMA and the CNV. You are invited to read and copy reports, statements or other information, other than confidential filings, that IRSA has filed with ByMA and the CNV. IRSA’s public filings with the CNV are electronically available from the CNV’s Internet site at www.cnv.gob.ar. Information contained on this website is not part of this prospectus or any accompanying prospectus supplement.
 
IRSA files or furnishes reports, including annual reports on Form 20-F and reports on Form 6-K, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may read and copy any materials filed with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Any filings IRSA makes electronically will be available to the public over the Internet at the SEC’s website at www.sec.gov. You may also inspect the information that IRSA files with the SEC at the New York Stock Exchange, Inc., at 11 Wall Street, New York, New York 10005. You may also access the SEC filings and obtain other information about IRSA through the website it maintains, which is www.irsa.com.ar. The information contained in that website is not incorporated by reference into this prospectus.
 
 
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ABOUT THIS DOCUMENT
 
This prospectus, which forms part of a registration statement on Form F-4 filed with the SEC by IRSA (File No. 333-260383), constitutes a prospectus of IRSA under Section 5 of the Securities Act with respect to the IRSA Shares (including IRSA Shares to be represented by IRSA GDSs) to be distributed to holders of IRSA CP Shares (including IRSA CP Shares represented by IRSA CP ADSs) as contemplated under the Preliminary Merger Agreement.
 
 
 
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EXCHANGE RATES
 
The following table sets forth the high, low, average and period-end exchange rates for the periods indicated, expressed in Argentine pesos per U.S. dollar and not adjusted for inflation. There can be no assurance that the Argentine peso will not depreciate or appreciate again in the future. The Federal Reserve Bank of New York does not report a noon buying rate for pesos.
 
 
 
Maximum (1) (2)
 
 
Minimum (1) (3)
 
 
Average (1) (4)
 
 
At closing (1)
 
Fiscal year ended:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2019 
  45.8700 
  27.1600 
  37.8373 
  42.3630 
June 30, 2020 
  70.3600 
  41.5000 
  59.5343 
  70.3600 
June 30, 2021 
  95.6200 
  70.4200 
  83.8081 
  95.6200 
Month ended:
    
    
    
    
July 31, 2021 
  96.5900 
  95.6600 
  96.1348 
  96.5900 
August 31, 2021 
  97.6400 
  96.6900 
  97.1110 
  97.6400 
September 30, 2021 
  98.6400 
  97.6800 
  98.1791 
  98.6400 
October 31, 2021
  99.6200 
  98.6900 
  99.1495 
  99.6200 
November 2021 (through November 3, 2021)  
    99.8100 
  99.7100 
    99.7600 
  99.8100 
 
Source: Banco de la Nación Argentina
(1) 
Average between the offer exchange rate and the bid exchange rate according to Banco de la Nación Argentina’s foreign currency exchange rate.
(2) 
The maximum exchange rate appearing in the table was the highest end-of-month exchange rate in the year or shorter period, as indicated.
(3) 
The minimum exchange rate appearing in the table was the lowest end-of-month exchange rate in the year or shorter period, as indicated.
(4)            
Average exchange rates at the end of the month.
 
Pursuant to Argentine law, we are required to pay cash dividends in Argentine pesos, and exchange rate fluctuations will affect the U.S. Dollar amounts received by holders of IRSA GDSs, on conversion by us or by the depositary of cash dividends on the shares represented by such GDSs. Fluctuations in the exchange rate between the Argentine peso and the U.S. Dollar will affect the U.S. Dollar equivalent of the Argentine peso price of our shares on ByMA and, as a result, can also affect the market price of the IRSA GDSs.
 
 
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EXCHANGE CONTROLS
 
On September 1, 2019, the Argentine government issued Decree No. 609/2019, pursuant to which foreign exchange controls were temporarily imposed until December 31, 2019. On January 3, 2020, the Argentine government issued Decree No. 91/2019, which permanently extended the foreign exchange controls that expired on December 31, 2019.
 
At present, foreign exchange regulations are included in the Consolidated Text on Foreign Trade and Exchange issued by Communication (Central Bank, also referred to as “BCRA”) “A” 6844, as supplemented.
 
The following is a brief summary of the exchange control regulations in force as of the date of this prospectus.
 
Exports of Goods
 
As a general rule, exporters of goods must repatriate, and settle in Argentine pesos through the foreign exchange market, the proceeds from exports cleared through customs after September 2, 2019 within different deadlines, depending on certain factors (nature of goods, relationship between exporter and importer, etc.). In certain cases (e.g. certificate of increase of exports against 2020, projects falling under the Investment Promotion Regime for Exports set out by the Executive Order 234/21, etc.) exporters have greater access to the foreign exchange market.
 
Sale of Non-Financial Assets
 
Proceeds in foreign currency from the sale of non-financial assets must be repatriated and settled in pesos in the foreign exchange market within five business days from the date of collection in Argentina or abroad, or the date of deposit of such amounts in foreign bank accounts.
 
Exports of Services
 
Exporters of services must repatriate, and settle in pesos through the foreign exchange market, the proceeds from their exports within five business days from the date of collection in Argentina or abroad, or the date of deposit of such amounts in foreign bank accounts.
 
Imports of Goods and Services
 
Except for certain exceptions current regulations provide for, importers of goods and/or services must obtain prior authorization from the Central Bank for the settlement of foreign currency-denominated debts in connection with the import of goods and services.
 
Foreign Assets
 
Prior authorization from the Central Bank is required for the acquisition of foreign assets (e.g., purchase of foreign currency, among others) and for derivative transactions by Argentine companies, Argentine local governments, Argentine mutual funds, trusts and other Argentine entities. Individuals must request authorization when the value of such assets exceed USD 200 (in the case of withdrawals from Argentine bank accounts) or USD 100 (in the case of cash purchases) in any calendar month.
 
 
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External Financial Indebtedness
 
Borrowers must repatriate and settle in the foreign exchange market the proceeds from financial indebtedness incurred after September 1, 2019, as a condition for accessing the foreign exchange market to make debt service payments thereunder. Subject to compliance with requirements set forth in the regulations, access to the foreign exchange market will be granted for the repayment of principal or interest up to three business days in advance of the due date.
 
Communication “A” 7,030, and its amendments, establishes the prior agreement of the Central Bank, until December 31, 2021, for the cancellation of capital services of financial debts with creditors abroad, provided that the creditor is a related counterparty, with limited exceptions.
 
Additionally, Communication “A” 7,106 and its amendments established the requirement, for those who register scheduled capital maturities until December, 2021 with creditors that are not related counterparties, to submit to the Central Bank a detail of a refinancing plan complying with certain criteria established in the said Communication, with limited exceptions (e.g. proceeds from financial indebtedness incurred after January 1, 2020, that were repatriated and settled in the foreign exchange market). Specifically, the Central Bank will grant access to companies for an amount up to 40% of maturities and companies must refinance the rest for a term of at least 2 years. This, provided that the amount for which the exchange market would be accessed for the cancellation of principal exceeds the equivalent of USD 2,000,000 per calendar month, with some exceptions, expressly provided for by the regulation.
 
Indebtedness Between Residents
 
Prior authorization from the Central Bank is required for the payment of foreign currency-denominated obligations between Argentine residents after September 1, 2019, with limited exceptions. However, no prior authorization is required for the payment of foreign currency-denominated obligations to Argentine financial entities, including, among others, payments made in respect of credit cards.
 
Profits and Dividends
 
Prior authorization from the Central Bank is required for the transfer of profits and/or dividends outside of Argentina, unless certain requirements expressly provided for by current regulation are met.
 
Non-Residents
 
Non-residents must obtain prior authorization from the Central Bank to access the foreign exchange market to purchase foreign currency, with limited exceptions.
 
Reporting Regime
 
In all cases, access to the foreign exchange market for the payment of financial or commercial debts will be granted to the extent that such debts were disclosed in accordance with the Central Bank’s reporting regime established through Communication “A” 6,401, if applicable.
 
Outgoings
 
Outflow of funds
 
Consolidated Text on Foreign Trade and Exchange provides for prior approval of the Central Bank in order to carry out any outflow of funds, unless the clients submit several affidavits related to (i) foreign currency holdings and liquid external assets; (ii) own and controlling company’s securities transactions (blue chip swap, “dolar MEP”, etc.); and (iii) economic benefits granted by the State.
 
 
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Through Communication “A” 7,001, as amended by Communication “A” 7,030, the Central Bank established certain restrictions to carry out sales of securities via the settlement of foreign currency and its transfer to depository institutions abroad. In this connection, in order to carry out any outflow of funds, the entity must:
 
(i) request the prior approval of the Central Bank; or
 
(ii) rely on an affidavit stating that the client did not carry out neither sales of securities via the settlement of foreign currency, nor its transfer to foreign depository entities on the day that access to the foreign exchange market was requested and within 90 days prior to such request, as well as that the customer undertakes not to carry out such transactions from the date access to the foreign exchange market is requested and for the subsequent 90 calendar days.
 
The Central Bank Communication “A” 7,030 also establishes the prior approval of the Central Bank to carry out any outflow of funds through the foreign exchange market from May 29, 2020 onwards, with some exceptions.
 
In addition, Communication “A” 7,030, as amended, established the prior approval of the Central Bank for certain outflow of funds through the foreign exchange market, unless the entity has an affidavit from the client stating that at the time of access to the foreign exchange market:
 
(a) All of its local foreign currency holdings are deposited in accounts in financial institutions and that it did not have liquid external assets available at the beginning of the day that access to the foreign exchange market is requested for a higher amount equivalent to USD 100,000 (with some exceptions, expressly provided for by the regulation).
 
(b) Undertakes to settle in pesos through the foreign exchange market, within five working days of its availability, those funds received abroad resulting from the collection of loans granted to third parties, the collection of a term deposit or the sale of any type of asset, when the asset has been acquired, the deposit constituted or the loan granted after May 28, 2020.
 
In addition to the above, by means of Communication “A” 7327, the Central Bank established that, as of July 12, 2021, in order for residents to be granted access to the foreign exchange market, it will be required (in addition to the preexisting conditions), that: (i) on the same day that such access is required and within the previous 90 days, such local resident has not exchanged securities for other foreign assets (in addition to the already existing requirement of not having sold securities with settlement in foreign currency or transferred them to depository institutions abroad during the same period); and (ii) for legal entities, to submit a sworn statement informing (a) a list of the persons or legal entities that directly control the client; and (b) that within the previous 90 days (or since July 12, 2021, in the event that 90 days have not yet elapsed since that date), the legal entity has not delivered in the country any funds in local currency or other liquid local assets to any of the aforementioned persons (except for those directly associated with usual transactions involving the acquisition of goods and/or services). Alternatively, the requirement set forth in (b) may be considered fulfilled if the legal entity submits a sworn statement executed by each of those persons exercising direct control stating that, during the same period, no sales of securities with settlement in foreign currency, or exchanges of securities for other external assets, or transfers thereof to depository institutions abroad, have been made.
 
On October 5, 2021, by means of General Resolution 907/21, a limit on the sale of securities which are denominated in U.S. dollars and issued under local law was established at the end of each week for those transactions that had a concurrence of tenders received with a priority of price and time. This limit may not exceed the amount of fifty thousand nominal values settled. Plus, it was also established as prior condition for those transactions that the orders may only be given if no sales have been made with foreign settlement in the previous thirty days, and a commit not to do so within thirty subsequent calendar days.
 
 
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Securities trading
 
Central Bank Communication “A” 7106, as amended by Communication “A” 7308, established that securities transactions performed in Argentina, unlike securities transactions performed abroad, can be settled in ARS in Argentina.
 
Central Bank Communication “A” 7340 provides that securities sale transactions settled in foreign currency must be paid by one of the following mechanisms:
 
By transfer of funds to and from demand accounts held in the customer’s name with local financial institutions;
 
Against wire transfers on bank accounts in the customer’s name with a foreign entity that is not incorporated in countries or territories where the Recommendations of the Financial Action Task Force do not apply, or do not sufficiently apply.
 
This Communication “A” 7340 also prohibits the settlement of purchase and sale transactions of securities with settlement in foreign currency through payment in foreign currency cash, or through their deposit in custody accounts or accounts of third parties.
 
No sales of securities with settlement in foreign currency may be executed in Argentina, and such securities may not be transferred to foreign depositaries or exchanged for other external assets, by persons that were granted with certain benefits (beneficiaries of refinancings contemplated under Section 2.1.1. of the regulations on “Financial services under the scope of the health emergency ordered by Decree No. 260/2020.
 
On July 8, 2021, the CNV passed General Resolution 895/2021 increasing the minimum holding periods for the settlement of securities against foreign currency and in foreign jurisdiction. The resolution does not incorporate modifications for the settlement of securities against local currency.
 
The minimum holding period for securities in the local custodian to be applied to the settlement of transactions in foreign currency and in foreign jurisdiction (i.e., settlement against “Dollar Cable” in a foreign account) was set to two (2) business days. This holding period does not apply in the case of purchases of securities with settlement in foreign currency and in a foreign jurisdiction.
 
In the case of sales of securities with settlement in foreign currency, but in local jurisdiction (i.e., settlement against a MEP transfer to a local account), the holding period remains one business day. This holding period shall not apply in the case of purchases of securities settling in foreign currency.
 
The holding period prior to settlement against foreign currency and in foreign jurisdiction (i.e. settlement against “Dollar Cable” in a foreign account) for locally credited securities from foreign depositories (i.e. acquired from foreign agents) has also been set to two (2) business days. In the case of transactions with settlement in foreign currency and in local jurisdiction (i.e., settlement against a MEP transfer to a local account), the holding period remains at one business day.

Finally, the CNV also modified the maximum limits for weekly transactions in sovereign securities issued by the Argentine Republic for each principal sub-account in the time-priority bidding segment, which prior to the entry into force of the General Resolution was 100,000 nominal amounts (only for securities issued under local law). According to the new General Resolution, the limit was split into (i) 50,000 nominal amounts for securities issued under local law, purchased with settlement in such currency and jurisdiction, and (ii) 50,000 nominal amounts for securities issued under foreign law. These limits continue not to apply to wholesale transactions (Argentine Open Electronic Market – Mercado Abierto Electrónico – and ByMA’s Segment of Bilateral Negotiation – Segmento de Negociación Bilateral–).
 
For more information see “Risk Factors—Restrictions on transfers of foreign currency and the repatriation of capital from Argentina may impair our ability to pay dividends and distributions and investors may face restrictions on their ability to collect capital and interest payments in connection with corporate bonds issued by Argentine companies” in the IRSA 2021 20-F.
 
 
 
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QUESTIONS AND ANSWERS ABOUT THE MERGER
 
The following are some questions that you may have regarding the Merger and the other matters being considered at the IRSA CP extraordinary general shareholders’ meetings and brief answers to those questions. We urge you to read the remainder of this prospectus carefully, including, without limitation, the Preliminary Merger Agreement, a copy of which is attached to this prospectus as Annex A, because the information in this section does not provide all the information that might be important to you with respect to the Merger. Additional important information is also contained in the annex to, and the documents incorporated by reference in, this prospectus.
 
Q. What are the reasons for the Merger?
 
A: The Merger is expected to generate important benefits and synergies for both IRSA and IRSA CP, resulting from greater efficiency of resources in their management, including, without limitation: (a) to operate and keep only one transactional information system and centralize the entire accounting process; (b) to submit only one set of financial statements to the various control authorities with the ensuing savings in accounting and advisory fees, and other related expenses; (c) to simplify the accounting reporting and consolidation process, as a consequence of the relief that the Merger would entail for the corporate structure as a whole; (d) to cause IRSA CP to be delisted from ByMA and NASDAQ, with the related cost-savings; (e) to reduce costs generally relating to legal fees and tax submissions; (f) to increase the percentage of capital stock listed in the different markets by increasing the liquidity of listed shares of IRSA; (g) to take advantage of tax savings related to the Merger; and (h) to prevent any potential overlap of businesses between IRSA and IRSA CP.
 
Q: What is the Merger?
 
A: The proposed Merger will be implemented under the Argentine General Companies Law No. 19,550 (as amended, the “Argentine Corporations Law”), together with any applicable rules and regulations of the CNV. Upon consummation of the Merger described in this prospectus, IRSA CP will cease to exist, IRSA will assume all of the rights and obligations of IRSA CP, and the holders of IRSA CP Shares and IRSA CP ADSs, other than us, will receive IRSA Shares and IRSA GDSs, respectively, in exchange therefor.
 
Q: What will happen in the Merger?
 
A: Effectively the Shares or the ADSs of IRSA CP will be exchanged for IRSA Shares or IRSA GDSs upon the approval and registration under all the applicable regulations in Argentina. In the meantime, from the approval of the shareholders meeting the shares of IRSA CP or the ADSs of IRSA CP will continue to trade in ByMA and NASDAQ respectively.
 
Q: Which company will survive the Merger?
 
A: If the Merger is approved, IRSA CP will be merged into IRSA, and IRSA will be the surviving company.
 
Q: What will be the name of the merged company if the Merger is approved?
 
A: If the Merger is approved, the merged company, which we also refer to as the “surviving company,” will be “IRSA Inversiones y Representaciones Sociedad Anónima.” IRSA CP will be dissolved without liquidation and cease to exist.
 
 
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Q: What is the status of the Merger?
 
A: As of the date of this prospectus, the Preliminary Merger Agreement has been approved by the Board of Directors of IRSA and the Board of Directors of IRSA CP. Shareholders of the two companies will be asked to approve the Merger at each of their respective extraordinary general shareholders’ meetings, and once such approval is received, the companies will complete all regulatory formalities related to the Merger and complete the exchange of IRSA Shares for outstanding IRSA CP Shares (including the exchange of IRSA Shares represented by IRSA GDSs for outstanding IRSA CP Shares represented by IRSA CP ADSs).
 
Q: What will happen to the IRSA CP Shares or IRSA CP ADSs in the Merger and what will holders of the IRSA CP Securities receive if the Merger is completed?
 
A: If the Merger is approved, IRSA CP Shares (other than those held by us) will be extinguished and the holders thereof will receive IRSA Shares. The IRSA CP ADS Depositary will deposit the IRSA Shares it receives in respect of the deposited IRSA CP Shares with the IRSA GDS Depositary and receive delivery of IRSA GDSs. It will then call for surrender of all IRSA CP ADSs to be exchanged for whole IRSA GDSs. If you are a direct holder of IRSA CP Shares, you will receive 1.40 IRSA Shares for each IRSA CP Share you hold. If you are a holder of IRSA CP ADSs, you will receive 0.56 IRSA GDSs for each IRSA CP ADS you hold. Any IRSA CP Securities owned by us will not be exchanged for IRSA Shares and will be cancelled in connection with the consummation of the Merger.
 
Q: Are the IRSA Shares traded in any stock exchange?
 
A: The IRSA Shares are listed on ByMA under the symbol “IRSA.” The IRSA GDSs, each representing ten common shares, are listed on the NYSE under the trading symbol “IRS.”
 
Q: If I hold IRSA CP ADSs, how will my fractional entitlements to IRSA GDSs be treated at the time of the Merger?
 
A: As a result of the Merger, holders of IRSA CP ADSs will be attributed 0.56 IRSA GDSs for every IRSA CP ADS validly surrendered (each IRSA CP ADS representing four IRSA CP Shares). No fractional IRSA GDSs will be distributed. Fractional entitlements to IRSA GDSs will be aggregated and sold by the IRSA CP ADS Depositary. The net proceeds from the sale of the fractional entitlements to IRSA GDSs shall be distributed by the IRSA CP ADS Depositary to the holders of IRSA CP ADSs entitled to them. The Depositary Trust Company (“DTC”) and direct and indirect DTC participants will employ a similar procedure with respect to the fractional GDS entitlements of their accountholders. Furthermore, the IRSA CP ADS Depositary, will not distribute any fraction of one cent but will round all payments to the nearest whole cent.
 
To receive the IRSA GDSs and the net proceeds from the sale of the fractional entitlements to IRSA GDSs, holders of IRSA CP ADSs will need to surrender their IRSA CP ADSs to The Bank of New York Mellon, as the IRSA CP ADS Depositary. Promptly after the Merger and upon surrender of their IRSA CP ADSs to the IRSA CP ADS Depositary, former IRSA CP ADS holders will receive the IRSA GDSs and a check in the amount of the pro rata net cash proceeds from the sale of entitlements to fractional IRSA GDSs. If you hold IRSA CP ADSs in a brokerage or custodian account, your IRSA GDSs and net cash proceeds will be credited to your securities account without any action on your part.
 
Q: Will holders of IRSA CP Shares or ADSs have to pay brokerage commission or any fees?
 
A: Holders of IRSA CP Securities will not have to pay brokerage commissions if their IRSA CP Shares or IRSA CP ADSs are registered in their name. However, if such IRSA CP Securities are held through a bank or broker or a custodian, holders of IRSA CP Securities should inquire as to whether any other transaction fee or service charges may be charged by the broker or custodian in connection with the Merger.
 
                    Holders of IRSA CP ADSs will be required to pay the IRSA GDS Depositary’s fee of up to USD 0.05 for each IRSA GDS issued.
 
 
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Q: What shareholder approvals are needed?

A: The Merger of IRSA CP with and into IRSA will require the affirmative votes of (i) holders of more than 50% of the total issued and outstanding share capital of IRSA CP, including IRSA CP Shares represented by IRSA CP ADSs, at an extraordinary general shareholders’ meeting of IRSA CP and (ii) holders of more than 50% of the total issued and outstanding share capital of IRSA, including IRSA Shares represented by IRSA GDSs, at an extraordinary general shareholders’ meeting of IRSA.
 
In order to validly hold an extraordinary general shareholders’ meeting at these companies, at least 60% of the total issued and outstanding share capital of each of IRSA and IRSA CP must be present or represented at the meeting following the first call. In regards to celebrating an extraordinary general shareholders’ meeting on second call, pursuant to Section 244 of the Argentine Corporations Law, at least a majority of the total issued and outstanding share capital is required to be present to validly celebrate any such meeting.
 
Q: Does IRSA intend to vote the IRSA CP Shares (including IRSA CP Shares represented by IRSA CP ADSs) that it directly or indirectly beneficially owns in favor of the Merger?
 
A: As of the date of this prospectus, the board of directors has not decided whether IRSA will vote the 432,545,580 IRSA CP Shares owned by IRSA, representing 79.92% of the total outstanding capital stock of IRSA CP at IRSA CP shareholders’ meeting.
 
Q: Do the holders of IRSA CP Shares have appraisal rights in connection with the Merger?
 
A: IRSA CP shareholders will not have any appraisal or dissenters’ rights under the Argentine Corporations Law or under IRSA CP’s bylaws (estatutos) in connection with the Merger, and neither IRSA CP nor IRSA will independently provide IRSA CP shareholders with any such rights. A dissenter’s right of appraisal is not available pursuant to Section 245 of the Argentine Corporations Law in the event of a Merger between two companies where shares of both of those companies are publicly traded and any new shares issued in the Merger are also publicly traded.
 
Q: Are there risks associated with the Merger that I should consider in deciding whether to vote for the Merger?
 
A: Yes. There are risks related to the Merger transaction that are discussed in this document. See, in particular, the detailed description of the risks associated with the Merger in “Risk Factors.
 
 
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Q: What happens if the Merger is approved, and when will the Merger be completed?
 
A: The respective extraordinary general shareholders’ meetings of each of IRSA CP and IRSA are expected to be held on               , 20     .
 
Under the Argentine Corporations Law, the Merger will be completed (though not effected) at the company level once it is approved at the shareholders’ meetings of each of IRSA CP and IRSA. Once the extraordinary general shareholders’ meetings of each of IRSA CP and IRSA have approved the Merger, pursuant to Argentine law the two companies have to publish notices in Argentina alerting creditors who may oppose the Merger for three (3) business days in the Argentine official gazette and in an Argentine major newspaper. Pursuant to the Argentine Corporations Law, pre-existing creditors may oppose the Merger within 15 calendar days from the last publication to protect their credits. These objections do not have the effect of staying any procedures effecting the Merger. However, the final, definitive documentation may not be executed until 20 calendar days after the expiration of the aforementioned 15-day term, to enable opposing creditors that have not been paid or duly guaranteed by the merging companies to obtain a judicial order for attachment by the courts. Once the 15-day period for the creditors’ opposition and additional 20-day period have elapsed, the merging companies may execute and deliver the definitive merger agreement through a public deed. After such execution, the definitive merger agreement and other relevant documentation must be executed and submitted to the CNV for registration with the Public Registry of Commerce of the City of Buenos Aires (Inspección General de Justicia ) (with respect to IRSA CP and IRSA) (the “Public Registry of Commerce”). Once such registration is approved by the CNV, the CNV will send the definitive merger agreement to the Public Registry of Commerce for registration. Simultaneously with the initial filing of the Argentine prospectus with the CNV, IRSA will request that the CNV (i) authorize the public offering of those newly-issued shares that are to be offered in exchange for the IRSA CP Shares and the listing of such shares on ByMA and (ii) deregister its shares, but such deregistration will not take place until the Merger is consummated. Because many of these steps are outside of our control and IRSA CP’s control and their completion depends on third parties, we can provide no assurances as to when we will consummate the Merger or whether the Merger will be consummated at all. Once the definitive merger agreement is registered with the Public Registry of Commerce, the Merger becomes effective vis-à-vis third parties. IRSA has 5 days to deliver a copy of the registered definitive merger agreement to ByMA to obtain definitive approval for the exchange of shares. Within 30 days of the definitive approval of ByMA for the exchange of shares, IRSA shall commence the exchange of shares.
 
Upon finalization of this registration process, the Merger will become effective and holders of IRSA CP Securities (other than us) at such time will receive IRSA Shares or IRSA GDSs, as the case may be, upon surrender by such holder of their IRSA CP Securities. Any IRSA CP Securities owned by us will not be exchanged for IRSA CP Securities and will be cancelled in connection with the consummation of the Merger.
 
Q: What happens if the Merger is not approved?
 
A: If the Merger is not approved, we intend to retain ownership of all IRSA CP Securities that we currently hold and continue to treat IRSA CP as subsidiary of IRSA.
 
Q: When will I know the results of the extraordinary general shareholders’ meetings?
 
A: We will issue a press release announcing the results of the extraordinary general shareholders’ meetings of each of IRSA and IRSA CP promptly following such meetings.
 
Q: As a legal matter, can holders of the IRSA CP Shares sell the IRSA Securities they receive in the Merger?
 
A: Yes, once the Merger is consummated provided that a holder of IRSA CP Securities is not an affiliate of either IRSA or IRSA CP. If such holder is an affiliate, there may be restrictions on its ability to resell the IRSA Securities under applicable securities law. We expect that holders of IRSA CP Securities will be able to sell their IRSA Shares and IRSA GDSs on the applicable stock exchange on which such securities are listed, so long as the holder or their broker or other securities intermediary has the ability to execute transactions on that exchange.
 
 
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Q: May the Merger be reversed?
 
A: Once the Merger is approved by shareholders of IRSA and IRSA CP, it may not be reversed. Following approval of the Merger by the extraordinary general shareholders’ meetings of each of IRSA CP and IRSA, each company must complete several regulatory steps described in this prospectus, and the Merger cannot be consummated before these steps are completed even though the companies will have been treated as merged for operational and tax purposes since the Merger Effectiveness Date. If these steps are not completed, the Merger will not be consummated. See “The Merger.”
 
Q: As a holder of the IRSA CP ADSs, what should I do to receive the IRSA GDSs?
 
A: The IRSA CP ADS Depositary will deposit the IRSA Shares it receives upon the effectiveness of the Merger and receive delivery of IRSA GDSs. The IRSA CP ADS Depositary will then call for surrender of all the IRSA CP ADSs (other than those held by us) to be exchanged on a mandatory basis for IRSA GDSs.
 
If you are a registered holder of IRSA CP ADSs and you hold an American depositary receipt (“ADR”) certificate that evidences your IRSA CP ADSs, you will be required to surrender your ADR certificate to the IRSA CP ADS Depositary to receive the IRSA GDSs. The IRSA CP ADS Depositary will mail to each registered holder of IRSA CP ADSs evidenced by an IRSA CP ADR certificate a letter of transmittal (“LT”) under which the holder may surrender the IRSA CP ADR certificate evidencing the IRSA CP ADSs and pay the requisite fee of the IRSA GDS Depositary of up to USD 0.05 for each IRSA GDS issued to the IRSA CP ADS Depositary.
 
Upon receipt of your properly completed and duly executed LT, together with the ADR certificate(s) representing your IRSA CP ADSs and payment of the requisite fee of the IRSA GDS Depositary, the IRSA CP ADS Depositary will cancel your IRSA CP ADSs and instruct the IRSA GDS Depositary to deliver and register the applicable whole number of IRSA GDSs to which you are entitled in your name on an uncertificated basis and mail you a confirmation of that registration. The IRSA CP ADS Depositary will also mail you a check for the net proceeds of any fraction of an IRSA GDS to which you were entitled.
 
If you are not a registered holder of your IRSA CP ADSs but hold your IRSA CP ADSs in a securities account with a broker or other securities intermediary, your IRSA CP ADSs will be debited, and your intermediary will automatically credit your account with the whole IRSA GDS to which you are entitled and the net proceeds of any fraction of an IRSA GDS to which you were entitled without requiring any action on your part. Your intermediary will charge your account the IRSA CP ADS Depositary’s fee of up to USD 0.05 for each IRSA GDS issued in exchange for your IRSA CP ADSs, along with any applicable fee your intermediary may charge.
 
                If you hold your IRSA CP ADSs in direct registration form (i.e., registered in your name but not evidenced by an ADR certificate you hold), the IRSA CP ADS Depositary will automatically cancel your IRSA CP ADSs, and instruct the IRSA GDS Depositary to deliver and register the applicable whole number of IRSA GDSs to which you are entitled in your name on an uncertificated basis and mail you a confirmation of that registration. The IRSA CP ADS Depositary will also mail you a check for the net proceeds of any fraction of an IRSA GDS to which you were entitled, together with a bill for payment of the requisite fee of the IRSA GDS Depositary of up to USD 0.05 for each IRSA GDS issued.
 
 Q: Why am I receiving this document?
 
A: In connection with the Merger, IRSA is required by the Securities Act to deliver this document to all holders of IRSA CP Securities that are U.S. residents. This document is being distributed to you for informational purposes only. You should carefully review it because as a shareholder of IRSA CP, you will be entitled to vote at the extraordinary general shareholders’ meeting that has been called in order for the shareholders of IRSA CP to approve the Merger.
 
 
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Q: What are the U.S. federal income tax consequences of the Merger and the payment in cash in lieu of fractional IRSA GDS interests?
 
A: Based upon representations contained in representation letters provided by IRSA CP and IRSA and on customary factual assumptions, all of which must have been and continue to be true, complete and correct in all material respects as of the Merger Effectiveness Date through the date of the Merger, it is the opinion of Simpson Thacher & Bartlett LLP that the Merger will constitute a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. Based on the foregoing, U.S. Holders (as defined in the section entitled “U.S. Federal Income Tax Consequences”) of IRSA CP Securities will not recognize gain or loss for U.S. federal income tax purposes as a result of the Merger, except for any gain or loss that may result from receipt of cash instead of fractional IRSA GDSs. You should read the section entitled “U.S. Federal Income Tax Consequences” for more information on the U.S. federal income tax consequences of the Merger and the ownership of IRSA Securities received pursuant to the Merger.
 
Q: What are the Argentine tax consequences of the Merger?
 
A: The Merger of IRSA CP and IRSA may qualify as a “tax-free reorganization” under the Argentine Income Tax Law N° 20,628, as amended (the “ITL”), the ITL’s Decreto Reglamentario 1344/98 (the “Regulatory Decree”), judicial decisions, and published rulings of the Argentine Federal tax authorities (Administración Federal de Ingresos Públicos or “AFIP”); therefore, we believe the shareholders will not have to recognize any Argentine-source income in connection with the exchange of IRSA CP Securities for IRSA Securities in the Merger.
 
In order for the Merger to qualify as a tax-free reorganization under the ITL and the Regulatory Decree, the companies must give formal notice of the Merger and submit other documentation to the AFIP within 180 calendar days from the Merger Effectiveness Date.
 
Q: What will be the accounting treatment of the Merger?
 
A: For accounting purposes, under the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), the Merger of IRSA CP with and into IRSA is a merger between entities under common control. Accordingly, it will be accounted for by IRSA in accordance with the predecessor basis of accounting. Under this method, the assets, liabilities and components of shareholders’ equity of the transferring entity are carried forward to the combined entity at their carrying amounts as of the effective Merger date.
 
As IRSA CP is already consolidated in IRSA’s consolidated financial statements, the only effect of the Merger is the reduction in non-controlling interest and an increase in share capital and other reserves within equity.
 
Q: Are any other approvals necessary for the completion of the Merger?
 
A: Except for the shareholder approvals and the regulatory steps described above and under “Regulatory Matters,” there are no other approvals necessary to complete the Merger.
 
 
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Q: Are there any conditions to the Merger?
 
A: The completion and effectiveness of the Merger is subject to the satisfaction of the following conditions:
 
approval of the Merger on the terms and conditions set forth in the Preliminary Merger Agreement by the shareholders of each of IRSA CP and IRSA at their respective extraordinary general shareholders’ meetings;
 
publication, during a 3 day period, of a Merger notice in the Argentine official gazette and in a major Argentine newspaper notifying creditors of IRSA CP of their right to oppose the Merger;
 
the completion of a period of 15 to 35 days to allow creditors of IRSA CP to oppose the Merger;
 
satisfaction or granting of guarantees to any creditors that file oppositions;
 
the execution of the definitive merger agreement through a public deed; and
 
the registration of the definitive merger agreement, the Merger and the dissolution of IRSA CP with the Public Registry of Commerce.
 
No assurance can be given as to when or whether any of these approvals and consents will be obtained, the terms and conditions that may be imposed in connection with their consents and approvals, or the consequences of failing to obtain the consents and approvals.

Q: How will my rights as an ADS holder change after the Merger?
 
A: By receiving IRSA GDSs, you will be entitled to certain rights that are different from your rights as a holder of IRSA CP ADSs. The IRSA GDSs to be issued in the Merger will have the same rights (including the right to receive dividends) as the IRSA Shares and IRSA GDSs issued prior to the Merger, as set forth in IRSA’s bylaws (estatutos) and the IRSA Deposit Agreement. However, it must be noted that as a holder of IRSA GDSs, you will not be treated as one of our shareholders and you will not have shareholder rights. The IRSA GDS Depositary will be the holder of the common shares underlying your IRSA GDSs and holders may exercise voting rights with respect to the common shares represented by the IRSA GDSs only in accordance with the IRSA Deposit Agreement. There are no provisions under Argentine law or under our bylaws that limit the exercise by IRSA GDS holders of their voting rights through the IRSA GDS Depositary with respect to the underlying IRSA Shares. However, there are practical limitations on the ability of IRSA GDS holders to exercise their voting rights due to the additional procedural steps involved in communicating with these holders. For example, holders of IRSA Shares will receive notice of shareholders’ meetings through publication of a notice in the CNV’s website, an Official Gazette in Argentina, an Argentine newspaper of general circulation and the bulletin of ByMA, and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. IRSA GDS holders, by comparison, will not receive notice directly from us. Instead, in accordance with the IRSA Deposit Agreement, we will provide the notice to the IRSA GDS Depositary. If we ask the IRSA GDS Depositary to do so, the IRSA GDS Depositary will mail to holders of IRSA GDSs the notice of the meeting and a statement as to the manner in which instructions may be given by holders. To exercise their voting rights, IRSA GDSs holders must then instruct the IRSA GDS Depositary as to voting the common shares represented by their IRSA GDSs. Under the IRSA Deposit Agreement, the IRSA GDS Depositary is not required to carry out any voting instructions unless it receives a legal opinion from us that the matters to be voted would not violate our bylaws or Argentine law. We are not required to instruct our legal counsel to give that opinion. Due to these procedural steps involving the IRSA GDS Depositary, the process for exercising voting rights may take longer for IRSA GDSs holders than for holders of common shares and common shares represented by IRSA GDSs may not be voted as you desire. IRSA GDS and IRSA CP ADS Depositary Programs are similar, so IRSA CP ADS holders will not have significant differences when they exchange their IRSA CP ADSs into IRSA GDSs. For a description of IRSA GDSs, see “Description of Global Depositary Receipts.”
 
 
 
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Q: Who can vote and what is the record date for the extraordinary general shareholders’ meetings?
 
A: Only shareholders of IRSA CP who hold their IRSA CP Shares of record as of close of business, Buenos Aires time, on the date that is 3 business days prior to the date of the IRSA CP extraordinary shareholders’ meeting will be entitled to attend and vote at such extraordinary general shareholders’ meeting to approve the Merger.
 
Only IRSA shareholders who hold IRSA Shares of record as of close of business, Buenos Aires time, on the date that is 3 business days prior to the date of IRSA extraordinary shareholders’ meeting will be entitled to attend and vote at such extraordinary general shareholders’ meeting to approve the Merger.
 
The IRSA CP ADS Depositary shall fix a record date as soon as practicable for the determination of the holders of IRSA CP ADSs who shall be entitled to give instructions for the exercise of voting rights at such meeting.
 
The IRSA GDS Depositary shall fix a record date as soon as practicable for the determination of the holders of IRSA GDSs who shall be entitled to give instructions for the exercise of voting rights at such meeting.
 
Q: Where and when is the extraordinary general shareholders’ meeting to approve the Merger?
 
A: IRSA CP will hold the extraordinary general meeting of IRSA CP shareholders at          , 20    ,        local time, at        , either in person or through remote communication.
 
IRSA will hold the extraordinary general meeting of IRSA shareholders at          , 20    ,        local time, at       , either in person or through remote communication.
 
Q: How do I vote and do I have to attend the general extraordinary shareholders’ meeting in person?
 
A: Holders of IRSA CP Shares or IRSA Shares
 
Holders of IRSA CP Shares or IRSA Shares may attend their respective extraordinary general shareholders’ meeting in person or by proxy to vote. In either case, you may also grant an Argentine power of attorney to an attorney-in-fact who must attend the meeting in person and vote your shares on your behalf. If you are a foreign company, you may participate through: (i) a legal representative duly registered with the Public Registry of Commerce pursuant to Section 123 of the Argentine Corporations Law; (ii) an attorney in fact acting by proxy granted by the legal representative duly registered with the Public Registry of Commerce; (iii) an attorney in fact acting by proxy granted in Argentina by an authorized person pursuant to the rules applicable to the foreign company in its origin jurisdiction; (iv) an attorney in fact by proxy granted in the foreign company’s origin jurisdiction. Such proxy must be duly notarized, apostilled and translated into Spanish.
 
Holders of IRSA CP ADSs
 
At the request of IRSA CP, holders of IRSA CP ADSs whose ownership is directly recorded on the registry of the IRSA CP ADS Depositary as of the record date will receive instructions on how to instruct the IRSA CP ADS Depositary to vote the IRSA CP Shares underlying their IRSA CP ADSs at the extraordinary general shareholders’ meeting. The IRSA CP ADS Depositary will endeavor to vote your IRSA CP ADSs in accordance with the instructions you provide. Beneficial owners of IRSA CP ADSs whose IRSA CP ADSs are held in a securities account with a custodial entity such as a bank, broker, custodian or other security intermediary and who wish to vote at the extraordinary general shareholders’ meeting should follow the instructions received from their intermediary as to how to give voting instructions with respect to their IRSA CP ADSs with sufficient time prior to the extraordinary general shareholders’ meeting. See “IRSA CP Extraordinary General Shareholders Meeting—Manner of Voting.”
  
Holders of IRSA GDSs
 
At our request, holders of IRSA GDSs whose ownership is directly recorded on the registry of the IRSA GDS Depositary as of the record date will receive instructions on how to instruct the IRSA GDS Depositary to vote the IRSA Shares underlying their IRSA GDSs at the extraordinary general shareholders’ meeting. The IRSA GDS Depositary will endeavor to vote your IRSA GDSs in accordance with the instructions you provide, subject to the terms of the IRSA Deposit Agreement. Beneficial owners of IRSA GDSs whose IRSA GDSs are held in a securities account with a custodial entity such as a bank, broker, custodian or other securities intermediary and who wish to vote at the extraordinary general shareholders’ meeting should follow the instructions received from the intermediary as to how to give voting instructions with respect to their IRSA GDSs with sufficient time prior to the extraordinary general shareholders’ meeting.
 
 
23
 
 
Q: What happens if I abstain from voting or do not vote?
 
A: Holders of IRSA CP Shares or IRSA Shares
 
If you hold IRSA CP Shares or IRSA Shares (in each case, not in form of ADSs) and abstain from voting, your vote will not be counted for the purposes of calculating the total number of shares that voted on the Merger. In such case, your vote will not be considered an affirmative or negative vote in respect of the Merger.
 
Holders of IRSA CP ADSs
 
IRSA CP ADSs for which no voting instruction is submitted to the IRSA CP ADS Depositary may be voted in favor of the proposal of the IRSA CP Board of Directors, subject to the conditions of the IRSA CP Deposit Agreement.
 
Holders of IRSA GDSs
 
IRSA GDSs for which no voting instruction is submitted to the IRSA GDS Depositary may be voted in favor of the proposal of the IRSA Board of Directors, subject to the conditions of the IRSA Deposit Agreement.
 
If the Merger is approved, holders of IRSA CP Securities that abstain from voting will receive IRSA Securities in exchange for their IRSA CP Securities.
 
Q: When will holders of the IRSA CP Shares begin to receive dividends?
 
A: You will receive any dividends that have a record date that falls after the date on which you receive IRSA GDSs or IRSA Shares pursuant to the Merger.
 
Q: Who can help answer my questions?
 
A: If you have any questions about the Merger, you should contact:
 
IRSA Inversiones y Representaciones S.A.
Carlos Della Paolera 261
(C1001ADA) Ciudad Autónoma de Buenos Aires, Argentina
Tel. +54 (11) 4323-7400
Attention: Matias Gaivironsky / Santiago Donato
www.irsa.com.ar
ir@irsa.com.ar
 
 
 
 
 
24
 
 
SUMMARY
 
The following is a summary that highlights information contained in this prospectus. This summary may not contain all the information that is important to you. For a more complete description of the Merger agreement and the transactions contemplated thereby, we encourage you to read carefully this entire prospectus, including the attached exhibits. In addition, we encourage you to read the information incorporated by reference into this prospectus, which includes important business and financial information about IRSA that has been filed with the SEC. You may obtain the information incorporated by reference into this prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information.”
 
The Companies
 
IRSA
 
IRSA was incorporated and organized on April 30, 1943, under Argentine law as a stock corporation (sociedad anónima), and was registered with the Public Registry of Commerce on June 23, 1943, under number 284, on page 291, book 46 of volume A.
 
We are one of Argentina’s leading real estate companies and the only Argentine real estate company whose shares are listed both on ByMA and on the NYSE, in the form of IRSA GDSs.
 
We are engaged, directly and indirectly through subsidiaries and joint ventures, in a range of diversified real estate-related activities in Argentina, including:
 
the acquisition, development and operation of shopping malls,
 
the acquisition and development of office buildings and other non-shopping mall properties primarily for rental purposes,
 
the development and sale of residential properties,
 
the acquisition and operation of luxury hotels,
 
the acquisition of undeveloped land reserves for future development or sale, and
 
selective investments outside Argentina.
 
We have the following main operations:
 
Shopping Malls. We are engaged in the acquisition, development and management of shopping malls through our subsidiary IRSA CP and its subsidiaries. Since 1996, we have expanded our real estate activities in the shopping mall segment, through the acquisition and development of shopping malls. As of June 30, 2021, we own 15 shopping malls in Argentina, out of which 14 are operated by us, adding a total of 334,826 sqm gross leasable area.
 
Offices. We own, develop and manage office buildings throughout Argentina, directly and indirectly through our subsidiary IRSA CP. As of June 30, 2021, we own 7 office buildings, for a total of 113,291 sqm gross leasable area.
 
 
25
 
Sales and developments. Since 1996, we have also expanded our operations to the residential real estate market through the development and construction of apartment Tower complexes in the City of Buenos Aires and through the development of private residential communities in the greater Buenos Aires. As of June 30, 2021, we own 17,106,945 sqm of land surface, which includes residential barter agreements and land reserves, for a total of 273,830 sqm salable area.
 
Hotels. In 1997, we entered the hotel market through the acquisition of a 50% interest in the Llao Llao Hotel near Bariloche Province of Rio Negro and 76.3% in the Intercontinental Hotel in the City of Buenos Aires. In 1998, we also acquired Libertador Hotel in the City of Buenos Aires and subsequently sold a 20% interest in it to an affiliate of Sheraton Hotels, and during the fiscal year 2019, we acquired the interest of 20% and reaching 100% of the capital of Hoteles Argentinos S.A.U and beginning to operate the hotel directly under the name “Libertador”.
 
In July 2008, we decided to expand internationally into the United States. As of June 30, 2021, we own a 18.9% interest and voting rights in “Condor Hospitality Trust”, which is a REIT listed on NASDAQ focused on medium-class hotels located in various states of the United States of America.
 
Others. Over the years, we have acquired 29.91% of Banco Hipotecario. Banco Hipotecario has historically been Argentina’s leading mortgage lender, provider of mortgage-related insurance and mortgage loan services.
 
Our headquarters are located at Carlos Della Paolera 261, 9th Floor (C1001ADA) Buenos Aires, Argentina. Our telephone is +54 (11) 4323-7400. Our website is www.irsa.com.ar.
 
Selected Financial Information
 
This prospectus incorporates by reference the audited consolidated financial statements of IRSA as of June 30, 2021 and 2020 and for each of the three years ended June 30, 2021, 2020 and 2019 included in the IRSA 2021 Form 20-F, which we refer to as the “IRSA Audited Financial Statements.” The IRSA Audited Financial Statements have been prepared in accordance with the IFRS as issued by the IASB and are presented in Argentine pesos.
 
The selected financial and operating information should be read in conjunction with, and is qualified in its entirety by reference to, the IRSA Audited Financial Statements and the notes thereto incorporated by reference in this prospectus.
 
IRSA CP
 
IRSA CP’s legal name is IRSA Propiedades Comerciales S.A. Formerly, IRSA CP’s legal name was Alto Palermo S.A., which was modified by vote of the special shareholders’ meeting (asamblea extraordinaria) held on February 5, 2015. IRSA CP was organized and incorporated on August 29, 1889, under Argentine law as a stock corporation (sociedad anónima), and registered with the IGJ on February 27, 1976 under number 323, on page 6, book 85 of the stock corporations volume.
 
IRSA CP’s common shares are listed and traded on ByMA and IRSA CP’s ADSs representing IRSA CP’s common shares are listed on NASDAQ, both under the ticker “IRCP”.
 
 
26
 
 
IRSA CP owns, develops and manages commercial real estate properties, which consist primarily of shopping malls and office buildings throughout Argentina. IRSA CP is currently the largest owner and operator of shopping malls and one of the largest owners of office buildings and other commercial properties in Argentina in terms of gross leasable area and number of rental properties according to data published by the Argentine Chamber of Shopping Centers.
 
IRSA CP operates its business through four principal business segments, namely “Shopping Malls,” “Offices,” “Sales and Developments” and “Others”:
 
Shopping Malls. Includes the operation and development of shopping malls, through which IRSA CP generates rental income and fees charged for services related to the lease of retail stores and other spaces. IRSA CP’s Shopping Malls segment includes highly diversified, multi-format assets with a particular focus on retailers that cater to middle- to high-income consumers. As of June 30, 2021, we own 15 shopping malls in Argentina, which 14 are operated by us, adding a total of 334,826 sqm gross leasable area.
 
Offices. Includes the lease of offices and other rental properties and services related to these properties. As of June 30, 2021, we own 7 office buildings, for a total of 113,291 sqm gross leasable area.
 
Sales and Developments. Includes the sales of undeveloped parcels of land and properties, and activities related to the development and maintenance of such properties. As of June 30, 2021, we own 1,477,057 sqm of land surface, which includes a total of 143,404 sqm salable area.
 
Others. Includes the entertainment activity throughout ALG Golf Center S.A. (La Arena), TGLT SA, and the exhibition and convention center La Rural and others.
 
IRSA CP’s headquarters are located at Carlos Della Paolera 261, 8th Floor (C1001ADA) Buenos Aires, Argentina. IRSA CP’s telephone is +54 (11) 4344-4600. IRSA CP’s website is www.irsacp.com.ar.
 
Selected financial information
 
This prospectus includes in Annex B the audited consolidated financial statements of IRSA CP as of June 30, 2021 and 2020 and for each of the three years ended June 30, 2021, 2020 and 2019, which we refer to as the “IRSA CP Audited Financial Statements.” The IRSA CP Audited Financial Statements have been prepared in accordance with the IFRS as issued by the IASB and are presented in Argentine pesos.
 
The Merger
 
Each of IRSA CP and IRSA have agreed to merge as contemplated in the Preliminary Merger Agreement, as explained in this prospectus. Under the terms of the Preliminary Merger Agreement, IRSA CP will merge into IRSA, by way of absorption by IRSA of IRSA CP. IRSA will assume, by universal succession, all of the assets and liabilities, and will succeed to all of the rights and obligations, of IRSA CP. Upon the registration of the definitive merger agreement with the Public Registry of Commerce, all of the assets and liabilities of IRSA CP will be transferred to IRSA. The surviving company will continue to be known as “IRSA Inversiones y Representaciones Sociedad Anónima.”
 
 
27
 
 
The Merger is expected to generate important benefits and synergies for both IRSA and IRSA CP, resulting from greater efficiency of resources in their management, including, without limitation: (a) to operate and keep only one transactional information system and centralize the entire accounting process; (b) to submit only one set of financial statements to the various control authorities with the ensuing savings in accounting and advisory fees, and other related expenses; (c) to simplify the accounting reporting and consolidation process, as a consequence of the relief that the Merger would entail for the corporate structure as a whole; (d) to cause IRSA CP to be delisted from ByMA and NASDAQ, with the related cost-savings; (e) to reduce costs generally relating to legal fees and tax submissions; (f) to increase the percentage of capital stock listed in the different markets by increasing the liquidity of listed shares of IRSA; (g) to take advantage of tax savings related to the Merger; and (h) to prevent any potential overlap of businesses between IRSA and IRSA CP.
 
On September 30, 2021, the Boards of Directors of the Companies approved the execution of the Preliminary Merger Agreement and the filing with the CNV and ByMA of the prior authorization request for the Merger by filing, among other documentation, a form of reorganization prospectus (prospecto de fusión). The Preliminary Merger Agreement is attached to this prospectus as Annex A. We encourage you to read this document in its entirety.
 
Applicable Argentine law and the Preliminary Merger Agreement will govern the Merger. Shareholders of IRSA CP and IRSA will be asked to vote on the decision to merge as contemplated by the Preliminary Merger Agreement at the extraordinary general meeting of shareholders of IRSA CP and IRSA, respectively.
 
If the Merger is approved by the required majority vote at the shareholders meetings of each of the companies, we and IRSA CP expect to enter into a definitive merger agreement, which will be filed with the relevant Argentine authorities for registration and effectiveness of the Merger. We expect the filing and registration of the Definitive Merger Agreement to take several months, and upon finalization of such registration process, and holders of IRSA CP Shares at such time will receive IRSA Securities, upon surrender by such holder of their IRSA CP Securities.
 
Though the Merger may qualify as a tax-free reorganization under Argentine law, we can provide no assurances as to the tax treatment of the Merger. If the Merger qualifies as a tax-free reorganization under Argentine law, no Argentine capital gains or withholding tax would apply to investors receiving IRSA Securities in the Merger in exchange for their IRSA CP Securities. Also, the consummation of the Merger may not occur for a significant period of time following the filing of this prospectus, in light of the requirements that each company to obtain shareholder approval, submit regulatory filings and complete a registration process. In addition, the Merger is subject to a number of conditions, including approval by the shareholders of the two companies, and as a result we can provide no assurances as to when we will consummate the Merger or whether the Merger will be consummated at all.
 
If the Merger is not approved, we intend to retain ownership of all IRSA CP Securities that we currently hold and continue to treat IRSA CP as a subsidiary of IRSA.
 
 
28
 
 
Merger Consideration
 
In the Merger, a holder of IRSA CP Shares will receive 1.40 newly-issued IRSA Shares for each IRSA CP Share (the “Share Exchange Ratio”). A holder of IRSA CP ADSs, each representing four IRSA CP Shares, will receive 0.56 newly-issued IRSA GDSs for each IRSA CP ADS (the “ADS Exchange Ratio” and, together with the Share Exchange Ratio, the “Merger Exchange Ratios”). IRSA will pay no additional consideration in cash or in kind to the shareholders of IRSA CP in connection with the Merger. Any IRSA CP Securities owned by us will not be exchanged for IRSA Securities and will be cancelled in connection with the consummation of the Merger.
 
The IRSA Shares and IRSA GDSs to be issued in the Merger will have the same rights (including the right to receive dividends) as the IRSA Shares and IRSA GDSs issued prior to the Merger, as set forth in IRSA’s bylaws (estatutos) and the IRSA Deposit Agreement.
 
Based on the number of IRSA CP Shares issued on the date hereof, after the effective time of the Merger, former IRSA CP shareholders will hold on a fully diluted basis approximately 17.1% of the then-issued IRSA Shares on a fully diluted basis.
 
For more information, see “The Merger Agreement—Merger Consideration”.
 
Shareholders Entitled to Vote
 
All holders of IRSA CP Shares as of            , 20    , and IRSA Shares as of            , 20    , are entitled to vote on the Merger at the extraordinary general shareholders meetings to be held on            , 20    . Holders may cast 1 vote for each IRSA CP Share (and 4 votes for each IRSA CP ADS) and 1 vote for each IRSA Share (and 10 votes for each IRSA GDS) that they own on the date indicated above. Such voting rights are governed by Article 26 of the bylaws (estatutos) of IRSA CP and Article 27 of the bylaws (estatutos) of IRSA, which incorporate by reference the provisions of Section 244 of the Argentine Corporations Law. Holders of IRSA CP ADSs are not entitled to attend the meeting, but they are invited to give voting instructions to the IRSA CP ADS Depositary to vote the IRSA CP Shares underlying their IRSA CP ADSs upon the terms set forth in the deposit agreement governing the IRSA CP ADSs. As of the date of this prospectus, IRSA’s board of directors has not decided whether IRSA will vote the 432,545,580 IRSA CP Shares owned by IRSA, representing 79.92% of the total outstanding capital stock of IRSA CP at IRSA CP shareholders’ meeting.
 
The Merger cannot be effected unless IRSA CP and IRSA shareholders adopt the decision to merge as contemplated by the Preliminary Merger Agreement (among other conditions set forth in this prospectus). The Merger of IRSA CP with and into IRSA will require the affirmative votes of (i) holders of more than 50% of the total issued and outstanding share capital of IRSA CP, including IRSA CP Shares represented by IRSA CP ADSs, at an extraordinary general shareholders’ meeting of IRSA CP and (ii) holders of more than 50% of the total issued and outstanding share capital of IRSA, including IRSA Shares represented by IRSA GDSs, at an extraordinary general shareholders’ meeting of IRSA.
 
In order to validly hold an extraordinary general shareholders’ meeting at these companies, at least 60% of the total issued and outstanding share capital of each of IRSA and IRSA CP must be present or represented at the meeting following the first call. In regards to celebrating an extraordinary general shareholders’ meeting on second call, pursuant to Section 244 of the Argentine Corporations Law, at least a majority of the total issued and outstanding share capital is required to be present to validly celebrate any such meeting.
 
 
29
 
 
Timetable for the Merger
 
The following chart sets forth the main milestones and dates of the main steps to complete the Merger:
 
Milestones
Task / Event
About 10 business days after the registration statement which this prospectus is a part of is declared effective.The Board of Directors of IRSA and IRSA CP, respectively, call for extraordinary general shareholders meetings to consider the Merger.
          , 20     to           , 20    
Publication in the Argentine official gazette and in an Argentine major newspaper of the notices calling for the extraordinary general shareholders meetings of IRSA and IRSA CP to vote upon the Merger.
 
No later than 45 calendar days after the last publication of notices calling the extraordinary general shareholders meetings
 
Extraordinary general shareholders meetings of IRSA and IRSA CP to consider and approve the Merger.
          , 20     to           , 20    
Publication in the Argentine official gazette and in an Argentine major newspaper of notices announcing the Merger for creditors’ opposition.
 
          , 20     to           , 20    
Expiration date for creditors’ opposition (if no creditors have opposed the Merger, the merging companies may execute and deliver the definitive merger agreement before an Argentine notary public).
 
          , 20     to           , 20    
Expiration date for the additional 20-day period in the event any creditors object to allowing the opposing creditors to obtain a judicial order for attachment. After such date the merging companies may execute and deliver the definitive merger agreement before an Argentine notary public.
 
Execution of definitive merger agreement between IRSA and IRSA CP before an Argentine notary public.
 
10 business days after the end of the 15 business-day period counted from the date of the last publication for creditors’ opposition, if no creditors have opposed; or 35 business-day period counted from the date of the last publication for creditors’ opposition, if any creditor has opposed.
Filing with the CNV of the definitive merger agreement for its registration with the Public Registry of Commerce.
 
Filing with CNV for capital increase resulting from the Merger.
 
Filing with CNV to cancel the public listing of IRSA CP Shares.
 
Approximately 12 to 24 weeks or as soon reasonably practicable from the filing of the requests to the CNV and the CNV sending such requests to the Public Registry of Commerce
Registration before the Public Registry of Commerce of the definitive merger agreement and dissolution of IRSA CP.
 
Registration and consummation of the Merger.
Approximately 10 business days after the registration with the Public Registry of Commerce
Request to ByMA for the listing of IRSA Shares and the delisting of IRSA CP Shares.
 
Approximately 8 business days after ByMA definitive approval
Filing with ByMA of notice to be published in ByMA’s Gazette announcing the exchange of shares.
 
During a 30-day period from ByMA’s authorization of the listing of IRSA SharesExchange of IRSA CP Shares for IRSA Shares.
  
 
 
30
 
 
Directors and Management of the Surviving Company After the Reorganization
 
Immediately following the approval of the Merger, the senior management and executives of the surviving company, IRSA, shall remain the same as the senior management and executive team currently in place and overseeing the operations of IRSA CP and IRSA. Eduardo Sergio Elsztain will remain as CEO and Chairman of IRSA.
 
On               , 20     , in accordance with the Preliminary Merger Agreement, the Boards of Directors of IRSA CP will be suspended automatically following the approval of the Merger by the extraordinary general shareholders’ meetings of IRSA CP and IRSA, and the Board of Directors of IRSA shall assume the duties and responsibilities of IRSA CP Boards of Directors.. The composition of the IRSA Board of Directors will not change as a consequence of the Merger.
 
Name and Executive Offices of the Surviving Company After the Merger
 
The surviving company shall continue to be known as “IRSA Inversiones y Representaciones Sociedad Anónima” upon the effectiveness of the Merger. The executive offices of the company will continue to be located in Buenos Aires, Argentina.
 
For more information, see “The Merger— Directors and Management of the Surviving Company After the Merger.”
 
Ownership of the Surviving Company After the Merger
 
Ownership of IRSA CP Prior to the Merger
 
Prior to the completion of the Merger, (i) we hold 79.92% of the IRSA CP Shares, including IRSA CP Shares in the form of IRSA CP ADSs and (ii) public investors, both in the United States and in Argentina, collectively hold 20.08% of the IRSA CP Shares, including IRSA CP Shares in the form of IRSA CP ADSs.
 
 
31
 
 
Ownership of IRSA Prior to the Merger
 
Prior to the completion of the Merger, we are not aware of any holder of more than five percent of any class of IRSA Shares, except as described below:
 
Shareholder
 
Number of Shares
 
 
Percentage of Capital and Voting Power(2)
 
 
Number of Warrants
 
 
Percentage of Capital and Voting Power(3)
 
Cresud (1)
  408,746,837 
  62.1%
  49,644,626 
  62.1%
Directors and officers (excluding Eduardo Elsztain)
  3,367,391 
  0.5%
  543,588 
  0.5%
ANSES
  29,696,047 
  4.5%
  3,781,213 
  4.5%
Total
  441,810,275 
  67.1%
  53,969,427 
  67.1%
 
 (1) 
Eduardo S. Elsztain is the beneficial owner of 215,998,867 common shares of Cresud, representing 36.5% of its total share capital, which include (i) 72,735,741 common shares beneficially owned by IFISA, 1,100 common shares owned by Consultores Venture Capital Uruguay S.A. for which Mr. Eduardo S. Elsztain is deemed to be the beneficial owner, (iii) 92,771,760 common shares owned by Agroinvestment S.A. for which Mr. Eduardo S. Elsztain is deemed beneficial owner and (iv) 50,490,266 common shares directly owned by Mr. Eduardo S. Although Mr. Elsztain does not own a majority of the common shares of Cresud, he is its largest shareholder and exercises substantial influence over it. If Mr. Elsztain is considered to be the beneficial owner of Cresud due to his substantial influence over it, he would be the beneficial owner of 63.1% of our common shares by virtue of his investment in Cresud of 408,746,837 common shares, Consultores Venture Capital Uruguay S.A. of 3,612,081 common shares, Consultores Asset Management S.A. of 493,002 and directly owned shares of 2,970,887. Cresud is a leading Argentine producer of basic agricultural products. Cresud’s common shares began trading in ByMA on December 12, 1960, under the trading symbol “CRES” and on March 1997 its GDSs began trading in NASDAQ under the trading symbol “CRESY.”
(2) 
As of August 31, 2021, the number of outstanding common shares was 658,676,460.
(3) 
On a fully diluted basis.
 
Merger Exchange Ratios and Exchange of Shares Pursuant to the Merger
 
Pursuant to the terms of the Merger, the Merger Exchange Ratios are as follows:
 
Share Exchange Ratio: a holder of IRSA CP Shares will receive 1.40 newly-issued IRSA Shares for each IRSA CP Share.
 
ADS Exchange Ratio: a holder of IRSA CP ADSs, each representing ten IRSA CP Shares, will receive 0.56 newly-issued IRSA GDSs, each representing four IRSA Shares, for each IRSA CP ADS.
 
Pursuant to the terms of the Merger, the shareholders of IRSA CP shall receive IRSA Shares as follows: public shareholders, both in Argentina and the United States (including ADS holders), shall receive 152,158,215 IRSA Shares, representing 17.1% of IRSA’s capital stock on a fully diluted basis. Any IRSA CP Securities owned by us will not be exchanged for IRSA Securities and will be cancelled in connection with the consummation of the Merger.
 
 
32
 
 
Ownership of IRSA Following Consummation of the Merger
 
The following table summarizes the shareholder participation in IRSA once the Merger is complete:
 
Shareholder
 
Number of Shares
 
 
Percentage of Capital and Voting Power
 
 
Number of Warrants
 
 
Percentage fully diluted
 
Cresud
  434,263,359 
  53.6%
  49,644,626 
  54.3%
Directors and officers (excluding Eduardo Elsztain)
  9,686,991 
  1.2%
  543,588 
  1.1%
ANSES
  42,920,447 
  5.3%
  3,781,213 
  5.2%
Total
  486,870,797 
  60.0%
  53,969,427 
  60.71%
 
The IRSA Securities issued pursuant to the Merger shall have the same voting rights and rights to dividends as those IRSA Securities currently in circulation.
 
 
33
 
 
Share Ownership of Directors and Senior Management
 
Prior to the completion of the Merger, the following members of our Board of Directors and senior management beneficially own more than one percent of the IRSA Shares:
 
NamePosition
 
Number of Shares
 
 
Percentage
 
 
Number of Warrants(2)
 
 
Percentage fully diluted
 
Directors 
 
 
 
 
 
 
 
 
 
 
 
 
Eduardo S. Elsztain (1)
Chairman
  415,822,807 
  63.1%
  50,512,505 
  63.1%
Saúl ZangVice-Chairman I
  540,311 
  0.1%
  68,795 
  0.1%
Alejandro G. ElsztainVice- Chairman II
  2,594,464 
  0.4%
  315,107 
  0.4%
Fernando A. ElsztainRegular Director
  - 
  - 
  - 
  - 
Cedric D. Bridger (3)
Regular Director
  - 
  - 
  - 
  - 
Marcos M. FischmanRegular Director
  - 
  - 
  - 
  - 
Mauricio E. WiorRegular Director
  - 
  - 
  - 
  - 
Daniel R. ElsztainRegular Director
  - 
  - 
  - 
  - 
María Julia BearziRegular Director
  - 
  - 
  - 
  - 
Oscar Pedro BergottoRegular Director
  - 
  - 
  - 
  - 
Liliana De NadaiRegular Director
  - 
  - 
  - 
  - 
Damian BrenerRegular Director
  - 
  - 
  - 
  - 
Gaston A. LernoudAlternate Director
  20,778 
  0.0%
  27,778 
  0.0%
Enrique AntoniniAlternate Director
  - 
  - 
  - 
  - 
Gabriel A. G. ReznikAlternate Director
  - 
  - 
  - 
  - 
David WilliamsAlternate Director
  - 
  - 
  - 
  - 
Ben Elsztain (4)
Alternate Director
  - 
  - 
  - 
  - 
Iair ElsztainAlternate Director
  10,650 
  0.0%
  1,350 
  0.0%
Senior Management 
    
    
    
    
Matías I. GaivironskyChief Financial and Administrative Officer
  182,258 
  0.0%
  130,558 
  0.0%
Jorge CrucesChief Investment Officer
  18,930 
  0.0%
  - 
  - 
Supervisory Committee 
    
    
    
    
José D. AbelovichMember
  - 
  - 
  - 
  - 
Marcelo H. FuxmanMember
  - 
  - 
  - 
  - 
Noemí I. CohnMember
  - 
  - 
  - 
  - 
Roberto D. MurmisAlternate member
  - 
  - 
  - 
  - 
Paula SoteloAlternate member
  - 
  - 
  - 
  - 
Ariela LevyAlternate member
  - 
  - 
  - 
  - 
 
(1)
Includes (i) 406,255,455 common shares beneficially owned by Cresud, (ii) 2,491,382 common shares owned by Helmir, (iii) 3,612,081 common shares owned by Consultores Venture Capital Uruguay S.A., (iv) 493,002 common shares owned by Consultores Asset Management S.A. and (v) 2,970,887 common shares directly owned by Mr. Eduardo Elsztain.
(2)
In May 2021, 80 million options were issued that will entitle the holders through their exercise to acquire up to 80 million additional new shares.
(3)
The position was not renewed at the Shareholders’ Metting held on October 21, 2021 
(4)
On October 21, 2021, the Shareholders’ Meeting approved by majority of votes the appointment of Mr. Ben Elsztain as non-independent Regular Director. 
 
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No member of the IRSA CP Board of Directors, or any member of the senior management of IRSA CP is the beneficial owner of more than one percent of the IRSA CP Shares. For more information, see “Material Contacts Among IRSA and IRSA CP” and “The Merger—Share Ownership of Directors and Senior Management.”
 
Stock Exchange Listings
 
The IRSA Shares and the IRSA CP Shares are listed on ByMA. The IRSA GDSs are listed on the NYSE and the IRSA CP ADSs are listed on NASDAQ.
 
Upon effectiveness of the Merger, the IRSA CP Shares and IRSA CP ADSs will cease to exist and will no longer be admitted to trading or listed on ByMA or NASDAQ, respectively.
 
Appraisal or Dissenters’ Rights in the Merger
 
IRSA CP shareholders will not have any appraisal or dissenters’ rights under Argentine law or under IRSA CP’s bylaws (estatutos) in connection with the Merger, and neither IRSA CP nor IRSA will independently provide IRSA CP shareholders with any such rights. A dissenter’s right of appraisal is not available pursuant to Section 245 of the Argentine Corporations Law in the event of a Merger between two companies where shares of both of those companies are publicly traded and any new shares issued in the Merger are also publicly traded.
 
Conditions to Effectiveness of the Merger
 
The completion and effectiveness of the Merger is subject to the satisfaction of the following conditions:
 
approval of the Merger on the terms and conditions set forth in the Preliminary Merger Agreement by the shareholders of IRSA CP and IRSA at their respective extraordinary general shareholders’ meetings;
 
publication, during a 3 day period, of a Merger notice in the Argentine official gazette and in a major Argentine newspaper notifying creditors of IRSA CP of their right to oppose the Merger;
 
the completion of a period of 15 to 35 days to allow creditors of IRSA CP to oppose the Merger;
 
satisfaction or granting of guarantees to any creditors that file oppositions;
 
the execution of the definitive merger agreement through a public deed; and
 
the registration of the definitive merger agreement, the Merger and the dissolution of IRSA CP with the Public Registry of Commerce.
 
No assurance can be given as to when or whether any of these approvals and consents will be obtained, the terms and conditions that may be imposed in connection with their consents and approvals, or the consequences of failing to obtain the consents and approvals.
 
 
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Regulatory Matters
 
The Merger is not subject to any additional regulatory requirements of any municipal, state, federal or foreign governmental agencies, other than those mentioned in this prospectus. For more information, see “Regulatory Matters.”
 
Termination of the Merger Agreement
 
The Preliminary Merger Agreement between IRSA CP and IRSA provides that either party may terminate the agreement if the shareholders of IRSA CP or IRSA do not approve the Merger at the relevant extraordinary general shareholders’ meeting within six months of the date of the agreement. Additionally, under Argentine law, the Preliminary Merger Agreement may be terminated if: (i) the shareholders of IRSA CP or IRSA do not approve the Merger at the relevant extraordinary general shareholders’ meeting; (ii) the Board of Directors of IRSA CP or IRSA decide to terminate the Preliminary Merger Agreement prior to its consideration by the extraordinary general shareholders’ meetings of IRSA CP and IRSA; or (iii) IRSA CP or IRSA do not hold an extraordinary general shareholders’ meeting to approve the Preliminary Merger Agreement within three months of its execution. For the avoidance of doubt, in the event that neither IRSA CP nor IRSA hold an extraordinary general shareholders’ meeting to approve the Preliminary Merger Agreement within three months of its execution, the Preliminary Merger Agreement will continue to be in full force and effect. In such case, both IRSA CP and IRSA will have a right (but will be under no obligation) to terminate the Preliminary Merger Agreement.
  
Taxation
 
U.S. Taxation
 
You should read the section entitled “U.S. Federal Income Tax Consequences” for more information on the U.S. federal income tax consequences of the Merger, and you should consult your own tax advisors regarding the tax consequences of the Merger in your particular circumstances.
 
Argentine Taxation
 
You should read the section entitled “Argentine Tax Consequences” for more information on the Argentine tax consequences of the Merger, and you should consult your own tax advisors regarding the tax consequences of the Merger in your particular circumstances.
 
Accounting Treatment
 
For accounting purposes, under IFRS as issued by the IASB, the Merger of IRSA CP with and into IRSA is a merger between entities under common control. Accordingly, it will be accounted for by IRSA in accordance with the predecessor basis of accounting. Under this method, the assets, liabilities and components of shareholders’ equity of the transferring entity are carried forward to the combined entity at their carrying amounts as of the effective Merger date.
 
As IRSA CP is already consolidated in IRSA’s consolidated financial statements, the only effect of the Merger is the reduction in non-controlling interest and an increase in share capital and other reserves within equity.
 
 
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Comparison of rights of IRSA and IRSA CP shareholders
 
As a result of the Merger, IRSA CP Securities will be automatically exchanged for IRSA Securities. By receiving IRSA Shares, you will be entitled to certain rights as a shareholder of IRSA that are different from your rights as a shareholder of IRSA CP. See “Comparison of the Rights of Shareholders of IRSA and IRSA CP.”
 
Risk Factors
 
In deciding whether to vote in favor of the Merger, you should carefully consider the following risk factors:
 
Market fluctuations may reduce the market value of the Merger consideration we are offering to holders of IRSA CP Securities because the Merger Exchange Ratios contemplated by the Merger are fixed;
 
Investors who own IRSA CP Securities but who do not wish to hold IRSA Securities may sell the IRSA Securities they receive or expect to receive in the Merger or sell their IRSA CP Securities prior to the consummation of the Merger. This may put downward pressure on the market price of the IRSA Securities that holders of IRSA CP Securities will receive in the Merger. Arbitrageurs may also adversely influence the price of the IRSA Securities;
 
We may fail to realize the synergies and benefits anticipated from the Merger;
 
IRSA’s business and the IRSA Shares and IRSA GDSs may be adversely impacted if the Merger is not consummated;
 
IRSA CP’s business and the IRSA CP Shares and IRSA CP ADSs may be adversely impacted if the Merger is not consummated;
 
The business relationships of IRSA CP, IRSA or their respective subsidiaries may be subject to disruptions due to uncertainty associated with the Merger, which could have an adverse effect on the operating results, cash flows and financial position of IRSA, IRSA CP and, following the consummation of the Merger, the combined company; and
 
Any delay in completing the Merger may reduce or eliminate the benefits expected to be achieved as a result of the Merger.
 
See “Risk Factors” beginning on page 41.
 
 
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COMPARATIVE PER SHARE MARKET DATA
 
The IRSA Board of Directors and IRSA CP Board of Directors approved the Merger on September 30, 2021 (the “Boards of Directors Approval Date”). The following tables present the market value of the IRSA CP Securities (on an historical and equivalent per share basis) and the market value of the IRSA Securities (on an historical basis) as of the Boards of Directors Approval Date and             , 20     , the last trading date prior to the date of this prospectus for which stock prices were available. Shareholders are urged to obtain current market information regarding the IRSA CP Securities and the IRSA Securities. The market prices of these securities will fluctuate during the pendency of the Merger and thereafter, and may be different from the prices set forth below at the time you receive our shares. See “Market Information” for further information about historical market prices of IRSA CP Securities and IRSA Securities.
 
The Merger Exchange Ratios are 1.40 IRSA Shares per IRSA CP Share or 0.56 IRSA GDSs per IRSA CP ADS.
 
IRSA CP Shares and IRSA Shares
 
The following table presents the closing market prices per share as reported on ByMA for IRSA Shares and IRSA CP Shares, respectively, as of (i) September 30, 2021 and (ii)           , 20    :
 
 
 
IRSA Shares
 
 
IRSA CP Shares
 
 
 
Historical(1)
 
 
Historical(1)
 
 
Equivalent Basis(1)
 
 
September 30, 2021
 
  79.00 
  141.00 
  110.6 
  , 20 
    
    
    
(1) Expressed in Argentine Pesos.
 
The “equivalent basis stock price” of IRSA CP Shares represents the applicable market price for IRSA Shares on the corresponding date, multiplied by the Share Exchange Ratio of 1.40 IRSA Shares for one IRSA CP Share.
 
IRSA CP ADSs and IRSA GDSs
 
The following table presents the closing market prices per share as reported on the NYSE and NASDAQ for IRSA GDSs and IRSA CP ADSs, respectively,  as of (i) September 30, 2021 and (ii)           , 20    :
 
 
 
IRSA GDSs
 
 
IRSA CP ADSs
 
 
 
Historical(1)
 
 
Historical(1)
 
 
Equivalent Basis(1)
 
 
September 30, 2021
 
  4.09 
  2.95 
  2.29 
  , 20 
    
    
    
(1) Expressed in U.S. Dollars.
 
The “equivalent basis stock price” of IRSA CP ADSs represents the applicable market price for IRSA GDSs on the corresponding date, multiplied by the ADS Exchange Ratio of 0.56 IRSA GDSs for one IRSA CP ADS.
 
 
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COMPARATIVE HISTORICAL AND EQUIVALENT BASIS PER SHARE DATA
 
The following comparative historical and equivalent basis per share data should be read in conjunction with the IRSA Audited Financial Statements incorporated by reference into this prospectus and the IRSA CP Audited Financial Statements included in this prospectus. No pro forma per share data is provided in this section for the reasons described in section “Summary Pro Forma Financial Information” below.
 
The following table presents historical and equivalent per share data. The amounts presented for the relevant periods in the table reflect the following:
 
Historical earnings per IRSA Share is calculated by dividing net income attributable to IRSA (controlling interest) by the weighted average number of IRSA Shares outstanding (588,409,377) during the year indicated.
 
Historical earnings per IRSA CP Share is calculated by dividing net income attributable to IRSA CP Shares (approximately a loss of ARS 21,933 million) by the weighted average number of IRSA CP Shares outstanding (541,230,019) during the year indicated.
 
Historical dividend per IRSA Share is calculated by dividing total dividends paid by IRSA to its shareholders by the weighted average number of IRSA Shares outstanding during the year indicated.
 
Historical dividend per IRSA CP Share is calculated by dividing total dividends paid to holders of IRSA CP Shares by the weighted average number of IRSA CP Shares outstanding during the year indicated.
 
Historical book value per IRSA Share is computed by dividing total shareholders’ equity attributable to IRSA (controlling interest) by the number of IRSA Shares outstanding as of the year indicated.
 
Historical book value per IRSA CP Share is computed by dividing total shareholders’ equity attributable to IRSA CP Shares by the number of IRSA CP Shares outstanding as of the year indicated.
 
Equivalent basis information of IRSA CP Shares reflects the amounts for IRSA Shares multiplied by the Share Exchange Ratio. For a comprehensive understanding of the effect of the Merger, this equivalent basis data should be read in conjunction with the market equivalent basis information provided in the section “Comparative per Share Market Data.”
 
 
 
For the year ended June 30, 2021
 
 
 
IRSA
 
 
IRSA CP
 
 
 
Historical
 
 
Historical(1)
 
 
Equivalent Basis(1)
 
Earnings per share
  (50.86)
  (40.52)
  (36.33)
Dividends per share
  - 
  103.50 
  - 
Book value per share
  94.15 
  133.89 
  131.81 
 
(1) Expressed in Argentine Pesos.


 
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SUMMARY PRO FORMA FINANCIAL INFORMATION
 
No pro forma financial information is presented in this section in connection with the Merger because there are no significant differences between the historical consolidated financial information of IRSA and the unaudited pro forma combined financial information of IRSA, including the pro forma adjustments giving effect to such Merger.
 
 
 
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RISK FACTORS
 
In addition to the other information included in this prospectus, including the matters addressed under “Cautionary Statement Concerning Forward-Looking Statements,” you should carefully consider the following risks before deciding whether to vote to adopt the Merger of IRSA CP into IRSA as contemplated by the Preliminary Merger Agreement. You should also consider the other information in this prospectus and the other documents incorporated by reference into this prospectus, including the Preliminary Merger Agreement. See “Where You Can Find More Information.”
 
Risks Related to The Merger
 
Market fluctuations may reduce the market value of the Merger consideration we are offering to holders of IRSA CP Shares and IRSA CP ADSs, respectively, because the Share Exchange Ratio and the ADS Exchange Ratio contemplated by the Merger are fixed.
 
Upon the consummation of the Merger, holders of IRSA CP Shares and IRSA CP ADSs will receive consideration that consists of a specified number of IRSA Shares or IRSA GDSs, respectively, rather than a number of IRSA Shares or IRSA GDSs with a specified market value. As a result, the market value of IRSA Shares and of IRSA GDSs that holders of IRSA CP Shares and IRSA CP ADSs receive in the Merger will fluctuate depending upon the market value of IRSA Shares on ByMA and IRSA GDSs on the NYSE, as applicable. Accordingly, the market value of IRSA Shares and of IRSA GDSs at the time at which they are received by holders of IRSA CP Shares and IRSA CP ADS may vary significantly from their market value on the date of this prospectus and at the time of the closing of the Merger.
 
Investors who own IRSA CP Securities but who do not wish to hold IRSA Securities may sell the IRSA Securities they receive or expect to receive in the Merger or sell their IRSA CP Securities prior to the consummation of the Merger. This may put downward pressure on the market price of the IRSA Securities that holders of IRSA CP Securities will receive in the Merger. Arbitrageurs may also adversely influence the price of the IRSA Securities.
 
Some holders of IRSA CP Securities may wish to sell their IRSA CP Securities prior to the consummation of the Merger, or, in the case of holders of IRSA CP Securities, the IRSA Securities that they will receive in the Merger. In addition, the market price of the IRSA CP Securities may be adversely affected by arbitrage activities prior to the consummation of the Merger. These sales or the prospect of future sales, as well as arbitrage activity, could adversely affect the market price of IRSA Securities.
 
 
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The Merger is subject to regulatory and shareholder approvals which may not be obtained, and any delay in completing the Merger may reduce or eliminate the benefits expected to be achieved as a result of the Merger
 
The Merger is subject to the receipt of the requisite approvals by the shareholders of IRSA and IRSA CP, which may not be obtained or may be delayed. In the event one or more of these approvals are not obtained, the Merger may not be consummated or its terms and conditions may be modified from the current agreement.
 
In addition to the shareholder approvals, the Merger requires certain regulatory and administrative approvals, some of which are beyond IRSA and IRSA CP’s control and any of which may prevent, delay or otherwise materially adversely affect the consummation of the Merger. The consummation of the Merger requires the receipt of an administrative consent from the CNV, the registration of the Final Merger Agreement with the Public Registry of Commerce of the City of Buenos Aires, and the cancellation of the IRSA CP Shares requires the approval by ByMA. Additional authorizations may be necessary from other governmental or regulatory entities to consummate the Merger. None of the Companies can predict whether or when these approvals will be obtained. Furthermore, the requirements for obtaining the required approvals, consents or clearances could delay the consummation of the Merger for a significant period of time or prevent it from occurring at all. Any delay in completing the Merger could prevent or delay the combined company from realizing some or all of the anticipated cost savings, synergies, growth opportunities and other benefits that IRSA and IRSA CP expect to achieve if the Merger is successfully completed within the expected time frame.
 
If the Merger is not consummated, there may not be a liquid market for the IRSA CP Securities.
 
If the Merger is not approved, IRSA intends to retain ownership of all of its IRSA CP Shares and will continue to treat IRSA CP as a subsidiary. Furthermore, IRSA may decide to cause IRSA CP to delist the IRSA CP Securities from any or all of NASDAQ and ByMA, withdraw the IRSA CP Shares from the public offering regime in Argentina or terminate the IRSA CP ADS deposit agreement and deregister the IRSA CP Shares and the IRSA CP ADSs under the Exchange Act. The decision would depend on, among other factors, IRSA’s management’s evaluation of the public float, trading volumes and liquidity of the IRSA CP Securities and the expenses of the IRSA CP Securities listed. In order to withdraw the IRSA CP Shares from the public offering regime in Argentina under Argentine law, IRSA CP would need to initiate a mandatory tender offer whereby they offer all IRSA CP shareholders that voted against the withdrawal of IRSA CP Shares the right to sell their IRSA CP Shares at a fair price (precio equitativo) based on certain parameters including the six-month weighted trading average value. The liquidity of any IRSA CP Security outstanding would be materially and adversely affected upon the withdrawal from the public offering regime, deregistration or delisting from either or any of ByMA and NASDAQ, as holders of IRSA CP Securities would likely no longer have an active trading market in which to sell such securities.
 
The businesses of IRSA and IRSA CP and value of the IRSA Securities and IRSA CP Securities may be adversely impacted if the Merger is not consummated.
 
There can be no assurance that the Merger will occur, as the Merger is subject to certain conditions including shareholders’, regulatory and administrative approvals, among others. We cannot guarantee that these conditions will be satisfied and that the Merger will be successfully completed. The failure to consummate the Merger will prevent IRSA from reaping the expected benefits of the Merger, which could adversely affect its results of operations and financial condition and could adversely affect the price of the IRSA Securities and the IRSA CP Securities.
 
In the case of IRSA CP Securities particularly, IRSA CP incurs considerable costs in order to maintain the listing of these securities on ByMA and NASDAQ, and if the Merger is not consummated, IRSA CP may need to consider reducing the markets in which its securities are listed.  
 
 
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IRSA may fail to realize the synergies and benefits anticipated from the Merger.
 
The Merger may not achieve the synergies and benefits that IRSA and IRSA CP anticipate. In particular the real estate industry in Argentina may develop in a different direction than anticipated, the future valuations of IRSA CP may decrease from the market price we paid, the revenues of IRSA CP may not offset increased operating expenses associated with the Merger, we may experience difficulties in integrating new IRSA CP businesses and operations into our own in an effective and timely manner or at all; and the integration of IRSA CP may divert the attention of our senior management from the operation of our daily business. IRSA may also face operational challenges as a result of the Merger, including difficulties integrating IRSA CP. IRSA may not be able to realize the benefits of this Merger if IRSA is unable to successfully integrate IRSA CP with its existing operations. In addition, higher than expected overhead and administrative expenses or an inability to eliminate duplicative overhead and administrative functions could cause IRSA not to realize the expected cost savings and synergies and leave IRSA’s business less profitable.
 
The business relationships of IRSA and IRSA CP may be subject to disruptions due to uncertainty associated with the Merger, which could have an adverse effect on the operating results, cash flows and financial position of IRSA and IRSA CP and, following the consummation of the Merger, the combined company.
 
Parties with which IRSA or IRSA CP do business may experience uncertainty associated with the Merger and related transactions, including with respect to current or future business relationships with IRSA, IRSA CP or the combined company. The business relationships of IRSA or IRSA CP may be subject to disruption as customers, suppliers and other persons with whom IRSA or IRSA CP have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with IRSA or IRSA CP, as applicable, or consider entering into business relationships with parties other than IRSA, IRSA CP or the combined company. Any delay in the approval or consummation of the Merger could have an adverse effect on the operating results, cash flows and financial position of IRSA, IRSA CP or, following the consummation of the Merger, the combined company including an adverse effect on the combined company’s ability to realize the expected synergies and other benefits of the Merger. The risk, and adverse effect, of any disruption could be exacerbated by a delay in the consummation of the Merger or termination of the Merger agreement.
 
Though the Merger may qualify as a tax-free reorganization under Argentine law, we can provide no assurances as to the tax treatment that the Argentine tax authorities will give to the Merger.
 
Though IRSA CP expects that all requirements for the Merger to qualify as a tax-free reorganization will be met in accordance with Section 77 et seq. of the Argentine Income Tax Law, no assurances can be given as to the tax treatment that Argentine tax authorities will give to the Merger and whether and when those requirements will be met. If the Merger qualifies as a tax-free reorganization under Argentine law, no Argentine capital gains or withholding tax would apply to investors receiving IRSA Securities in the Merger in exchange for their IRSA CP Securities. See “Argentine Tax Consequences—Tax Consequences Related to the Merger” for more detail on the issues related to the tax-free treatment of the Merger. If the Merger does not qualify as a tax-free reorganization, each transfer of assets and liabilities to IRSA caused by the Merger shall be subject to tax in accordance with the respective applicable law and regulations and we may be required to revise IRSA’s, and IRSA CP’s tax return filings in order to reflect the fact that the proposed Merger would not be tax-free, which may have an adverse impact on IRSA’s financial condition and results of operations.
 
The integration of IRSA CP into IRSA is a complex process that may affect the operations and results of operation of IRSA.
 
The integration of the operations and personnel of IRSA CP and IRSA is a complex process that is subject to important challenges that may not be successful, incur unforeseen costs or experience unexpected delays. In particular, IRSA may experience difficulties in the integration of internal standards, controls, procedures, practices, policies, business systems, IT systems, customer service, personnel, networks, suppliers, technology and infrastructure. Any of these could adversely affect the anticipated strategic and financial benefits from the Merger.
 
 
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Risks Related to Argentina
 
You should read and consider the risk factors specific to Argentina. These risks are described in the IRSA 2021 Form 20-F and in other documents that are incorporated by reference into this document. See “Where You Can Find More Information” for more detail on the information incorporated by reference in this document.
 
Risks Related to IRSA CP’s Business
 
Disease outbreaks or other public health concerns could reduce traffic in IRSA CP’s shopping malls.
 
As a result of the outbreak of Swine Flu during the winter of 2009, consumers and tourists dramatically changed their spending and travel habits to avoid contact with crowds. Recently, as a result of the COVID-19 pandemic, the Argentine government enacted several regulations limiting the operation of schools, cinemas and shopping malls, which has significantly reduced traffic at IRSA CP’s shopping malls. See “Risks Relating to Argentina – The ongoing COVID-19 pandemic and government measures to contain the virus are adversely affecting IRSA CP’s business and results of operations, and, as conditions are evolving rapidly, IRSA CP cannot accurately predict the ultimate impact on IRSA CP’s results of operation”. IRSA CP cannot assure you that new disease outbreaks or health hazards (such as the Ebola outbreak in recent years) will not occur in the future, or that such an outbreak or health hazard would not significantly affect consumer and/or tourists’ activity. The recurrence of such a scenario could adversely affect IRSA CP’s business and IRSA CP’s results of operations.
 
IRSA CP is subject to risks inherent to the operation of shopping malls that may affect IRSA CP’s profitability.
 
IRSA CP’s shopping malls are subject to various factors that affect their development, administration and profitability, including:
 
declines in lease prices or increases in levels of default by IRSA CP’s tenants due to economic conditions;
 
increases in interest rates and other factors outside IRSA CP’s control;
 
the accessibility and attractiveness of the areas where IRSA CP’s shopping malls are located;
 
the intrinsic attractiveness of the shopping mall;
 
the flow of people and the level of sales of rental units in IRSA CP’s shopping malls;
 
the increasing competition from internet sales;
 
the amount of rent collected from tenants at IRSA CP’s shopping malls;
 
changes in consumer demand and availability of consumer credit, both of which are highly sensitive to general macroeconomic conditions; and
 
fluctuations in occupancy levels in IRSA CP’s shopping malls.
 
An increase in IRSA CP’s operating costs could also have a material adverse effect on IRSA CP if IRSA CP’s tenants were to become unable to pay higher rent IRSA CP may be required to impose as a result of increased expenses. Moreover, the shopping mall business is closely related to consumer spending and affected by prevailing economic conditions. All of IRSA CP’s shopping malls and commercial properties are located in Argentina, and consequently, these operations may be adversely affected by recession or economic uncertainty in Argentina. Persistently poor economic conditions could result in a decline in consumer spending which could have a material adverse effect on shopping mall revenue.
 
IRSA CP’s assets are highly concentrated in certain geographic areas and an economic downturn in such areas could have a material adverse effect on IRSA CP’s results of operations and financial condition.
 
As of June 30, 2021, most of IRSA CP’s revenue from leases and services provided by the Shopping Malls segment derived from properties located in the City of Buenos Aires and the Greater Buenos Aires metropolitan area. In addition, all of IRSA CP’s office buildings are located in Buenos Aires and a substantial portion of IRSA CP’s revenue is derived from such properties. Although IRSA CP owns properties and may acquire or develop additional properties outside Buenos Aires and the Greater Buenos Aires metro area, IRSA CP expects to continue to be largely affected by economic conditions or pandemic effects which could affect these high populated areas. Consequently, an economic downturn in those areas could cause a reduction in IRSA CP’s rental income and adversely affect IRSA CP’s ability to comply with IRSA CP’s debt service and fund operations.
 
 
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IRSA CP’s performance is subject to the risks associated with IRSA CP’s properties and with the real estate industry.
 
IRSA CP’s operating performance and the value of IRSA CP’s real estate assets, and as a result, the value of IRSA CP’s securities, are subject to the risk that IRSA CP’s properties may not be able to generate sufficient revenue to meet IRSA CP’s operating expenses, including debt service and capital expenditures, IRSA CP’s cash flow needs and IRSA CP’s ability to service IRSA CP’s debt service obligations. Events or conditions beyond IRSA CP’s control that may adversely affect IRSA CP’s operations or the value of IRSA CP’s properties include:
 
downturns in national, regional and local economies;
 
decrease in consumer spending and consumption;
 
competition from other shopping malls and sales outlets;
 
local real estate market conditions, such as oversupply or lower demand for retail space;
 
changes in interest rates and availability of financing;
 
the exercise by IRSA CP’s tenants of their right to early termination of their leases;
 
vacancies, changes in market rental rates and the need to periodically repair, renovate and re-lease space;
 
increased operating costs, including insurance expenses, salary increases, utilities, real estate taxes, federal and local taxes and higher security costs;
 
the impact of losses resulting from civil disturbances, strikes, natural disasters, terrorist acts or acts of war;
 
significant fixed expenditures associated with each investment property, such as debt service payments, real estate taxes, insurance and maintenance costs;
 
declines in the financial condition of IRSA CP’s tenants and IRSA CP’s ability to collect rents when due;
 
changes in IRSA CP’s or IRSA CP’s tenants’ ability to provide for adequate maintenance and insurance that result in a reduction in the useful life of a property; and
 
changes in law or governmental regulations (such as those governing usage, zoning and real property taxes) or changes in the exchange controls or government action (such as expropriation).
 
 
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An adverse economic environment for real estate companies and the credit crisis may adversely affect IRSA CP’s results of operations.
 
The success of IRSA CP’s business and profitability of IRSA CP’s operations depends on continued investment in real estate and access to long-term financing. A prolonged crisis of confidence in real estate investments and lack of credit for acquisitions may constrain IRSA CP’s growth and the maintenance of IRSA CP’s current business and operations. As part of IRSA CP’s strategy, IRSA CP intends to increase IRSA CP’s properties portfolio through strategic acquisitions at favorable prices, where IRSA CP believes IRSA CP can bring the necessary expertise to enhance property values. In order to pursue acquisitions, IRSA CP may require capital or debt financing. Recent disruptions in the financial markets may adversely impact IRSA CP’s ability to refinance existing debt and the availability and cost of credit in the future. Any consideration of sales of existing properties or portfolio interests may be offset by lower property values. IRSA CP’s ability to make scheduled payments or to refinance IRSA CP’s existing debt obligations depends on IRSA CP’s operating and financial performance, which in turn is subject to prevailing economic conditions. If disruptions in financial markets prevail or arise in the future, IRSA CP cannot provide assurances that government responses to such disruptions will restore investor confidence, stabilize the markets or increase liquidity and the availability of credit.
 
As of September 2021; Evergrande, one of the biggest chinese real estate company, announced that it would not be able to pay its debt obligations. Since then, markets have been affected negatively by the announcement. As of the date of this prospectus, chinese government is assisting IRSA CP in order to neutralize a high impact in the global economy.
 
IRSA CP’s revenue and profit may be materially and adversely affected by continuing inflation and economic activity in Argentina.
 
IRSA CP’s business is mainly driven by consumer spending since a portion of the revenue from IRSA CP’s Shopping Mall segment derives directly from the sales of IRSA CP’s tenants, whose revenue relies on the sales to consumers. As a result, IRSA CP’s revenue and net income are impacted to a significant extent by economic conditions in Argentina, including the development in the textile industry and domestic consumption, which has experienced significant decline during 2019, 2020 and 2021. Consumer spending is influenced by many factors beyond IRSA CP’s control, including consumer perception of current and future economic conditions, inflation, political uncertainty, rates of employment, interest rates, taxation and currency exchange rates. Any continuing economic slowdown, whether actual or perceived, could significantly reduce domestic consumer spending in Argentina and therefore adversely affect IRSA CP’s business, financial condition and results of operations.
 
The loss of tenants could adversely affect IRSA CP’s operating revenue and value of IRSA CP’s properties.
 
Although no single tenant represents more than 6.2% of IRSA CP’s revenue in any fiscal year, if a significant number of tenants at IRSA CP’s retail or office properties were to experience financial difficulties, including bankruptcy, insolvency or a general downturn of business, or if IRSA CP failed to retain them, IRSA CP’s business could be adversely affected. Further, IRSA CP’s shopping malls typically have a significant “anchor” tenant, such as well-known department stores, that generate consumer traffic at each mall. A decision by such tenants to cease operating at any of IRSA CP’s shopping mall properties could have a material adverse effect on IRSA CP’s financial condition and the results of IRSA CP’s operations. In addition, the closing of one or more stores that attract consumer traffic may motivate other tenants to terminate or to not renew their leases, to seek rent concessions and/or close their stores. Moreover, tenants at one or more properties might terminate their leases as a result of mergers, acquisitions, consolidations, dispositions or bankruptcies. The bankruptcy and/or closure of multiple stores, if IRSA CP is not able to successfully release the affected space, could have a material adverse effect on both the operating revenue and underlying value of the properties involved.
 
 
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IRSA CP may face risks associated with acquisitions of properties.
 
As part of IRSA CP’s growth strategy, IRSA CP has acquired, and intends to do so in the future, properties, including large properties (such as Edificio República, Abasto de Buenos Aires and Alto Palermo Shopping), that tend to increase the size of IRSA CP’s operations and potentially alter IRSA CP’s capital structure. Although IRSA CP believes that the acquisitions IRSA CP has completed in the past and that IRSA CP expects to undertake enhance IRSA CP’s financial performance, the success of such transactions is subject to a number of uncertainties, including the risk that:
 
IRSA CP may not be able to obtain financing for acquisitions on favorable terms;
 
acquired properties may fail to perform as expected;
 
the actual costs of repositioning or redeveloping acquired properties may be higher than IRSA CP’s estimates;
 
acquired properties may be located in new markets where IRSA CP may have limited knowledge and understanding of the local economy, absence of business relationships in the area or are unfamiliar with local governmental and permitting procedures; and
 
IRSA CP may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into IRSA CP’s organization and to manage new properties in a way that allow IRSA CP to realize cost savings and synergies.
 
IRSA CP’s future acquisitions may not be profitable.
 
IRSA CP seeks to acquire additional shopping malls to the extent IRSA CP manages to acquire them on favorable terms and conditions and they meet IRSA CP’s investment criteria. Acquisitions of commercial properties entail general investment risks associated with any real estate investment, including:
 
IRSA CP’s estimates of the cost of improvements needed to bring the property up to established standards for the market may prove to be inaccurate;
 
Properties IRSA CP acquires may fail to achieve, within the time frames IRSA CP project, the occupancy or rental rates IRSA CP expects to achieve at the time IRSA CP makes the decision to acquire, which may result in the properties’ failure to achieve the returns IRSA CP projected;
 
IRSA CP’s pre-acquisition evaluation and the physical condition of each new investment may not detect certain defects or identify necessary repairs, which could significantly increase IRSA CP’s total acquisition costs; and
 
IRSA CP’s investigation of a property or building prior to its acquisition, and any representations IRSA CP may receive from the seller of such building or property, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase IRSA CP’s acquisition cost.
 
If IRSA CP acquires a business, IRSA CP will be required to merge and integrate the operations, personnel, accounting and information systems of such acquired business. In addition, acquisitions of or investments in companies may cause disruptions in IRSA CP’s operations and divert management’s attention away from day-to-day operations, which could impair IRSA CP’s relationships with IRSA CP’s current tenants and employees.
 
 
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The properties IRSA CP acquires may be subject to unknown liabilities.
 
The properties that IRSA CP acquires may be subject to unknown liabilities, in respect to which IRSA CP may have limited or no recourse to the former owners. If a liability were asserted against IRSA CP based on IRSA CP’s ownership of an acquired property, IRSA CP may be required to incur significant expenditures to settle, which could adversely affect IRSA CP’s financial results and cash flow. Unknown liabilities relating to acquired properties could include:
 
liabilities for clean-up of undisclosed environmental contamination;
 
the costs of changes in laws or in governmental regulations (such as those governing usage, zoning and real property taxes); and
 
liabilities incurred in the ordinary course of business.
 
IRSA CP’s dependence on rental income may adversely affect IRSA CP’s ability to meet IRSA CP’s debt obligations.
 
A substantial part of IRSA CP’s revenue is derived from rental income. As a result, IRSA CP’s performance depends on IRSA CP’s ability to collect rent from IRSA CP’s tenants. IRSA CP’s revenue and profits would be negatively affected if a significant number of IRSA CP’s tenants or any significant tenant were to:
 
delay lease commencements;
 
decline to extend or renew leases upon expiration;
 
fail to make rental payments when due; or
 
close stores or declare bankruptcy.
 
Any of these actions could result in the termination of leases and the loss of related rental income. In addition, IRSA CP cannot assure that any tenant whose lease expires will renew that lease or that IRSA CP will be able to re-let the space on economically reasonable terms. The loss of rental revenue from a number of IRSA CP’s tenants and IRSA CP’s inability to replace such tenants may adversely affect IRSA CP’s profitability and IRSA CP’s ability to comply with IRSA CP’s debt service obligations. These factors are particularly disruptive in the context of emergency situations such as the COVID-19 pandemic which has caused significant adverse impacts on IRSA CP’s business as tenants have been required to shut down or significantly reduce their operating activities.
 
It may be difficult to buy and sell real estate quickly and transfer restrictions may apply to part of IRSA CP’s portfolio of properties.
 
Real estate investments are relatively illiquid and this tends to limit IRSA CP’s ability to change the mix of IRSA CP’s portfolio in response to economic circumstances or other conditions. In addition, significant expenditures associated with each investment, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when an investment generates lower revenue. If revenue from a property declines while expenses remain the same, IRSA CP’s results of operations would be adversely affected. Certain properties are mortgaged and if IRSA CP were unable to meet IRSA CP’s underlying payment obligations, IRSA CP could suffer losses as a result of foreclosures on those mortgaged properties. Furthermore, if IRSA CP is required to dispose of one or more of IRSA CP’s mortgaged properties, IRSA CP would not be able to obtain release of the mortgage interest without payment of the associated debt. The foreclosure of a mortgage on a property or inability to sell a property could adversely affect IRSA CP’s business. In this kind of transactions, IRSA CP may agree not to sell the acquired properties for a considerable time which could affect IRSA CP’s results of operations.
 
 
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Some of the land IRSA CP has purchased is not zoned for development and IRSA CP may be unable to obtain, or may face delays in obtaining, the necessary zoning permits and other authorizations.
 
IRSA CP owns several plots of land which are not zoned for IRSA CP’s intended development plans. In addition, IRSA CP has not yet applied for the required land-use, building, occupancy and other required governmental permits and authorizations for these properties. IRSA CP cannot assure that IRSA CP will continue to be successful in IRSA CP’s attempts to rezone land and to obtain all necessary permits and authorizations, or that rezoning efforts and permit requests will not be delayed or rejected. Moreover, IRSA CP may be affected by building moratorium and anti-growth legislation. If IRSA CP is unable to obtain the governmental permits and authorizations IRSA CP needs to develop IRSA CP’s present and future projects as planned, IRSA CP may be forced to make unwanted modifications to such projects or abandon them altogether.
 
IRSA CP’s ability to grow will be limited if IRSA CP cannot obtain additional financing.
 
IRSA CP must maintain liquidity to fund IRSA CP’s working capital, service IRSA CP’s outstanding indebtedness and finance investment opportunities. Without sufficient liquidity, IRSA CP could be forced to curtail IRSA CP’s operations or IRSA CP may not be able to pursue new business opportunities. IRSA CP’s growth strategy is focused on the development and redevelopment of properties IRSA CP already own and the acquisition of additional properties for development. As a result, IRSA CP is likely to have to depend to an important degree on the availability of capital financing, which may or may not be available on favorable terms if at all. IRSA CP cannot assure you that additional financing, refinancing or other capital will be available in the amounts IRSA CP require or on favorable terms. IRSA CP’s access to debt or equity capital markets depends on a number of factors, including the market’s perception of IRSA CP’s growth potential, IRSA CP’s ability to pay dividends, IRSA CP’s financial condition, IRSA CP’s credit rating and IRSA CP’s current and potential future earnings. Depending on these factors, IRSA CP could experience delays or difficulties in implementing IRSA CP’s growth strategy on satisfactory terms or at all.
 
Adverse incidents that occur in IRSA CP’s shopping malls may result in damage to IRSA CP’s reputation and a decrease in the number of customers.
 
Given that IRSA CP’s shopping malls are open to the public, with ample circulation of people, accidents, theft, robbery, public protest, pandemic effects and other incidents may occur in IRSA CP’s facilities, regardless of the preventative measures IRSA CP adopts. If such an incident or series of incidents occurs, shopping mall customers and visitors may choose to visit other shopping venues that they believe are safer, which may cause a reduction in the sales volume and operating income of IRSA CP’s shopping malls.
 
Argentine laws governing leases impose restrictions that limit IRSA CP’s flexibility.
 
Argentine laws governing leases impose certain restrictions, including the following:
 
a prohibition on including automatic price adjustment clauses based on inflation increases in leases; and
 
the imposition of a two-year minimum lease term for all purposes, except in particular cases such as embassy, consulate or international organization venues, room with furniture for touristic purposes for less than three months, custody and bailment of goods, exhibition or offering of goods in fairs or in cases where due to the circumstances, the subject matter of the lease requires a shorter term.
 
As a result, IRSA CP is exposed to the risk of higher rates of inflation under IRSA CP’s leases, and any exercise of rescission rights by IRSA CP’s tenants could materially and adversely affect IRSA CP’s business and results of operations. IRSA CP cannot assure that IRSA CP’s tenants will not exercise such right, especially if rental rates stabilize or decline in the future or if economic conditions continue to deteriorate.
 
 
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IRSA CP may be liable for certain defects in IRSA CP’s buildings.
 
The Argentine Civil and Commercial Code imposes liability for real estate developers, builders, technical project managers and architects in case of hidden defects in a property for a period of three years from the date title on the property is tendered to the purchaser, even when those defects did not cause significant property damage. If any defect affects the structural soundness or make the property unfit for use, the liability term is ten years.
 
In IRSA CP’s real estate developments, IRSA CP usually acts as developers and sellers while construction generally is carried out by third party contractors. Absent a specific claim, IRSA CP cannot quantify the potential cost of any obligation that may arise as a result of a future claim, and IRSA CP has not recorded provisions associated with them in IRSA CP’s financial statements. If IRSA CP was required to remedy any defects on completed works, IRSA CP’s financial condition and results of operations could be adversely affected.
 
IRSA CP could have losses if IRSA CP has to resort to eviction proceedings in Argentina to collect unpaid rent because such proceedings are complex and time-consuming.
 
Although Argentine law permits filing of an executive proceeding to collect unpaid rent and a special proceeding to evict tenants, eviction proceedings in Argentina are complex and time-consuming. Historically, the heavy workloads of the courts and the numerous procedural steps required have generally delayed landlords’ efforts to evict tenants. Eviction proceedings generally take between six months and two years from the date of filing of the suit to the time of actual eviction.
 
Historically, IRSA CP has sought to negotiate the termination of leases with defaulting tenants after the first few months of non-payment in an effort to avoid legal proceedings. Delinquency may increase significantly in the future, and such negotiations with tenants may not be as successful as they have been in the past. Moreover, new Argentine laws and regulations may forbid or restrict eviction, and in each such case they would likely have a material and adverse effect on IRSA CP’s financial condition and results of operations.
 
Climate change may have adverse effects on IRSA CP’s business
 
IRSA CP, IRSA CP’s customers, and communities in which IRSA CP operates, may be adversely affected by the physical risks of climate change, including increases in temperatures, sea levels, and the frequency and severity of adverse climatic events including fires, storms, floods and droughts. These effects, whether acute or chronic in nature, may directly impact IRSA CP and its customers through disruptions to business and economic activity or impacts on income and asset values.
 
Initiatives to mitigate or respond to climate change may impact market and asset prices, economic activity, and customer behavior, particularly in emissions intensive industry sectors and geographies affected by these changes.
 
Failure to effectively manage and disclose these risks could adversely affect IRSA CP’s business, prospects, reputation, financial performance or financial condition.
 
The recurrence of a credit crisis could have a negative impact on IRSA CP’s major customers, which in turn could materially adversely affect IRSA CP’s results of operations and liquidity.
 
The global credit crisis has a significant negative impact on businesses around the world. Similarly, Argentina is undergoing a credit crisis that could negatively impact IRSA CP’s tenants’ ability to comply with their lease obligations. The impact of a future credit crisis on IRSA CP’s major tenants cannot be predicted and may be quite severe. A disruption in the ability of IRSA CP’s significant tenants to access liquidity could pose serious disruptions or an overall deterioration of their businesses, which could lead to a significant reduction in future orders of their products and their inability or failure to comply with their obligations, any of which could have a material adverse effect on IRSA CP’s results of operations and liquidity.
 
 
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IRSA CP is subject to risks inherent to the operation of office buildings that may affect IRSA CP’s profitability.
 
Office buildings are exposed to various factors that may affect their development, administration and profitability, including the following factors:
 
lower demand for office space;
 
a deterioration in the financial condition of IRSA CP’s tenants that causes defaults under leases due to lack of liquidity, access to capital or for other reasons;
 
difficulties or delays renewing leases or re-leasing space;
 
decreases in rents as a result of oversupply, particularly offerings at newer or re-developed properties;
 
competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from IRSA CP’s tenants;
 
maintenance, repair and renovation costs incurred to maintain the competitiveness of IRSA CP’s office buildings;
 
exchange controls that may interfere with their ability to pay rents that generally are pegged to the U.S. dollar;
 
the consequences of a pandemic, epidemic or disease outbreak that would produce lower demand for offices spaces; and
 
an increase in IRSA CP’s operating costs, caused by inflation or by other factors could have a material adverse effect on us if IRSA CP’s tenants are unable to pay higher rent as a result of increased expenses.
 
IRSA CP’s investment in property development and management activities may be less profitable than IRSA CP anticipates.
 
IRSA CP is engaged in the development and construction of properties to be used for office, residential or commercial purposes, shopping malls and residential complexes, in general through third-party contractors. Risks associated with IRSA CP’s development, reconversion and construction activities include the following, among others:
 
abandonment of development opportunities and renovation proposals;
 
construction costs may exceed IRSA CP’s estimates for reasons including higher interest rates or increases in the cost of materials and labor, making a project unprofitable;
 
occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors, including market and economic conditions, resulting in lower than projected rental revenue and a corresponding lower return on IRSA CP’s investment;
 
pre-construction buyers may default on their purchase contracts or units in new buildings may remain unsold upon completion of construction;
 
lack of affordable financing alternatives in the private and public debt markets;
 
sale prices of residential units may be insufficient to cover development costs;
 
 
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construction and lease commencements may not be completed on schedule, resulting in increased debt service expense and construction costs;
 
failure or delays in obtaining necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, or building moratoria and anti-growth legislation;
 
significant time lags between the commencement and completion of projects subjects IRSA CP to greater risks due to fluctuation in the general economy;
 
construction may be delayed because of a number of factors, including weather, strikes or delays in receipt of zoning or other regulatory approvals, or man-made or natural disasters, resulting in increased debt service expense and construction costs;
 
changes in IRSA CP’s tenants’ demand for rental properties outside of Buenos Aires; and
 
IRSA CP may incur capital expenditures that require considerable time and effort and which may never be completed due to government restrictions or overall market conditions.
 
In addition, IRSA CP may face claims for the enforcement of labor laws in Argentina. Many companies hire personnel from third-parties that provide outsourced services, and sign indemnity agreements if labor claims from employees of such third company arise. However, in recent years several courts have rejected the existence of independence in those labor relations and ruled that joint and several responsibility by both companies.
 
IRSA CP is subject to risks associated with property development, such as cost overruns, design changes and timing delays arising from a lack of availability of materials and labor, weather conditions and other factors outside of IRSA CP’s control, as well as financing costs that, may exceed original estimates, possibly making the associated investment unprofitable. Any delays or unanticipated expenses could adversely affect the investment returns from these development projects and harm IRSA CP’s operating results.
 
Greater than expected increases in construction costs could adversely affect the profitability of IRSA CP’s new developments.
 
IRSA CP’s businesses activities include real estate developments. One of the main risks related to this activity corresponds to potential increases in constructions costs, which may be driven by higher demand and new development projects in the shopping malls and buildings sectors. Increases higher than those included in the original budget may result in lower profitability than expected.
 
The increasingly competitive real estate sector in Argentina may adversely affect IRSA CP’s ability to rent or sell office space and other real estate and may affect the sale and lease price of IRSA CP’s premises.
 
IRSA CP’s real estate activities are highly concentrated in the Buenos Aires metropolitan area where the market is highly competitive due to a scarcity of properties in sought-after locations and an increasing number of local and international competitors. The Argentine real estate industry is highly competitive and fragmented and does not have high barriers to entry for new competitors. The main competitive factors in the real estate development business include availability and location of land, price, funding, design, quality, reputation and partnerships with developers. A number of residential and commercial developers and real estate service companies compete in identifying land acquisition opportunities, attracting financial resources, and appealing to prospective purchasers and tenants. Other companies, including joint ventures of foreign and local companies, have become increasingly active in the market, further increasing competition. If one or more of IRSA CP’s competitors is able to acquire and develop desirable properties, because it has access to greater financial resources or otherwise, if IRSA CP is unable to respond to such pressures as promptly as IRSA CP’s competitors, or competition increases, IRSA CP’s business and financial condition could be adversely affected.
 
 
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All of IRSA CP’s shopping mall and commercial office properties are located in Argentina. There are other shopping malls and independent retail stores and residential properties that are within the geographic scope of each of IRSA CP’s properties. The number of competing properties in a particular area could have a material adverse effect both on IRSA CP’s ability to lease retail space in IRSA CP’s shopping malls or sell units in IRSA CP’s residential complexes and on the amount of rent or the sale price that IRSA CP is able to charge. IRSA CP cannot assure that other shopping mall operators will not invest in Argentina in the near future. If additional competitors become active in the shopping mall segment, such competition could have a material adverse effect on IRSA CP’s results of operations.
 
Substantially all of IRSA CP’s offices and other non-shopping mall rental properties are located in developed urban areas. There are many office buildings, shopping malls, retail and residential premises in the areas where IRSA CP’s properties are located. This is a highly fragmented market, and the abundance of comparable properties in IRSA CP’s vicinity may adversely affect IRSA CP’s ability to rent or sell office space and other real estate and may affect the sale and lease price of IRSA CP’s premises. In the future, both national and foreign companies may participate in Argentina’s real estate development market, competing with us for business opportunities.
 
Some potential losses are not covered by insurance and certain kinds of insurance coverage may become prohibitively expensive.
 
IRSA CP currently carries insurance policies that cover potential risks such as civil liability, fire, lost profit and floods, including extended coverage and losses from leases on all of IRSA CP’s properties. Although IRSA CP believes the policy specifications and insured limits of these policies are customary, there are certain types of losses, such as lease and other contract claims, terrorism and acts of war that generally are not insured under the insurance policies offered in Argentina. In the event of a loss that was not insured or a loss in excess of insured limits, IRSA CP could lose all or a portion of the capital IRSA CP have invested in a property, as well as its anticipated future revenue. In such an event, IRSA CP might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. IRSA CP cannot assure that material losses in excess of insurance proceeds will not occur in the future. If any of IRSA CP’s properties were to experience a catastrophic loss, it could seriously disrupt IRSA CP’s operations, delay revenue and result in large expenses to repair or rebuild the property. Insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and the existence of mold, or, if offered, these types of insurance may become too expensive.
 
IRSA CP do not have life or disability insurance for IRSA CP’s key employees. If any of IRSA CP’s key employees were to die or become disabled, IRSA CP could experience losses caused by a disruption in IRSA CP’s operations which will not be covered by insurance, and this could have a material adverse effect on IRSA CP’s financial condition and results of operations.
 
An uninsured loss or a loss that exceeds policy limits could subject IRSA CP to lost capital or revenue on those properties.
 
The terms of IRSA CP’s standard form property leases currently in effect, require tenants to indemnify and hold IRSA CP harmless from liabilities resulting from injury to persons or property at or outside the premises, due to activities conducted on the properties, except for claims arising from negligence or intentional misconduct of IRSA CP’s agents. Tenants are generally required, at the tenant’s expense, to obtain and keep in full force during the term of the lease, liability insurance policies. IRSA CP cannot provide assurance that IRSA CP’s tenants will be able to properly maintain their insurance policies or have the ability to pay deductibles. If an uninsured loss occurs or a loss arises that exceeds the combined aggregate limits for the policies, or if a loss arises that is subject to a substantial deductible under an insurance policy, IRSA CP could lose all or part of IRSA CP’s capital invested in, and anticipated revenue from, one or more of IRSA CP’s properties, which could have a material adverse effect on IRSA CP’s business, financial condition and results of operations.
 
 
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Demand for IRSA CP’s premium properties, aimed at high-income consumers, may not be sufficient.
 
IRSA CP has focused on development projects that cater to affluent consumers and IRSA CP has entered into property barter arrangements pursuant to which IRSA CP contributes undeveloped land parcels to joint venture entities with developers who agree to deliver units at premium development locations in exchange for IRSA CP’s land contribution. When the developers return these properties to IRSA CP, demand for premium residential units could be significantly lower. In such case, IRSA CP would be unable to sell these residential units at the estimated prices or time frame, which could have an adverse effect on IRSA CP’s financial condition and results of operations.
 
IRSA CP’s level of debt may adversely affect IRSA CP’s operations and IRSA CP’s ability to pay IRSA CP’s debt as it becomes due.
 
 
IRSA CP had, and expects to have, substantial liquidity and capital resource requirements to finance IRSA CP’s business. As of June 30, 2021, IRSA CP’s consolidated financial debt amounted to ARS 42,922 million, including accrued and unpaid interest and deferred financing costs. Although IRSA CP generates sufficient funds from IRSA CP’s operating cash flows to meet IRSA CP’s debt service obligations and IRSA CP’s ability to obtain new financing is adequate, considering the current limited availability of loan financing in Argentina, IRSA CP cannot assure that IRSA CP will have sufficient cash flows and adequate financial structure in the future. On September 15, 2020, Communication “A” 7,106 established that companies must refinance maturities of financial debt capital in the period from October 15, 2020 to March 31, 2021. In this sense, the Argentine Central Bank will give access to companies for less than 40% of maturities and companies must refinance the rest within at least two years. For more information see. “Exchange Controls.”
 
The success of IRSA CP’s business and the feasibility of IRSA CP’s transactions depend on the continuity of investments in the real estate markets and IRSA CP’s ability to access capital and debt financing. In the long-term, lack of confidence in real estate investments and lack of access to credit for acquisitions could restrict growth. As part of IRSA CP’s business strategy, IRSA CP will strive to increase IRSA CP’s real estate portfolio through strategic acquisitions of properties at favorable prices and properties with added value which IRSA CP believes meet the requirements to increase the value of IRSA CP’s properties.
 
IRSA CP may not be able to generate sufficient cash flows from operations to satisfy IRSA CP’s debt service requirements or to obtain future financing. If IRSA CP cannot satisfy IRSA CP’s debt service requirements or if IRSA CP default on any financial or other covenants in IRSA CP’s debt arrangements, the lenders and/or holders of IRSA CP’s securities will be able to accelerate the maturity of such debt or default under other debt arrangements. IRSA CP’s ability to service debt obligations or to refinance them will depend upon IRSA CP’s future financial and operating performance, which will, in part, be subject to factors beyond IRSA CP’s control such as macroeconomic conditions and regulatory changes in Argentina. If IRSA CP cannot obtain future financing, IRSA CP may have to delay or abandon some or all of IRSA CP’s planned capital expenditures, which could adversely affect IRSA CP’s ability to generate cash flows and repay IRSA CP’s obligations as they become due.
 
 
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The shift by consumers to purchasing goods over the internet, where barriers to entry are low, may negatively affect sales at IRSA CP’s shopping malls.
 
In recent years, internet retail sales have grown significantly in Argentina, even though the market share of such sales is still modest. The Internet enables manufacturers and retailers to sell directly to consumers, diminishing the importance of traditional distribution channels such as retail stores and shopping malls. IRSA CP believes that IRSA CP’s target consumers are increasingly using the Internet, from home, work or elsewhere, to shop electronically for retail goods, and this trend is likely to continue. Retailers at IRSA CP’s properties face increasing competition from online sales and this could cause the termination or non-renewal of their leases or a reduction in their gross sales, affecting IRSA CP’s percentage rent based revenue. If e commerce and retail sales through the Internet continue to grow, retailers’ and consumers’ reliance on IRSA CP’s shopping malls could be materially diminished, having a material adverse effect on IRSA CP’s financial condition, results of operations and business prospects.
 
IRSA CP’s business is subject to extensive regulation and additional regulations may be imposed in the future.
 
IRSA CP’s activities are subject to Argentine federal, state and municipal laws, and to regulations, authorizations and licenses required with respect to construction, zoning, use of the soil, environmental protection and historical landmark preservation, consumer protection, antitrust and other requirements, all of which affect IRSA CP’s ability to acquire land, buildings and shopping malls, develop and build projects and negotiate with customers. In addition, companies in this industry are subject to increasing tax rates, the introduction of new taxes and changes in the taxation regime. IRSA CP is required to obtain permits from different government agencies in order to carry out IRSA CP’s projects. Maintaining IRSA CP’s licenses and authorizations can be costly. If IRSA CP fail to comply with such laws, regulations, licenses and authorizations, IRSA CP may face fines, project shutdowns, and cancellation of licenses and revocation of authorizations.
 
In addition, public agencies may issue new and stricter standards, or enforce or construe existing laws and regulations in a more restrictive manner, which may force us to incur expenditures in order to comply. Development activities are also subject to risks of potential delays in or an inability to obtain all necessary zoning, environmental, land-use, development, building, occupancy and other permits and authorizations. Any such delays or failures to obtain such government approvals may have an adverse effect on IRSA CP’s business.
 
In the past, the Argentine government regulations regarding leases in response to housing shortages, high rates of inflation and difficulties in accessing credit. Such regulations limited or prohibited increases on rental prices and prohibited eviction of tenants, even for failure to pay rent. Most of IRSA CP’s leases provide that tenants pay all costs and taxes related to their respective leased areas. In the event of a significant increase in such costs and taxes, the Argentine government may respond to political pressure to intervene by regulating this practice, thereby negatively affecting IRSA CP’s rental income. IRSA CP cannot assure that the Argentine government will not impose similar or other regulations in the future. Changes in existing laws or the enactment of new laws governing the ownership, operation or leasing of shopping malls and office properties in Argentina could negatively affect the real estate and the rental market and materially and adversely affect IRSA CP’s operations and financial condition.
 
IRSA CP is dependent on IRSA CP’s Chairman, Eduardo Sergio Elsztain, IRSA CP’s Board of Directors and IRSA CP’s controlling shareholder IRSA.
 
IRSA CP’s success, to a significant extent, depends on the continued employment of Eduardo Sergio Elsztain and certain other members of IRSA CP’s Board of Directors and senior management, who have significant expertise and knowledge of IRSA CP’s business and industry. The loss or interruption of their services for any reason could have a material adverse effect on IRSA CP’s business and results of operations. IRSA CP’s future success also depends in part upon IRSA CP’s ability to attract and retain other highly qualified personnel. IRSA CP cannot assure that IRSA CP will be successful in hiring or retaining qualified personnel, or that any of IRSA CP’s personnel will remain employed by IRSA CP.
 
 
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Further, IRSA CP believe that IRSA CP’s success also depends, to a significant extent, on the continued success of IRSA which owns approximately 79.9% of IRSA CP’s outstanding shares as of June 30, 2021. IRSA is engaged in a range of real estate, investment and other business activities, many of which are different from IRSA CP’s business, including IRSA’s significant investments in Banco Hipotecario, an Argentine bank.. As a result, IRSA is exposed to certain important risks, as described in IRSA CP Audited Financial Statements and its filings with the SEC, which under certain circumstances could have a material adverse effect on its financial condition, results of operations and business prospects. IRSA CP cannot assure that IRSA will not be adversely affected by the risks that it faces (including those relating to its investments in Banco Hipotecario), and IRSA CP believes that if IRSA were to be so affected, the market perception of the group of companies controlled by Eduardo Sergio Elsztain, including IRSA CP, could be adversely affected as well.
 
Labor relations may negatively impact IRSA CP
 
As of June 30, 2021, 44.2% of IRSA CP’s workforce was represented by unions under collective bargaining agreements. Although IRSA CP currently enjoys good relations with IRSA CP’s employees and their unions, IRSA CP cannot assure that labor relations will continue to be positive or that deterioration in labor relations will not materially and adversely affect IRSA CP.
 
IRSA CP’s results of operations include unrealized revaluation adjustments on investment properties, which may fluctuate significantly over financial periods and may materially and adversely affect IRSA CP’s business, results of operations and financial condition.
 
During the year ended June 30, 2021, IRSA CP had fair value loss on investment properties of ARS 13,946 million. Although the upward or downward revaluation adjustments reflect unrealized capital gains or losses on IRSA CP’s investment properties during the relevant periods, the adjustments do not reflect the actual cash flow or profit generated from the sales or rental of IRSA CP’s investment properties. Unless such investment properties are disposed of at similarly revalued amounts, IRSA CP will not realize the actual cash flow. The amount of revaluation adjustments has been, and will continue to be, significantly affected by the prevailing property markets and will be subject to market fluctuations in those markets.
 
IRSA CP cannot guarantee whether changes in market conditions will increase, maintain or decrease the historical average fair value gains on IRSA CP’s investment properties or at all. In addition, the fair value of IRSA CP’s investment properties may materially differ from the amount IRSA CP receive from any actual sale of an investment property. If there is any material downward adjustment in the revaluation of IRSA CP’s investment properties in the future or if IRSA CP’s investment properties are disposed of at significantly lower prices than their valuation or appraised value, IRSA CP’s business, results of operations and financial condition may be materially and adversely affected.
 
 
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Due to the currency mismatches between IRSA CP’s assets and liabilities, IRSA CP has high currency exposure.
 
As of June 30, 2021, the majority of IRSA CP’s liabilities, such as IRSA CP’s Series 2, were denominated in U.S. dollars while IRSA CP’s revenue are mainly denominated in pesos. This currency gap and restrictions to access to foreign exchange markets to acquire the required U.S. dollars to pay IRSA CP’s U.S. dollar denominated debt, exposes IRSA CP to a risk of volatility, which circumstances may adversely affect IRSA CP’s financial results if the U.S. dollar appreciates against the peso and may affected IRSA CP’s ability to IRSA CP’s U.S. dollar denominated debt. Any depreciation of the peso against the U.S. dollar increases the nominal amount of IRSA CP’s debt in pesos, which further adversely affects IRSA CP’s results of operation and financial condition and may increase the collection risk of IRSA CP’s leases and other receivables from IRSA CP’s tenants and mortgagees, most of which generate peso denominated revenue.
 
IRSA CP issues debt in the local and international capital markets as one of IRSA CP’s main sources of funding and IRSA CP’s capacity to successfully access the local and international markets on favorable terms affects IRSA CP’s cost of funding.
 
IRSA CP’s ability to successfully access the local and international capital markets on acceptable terms depends largely on capital markets conditions prevailing in Argentina and internationally. IRSA CP has no control over capital markets conditions, which can be volatile and unpredictable. If IRSA CP is unable to issue debt in the local and/or international capital markets and on terms acceptable to IRSA CP, whether as a result of regulations and foreign exchange restrictions, a deterioration in capital markets conditions or otherwise, IRSA CP would likely be compelled to seek alternatives for funding, which may include short-term or more expensive funding sources. If this was to happen, IRSA CP may be unable to fund IRSA CP’s liquidity needs at competitive costs and IRSA CP’s business results of operations and financial condition may be materially and adversely affected.
 
Property ownership through joint ventures or investees may limit IRSA CP’s ability to act exclusively in IRSA CP’s interest.
 
IRSA CP develops and acquires properties in joint ventures with other persons or entities or make minority investments in entities when IRSA CP believes circumstances warrant the use of such structures. For example, IRSA CP currently owns 50% of Quality Invest S.A. (“Quality Invest”), a joint venture that holds IRSA CP’s investment in the Nobleza Piccardo plant. IRSA CP could engage in a dispute with one or more of IRSA CP’s joint venture partners or controlling shareholder in an investment that might affect IRSA CP’s ability to operate a jointly-owned property. Moreover, IRSA CP’s joint venture partners or controlling shareholder in an investment may, at any time, have business, economic or other objectives that are inconsistent with IRSA CP’s objectives, including objectives that relate to the timing and terms of any sale or refinancing of a property. For example, the approval of certain of IRSA CP’s investors is required with respect to operating budgets and refinancing, encumbering, expanding or selling any of these properties. In some instances, IRSA CP’s joint venture partners or controlling shareholder in an investment may have competing interests in their markets that could create conflicts of interest. If the objectives of IRSA CP’s joint venture partners or controlling shareholder in an investment are inconsistent with IRSA CP’s own objectives, IRSA CP will not be able to act exclusively in IRSA CP’s interests.
 
If one or more of the investors in any of IRSA CP’s jointly owned properties were to experience financial difficulties, including bankruptcy, insolvency or a general downturn of business, there could be an adverse effect on the relevant property or properties and in turn, on IRSA CP’s financial performance. Should a joint venture partner or controlling shareholder in an investment declare bankruptcy, IRSA CP could be liable for IRSA CP’s partner’s common share of joint venture liabilities or liabilities of the investment vehicle.

Risks Related to IRSA’s Securities and Business
 
You should read and consider the risk factors specific to IRSA’s securities and business. These risks are described in the IRSA 2021 Form 20-F and in other documents that are incorporated by reference into this document. See “Where You Can Find More Information” for more detail on the information incorporated by reference in this document.
 
 
 
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THE IRSA CP EXTRAORDINARY GENERAL SHAREHOLDERS’ MEETING
 
Date, Time, Place, Purpose and Agenda of the IRSA CP Extraordinary General Shareholders Meeting
 
The extraordinary general shareholders’ meeting of IRSA CP will be held on            , 20     , at             Buenos Aires time, at         , either in person or through remote communication.
 
The purpose of the extraordinary general shareholders’ meeting is to consider and to vote on the proposal to merge IRSA CP into IRSA as contemplated by the Preliminary Merger Agreement dated as of September 30, 2021.
 
The tentative agenda for the extraordinary general shareholders’ meeting is as follows:
 
Approval of the Merger whereby IRSA CP shall merge into IRSA by way of absorption by IRSA of IRSA CP without liquidation of IRSA CP, as contemplated by (i) the preliminary Merger agreement executed by IRSA CP and IRSA, following the announcement of the Merger in the Argentine Official Gazette and a major Argentine newspaper, and (ii) the special purpose separate statement of financial position;
 
approval of the Merger Exchange Ratios;
 
the dissolution without liquidation of IRSA CP;
 
discharge of the directors and the auditors of IRSA CP;
 
the authorization to execute and deliver the definitive merger agreement on behalf of IRSA CP; and
 
the authorization to carry out all the actions necessary to comply with the Merger.
 
Who Can Vote at the IRSA CP Extraordinary General Shareholders Meeting
 
All holders of IRSA CP Shares as of              , 20    , are entitled to vote on the Merger at the extraordinary general shareholders’ meeting to be held on              , 20    . Holders may cast 1 vote for each IRSA CP Share (and 4 votes for each IRSA CP ADS) that they own on the date indicated above. Such voting rights are governed by Article 26 of the bylaws (estatutos) of IRSA CP, which incorporate by reference the provisions of Section 244 of the Argentine Corporations Law. Holders of IRSA CP ADSs are not entitled to attend the meeting, but they are invited to give voting instructions to the IRSA ADS Depositary to vote the IRSA CP Shares underlying their IRSA CP ADSs upon the terms set forth in the deposit agreement governing the IRSA CP ADSs. As of the date of this prospectus, IRSA’s board of directors has not decided whether IRSA will vote the 432,545,580 IRSA CP Shares owned by IRSA, representing 79.92% of the total outstanding capital stock of IRSA CP at IRSA CP shareholders’ meeting.
 
The Merger cannot be effected unless IRSA CP and IRSA shareholders adopt the decision to merge as contemplated by the Preliminary Merger Agreement (among other conditions set forth in this prospectus). The Merger of IRSA CP with and into IRSA will require the affirmative votes of (i) holders of more than 50% of the total issued and outstanding share capital of IRSA CP, including IRSA CP Shares represented by IRSA CP ADSs, at an extraordinary general shareholders’ meeting of IRSA CP and (ii) holders of more than 50% of the IRSA Shares of the total issued and outstanding share capital of IRSA, including IRSA Shares represented by IRSA GDSs, at an extraordinary general shareholders’ meeting of IRSA.
  
 
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In order to validly hold an extraordinary general shareholders’ meeting at these companies, at least 60% of the total issued and outstanding share capital of each of IRSA and IRSA CP must be present or represented at the meeting following the first call. In regards to celebrating an extraordinary general shareholders’ meeting on second call, pursuant to Section 244 of the Argentine Corporations Law, at least a majority of the total issued and outstanding share capital is required to be present to validly celebrate any such meeting.
  
Holders of IRSA CP Shares. Holders of IRSA CP Shares who intend to attend the extraordinary general shareholders’ meeting must notify IRSA CP of their intention to do so at least 3 business days prior to the date of such meeting through a written notice signed by the holder of the IRSA CP Shares or an authorized representative acting on such holder’s behalf. Along with the written notice, a statement of account crediting the ownership of the shares (or a beneficial interest therein) issued by Caja de Valores S.A. or other authorized clearing system where the IRSA CP Shares are registered shall be submitted.
 
Holders of IRSA CP ADSs. In order to exercise their voting rights at the extraordinary general shareholders’ meeting in person or by proxy, holders of IRSA CP ADSs whose ownership is directly or indirectly recorded in the ADR register of the IRSA CP ADS Depositary must follow the instructions described under “—Manner of Voting—Holders of IRSA CP ADSs Whose Ownership is Directly Recorded in the IRSA CP ADS Depositary’s IRSA CP ADR Register” or “—Manner of Voting—Beneficial Owners of IRSA CP ADSs Whose Ownership is Indirectly Recorded in the IRSA CP ADS Depositary’s IRSA CP ADR Register,” as applicable.
 
Under Argentine law, dissenters’ rights will not be available for holders of IRSA CP Shares or IRSA CP ADSs who vote against the Merger, as the IRSA Shares to be issued in exchange for the IRSA CP Shares are admitted for public trading or offering. Dissenting holders of IRSA CP Shares or IRSA CP ADSs may only exercise dissenter’s rights in the event that the IRSA Shares offered to holders are denied registration or delisted from public trading or offering.
 
Vote Required for Adoption of Decision to Merge
 
In order to effect the Merger, holders of IRSA CP Shares, including holders of IRSA CP Shares represented by IRSA CP ADSs must adopt the decision to merge IRSA CP into IRSA as contemplated by the Preliminary Merger Agreement. The Merger of IRSA CP with and into IRSA will require the affirmative votes of holders of more than 50% of the total issued and outstanding share capital of IRSA CP, including IRSA CP Shares represented by IRSA CP ADSs, at an extraordinary general shareholders’ meeting of IRSA CP.
 
In order to validly hold an extraordinary general shareholders’ meeting at these companies, at least 60% of the total issued and outstanding share capital of IRSA CP must be present or represented at the meeting following the first call. In regards to celebrating an extraordinary general shareholders’ meeting on second call, pursuant to Section 244 of the Argentine Corporations Law, at least a majority of the total issued and outstanding share capital is required to be present to validly celebrate any such meeting.
  
Manner of Voting
 
Holders of IRSA CP Shares may submit their vote for or against the submitted proposal or abstain from voting at the IRSA CP extraordinary general shareholders’ meeting in person or by personal proxy. All IRSA CP Shares entitled to vote and represented by duly completed proxies received prior to the IRSA CP extraordinary general shareholders’ meeting in accordance with the applicable formalities, and not revoked, will be voted at the IRSA CP extraordinary general shareholders’ meeting as instructed on the proxies.
 
 
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Directors, syndics, managers and other employees of IRSA CP may not be proxies. Proxies may be granted through private instrument with the signature certified by a notary public and legalized by apostille if certified abroad. This prospectus does not constitute a proxy statement. We are not asking you for a proxy and you are requested not to send us a proxy.
 
Holders of IRSA CP ADSs Whose Ownership is Directly Recorded in the IRSA CP ADS Depositary’s IRSA CP ADR Register
 
The IRSA CP ADS Depositary may, after consultation with IRSA CP if practicable, fix a record date (which, to the extent applicable, shall be as near as practicable to any corresponding record date set by the IRSA CP) for the determination of the holders of IRSA CP ADSs who are entitled to give instructions for the exercise of any voting right. Only the holders of IRSA CP ADSs on such record date shall be entitled to give such voting instructions.
 
As soon as practicable after receipt from the IRSA CP of notice of any meeting or solicitation of consents or proxies of holders of IRSA CP Shares, the IRSA CP ADS Depositary shall distribute to holders of IRSA CP ADSs a notice stating (i) such information as is contained in such notice and any solicitation materials, (ii) that each IRSA CP ADS holder on the record date set by the IRSA CP ADS Depositary therefor will, subject to any applicable provisions of Argentine law, be entitled to instruct the IRSA CP ADS Depositary as to the exercise of the voting rights, if any, pertaining to the IRSA CP Shares represented by the ADSs and (iii) the manner in which such instructions may be given. Upon receipt of instructions of a IRSA CP ADS holder on such record date in the manner and on or before the date established by the IRSA CP ADS Depositary for such purpose, the IRSA CP ADS Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing the IRSA CP Shares to vote or cause to be voted the IRSA CP Shares represented by the IRSA CP ADSs in accordance with such instructions. The IRSA CP Depositary will not itself exercise any voting discretion in respect of any IRSA CP ADSs.
 
There is no guarantee that IRSA CP ADS holders generally will receive the notice described above with sufficient time to enable such holder to return any voting instructions to the IRSA CP ADS Depositary in a timely manner.
 
Notwithstanding anything else contained in the IRSA CP ADS deposit agreement, the IRSA CP ADS Depositary shall not have any obligation to take any action with respect to any shareholders’ meeting, or solicitation of consents or proxies, of holders of shares if the taking of such action would violate U.S. or Argentine laws.
 
Any shareholder of IRSA CP who votes on any matter involving IRSA CP in which the shareholder’s interests conflict with the interests of IRSA CP may under Argentine law be liable for damages to IRSA CP resulting from the shareholder’s vote but only if the matter would not have been approved without the shareholder’s vote. In addition, under Argentine law, shareholders who vote in favor of a resolution that is subsequently declared void by a court as contrary to Argentine law, applicable Argentine regulations or the bylaws (estatutos) may be held jointly and severally liable for damages to the company, other shareholders or third parties resulting from that resolution.

Beneficial Owners of IRSA CP ADSs Whose Ownership is Indirectly Recorded in the IRSA CP ADS Depositary’s IRSA CP ADR Register
 
Beneficial owners of IRSA CP ADSs whose IRSA CP ADSs are held by a custodial entity such as a bank, broker, custodian or other securities intermediary and who wish to vote at the extraordinary general shareholders’ meeting should follow the instructions received from their securities intermediary as to how to give voting instructions with respect to their IRSA CP ADSs with sufficient time prior to the extraordinary general shareholders’ meeting.
 
 
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THE MERGER
 
The following is a description of the material aspects of the Merger. While we believe that the following description covers the material terms of the Merger, the description may not contain all the information that is important to you. We encourage you to read carefully this entire prospectus, including the Preliminary Merger Agreement, a copy of which is incorporated by reference to this prospectus, for a more complete understanding of the Merger.
 
Overview
 
The Merger is subject to the terms and conditions set forth in the Preliminary Merger Agreement. On September 30, 2021, each of the Boards of Directors of IRSA CP and IRSA approved the Preliminary Merger Agreement and the transactions contemplated thereunder. At the effective time of the Merger, IRSA CP will merge into IRSA by way of absorption by IRSA of IRSA CP, without liquidation of IRSA CP. The surviving company will continue to be known as “IRSA Inversiones y Representaciones Sociedad Anónima.” IRSA CP shareholders will receive the Merger consideration upon the terms set forth in the Preliminary Merger Agreement and as further described under “The Merger Agreement—Merger Consideration.”
 
Upon consummation of the Merger described in this prospectus, IRSA CP will cease to exist, IRSA will assume all of the rights and obligations of IRSA CP, and the holders of IRSA CP Shares and IRSA CP ADSs other than us will receive IRSA Shares and IRSA GDSs, respectively, in exchange therefor. Any IRSA CP Securities owned by us will not be exchanged for IRSA Securities and will be cancelled in connection with the consummation of the Merger. Therefore, if the Merger is consummated, holders of IRSA CP Shares and/or IRSA CP ADSs will cease to have any equity interest in IRSA Propiedades Comerciales S.A.
 
If the Merger is not consummated, holders of IRSA CP Securities will remain holders of IRSA CP Shares or IRSA CP ADSs, as the case may be. Currently, there are 471,121,146 IRSA CP Shares (87% of the total IRSA CP Shares) and 17,527,218 IRSA CP ADSs (13% of the total IRSA CP Shares) in public circulation.
 
Background of the Merger
 
Applicable Legal Framework
 
The Merger will be implemented in accordance with Sections 82 and 83 and the remaining applicable provisions of the Argentine Corporations Law, Section 77 et seq. of the Argentine Income Tax Law, and applicable rules from the CNV and ByMA.
 
Preliminary Merger Agreement
 
On September 30, 2021, the Boards of Directors of the Companies approved the execution of the Preliminary Merger Agreement and the filing with the CNV and ByMA of the prior authorization request for the Merger by filing, among other documentation, a form of reorganization prospectus (prospecto de fusión).
 
The following summary describes the material provisions of the Preliminary Merger Agreement, a complete translated copy of which is incorporated by reference into this prospectus. This summary is qualified in its entirety by reference to the complete text of the Preliminary Merger Agreement and may not contain all the information about the Preliminary Merger Agreement that is important to you.
 
 
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The Merger: IRSA CP will merge into IRSA, by way of absorption by IRSA of IRSA CP, without liquidation of IRSA CP, IRSA assuming, by universal succession, the rights and obligations of IRSA CP. The surviving company will continue to be known as “IRSA Inversiones y Representaciones Sociedad Anónima.”
 
Purpose of the Merger: The purpose of the Merger for the merging companies is based on the advantages of simplifying the corporate structure of IRSA and IRSA CP and eliminating the tiered corporate structure, which involves unnecessary costs.
 
Accounting Information for the Merger: The Preliminary Merger Agreement incorporated the special purpose separate statement of financial position of IRSA and IRSA CP as of June 30, 2021, and the Special Statement of Financial Position of the Merger as of June 30, 2021 and included within the Preliminary Merger Agreement attached to this prospectus as Annex A, each prepared on a consistent basis with similar evaluation criteria as provided by Section 83 of the Argentine Corporations Law, which shall be considered and approved by the extraordinary general shareholders’ meetings of IRSA and IRSA CP which shall be called to consider the Merger.
 
Merger Effective Date: The Merger Effectiveness Date is July 1, 2021. From that date the two companies began to act as only one entity for Argentine tax purposes.
 
Management of IRSA CP: From the date of the respective extraordinary general shareholders’ meetings of IRSA CP and IRSA approving the Merger and until the definitive merger agreement is registered with the Public Registry of Commerce (when the final dissolution without liquidation of IRSA CP takes place), the IRSA Board of Directors shall be responsible for the management and administration of IRSA CP’ assets and liabilities, and those who previously exercised such management duties (i.e., directors, managers, officers, etc.) shall be suspended. From the Merger Effectiveness Date, IRSA shall act on its own account in every administrative act performed on behalf of IRSA CP, and all income, losses and consequences of the acts undertaken shall be attributed to IRSA. Every act executed and carried out by IRSA CP from the Merger Effectiveness Date forward shall be executed and carried out by IRSA, but will be considered executed on account and by the order of IRSA CP in the event that the definitive merger agreement is not entered into for any reason whatsoever.
 
Merger Exchange Ratios:
 
o
Share Exchange Ratio: a holder of IRSA CP Shares will receive 1.40 newly-issued IRSA Shares for each IRSA CP Share.
 
o
ADS Exchange Ratio: a holder of IRSA CP ADSs, each representing ten IRSA CP Shares, will receive 0.56 newly-issued IRSA GDSs, each representing four IRSA Shares, for each IRSA CP ADS.
 
No fractional IRSA GDSs will be distributed. Fractional entitlements to IRSA GDSs will be aggregated and sold by the IRSA CP ADS Depositary. The net proceeds from the sale of the fractional entitlements shall be distributed by the IRSA CP ADS Depositary to the holders of IRSA CP ADSs.
 
 
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Capital Increase: As a consequence of the assumption of all the assets and liabilities of IRSA CP and the Merger Exchange Ratios, the corporate capital of IRSA will be increased in the amount of ARS 152,158,215 from the amount of ARS 658,676,460 to the amount of ARS 810,834,675 through the issuance of 152,158,215 IRSA Shares.
 
Issuance of IRSA Securities: The cancellation of IRSA CP Securities and the exchange of IRSA CP Securities (other than those held by us) for newly issued IRSA Securities as a consequence of the Merger will take place once the definitive merger agreement is registered with the Public Registry of Commerce.
 
Applicable legal framework: The Merger is carried out pursuant to the provisions of Sections 82 to 87 of the Argentine Corporations Law, the CNV regulations and the regulations of the Public Registry of Commerce. The Merger is also carried on as a tax-exempted corporate reorganization within the frame-work set forth by Articles 77 and 78 of the Income Tax Law and other Argentine tax regulations.
 
Pursuant to Section I, Chapter X, Title II of the CNV Rules, (approved by CNV Resolution 622/2013), when a public company decides to merge with another company (public or not), it is required to make a filing with the CNV at least 30 business days prior to the date of the shareholders’ meeting that will consider and approve the Merger. The filing consists of a prospectus describing the Merger that shall contain, among other items:
 
a description of the shares that will be issued in exchange for the shares of the absorbed company; form of the shares; exchange ratio and conditions of the exchange, grounds for the determination of the exchange ratio and a certification of an independent auditor regarding the exchange ratio;
 
a decision to request the public offering of the new shares;
 
an explanation about the reasons of the Merger and business, economic and financial impact of the Merger in the absorbing and absorbed company;
 
the limitations agreed by the merging companies regarding the administration and management of the business and their granting of guarantees for fulfillment of normal activity during the time which will elapse until the Merger is registered;
 
a draft of amendment to the corporate bylaws of the absorbing company (if necessary); and
 
a special purpose unconsolidated statement of financial position for the Merger from each company, and consolidated statement of financial position, prepared pursuant to Section 83 of the Argentine Corporations Law and the accounting standards and regulations of the CNV.
 
 
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Effectiveness of the Merger
 
On                 , 20    , the IRSA Board of Directors and IRSA CP Boards of Directors each will call an extraordinary general shareholders’ meeting to vote upon the proposed Merger. All holders of the IRSA CP Securities, and all holders of the IRSA Securities, respectively, shall be entitled to vote upon the Merger, with one vote allocated per share held.
 
At the extraordinary general shareholders’ meetings the following matters shall be specifically considered and approved:
 
IRSA
 
Approval of the Merger whereby IRSA CP shall merge into IRSA by way of absorption by IRSA of IRSA CP without liquidation of IRSA CP, as contemplated by (i) the preliminary Merger agreement executed by IRSA CP and IRSA, following the announcement of the Merger in the Argentine Official Gazette and a major Argentine newspaper, and (ii) the special purpose separate statement of financial position;
 
approval of the Merger Exchange Ratios;
 
the capital increase to issue shares to be delivered to the shareholders of IRSA CP and IRSA CP ADS holders in exchange for IRSA Shares or IRSA GDSs;
 
the authorization to execute and deliver the definitive merger agreement on behalf of IRSA; and
 
the authorization to carry out all the actions necessary to comply with the Merger.
 
IRSA CP
 
Approval of the Merger whereby IRSA CP shall merge into IRSA by way of absorption by IRSA of IRSA CP without liquidation of IRSA CP, as contemplated by (i) the preliminary Merger agreement executed by IRSA CP and IRSA, following the announcement of the Merger in the Argentine Official Gazette and a major Argen-tine newspaper, and (ii) the special purpose separate statement of financial position;
 
approval of the Merger Exchange Ratios;
 
the dissolution without liquidation of IRSA CP;
 
discharge of the directors and the auditors of IRSA CP;
 
the authorization to execute and deliver the definitive merger agreement on behalf of IRSA CP; and
 
the authorization to carry out all the actions necessary to comply with the Merger.
 
 
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Table of contents
 
To this effect, copies of the Preliminary Merger Agreement, the reports of audit committees of IRSA and IRSA CP, their special purpose separate statement of financial position and the Merger information memorandum must be available in the offices of the respective companies for their review by the shareholders not less than 15 days in advance of the date of the shareholders’ meetings.
 
Once the extraordinary general shareholders’ meetings of IRSA and IRSA CP  have approved the Merger, both companies have to publish notices for three business days in the Argentine official gazette and in a major Argentine newspaper announcing the Merger to alert potential creditors who may oppose the Merger.
 
Under Argentine law, creditors under preexisting credits may oppose the Merger within 15 calendar days from the last publication to protect their credits. The definitive merger agreement may not be executed until 20 calendar days after the expiration of the aforementioned 15-day term, to enable the opposing creditors that have not been paid or duly guaranteed by the merging companies to obtain a judicial order for attachment by the courts.
 
Once the definitive merger agreement is executed and delivered through a public deed, such agreement and other relevant documentation must be filed with the CNV for registration with the Public Registry of Commerce.
 
Simultaneously with the initial filing of the Argentine prospectus on            , 2021, IRSA requested that the CNV (i) authorize the public offering of those newly-issued shares that are to be offered in exchange for the IRSA CP Shares and the listing of such shares on ByMA and (ii) deregister its shares, but such deregistration will not take place until the Merger is consummated. Upon effectiveness of the Merger, the IRSA CP Shares and IRSA CP ADSs will cease to exist and will no longer be admitted to trading or listed on ByMA or NASDAQ, respectively.
 
Once the definitive merger agreement is registered with the Public Registry of Commerce, the Merger becomes effective vis-à-vis third parties.
 
IRSA has to deliver copy of the registered definitive merger agreement to ByMA to obtain the definitive approval for the exchange of shares. Within 30 days of the definitive approval of ByMA for the exchange of shares, IRSA shall commence the exchange of shares, which could take up to ten business days.
 
Ownership of the Surviving Company After the Merger
 
Ownership of IRSA CP Prior to the Merger
 
Prior to the completion of the Merger, (i) we hold 79.92% of the IRSA CP Shares, and (ii) public investors, both in the United States and in Argentina, collectively hold 20.08% of the IRSA CP Shares.
 
 
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Merger Exchange Ratios and Exchange of Shares Pursuant to the Merger
 
Pursuant to the terms of the Merger, the Merger Exchange Ratios are as follows:
 
Share Exchange Ratio: a holder of IRSA CP Shares will receive 1.40 newly-issued IRSA Shares for each IRSA CP Share.
 
ADS Exchange Ratio: a holder of IRSA CP ADSs, each representing ten IRSA CP Shares, will receive 0.56 newly-issued IRSA GDSs, each representing four IRSA Shares, for each IRSA CP ADS.
 
Pursuant to the terms of the Merger, the shareholders of IRSA CP shall receive IRSA Shares as follows: public shareholders, both in Argentina and the United States (including ADS holders), shall receive 152.158.215 IRSA Shares, representing 17.1% of IRSA’s capital stock on a fully diluted basis. Any IRSA CP Securities owned by us will not be exchanged for IRSA Securities and will be cancelled in connection with the consummation of the Merger.
 
Ownership of IRSA Following Consummation of the Merger
 
The following table summarizes the shareholder participation in IRSA once the Merger is complete:
 
Shareholder
 
Number of Shares
 
 
Percentage of Capital and Voting Power
 
 
Number of Warrants
 
 
Percentage fully diluted
 
Cresud
  434,263,359 
  53.6%
  49,644,626 
  54.3%
Directors and officers (excluding Eduardo Elsztain)
  9,686,991 
  1.2%
  543,588 
  1.1%
ANSES
  42,920,447 
  5.3%
  3,781,213 
  5.2%
Total
  486,870,797 
  60.0%
  53,969,427 
  60.71%
 
The IRSA Securities issued pursuant to the Merger shall have the same voting rights and rights to dividends as those IRSA Securities currently in circulation.
 
IRSA and IRSA CP’s Boards of Directors’ Reasons for the Merger
 
Purpose of and Reasons for the Merger
 
The Merger is expected to generate important benefits and synergies for both IRSA and IRSA CP, resulting from greater efficiency of resources in their management, including, without limitation: (a) to operate and keep only one transactional information system and centralize the entire accounting process; (b) to submit only one set of financial statements to the various control authorities with the ensuing savings in accounting and advisory fees, and other related expenses; (c) to simplify the accounting reporting and consolidation process, as a consequence of the relief that the Merger would entail for the corporate structure as a whole; (d) to cause IRSA CP to be delisted from ByMA and NASDAQ, with the related cost-savings; (e) to reduce costs generally relating to legal fees and tax submissions; (f) to increase the percentage of capital stock listed in the different markets by increasing the liquidity of listed shares of IRSA; (g) to take advantage of tax savings related to the Merger; and (h) to prevent any potential overlap of businesses between IRSA and IRSA CP.
 
 
 
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Plans for IRSA CP Following the Merger
 
If the Merger is approved by the required majority vote at the shareholders’ meetings each of the companies, we and IRSA CP expect to enter into a definitive merger agreement, which will be filed with the relevant Argentine authorities for registration and effectiveness of the Merger. We expect the filing and registration of the definitive merger agreement to take several months, and upon finalization of such registration process, the Merger will become effective and holders of IRSA CP Securities at such time will receive IRSA Shares or IRSA GDSs, as the case may be, upon surrender by such holder of their IRSA CP Securities.
 
Though the Merger may qualify as a tax-free reorganization under Argentine law, we can provide no assurances as to the tax treatment of the Merger. If the Merger qualifies as a tax-free reorganization under Argentine law, no Argentine capital gains or withholding tax would apply to investors receiving IRSA Securities in the Merger in exchange for their IRSA CP Securities. Also, the consummation of the Merger may not occur for a significant period of time following the filing of this prospectus, in light of the requirements that each company to obtain shareholder approval, submit regulatory filings and complete a registration process. In addition, the Merger is subject to a number of conditions, including approval by the shareholders of the two companies, and as a result we can provide no assurances as to when we will consummate the Merger or whether the Merger will be consummated at all.
 
If the Merger is not approved, we intend to retain ownership of all IRSA CP Securities that we currently hold and continue to treat IRSA CP as subsidiaries of IRSA. Furthermore, we may decide to cause IRSA CP to delist from either or both of NASDAQ and ByMA, terminate the deposit agreement for the IRSA CP ADSs and deregister the IRSA CP Shares and the IRSA CP ADSs under the Exchange Act. The decision would depend on, among other factors, our management’s evaluation of the public float, trading volumes and liquidity of the IRSA CP Securities.
 
The liquidity of any IRSA CP Security outstanding would be materially and adversely affected upon deregistration and delisting from either or both of ByMA and the NYSE, as holders of IRSA CP Securities would likely no longer have an active trading market in which to sell such securities.
 
Timetable for the Merger
 
The Preliminary Merger Agreement dated September 30, 2021 will be made publicly available after the CNV authorization of the Merger and not less than 15 days prior to the date of shareholders’ meeting in the corporate domicile of the merging companies. A copy of the Preliminary Merger Agreement is attached to this prospectus as Annex A.
 
In order to complete the Merger, the shareholders of IRSA CP and IRSA must adopt the decision to merge IRSA CP into IRSA as contemplated by the Preliminary Merger Agreement. The extraordinary general meetings of shareholders of IRSA CP and IRSA that will vote on the proposal to merge IRSA CP into IRSA will be held on            , 20      at the offices indicated herein.
 
 
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If the proposal to merge is adopted by the requisite majority at the extraordinary general shareholders’ meetings of IRSA CP and IRSA and all other conditions precedent are satisfied or waived, the Merger is expected to be completed on or about             , 20       , though it will be retroactively effective for Argentine tax and operating purposes from the Merger Effectiveness Date, when all the companies began carrying on business jointly. Following the date of the respective extraordinary general shareholders’ meetings that vote on the proposed Merger, the management of IRSA CP will be suspended.
 
Upon effectiveness of the Merger, holders of IRSA CP Shares or IRSA CP ADSs (other than us) will, as soon as practicable, receive newly-issued IRSA Shares or IRSA GDSs representing such shares, respectively, in accordance with the Merger Exchange Ratios and on the basis of their respective holdings as entered in the IRSA CP shareholder registry (Caja de Valores S.A.) or their respective securities accounts. Holders of IRSA CP Shares (other than us) whose shares are registered directly in the IRSA CP shareholder registry will automatically receive newly-issued IRSA Shares through an entry in the shareholder registry (Caja de Valores S.A.) of IRSA. Holders of IRSA CP Shares whose shares are not registered directly will need to arrange with their broker, bank, custodian or other nominee to deliver their IRSA CP ADSs to the IRSA GDS Depositary to be cancelled and exchanged for IRSA GDSs.
 
The IRSA CP Shares or IRSA CP ADSs, which will automatically cease to exist in the Merger, will no longer be listed and traded on ByMA or NASDAQ, respectively, as of the day of effectiveness of the Merger. The last day of listing and trading of the IRSA CP Shares and IRSA CP ADSs on these exchanges is expected to be on or about              , 20     .
 
Directors and Management of the Surviving Company After the Merger
 
Immediately following the Merger, the senior management and executives of the surviving company, IRSA, shall remain the same as the senior management and executive team currently in place and overseeing the operations of IRSA CP and IRSA.
 
On               , 20     , in accordance with the Preliminary Merger Agreement, the Boards of Directors of IRSA CP will be suspended automatically following the approval of the Merger by the extraordinary general shareholders’ meetings of IRSA CP and IRSA, and the Board of Directors of IRSA shall assume the duties and responsibilities of IRSA CP Boards of Directors. Following the approval of the Merger by the extraordinary general shareholders’ meetings of IRSA CP and IRSA, and once the creditors opposition period has ended, the definitive merger agreement will be signed and registered with the Public Registry of Commerce, and the IRSA Board of Directors shall assume full control of the surviving company. The composition of the IRSA Board of Directors will not change as a consequence of the Merger.
 
 
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Share Ownership of Directors and Senior Management
 
Prior to the completion of the Merger, the following members of our Board of Directors and senior management beneficially own more than one percent of the IRSA Shares:
 
NamePosition
 
Number of Shares
 
 
Percentage
 
 
Number of Warrants(2)
 
 
Percentage fully diluted
 
Directors 
 
 
 
 
 
 
 
 
 
 
 
 
Eduardo S. Elsztain (1)
Chairman
  415,822,807 
  63.1%
  50,512,505 
  63.1%
Saúl ZangVice-Chairman I
  540,311 
  0.1%
  68,795 
  0.1%
Alejandro G. ElsztainVice- Chairman II
  2,594,464 
  0.4%
  315,107 
  0.4%
Fernando A. ElsztainRegular Director
  - 
  - 
  - 
  - 
Cedric D. Bridger (3)
Regular Director
  - 
  - 
  - 
  - 
Marcos M. FischmanRegular Director
  - 
  - 
  - 
  - 
Mauricio E. WiorRegular Director
  - 
  - 
  - 
  - 
Daniel R. ElsztainRegular Director
  - 
  - 
  - 
  - 
María Julia BearziRegular Director
  - 
  - 
  - 
  - 
Oscar Pedro BergottoRegular Director
  - 
  - 
  - 
  - 
Liliana De NadaiRegular Director
  - 
  - 
  - 
  - 
Damian BrenerRegular Director
  - 
  - 
  - 
  - 
Gaston A. LernoudAlternate Director
  20,778 
  0.0%
  27,778 
  0.0%
Enrique AntoniniAlternate Director
  - 
  - 
  - 
  - 
Gabriel A. G. ReznikAlternate Director
  - 
  - 
  - 
  - 
David WilliamsAlternate Director
  - 
  - 
  - 
  - 
Ben Elsztain (4)
Alternate Director
  - 
  - 
  - 
  - 
Iair ElsztainAlternate Director
  10,650 
  0.0%
  1,350 
  0.0%
Senior Management 
    
    
    
    
Matías I. GaivironskyChief Financial and Administrative Officer
  182,258 
  0.0%
  130,558 
  0.0%
Jorge CrucesChief Investment Officer
  18,930 
  0.0%
  - 
  - 
Supervisory Committee 
    
    
    
    
José D. AbelovichMember
  - 
  - 
  - 
  - 
Marcelo H. FuxmanMember
  - 
  - 
  - 
  - 
Noemí I. CohnMember
  - 
  - 
  - 
  - 
Roberto D. MurmisAlternate member
  - 
  - 
  - 
  - 
Paula SoteloAlternate member
  - 
  - 
  - 
  - 
Ariela LevyAlternate member
  - 
  - 
  - 
  - 
 
(1) 
Includes (i) 406,255,455 common shares beneficially owned by Cresud, (ii) 2,491,382 common shares owned by Helmir, (iii) 3,612,081 common shares owned by Consultores Venture Capital Uruguay S.A., (iv) 493,002 common shares owned by Consultores Asset Management S.A. and (v) 2,970,887 common shares directly owned by Mr. Eduardo Elsztain.
(2) 
In May 2021, 80 million options were issued that will entitle the holders through their exercise to acquire up to 80 million additional new shares.
(3) 
The position was not renewed at the Shareholders’ Metting held on October 21,2021.
(4)   On October 21, 2021, the Shareholders’ Meeting approved by majority of votes the appointment of Mr. Ben Elsztain as non-independent Regular Director.
 
 
 
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Prior to the completion of the Merger, the following members of IRSA CP’s Board of Directors and senior management beneficially own more than one percent of the IRSA CP Shares:
 
  
 
Share ownership
 
NamePosition
 
Number of shares
 
 
(%)
 
  
 
(in thousands)
 
 
 
 
Directors 
 
 
 
 
 
 
Eduardo Sergio Elsztain (1) Chairman
  458,118 
  84.64 
Saúl Zang First Vice-Chairman
  634 
  * 
Alejandro Gustavo Elsztain Executive Vice-Chairman
  3,812 
  * 
Mariana CarmonaDirector
  22 
  * 
Fernando ElsztainDirector
   
   
Javier KizlanzkyDirector
   
   
Isela CostantiniDirector
   
   
Leonardo Fernandez (2)
Director
   
   
Marcos BarylkaDirector
   
   
Gabriel ReznikAlternate Director
   
   
Juan Manuel QuintanaAlternate Director
  2 
  * 
Mauricio WiorAlternate Director
  1 
  * 
Salvador BergelAlternate Director
   
   
Pablo VergaraAlternate Director
  8 
  * 
Gaston LernoudAlternate Director
  8 
  * 
Ilan ElsztainAlternate Director
  39 
  * 
Ben Elsztain (3)
Alternate Director
   
   
Senior Management 
    
    
Daniel Ricardo ElsztainChief Executive Officer
  238 
  * 
Matías Gaivironsky Chief Administrative and Financial Officer
  7 
  * 
Jorge Cruces Chief Investment Officer
  28 
  * 
Arnaldo Jawerbaum General Operation of shopping malls and offices Manager
   
   
Supervisory Committee 
    
    
José Daniel Abelovich Member
   
   
Marcelo Héctor Fuxman Member
   
   
Noemi Cohn Member
   
   
Roberto Daniel Murmis Alternate Member
   
   
Paula Sotelo Alternate Member
   
   
Ariela Levy Alternate Member
   
   
 
(1) 
Mr. Eduardo Sergio Elsztain, chairman of IRSA CP board of directors, beneficially owns, as of August 31, 2021, 215,998,867 common shares of Cresud representing 36.5% of its total share capital. Although Mr. Elsztain does not own a majority of the common shares of Cresud, he is its largest shareholder and exercises substantial influence over Cresud. Cresud, as of August 31, 2021, owned (directly and indirectly) 62.06% of IRSA’s common shares. If Mr. Elsztain were considered to control Cresud due to his significant influence over it, he would be considered to be the beneficial owner of 63.13% of IRSA’s common shares (which includes (i) 406,255,455 common shares owned by Cresud, (ii) 2,491,382 common shares owned by Cresud’s subsidiary, Helmir S.A., (iii) 3,612,081 common shares owned by Consultores Venture Capital Uruguay S.A, a company controlled by Eduardo Elsztain), (iv) 493,002 common shares owned by Consultores Asset Management S.A., a company controlled by Eduardo Elsztain and (v) 2,970,887 common shares directly hold by him. IRSA, as of August 31, 2021, owns 79.92% of the IRSA CP Shares, which includes: (i) 422,557,196 common shares directly owned by IRSA; (ii) 7,341,836 common shares owned by E-Commerce, a company fully owned by IRSA; and (iii) 2,646,548 common shares owned by Tyrus, a company fully owned by IRSA. Additionally, (i) Mr. Elsztain directly owns 2,995,982 IRSA CP Shares, (ii) Cresud directly owns 18,201,523 IRSA CP Shares, (iii) Consultores Venture Capital Uruguay S.A. owns 3,800,541 IRSA CP Shares and (iv) Consultores Asset Management owns 550,135 IRSA CP Shares. If Mr. Elsztain were considered the beneficial owner of 63.13% of IRSA, he would be the beneficial owner of 84.64% of IRSA CP Shares.
(2)   The position was not renewed at the Shareholders’ Meeting on October 21, 2021.
(3)   On October 21, 2021, the Shareholders’ Meeting approved by majority of votes the appointment of Mr. Ben Elsztain as non-independent Regular Director.
 
 For more information, see “Material Contacts Among IRSA and IRSA CP.”
 
 
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Structure of the Merger
 
Upon the terms and subject to the conditions set forth in the Preliminary Merger Agreement, at the effective time of the Merger, IRSA CP will merge into IRSA, by way of absorption by IRSA of IRSA CP and without liquidation of IRSA CP. The surviving company will continue to be known as “IRSA Inversiones y Representaciones Sociedad Anónima.”
 
Taxation
 
For a description of certain material tax consequences of the Merger to the holders of IRSA CP Securities, see “U.S. Federal Income Tax Consequences” and “Argentine Tax Consequences.”
 
Accounting Treatment
 
For accounting purposes, under IFRS as issued by the IASB, the Merger of IRSA CP with and into IRSA is a merger between entities under common control. Accordingly, it will be accounted for by IRSA in accordance with the predecessor basis of accounting. Under this method, the assets, liabilities and components of shareholders’ equity of the transferring entity are carried forward to the combined entity at their carrying amounts as of the effective Merger date.
 
As IRSA CP is already consolidated in IRSA’s consolidated financial statements, the only effect of the Merger is the reduction in non-controlling interest and an increase in share capital and other reserves within equity.
 
Stock Exchange Listings
 
The IRSA Shares and the IRSA CP Shares are listed on ByMA. The IRSA GDSs are listed on the NYSE and the IRSA CP ADSs are listed on NASDAQ.
 
Upon effectiveness of the Merger, the IRSA CP Shares and IRSA CP ADSs will cease to exist and will no longer be admitted to trading or listed on ByMA or NASDAQ, respectively.
 
Appraisal or Dissenters’ Rights in the Merger
 
IRSA CP shareholders will not have any appraisal or dissenters’ rights under Argentine law or under IRSA CP’s bylaws (estatutos) in connection with the Merger, and neither IRSA CP nor IRSA will independently provide IRSA CP shareholders with any such rights. A dissenter’s right of appraisal is not available pursuant to Section 245 of the Argentine Corporations Law in the event of a Merger between two companies where shares of both of those companies are publicly traded and any new shares issued in the Merger are also publicly traded.
 
Agreements Between IRSA CP and IRSA Related to the Merger
 
For a summary of the agreements between IRSA CP and IRSA related to the Merger, see “The Merger Agreement” and “Material Contacts Among IRSA an IRSA CP.”
 
Regulatory Matters
 
The Merger is not subject to any additional regulatory requirements of any municipal, state, federal or foreign governmental agencies, other than those mentioned in this prospectus. For more information, see “Regulatory Matters.”
 
 
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THE MERGER AGREEMENT
 
The following summary describes selected material provisions of the Preliminary Merger Agreement, a copy of which is attached to this prospectus as Annex A, and is incorporated by reference into this prospectus. This summary is qualified in its entirety by reference to the complete text of the Preliminary Merger Agreement and may not contain all the information about the Preliminary Merger Agreement that is important to you.
 
As a matter of Argentine law, the decision to merge IRSA CP and IRSA is effected solely through the adoption by the shareholders of IRSA CP and the shareholders of IRSA of the decision to merge as contemplated by the Preliminary Merger Agreement. Therefore, you are encouraged to read carefully the Preliminary Merger Agreement in its entirety.
 
Structure of the Merger
 
Upon the terms and subject to the conditions set forth in the Preliminary Merger Agreement, at the effective time of the Merger, IRSA CP will merge into IRSA, by way of absorption by IRSA of IRSA CP without liquidation of IRSA CP, and IRSA will assume, by universal succession, the rights and obligations of IRSA CP. The surviving company will continue to be known as “IRSA Inversiones y Representaciones Sociedad Anónima.”
 
Merger Consideration
 
As a consequence of the assumption of all the assets and liabilities of IRSA CP and the Merger Exchange Ratios, the corporate capital of IRSA will be increased in the amount of ARS 152,158,215 from the amount of ARS 658,676,460 to the amount of ARS 810,834,675 through the issuance of 152,158,215 IRSA Shares.
 
Pursuant to the terms of the Merger, the Merger Exchange Ratios are as follows:
 
Share Exchange Ratio: a holder of IRSA CP Shares will receive 1.40 newly-issued IRSA Shares for each IRSA CP Share.
 
ADS Exchange Ratio: a holder of IRSA CP ADSs, each representing ten IRSA CP Shares, will receive 0.56 newly-issued IRSA GDSs, each representing four IRSA Shares, for each IRSA CP ADS.
 
No fractional IRSA GDSs will be distributed. Fractional entitlements to IRSA GDSs will be aggregated and sold by the IRSA CP ADS Depositary. The net proceeds from the sale of the fractional entitlements to IRSA GDSs shall be distributed by the IRSA CP ADS Depositary to the holders of IRSA CP ADSs.
 
No additional consideration in cash or in kind will be paid by IRSA to the shareholders of IRSA CP in connection with the Merger.
 
The IRSA Shares and IRSA GDSs to be issued in the Merger will have the same rights (including the right to receive dividends) as the IRSA Shares and IRSA GDSs issued prior to the Merger, as set forth in IRSA’s bylaws (estatutos).
 
 
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The cancellation of IRSA CP Securities and their exchange for newly issued IRSA Securities as a consequence of the Merger will take place once the definitive merger agreement is registered with the Public Registry of Commerce. IRSA then will require ByMA to definitively approve the exchange of shares which will have to commence within 30 days of such approval. See “Summary—Timetable for the Merger.”
 
Based on the number of IRSA CP Shares issued on the date hereof, after the effective time of the Merger, former IRSA CP shareholders will hold approximately 17.1% of the then-issued IRSA shares on a fully diluted basis.
 
The IRSA Shares to be issued in the Merger will be entitled to receive dividends in the same manner as the IRSA Shares issued prior to the Merger.
 
Opinion of Banco Itaú Argentina S.A.
 
Pursuant to an engagement letter dated September 20, 2021, on September 24, 2021 the Board of Directors of IRSA CP received a written opinion issued by Banco Itaú Argentina S.A. (“Itaú”), relating to the fairness, from a financial standpoint, of the exchange ratio of the IRSA CP Shares, as of the date of the opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the opinion (the “Itaú Opinion”).
 
In selecting Itaú as independent professional appraiser, the Board of Directors of IRSA CP considered, among other things, that Itaú is an internationally recognized investment banking firm with substantial experience in providing strategic advisory services with respect to transactions in Latin America and its familiarity with IRSA CP. As a part of its investment banking business, Itaú and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. As of the date of this prospectus, IRSA CP has a business relationship with Itaú and its affiliates, including short term loans and overdrafts.
 
The full text of the Itaú Opinion, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, has been furnished as an exhibit to the registration statement this prospectus is a part of. The Itaú Opinion was provided for the exclusive use of the IRSA CP Board of Directors in the evaluation of the Merger. Itaú expressed no opinion as to the merits of the underlying decision by IRSA CP to engage in the Merger or the relative merits of the Merger as compared to alternative business strategies, nor did it express any opinion as to how any IRSA CP shareholder should vote on any matter.
 
In arriving at its opinion, Itaú, among other things:
 
reviewed certain financial and commercial information relating to the Merger furnished by IRSA CP and IRSA;
 
reviewed certain audited financial statements, operative and financial data, financial forecasts of IRSA CP and IRSA and valuation reports prepared by IRSA CP, IRSA and/or any external advisor independently selected and hired, furnished by and discussed with the management of IRSA CP and IRSA;
 
discussed past, current and prospective operations as well as the details of the Merger with IRSA CP and IRSA’s management;
 
considered other factors and information and conducted other analyses that Itaú deemed appropriate;
 
compared the financial and operative performance of IRSA CP and IRSA with publicly available information that Itaú deemed relevant;
 
review certain internal financial analyses and forecasts prepared by IRSA CP and IRSA;
 
 
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considered other economic and financial reports, analysis, investigations and data, that Itaú, in its sole discretion, deemed relevant.
 
In connection with its review, Itaú has, with the consent of IRSA CP, relied on the information supplied to, discussed with or reviewed by it for purposes of its opinion being complete and accurate in all material respects. Itaú did not assume any responsibility for independent verification of (and did not independently verify) any of such information. With respect to financial, accounting, commercial and legal matters, Itaú, with the consent of IRSA CP, relied on its accuracy, veracity, coherence, integrity and sufficiency. With respect to financial forecasts and sensitive matters relating to the future performance of IRSA CP that Itaú received or discussed with IRSA CP’s management, Itaú assumed that those projections have been prepared in good faith, in a reasonable and accurate manner, and intending to reflect the then available estimates and judgements of IRSA CP’s management, as the case may be, as to the future performance of IRSA CP and the potential impact that certain sensitive matters could have on such future financial performance. In addition, Itaú assumed, following recommendations made by IRSA CP and IRSA, that there has not been any relevant change relating to the assets, financial performance, operative results, businesses and forecasts of IRSA CP and IRSA since Itaú received the most recent financial statements and other information relating to IRSA CP.
 
Based on and subject to the above and to other factors Itaú has taken into consideration, Itaú was of the opinion that, as of the date of the Itaú Opinion, a share exchange ratio of 1.40 IRSA Shares for each IRSA CP Share was fair, from a financial standpoint, for IRSA CP shareholders in the context of the Merger. The Itaú Opinion did not address any legal, regulatory or any other matters. Itaú was not asked to, and Itaú did not, offer any opinion as to any terms of the Merger or any aspect or implication of the Merger, except for the fairness of the exchange ratio of the IRSA Shares upon completion of the Merger.
 
The Itaú Opinion was for the use and benefit of IRSA CP in its evaluation of the Merger. The Itaú Opinion was considered by the Board of Directors of IRSA CP on the meeting held on September 30, 2021.
 
The Itaú Opinion is publicly available for inspection and copying during regular business hours at the principal executive offices of IRSA CP located at Carlos Della Paolera 261, 8th Floor (C1001ADA) Buenos Aires, Argentina, by any interested holder or representative who has been so designated in writing of IRSA CP Securities. A copy of the Itaú Opinion will be transmitted by IRSA CP to any interested holder or representative who has been so designated in writing of IRSA CP Securities at the expense of the requesting security holder.
 
Conditions to Effectiveness of the Merger
 
The completion and effectiveness of the Merger is subject to the satisfaction of the following conditions:
 
approval of the Merger on the terms and conditions set forth in the Preliminary Merger Agreement by the shareholders of IRSA CP and IRSA at their respective extraordinary general shareholders’ meetings;
 
publication, during a 3 day period, of a Merger notice in the Argentine official gazette and in a major Argentine newspaper notifying creditors of IRSA CP of their right to oppose the Merger;
 
the completion of a period of 15 to 35 days to allow creditors of IRSA CP to oppose the Merger;
 
satisfaction or granting of guarantees to any creditors that file oppositions;
 
the execution of the definitive merger agreement through a public deed; and
 
the registration of the definitive merger agreement, the Merger and the dissolution of IRSA CP with the Public Registry of Commerce.
 
No assurance can be given as to when or whether any of these approvals and consents will be obtained, the terms and conditions that may be imposed in connection with their consents and approvals, or the consequences of failing to obtain the consents and approvals.
 
 
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Termination
 
The Preliminary Merger Agreement between IRSA CP and IRSA provides that either party may terminate the agreement if the shareholders of IRSA CP or IRSA do not approve the Merger at the relevant extraordinary general shareholders’ meeting within six months of the date of the agreement. Additionally, under Argentine law, the Preliminary Merger Agreement may be terminated if: (i) the shareholders of IRSA CP or IRSA do not approve the Merger at the relevant extraordinary general shareholders’ meeting; (ii) the Board of Directors of IRSA CP or IRSA decide to terminate the Preliminary Merger Agreement prior to its consideration by the extraordinary general shareholders’ meetings of IRSA CP and IRSA; or (iii) IRSA CP or IRSA do not hold an extraordinary general shareholders’ meeting to approve the Preliminary Merger Agreement within three months of its execution. For the avoidance of doubt, in the event that neither IRSA CP nor IRSA hold an extraordinary general shareholders’ meeting to approve the Preliminary Merger Agreement within three months of its execution, the Preliminary Merger Agreement will continue to be in full force and effect. In such case, both IRSA CP and IRSA will have a right (but will be under no obligation) to terminate the Preliminary Merger Agreement.
 
Effect of Termination
 
If the Preliminary Merger Agreement is terminated or the Merger cannot be consummated for any reason, the Preliminary Merger Agreement provides that:
 
The preliminary Merger agreement shall remain with no effect and there shall be no consequence for any of the merging companies;
 
All the acts performed by IRSA from the Merger Effective Date as a consequences of the management of business to be merged, shall be considered as performed on behalf of IRSA CP; and
 
The companies will continue to run their business as they did prior to the execution of the Preliminary Merger Agreement. Depending on the reason for which the Merger is terminated, the directors may be liable for damages caused by such termination.
 
Under Sections 59 and 274 of the Argentine Corporations Law, any breach of a director’s duty of loyalty or fiduciary duty to the company or its shareholders may result in unlimited, joint and several liability to the company, its shareholders and third parties for damages resulting from such breach. Liability may also attach when a director violates the law, the corporation’s bylaws (estatutos), or when such director causes damage through fraud, gross negligence or abuse of authority. Directors may also be held liable for damages that could have been prevented but for their omissions or failure to act.
 
No Rescission
 
None of IRSA CP or IRSA has restricted its ability to rescind the Preliminary Merger Agreement. However, since there is no specific provision in such Merger agreement allowing any of the parties to rescind the agreement without cause, in order to terminate the agreement, all parties will have to enter into an agreement to rescind the Preliminary Merger Agreement.
 
Amendment and Waiver
 
There is no provision in the Preliminary Merger Agreement providing for amendments or waivers of the agreement, therefore, in order to do so all parties will have to sign and deliver each other a written instrument amending or waiving provisions of the Preliminary Merger Agreement.
 
 
 
 
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DESCRIPTION OF CAPITAL STOCK
 
Set forth below is certain information relating to IRSA Shares, including brief summaries of certain provisions of our bylaws, the Argentine Corporations Law and certain related laws and regulations of Argentina, all as in effect as of the date hereof. The following summary description of our capital stock does not purport to be complete and is qualified in its entirety by reference to our bylaws, the Argentine Corporations Law and the provisions of other applicable Argentine laws and regulations, including the CNV Rules and the rules of ByMA.
 
General
 
IRSA Shares are listed on ByMA under the trading symbol “IRSA” and IRSA GDSs are listed on the NYSE under the trading symbol “IRS.” As of June 30, 2021, we had authorized capital stock of 658,676,460 common shares, ARS1.00 par value per share, and outstanding capital stock of 658,676,460 common shares. As of the date of this prospectus, we have no other shares of any class or series issued and outstanding. IRSA Shares have one vote per share. All outstanding shares of the IRSA Shares are validly issued, fully paid and non-assessable. As of June 30, 2021, there were approximately 4,856 holders of our common shares.
 
Shareholders’ rights in an Argentine stock corporation are governed by its bylaws and by the Argentine Corporations Law. All provisions of the Argentine Corporations Law take precedence over any contrary provision in a corporation’s bylaws.
 
The Argentine securities markets are principally regulated by the CNV Rules, the Capital Markets Law, the Negotiable Obligations Law Nº 23,576 and the Argentine Corporations Law. These laws govern disclosure requirements, restrictions on insider trading, price manipulation and protection of minority investors.
 
Corporate purpose
 
Our legal and commercial name is IRSA Inversiones y Representaciones Sociedad Anónima. We were incorporated and organized on April 30, 1943, under Argentine law as a stock corporation (sociedad anónima), and we were registered with the Public Registry of Commerce on June 23, 1943, under number 284, on page 291, book 46 of volume A. Pursuant to our bylaws, our term of duration expires on April 5, 2043. Pursuant to article 4 of our by-laws our purpose is to perform the following activities:
 
Invest, develop and operate real estate developments;
 
Invest, develop and operate personal property, including securities;
 
Construct and operate works, services and public property;
 
Agency activities;
 
Manage real or personal property, whether owned by us or by third parties;
 
Build, recycle, or repair real property whether owned by us or by third parties;
 
Advise third parties with respect to the aforementioned activities;
 
Finance projects, undertakings, works and/or real estate transactions of third parties;
 
Finance, create, develop and operate projects related to Internet.
 
 
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Limited liability
 
Shareholders’ liability for losses is limited to their shareholdings in the Company. Notwithstanding the foregoing, a shareholder who votes on a business transaction in which the shareholder’s interest conflicts with that of the Company may be liable for damages under the Argentine Corporations Law, but only if the transaction would not have been validly approved without such shareholder’s vote. In addition, under Argentine Corporations Law, shareholders who voted in favor of a resolution that is subsequently declared void by a court as contrary to Argentine law or a company’s bylaws (or regulation, if any) may be held jointly and severally liable for damages to such company, other shareholders or third parties resulting from such resolution.
 
Capitalization
 
We may increase our share capital upon authorization by our shareholders at an ordinary shareholders’ meeting in terms of Section 188 of the Argentine Corporations Law. Capital increases must be registered with the public registry of commerce (Registro Público de Comercio), and published in the Official Gazette. Capital reductions may be voluntary or mandatory and must be approved by the shareholders at a special shareholders’ meeting (asamblea extraordinaria) taking into account a report from the audit committee on voluntary reductions. Reductions in capital are mandatory when losses have depleted reserves and exceed 50% of capital. As of the date of this prospectus, our share capital consisted of 658,707,201 common shares.
 
Our bylaws provide that preferred stock may be issued when authorized by the shareholders at a special shareholders’ meeting (asamblea extraordinaria) and in accordance with applicable regulations. Such preferred stock may have a fixed cumulative dividend, with or without additional participation in our profits that may be issued without voting rights, except for certain issues, as resolved in a shareholders’ meeting. We currently have no outstanding preferred stock.
 
Preemptive rights and increases of share capital
 
Pursuant to our bylaws and Argentine Corporations Law, in the event of an increase in our share capital, each of our existing holders of our common shares has a preemptive right to subscribe for new common shares in proportion to such holder’s share ownership. For any shares of a class not preempted by any holder of that class, the remaining holders of the class will be entitled to accretion rights based on the number of shares they purchased when they exercised their own preemptive rights. Notices of such increase must be published for three days in the Official Gazette and in a widely circulated newspaper in Argentina. Accretion rights must be exercised within the 30 days that follow that publication of the last notice. Pursuant to the Argentine Corporations Law, such 30-day period may be reduced to 10 days by a decision of our shareholders adopted at an extraordinary shareholders’ meeting (asamblea extraordinaria). At a meeting held on October 29, 2018, our shareholders approved a resolution to reduce such period to 10 days.
 
Additionally, the Argentine Corporations Law permits shareholders at a special shareholders’ meeting (asamblea extraordinaria) to suspend or limit their preemptive rights relating to the issuance of new shares in specific and exceptional cases in which the interest of our Company requires such action and, additionally, under the following specific conditions:
 
the issuance is expressly included in the list of matters to be addressed at the shareholders’ meeting; and
the shares to be issued are to be paid in-kind or in exchange for payment under pre-existing obligations.
 
Preemptive rights may be eliminated, and/or the subscription period may be reduced to not less than 10 days, if we enter into an agreement with underwriters to assign such preemptive rights. Preemptive rights may also be eliminated so long as a resolution providing so has been approved at a special shareholder’s meeting (asamblea extraordinaria) by at least 50% of the outstanding capital stock entitled to vote.
 
 
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Shareholders’ meetings and voting rights
 
General
 
Shareholders’ meetings may be ordinary or extraordinary. We are required to convene an ordinary shareholders’ meeting within four months of the close of each fiscal year to approve our financial statements, allocate net income for the fiscal year, approve the reports of the Board of Directors and the audit committee, and elect and set remuneration of directors and members of the audit committee. Other matters which may be considered at an ordinary meeting include the responsibility of directors and members of the audit committee, capital increases and the issuance of certain corporate bonds. Extraordinary shareholders’ meetings may be called at any time to consider matters beyond the scope of an ordinary meeting, including amendment of the bylaws, issuance of debentures, early dissolution, merger, spin-off, reduction of capital stock and redemption of shares, changing the limiting or extending the shareholders liability by changing our corporate legal status and limitation of shareholders preemptive rights.
 
Notices
 
Notice of shareholders’ meetings must be published for five days in the Official Gazette of the Republic of Argentina, in an Argentine newspaper of wide circulation and in the publications of Argentine exchanges or securities markets in which our common shares are traded, at least ten days and no more than thirty days prior to the date on which themeeting is to be held, as per Argentine Corporations Law, and at least twenty days prior to the meeting, with a maximum of forty five days prior, as per Capital Markets Law. The notice must include information regarding the type of meeting to be held, the date, time and place of the meeting and the agenda. If there is no quorum at the meeting, notice for a meeting on second call must be published for three days, at least eight days before the date of the second meeting, and must be held within thirty days of the date for which the first meeting was called. The first call and second call notices may be sent simultaneously in order for the meeting on second call to be held on the same day as the meeting on first call, but only in the case of ordinary shareholders’ meetings. Shareholders’ meetings may be validly held with at least ten days’ prior notice in the publications of Argentine exchanges or securities markets in which our common shares are traded if all common shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote.
 
The Board of Directors will determine appropriate publications for notice outside Argentina in accordance with requirements of jurisdictions and exchanges where our common shares are traded.
 
Quorum and voting requirements
 
The quorum for ordinary meetings of shareholders on first call is a majority of the common shares entitled to vote, and action may be taken by the affirmative vote of an absolute majority of the common shares present that are entitled to vote on such action. If a quorum is not available, a second call meeting may be held at which action may be taken by the holders of an absolute majority of the common shares present, regardless of the number of such common shares. The quorum for an extraordinary shareholders’ meeting on first call is 60% of the common shares entitled to vote, and if such quorum is not available, a second call meeting may be held, for which there are no quorum requirements.
 
Action may be taken at extraordinary shareholders’ meetings by the affirmative vote of an absolute majority of common shares present that are entitled to vote on such action, except that the approval of a majority of common shares with voting rights, without application of multiple votes, is required in both first and second call for: (i) the transfer of our domicile outside Argentina, (ii) a fundamental change of the corporate purpose set forth in the bylaws, (iii) our anticipated dissolution, (iv) the total or partial repayment of capital, (v) a merger of our company, if we are not the surviving entity, (vi) a spin-off of our company or (vii) changing our corporate legal status.
 
Shareholders’ meetings may be called by the Board of Directors or the members of the statutory audit committee whenever required by law or whenever they deem it necessary. Also, the board or the members of the statutory audit committee are required to call shareholders’ meetings upon the request of shareholders representing an aggregate of at least five percent of our outstanding capital stock. If the board or
 
 
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the statutory audit committee fails to call a meeting following this request, a meeting may be ordered by the CNV or by the courts. In order to attend a meeting, a shareholder must deposit with us a certificate of book-entry shares registered in his name and issued by Caja de Valores S.A. at least three business days prior to the date on which the meeting is to be held. A shareholder may be represented by proxy. Proxies may not be granted to any of our directors, members of our audit committee or officers or employees.
 
Dividends and liquidation rights
 
The Argentine Corporations Law establishes that the distribution and payment of dividends to shareholders is valid only if they result from realized and net earnings of the company pursuant to an annual balance sheet approved by the shareholders. Our board of directors submits our financial statements for the previous financial year, together with the reports of our Supervisory Committee, to the Annual Ordinary Shareholders’ Meeting. This meeting must be convened by October 31 of each year to approve the financial statements and decide on the allocation of our net income for the year under review. The distribution, amount and payment of dividends, if any, must be approved by the affirmative vote of the majority of the present votes with right to vote at the meeting.
 
The shareholders’ meeting may authorize payment of dividends on a quarterly basis pursuant to our bylaws and provided no applicable regulations are violated. In that case, all and each of the members of the Board of Directors and the Supervisory Committee will be jointly and severally liable for the refund of those dividends if, as of the end of the respective fiscal year, the realized and net earnings of the Company are not sufficient to allow the payment of dividends.
 
When we declare and pay dividends on the IRSA Shares, the holders of IRSA GDSs, each representing the right to receive ten ordinary shares, outstanding on the corresponding registration date, are entitled to receive the dividends due on the common shares underlying the IRSA GDSs, subject to the terms of the IRSA Deposit Agreement. The cash dividends are to be paid in Argentine pesos and, subject to applicable Argentine laws, regulations and approvals, to the extent that the IRSA GDS Depositary can in its judgment convert Argentine pesos (or any other foreign currency) into U.S. dollars on a reasonable basis and transfer the resulting U.S. dollars to the United States, are to be paid to the holders of the IRSA GDSs net of any applicable fee on the dividend distribution, costs and conversion expenses, taxes and public charges. The exchange rate for the dividends will occur at a floating market rate.
 
Our dividend policy is proposed from time to time by our board of directors and is subject to shareholders’ approval at an ordinary shareholders’ meeting. Declarations of dividends are based upon our results of operations, financial condition, cash requirements and future prospects, as well as restrictions under debt obligations and other factors deemed relevant by our board of directors and our shareholders.
 
Dividends may be lawfully paid only out of our retained earnings determined by reference to the financial statements prepared in accordance with IFRS. In accordance with the Argentine Corporations Law, net income is allocated in the following order: (i) allocate 5% of such net profits to legal reserve, until the amount of such reserve equals 20% of our capital stock; (ii) the sum established by the shareholders’ meeting as remuneration of the Board of Directors and the Supervisory Committee; and (iii) dividends, additional dividends to preferred shares if any, or to optional reserve funds or contingency reserves or to a new account, or for whatever purpose the shareholders determine at the shareholders’ meeting.
 
Our legal reserve is not available for distribution. Under the applicable regulations of the CNV, dividends are distributed pro rata in accordance with the number of shares held by each holder within 30 days of being declared by the shareholders for cash dividends and within 90 days of approval in the case of dividends distributed as shares. The right to receive payment of dividends expires three years after the date on which they were made available to shareholders.
 
In the event of liquidation, dissolution or winding-up of the Company, our assets are:
 
to be applied to satisfy its liabilities; and
  
 
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to be proportionally distributed among holders of preferred shares in accordance with the terms of the preferred shares. If any surplus remains, our shareholders are entitled to receive and share proportionally in all net assets available for distribution to our shareholders, subject to the order of preference established by our bylaws.
 
Approval of financial statements
 
Our fiscal year ends on June 30 of each year, after which we prepare an annual report which is presented to our Board of Directors and Supervisory Committee. The Board of Directors submits our financial statements for the previous financial year, together with the reports of our Supervisory Committee, to the annual ordinary shareholders’ meeting, which must be convened within 120 days of the close of our fiscal year, in order to approve our financial statements and determine our allocation of net income for such year. At least 20 days before the ordinary shareholders’ meeting, an annual report must be available for inspection at our principal office.
 
Dissenting shareholders may exercise appraisal rights
 
Whenever certain actions are approved at a special shareholders’ meeting (asamblea extraordinaria), including:
 
a merger or a spin-off in which we would not be the surviving entity (except when the shares of the acquired company are publicly traded);
a transformation from one type of corporation to another;
a fundamental change in our bylaws;
a transfer of the domicile of our company outside of Argentina;
a voluntary withdrawal of a public offer or delisting of the IRSA Shares;
a decision to continue operations after the IRSA Shares cease to be publicly traded;
total or partial recapitalization following a mandatory reduction of capital or liquidation;
any shareholder dissenting from the adoption of any such resolution or who was not present or represented by proxy at the shareholders’ meeting at which any such resolution was adopted may withdraw and tender their common shares to us and receive the book value per share determined on the basis of our latest financial statements, whether completed or to be completed.
 
The shareholder must exercise their appraisal rights within five days following the shareholders’ meeting at which the resolution was adopted, in the case of dissenting shareholders, or within fifteen days following the shareholders’ meeting, in the case of absent shareholders who can prove they were a shareholder of record on the day of the shareholders’ meeting.
 
In the case of a merger or spin-off involving an entity that has qualified for a public offering of its shares, appraisal rights may not be exercised if the shares to be received in connection with such merger or spin-off are publicly traded. Appraisal rights are extinguished with respect to a given resolution if such resolution is subsequently overturned at another shareholders’ meeting held within 60 days of the previous meeting at which the original resolution was adopted.
 
Payment on the appraisal rights must be made within one year of the date of the shareholders’ meeting at which the resolution was adopted, except where the resolution involved a decision that the IRSA Shares cease to be publicly traded, in which case the payment period is reduced to 60 days from the date on which an absent shareholder could have exercised their appraisal rights or 60 days from the date of publication of the decision that our common shares cease to be publicly traded.
 
Ownership restrictions
 
The CNV Rules require that transactions that would result in a person holding 5% or more of the capital stock of a registered Argentine company should be immediately notified to the CNV. Thereafter, every
 
 
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change in the holdings that represents a multiple of 5% of the voting power should also be notified to the CNV.
 
Directors, senior managers, executive officers, members of the Supervisory Committee, and controlling shareholders of an Argentine company whose securities are publicly listed, must notify the CNV on a monthly basis of their beneficial ownership of shares, debt securities, and call and put options related to securities of such companies and their controlling, controlled or affiliated companies.
 
Holders of more than 50% of the common shares of a listed company or who otherwise have voting control of a company, as well as directors, officers and members of the Supervisory Committee, must provide the CNV with a prospectus setting forth their holdings in the capital stock of such companies and file reports of any change in their holdings.
 
Tender offers
 
Tender offers under Argentine law may be voluntary or mandatory. In either case, the offer must be addressed to all shareholders. In the case of a mandatory tender offer, the offer must also be made to the holders of subscription rights, stock options or convertible debt securities that directly or indirectly may grant a subscription, acquisition or conversion right on voting shares in proportion to their holdings at the time the offer is made.
 
According to our bylaws, when a person or an entity, be it directly or indirectly, intends to acquire 35% or more of the shares of a company (participación significativa) (“significant holding”) a mandatory tender offer to purchase at least 50% of the corporate voting capital is required. According to the CNV Rules, if the person or entity intends to acquire 50% or more of the shares of a company, be it directly or indirectly, then a mandatory tender offer to purchase all capital stock outstanding is required.
 
Finally, when a shareholder controls 95% or more of the outstanding shares of a company, (i) any minority shareholder may, at any time, demand that the controlling party make an offer to purchase all of the remaining shares of the minority shareholders and (ii) the controlling party can issue a unilateral statement of intention to acquire all of the remaining shares owned by the other shareholders.
 
Redemption of common shares
 
Pursuant to the Argentine Companies Law we may redeem our outstanding common shares only under the following circumstances:
 
to cancel such shares and only after a decision to reduce our capital stock at a duly convened shareholders’ meeting (asamblea extraordinaria) called for such purpose;
to avoid significant damage to the Company under exceptional circumstances, and then only using retained earnings or free reserves that have been fully paid, which action must be ratified at the next succeeding annual shareholders’ meeting; or
in the case of the acquisition by a third party of the IRSA Shares.
 
The Argentine Capital Markets Law provides for other circumstances under which the Company, as a publicly listed company, can repurchase the IRSA Shares. The following are necessary conditions for the acquisition of the IRSA Shares:
 
the shares to be acquired shall be fully paid;
there shall be a board of directors’ resolution containing a report of our Supervisory Committee or Audit Committee regarding such proposed share repurchase. Our board of director’s resolution must set forth the purpose of the acquisition, the maximum amount to be invested, the maximum number of shares or the maximum percentage of capital that may be acquired and the maximum price to be paid per share. Our board of directors must give complete and detailed information to both shareholders and investors;
 
 
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the purchase shall be funded from our net profits or with free or optional reserves, and we must provide to the CNV that we have the necessary liquidity and that the proposed share repurchase will not affect our solvency; and
under no circumstances may the shares we acquire, including those that may have been previously acquired that we held as treasury stock, exceed 10% of our capital stock or such lower percentage established by the CNV after taking account of the trading volume of our shares.
 
Any shares acquired by us that exceed 10% of our capital stock must be disposed of within 90 business days from the date of repurchase of share that resulted in such excess.
 
Transactions relating to the acquisition of our own shares may be carried out through open market transactions or through a tender offer. In the case of acquisitions in the open market, the amount of shares purchased daily cannot exceed 25% of the mean daily traded volume of our shares during the previous 90 business days. In case of an open market transactions or through a tender offer, the CNV can require that the acquisition be carried out through a tender offer if the shares to be purchased represent a significant percentage in relation to the mean traded volume.
 
There are no legal limitations to ownership of the IRSA Securities or to the exercise of voting rights pursuant to the ownership of the IRSA Securities, by non-resident or foreign shareholders.
 
Registrations and transfers
 
The IRSA Shares are held in registered, book-entry form. The registry for the IRSA Shares is maintained by Caja de Valores S.A. at its executive offices located at 25 de Mayo 362, (C1002ABH) Buenos Aires, Argentina. Only those persons whose names appear on such share registry are recognized as owners of the IRSA Shares. Transfers, encumbrances and liens on the IRSA Shares must be registered in our share registry and are only enforceable against us and third parties from the moment registration takes place.
 
 
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DESCRIPTION OF GLOBAL DEPOSITARY RECEIPTS
 
The following is a summary of certain provisions of the IRSA Deposit Agreement. Such summary does not purport to be complete and is qualified in its entirety by reference to the form of deposit agreement, incorporated as an exhibit to our Form 20-F, Registration Number 001-13542 as filed with the SEC. Copies of the IRSA Deposit Agreement are also available for inspection at the principal office of the IRSA GDS Depositary, currently located at 240 Greenwich Street, New York, NY 10286. Terms used in this prospectus and not otherwise defined shall have the respective meanings set forth in the IRSA Deposit Agreement.
 
Global depositary shares
 
GDRs evidencing IRSA GDSs are issuable pursuant to the deposit agreement. One IRSA GDS represents the right to receive 10 common shares. The shares represented by IRSA GDSs will be deposited with the Caja de Valores for the account of Banco Santander Río S.A., as custodian for the IRSA GDS Depositary in Argentina. A GDR may evidence any number of IRSA GDSs and represents all other securities, property and cash received in respect of shares in accordance with the deposit agreement. Only persons in whose names GDRs are registered on the books of the Depositary will be treated by us as owners and holders of GDRs.
 
Deposit and withdrawal of shares and issuance of GDRs
 
Subject to the terms and conditions of the IRSA Deposit Agreement, the IRSA GDS Depositary has agreed that upon deposit with the custodian of IRSA Shares by delivery of certificates of such shares to the custodian, by electronic transfer of such shares to the account maintained by the custodian, or delivery to the custodian of evidence, reasonably satisfactory to the custodian that irrevocable instructions have been given to cause such shares to be transferred to such account, together with appropriate issuance instructions and instruments of transfer or endorsement, satisfaction of all laws and regulations, payments of the fees and expenses of the IRSA GDS Depositary and the certifications referred to below, and subject to the terms of the IRSA Deposit Agreement, the IRSA GDS Depositary will execute and deliver at the IRSA GDS Depositary’s principal corporate trust office, to the person or persons certified entitled thereto, a GDR or GDRs evidencing the number of IRSA GDSs issuable in respect of such deposit.
 
Upon surrender of GDRs at the principal corporate trust office of the IRSA GDS Depositary, and upon payment of the fees, taxes and governmental charges specified in the IRSA Deposit Agreement, subject to the terms and conditions of the IRSA Deposit Agreement, our corporate charter and deposited securities (as defined below) and Argentine laws and regulations, owners are entitled to electronic delivery through the Caja de Valores or, if available, to physical delivery at the office of the custodian in Buenos Aires or the principal corporate trust office of the IRSA GDS Depositary of the deposited securities and any other securities and property represented by the IRSA GDSs so surrendered. Such delivery will be made to the GDR holder or upon the GDR holder’s order without unreasonable delay. The forwarding of shares and other documents of title for such delivery to a GDR holder, or as ordered by such GDR holder, will be at its risk and expense or the risk and expense of the person submitting such written instruction for delivery.
 
The IRSA GDS Depositary may own and deal in any class of securities of us or of our affiliates and in GDRs.
 
Dividends, other distributions and rights
 
Subject to applicable Argentine laws, regulations and approvals, to the extent that the IRSA GDS Depositary can in its judgment convert Argentine pesos (or any other foreign currency) into U.S. dollars on a reasonable basis and transfer the resulting U.S. dollars to the United States, the IRSA GDS Depositary will promptly as practicable convert or cause to be converted all cash dividends and other cash distributions received by it on the deposited securities into U.S. dollars and distribute the resulting U.S. dollars after deduction of the fees of theIRSA GDS Depositary and any amount charged by the IRSA GDS Depositary in connection with the conversion of Argentine pesos (or other foreign currency) into U.S. dollars, to the owners in proportion to the number of IRSA GDSs representing such deposited securities held by each of them. The
 
 
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amounts distributed will be reduced by any amounts required to be withheld by us, the IRSA GDS Depositary or the custodian on account of taxes or other governmental charges. If the IRSA GDS Depositary determines that in its judgment any foreign currency received by it cannot be so converted on a reasonable basis (including, as a result of applicable Argentine laws, regulations and approval requirements), the Depositary may distribute the foreign currency received by it or in its discretion hold such currency uninvested for the respective accounts of the owners entitled to receive the same (without liability for interest).
 
If the custodian or the IRSA GDS Depositary receives any distribution upon any deposited securities in securities or property (other than cash or shares or rights upon any deposited securities), the IRSA GDS Depositary will distribute such securities or property to the owners entitled thereto, after deduction or upon payment of the fees and expense of the IRSA GDS Depositary, in proportion to their holdings, in any manner that the IRSA GDS Depositary deems equitable and practicable. If in the opinion of the IRSA GDS Depositary, however, the distribution of such property cannot be made proportionately among such owners, or if for any other reason (including any requirement that we or the IRSA GDS Depositary withhold an amount on account of taxes or other governmental charges or that such securities must be registered under the Securities Act in order to be distributed to such owners) the IRSA GDS Depositary deems such distribution not feasible, the IRSA GDS Depositary may, upon consultation with us, adopt such method as it may deem equitable or practicable in order to effect such distribution, including the sale (public or private) of all or any part of such property and securities and the distribution to owners of the net proceeds of any such sale, as in the case of a distribution received in cash.
 
If we declare a dividend in, or free distribution of, additional shares, the IRSA GDS Depositary may, and shall if we so request, instruct us to deposit or cause such shares to be deposited with the account of the custodian at Caja de Valores and distribute to the owners in proportion to their holdings, additional GDRs for an aggregate number of IRSA GDSs representing the number of shares received as such dividend or free distribution, subject to the terms and conditions of the IRSA Deposit Agreement and after deduction or payment of any amounts required to be withheld on account of taxes or other governmental charges and the fees and expenses of the IRSA GDS Depositary. If additional GDRs are not so distributed, each IRSA GDS shall thereafter also represent the additional shares distributed with respect to the shares represented thereby. In lieu of issuing GDRs for fractions of IRSA GDSs, in any such case, the IRSA GDS Depositary shall sell the number of shares represented by the aggregate of such fractions and distribute the new proceeds in U.S. dollars, all in the manner and subject to the conditions set forth in the IRSA Deposit Agreement.
 
If we offer or cause to be offered to the holders of IRSA Shares any rights to subscribe for additional shares or any rights of any other nature, the IRSA GDS Depositary shall have discretion as to the procedure to be followed. The IRSA GDS Depositary may
 
to the extent that the IRSA GDS Depositary determines, at the time of the offering of any such rights, that it is lawful and feasible, and upon provision of any documents or certifications requested by the IRSA GDS Depositary, take such action as is necessary for all or certain of the rights to be made available to or exercised by or on behalf of certain or all of the owners;
to the extent that the IRSA GDS Depositary determines that taking of any such action is not lawful or feasible, sell such rights, and, after deduction or upon payment of all amounts required to be withheld on account of taxes or other governmental changes and the fees and expenses of the IRSA GDS Depositary, allocate the new proceeds of such sales for the accounts of such owners otherwise entitled thereto upon an averaged or other practical basis without regard to any distinctions among such owners because of exchange restrictions or the date of delivery of any GDR or GDRs; or
Allow the rights to lapse.
 
The IRSA GDS Depositary will not make available to owners any right to subscribe for or to purchase any IRSA Securities unless a registration statement under the Securities Act is in effect as to both the rights and the securities to which such rights relate or unless the offer and sale of such securities to such owners is exempt from registration under the provisions of the Securities Act.
 
 
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Record dates
 
Whenever any cash dividend or other cash distribution becomes payable or any distribution other than cash is made, or whenever rights are issued with respect to the deposited securities, or whenever, for any reason, the IRSA GDS Depositary causes a change in the number of shares that are represented by each IRSA GDS or whenever the IRSA GDS Depositary shall receive notice of any meeting of holders of deposited securities, the IRSA GDS Depositary will fix a record date for the determination of the owners who are entitled to receive such dividend, distributions or rights or the net proceeds of the sale thereof, or to give instructions for the exercise of voting rights at any such meeting, or for fixing the date on or after which each IRSA GDS will represent the changed number of shares, subject to the provisions of the IRSA Deposit Agreement.
 
Voting. If requested in writing by us, as soon as practicable after receipt of notice of a meeting of holders of IRSA Shares, or other deposited securities, and to the extent permitted by law, the IRSA GDS Depositary will mail to the owners the information contained in such notice of meeting. Owners at the close of business on the record date specified by the IRSA GDS Depositary are entitled, subject to Argentine law, or our by-laws and the provisions affecting the deposited securities, to instruct the IRSA GDS Depositary as to the exercise of the voting rights, if any, pertaining to the shares, or other deposited securities, underlying the GDRs held by such owners. Upon written request, the IRSA GDS Depositary will endeavor to vote or cause to be voted the shares, or other deposited securities, represented by the IRSA GDSs held by such owners in accordance with such instructions, provided that if, after complying with the foregoing procedures, the IRSA GDS Depositary does not receive instructions from an owner on or before the date established by the IRSA GDS Depositary for such purpose, the IRSA GDS Depositary will exercise such owner’s voting rights relating to the shares or other deposited securities represented by the IRSA GDSs as instructed by our Board of Directors, and if the Board does not provide any recommendation, in the same manner as the majority of such shares or other deposited securities not held in the IRSA GDS Depositary receipt facility under the IRSA Deposit Agreement, provided further that the IRSA GDS Depositary shall only be required to vote shares or other deposited securities in accordance with the foregoing procedures if it is satisfied that the actions to be voted upon are not contrary to Argentine law or regulations or our by-laws.
 
Inspection of transfer books
 
The IRSA GDS Depositary will keep books at its transfer office in the City of New York for the registration and transfer of GDRs, which at all reasonable times will be open for inspection by the owners, provided that such inspection shall not be for the purpose of communicating with owners in the interest of a business or object other than our business or a matter related to the deposit agreement or the GDRs.
 
Reports and notices
 
We will furnish to the IRSA GDS Depositary copies in English of all notices of shareholders’ meetings, its annual reports to shareholders and other reports and communications that are made generally available to shareholders. Upon receipt thereof, the IRSA GDS Depositary will, upon our request, promptly mail such reports to all owners. The IRSA GDS Depositary will make available for inspection by owners at its principal office any reports and communications received from us that are made generally available to shareholders.
 
On or before the first date on which we give notice, by publication or otherwise, of any shareholders’ meeting or of any adjourned shareholders’ meeting, or of the taking of any action in respect of any cash or other distributions or the offering of any rights in respect of deposited securities, we agree to transmit to the IRSA GDS Depositary and the custodian a copy of the notice thereof in the form given to owners. If requested by us, the IRSA GDS Depositary will, at our expense, arrange for the prompt mailing of such notices to all owners.
 
We are required to file certain reports with the SEC pursuant to the Exchange Act. Such reports will be available for review over the internet at the SEC’s website at www.sec.gov and at our website at
 
 
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www.irsa.com.ar. We are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements.
 
Changes affecting deposited shares
 
Upon any change in par value, split-up, consolidation or any other reclassification of deposited securities or upon any recapitalization, reorganization, merger or consolidation or sale of assets affecting us or to which it is a party, any securities which shall be received by the IRSA GDS Depositary or the custodian in exchange for, in conversion of or otherwise in respect of deposited securities shall be treated as new deposited securities under the IRSA Deposit Agreement, and the IRSA GDS Depositary may execute and deliver new GDRs, or call for the surrender of outstanding GDRs to be exchanged for additional GDRs specifically describing such new deposited securities.
 
Amendment and termination of the deposit agreements
 
The form of GDRs and the deposit agreement may at any time be amended by agreement between us and the IRSA GDS Depositary and, except as provided in the next sentence, such amendment shall require no consent from owners. Any amendment which imposes or increases any fees or charges (other than taxes and other governmental charges and expenses of the IRSA GDS Depositary), or which otherwise prejudices any substantial existing rights of owners, will not take effect as to outstanding GDRs until the expiration of 30 days after notice of such amendment has been given to the owners. Each owner, at the time such amendment becomes effective, will be deemed, by continuing to hold such GDR or GDRs, to consent and agree to such amendment and to be bound by the deposit agreement as amended thereby.
 
Whenever so directed by us, the IRSA GDS Depositary will terminate the IRSA Deposit Agreement by mailing notice of such termination to the owners of all GDRs then outstanding at least 90 days prior to the date fixed in such notice for such termination. The IRSA GDS Depositary may likewise terminate the IRSA Deposit Agreement if, at any time 90 days after the IRSA GDS Depositary shall have delivered to us a notice of its election to resign, a successor depositary shall not have been appointed and accepted its appointment as provided in the IRSA Deposit Agreement. If any GDRs remain outstanding after the date of termination, the IRSA GDS Depositary thereafter will discontinue the registration of transfers of GDRs, will suspend the distribution of dividends to the owners thereof, will not give any further notices or perform any further acts under the IRSA Deposit Agreement except the collection of dividends and other distributions pertaining to the deposited securities, the sale of property and rights as provided in the IRSA Deposit Agreement and the delivery of deposited securities together with dividends or other distributions, in exchange for surrendered GDRs upon payment of the IRSA GDS Depositary’s fee for such cancellations.
 
At any time after the expiration of one year from the date of termination, the IRSA GDS Depositary may sell the deposited securities and hold the net proceeds, together with any cash then held, unsegregated and without liability for interest, for the pro rata benefit of the owners of GDRs which have not theretofore been surrendered and such owners will thereupon become general creditors of the IRSA GDS Depositary with respect to such net proceeds.
 
Governing law
 
The deposit agreement and the GDRs, and all the rights thereunder, are governed by and will be interpreted in accordance with the laws of the State of New York.
 
Charges of Depositary
 
The following charges shall be incurred by any party depositing or withdrawing shares or by any party surrendering GDRs or to whom GDRs are issued (including without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the GDRs or deposited securities), whichever applicable:
 
taxes and other governmental charges,
 
 
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such registration fees as may from time to time be in effect for the registration of transfers of shares generally on our register (or our appointed agent for transfer and registration of the shares) and applicable to transfers of shares to the name of the IRSA GDS Depositary or its nominee or the custodian or its nominee on the making of deposits or withdrawals hereunder,
such cable, telex and facsimile transmission expenses as are expressly provided in the deposit agreement to be at the expense of persons depositing shares or owners,
such expenses as are incurred by the IRSA GDS Depositary in the conversion of foreign currency,
a fee not in excess of USD 5.00 per 100 IRSA GDSs (or portion thereof) for the execution and delivery of GDRs pursuant to the deposit of shares or other deposited securities or distribution in shares or other deposited securities and the surrender of GDRs for withdrawal of shares and other deposited securities, and
a fee not in excess of USD 0.02 per IRSA GDS (or portion thereof), for any cash distribution made pursuant to the IRSA Deposit Agreement.
General
 
Neither the IRSA GDS Depositary nor us nor any of their directors, employees, agents or affiliates shall incur any liability to any owner if, by reason of any present or future provision of any law or regulation of the United States, Argentina or of any other country, or any governmental or regulatory authority or stock exchange, or by reason of any provision, present or future, of our by-laws, or by reason of any provision of or governing any deposited securities, or by reason of an act of God or war or other circumstances beyond its control, the IRSA GDS Depositary or us or any of their directors, employees, agents or affiliates shall be prevented, delayed or forbidden from, or subjected to any civil or criminal penalty on account of, doing or performing any act or thing which by the terms of the IRSA Deposit Agreement or the deposited securities it is provided shall be done or performed. Our obligations and those of the IRSA GDS Depositary under the IRSA Deposit Agreement are expressly limited to performing their respective duties specified therein without negligence or bad faith.
 
The GDRs are transferable on the books of the IRSA GDS Depositary, provided that the IRSA GDS Depositary may close the transfer books at any time or from time to time, after consultation with us, when deemed expedient by it in connection with the performance of its duties under the IRSA Deposit Agreement or at our written request. As a condition precedent to the execution and delivery, registration of transfer, split-up, combination or surrender of any GDR or the transfer or withdrawal of any deposited securities, we, the IRSA GDS Depositary or the custodian may require payment from the presenter of the GDRs or the depositor of the shares of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto and payment of any applicable fees payable by the owners.
 
The IRSA GDS Depositary may refuse to deliver GDRs, register the transfer of any GDRs, make any distributions or deliver any deposited securities until it has received such proof of citizenship, residence, exchange control approval, legal or beneficial ownership or other information as it may deem necessary or proper or as we may require. The delivery of GDRs against deposits of shares or the registration of transfers of GDRs may be suspended during any period when the transfer books of the Depositary or we are closed if such action is deemed necessary or advisable by the Depositary or us, in good faith, at any time or from time to time in accordance with the deposit agreement.
 
 
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U.S. FEDERAL INCOME TAX CONSEQUENCES
 
The following summary describes the material U.S. federal income tax consequences to U.S. Holders (as defined below) of the Merger and the ownership of IRSA Securities received pursuant to the Merger and, except as otherwise noted herein, represents the opinion of Simpson Thacher & Bartlett LLP, U.S. counsel to IRSA. The discussion set forth below is applicable only to U.S. Holders that hold IRSA CP Securities, and will hold the IRSA Securities received pursuant to the Merger, as capital assets for U.S. federal income tax purposes. This summary does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:
 
a bank or other financial institution;
 
a dealer in securities or currencies;
 
a regulated investment company;
 
a real estate investment trust;
 
an insurance company;
 
a tax-exempt organization;
 
a person holding the IRSA CP Securities or IRSA Securities as part of a hedging, integrated or conversion transaction, constructive sale or straddle;
 
a trader in securities that has elected the mark-to-market method of accounting for your securities;
 
a person liable for alternative minimum tax;
 
a person who owns or is deemed to own 5% or more of the outstanding stock of IRSA CP or IRSA (by vote or value);
 
a person required to accelerate the recognition of any item of gross income with respect to IRSA CP Securities or IRSA Securities as a result of such income being recognized on an applicable financial statement;
 
a partnership or other pass–through entity for U.S. federal income tax purposes; or
 
a person whose “functional currency” is not the U.S. dollar.
 
Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. This summary does not contain a detailed description of all the U.S. federal income tax consequences to you in light of your particular circumstances and does not address the Medicare tax on net investment income, U.S. federal estate and gift taxes or the effects of any state, local or non-U.S. tax laws. In addition, this summary assumes that the IRSA CP ADS deposit agreement and the IRSA Deposit Agreement (and all other related agreements) have been, and will continue to be, performed in accordance with their terms.
 
 
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We do not believe that IRSA CP is a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes, and this summary assumes that IRSA CP is not, and has not been, a PFIC. In addition, as discussed under “—Passive Foreign Investment Company” below, we do not believe IRSA was a PFIC for the taxable year ending June 30, 2021, and we do not currently expect IRSA to become a PFIC, although there can be no assurance in this regard. Except where specifically noted under “—Passive Foreign Investment Company” below, this summary assumes that IRSA CP is not a PFIC for any taxable year.
 
As used herein, the term “U.S. Holder” means a beneficial owner of IRSA CP Securities or IRSA Securities that is for U.S. federal income tax purposes:
 
an individual citizen or resident of the United States;
 
a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
 
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
 
a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
 
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds IRSA CP Securities or IRSA Securities, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding IRSA CP Securities or IRSA Securities, you should consult your tax advisors.
 
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO YOU OF THE MERGER AND THE OWNERSHIP OF IRSA SECURITIES RECEIVED PURSUANT TO THE MERGER AS WELL AS ANY CONSEQUENCES ARISING UNDER OTHER U.S. FEDERAL TAX LAWS AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
 
U.S. Federal Income Tax Consequences of the Merger
 
Based upon representations contained in representation letters provided by IRSA CP and IRSA and on customary factual assumptions, all of which must have been and continue to be true, complete and correct in all material respects as of the Merger Effectiveness Date through the date of the Merger, it is the opinion of Simpson Thacher & Bartlett LLP that the Merger will constitute a tax-free reorganization under Section 368(a) of the Code. Based on the foregoing:
 
you will not recognize gain or loss for U.S. federal income tax purposes as a result of the Merger, except for any gain or loss that may result from your receipt of cash instead of fractional IRSA GDSs;
 
your aggregate tax basis in the IRSA Securities that you receive in the Merger (including any fractional IRSA GDSs for which you receive cash) will equal your aggregate tax basis in the IRSA CP Securities that you surrender in the Merger; and
 
your holding period for the IRSA Securities that you receive in the Merger (including any fractional IRSA GDSs for which you receive cash) will include your holding period for the IRSA CP Securities that you surrender in the Merger.
 
 
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If you acquired different blocks of IRSA CP Securities at different times or at different prices, your tax basis and holding period in your IRSA Securities will generally be determined with reference to each block of IRSA CP Securities.
 
If you receive cash instead of fractional IRSA GDSs, you will generally recognize capital gain or loss equal to the difference between the amount of cash received and the tax basis allocable to the fractional IRSA GDSs. The gain or loss will generally constitute long-term capital gain or loss if your holding period in the IRSA CP ADSs surrendered in the Merger is greater than one year as of the date of the Merger.
 
U.S. Federal Income Tax Consequences of Ownership of IRSA Securities Received Pursuant to the Merger
 
IRSA GDSs
 
If you hold IRSA GDSs, for U.S. federal income tax purposes, you generally will be treated as the owner of the underlying IRSA Shares that are represented by such IRSA GDSs. Accordingly, deposits or withdrawals of IRSA Shares for IRSA GDSs will not be subject to U.S. federal income tax.
 
Distributions on IRSA Securities
 
The gross amount of distributions on IRSA Securities (including amounts withheld to reflect Argentine withholding taxes, if any) will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such dividends will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of the IRSA Shares, or by the IRSA GDS Depositary, in the case of the IRSA GDSs. Such dividends will not be eligible for the dividends received deduction generally allowed to corporations under the Code.
 
Subject to applicable limitations (including a minimum holding period requirement), dividends received by non-corporate U.S. Holders from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on common shares (or depositary shares representing such common shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that the IRSA GDSs (which are listed on the NYSE), but not the IRSA Shares, are readily tradable on an established securities market in the United States. Thus, we believe that dividends received on IRSA GDSs, but not dividends received on IRSA Shares, will be potentially eligible for these reduced tax rates. There can be no assurance, however, that the IRSA GDSs will be considered readily tradable on an established securities market in the United States in later years. You should consult your own tax advisors regarding the application of these rules to your particular circumstances.
 
 
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The amount of any dividend paid in pesos will equal the U.S. dollar value of the pesos received calculated by reference to the exchange rate in effect on the date the dividend is actually or constructively received by you, in the case of the IRSA Shares, or by the IRSA GDS Depositary, in the case of the IRSA GDSs, regardless of whether the pesos are converted into U.S. dollars. If the pesos received as a dividend are not converted into U.S. dollars on the date of receipt, you will have a tax basis in the pesos equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the pesos will be treated as U.S.-source ordinary income or loss.
 
Subject to certain complex conditions and limitations (including a minimum holding period requirement), Argentine withholding taxes on dividends, if any, may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid on IRSA Securities will be treated as income from sources outside the United States and will generally constitute passive category income. If you do not elect to claim a credit for any foreign taxes paid during a taxable year, you may instead claim a deduction in respect of such Argentine withholding taxes. The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.
 
To the extent that the amount of any distribution (including amounts withheld to reflect Argentine withholding taxes, if any) exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of your IRSA Securities, and thereafter as capital gain recognized on a sale or exchange (as discussed below under “—Taxation of Capital Gains”). However, we do not expect IRSA to determine earnings and profits in accordance with U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be reported as a dividend (as discussed above).
 
Distributions of IRSA Securities that are received as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal income taxes.
 
Passive Foreign Investment Company
 
Based on the past and projected composition of our income and assets and the valuation of our assets, including goodwill, we do not believe IRSA was a PFIC for U.S. federal income tax purposes for the taxable year ending June 30, 2021, and we do not currently expect IRSA to become a PFIC, although there can be no assurance in this regard. The determination of whether IRSA is a PFIC is made annually. Accordingly, it is possible that IRSA may be a PFIC in the current or any future taxable year due to changes in its asset or income composition or if our projections are not accurate. The volatility and instability of Argentina’s economic and financial system may substantially affect the composition of our income and assets and the accuracy of our projections. In addition, this determination is based on the interpretation of certain U.S. Treasury regulations relating to rental income, which regulations are potentially subject to differing interpretation.
 
In general, IRSA will be a PFIC for any taxable year in which:
 
at least 75% of IRSA’s gross income is passive income; or
 
at least 50% of the value (generally determined based on a quarterly average) of IRSA’s assets is attributable to assets that produce or are held for the production of passive income.
 
 
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For this purpose, cash is generally a passive asset and passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person), annuities and gains from assets that produce passive income. If IRSA owns at least 25% by value of the stock of another corporation, IRSA will be treated, for purposes of the PFIC tests, as owning its proportionate share of that other corporation’s assets and receiving its proportionate share of that other corporation’s income. If IRSA is a PFIC for any taxable year during which you hold IRSA Securities, you will be subject to special tax rules discussed below.
 
If IRSA is a PFIC for any taxable year during which you hold IRSA Securities and you do not make a timely mark-to-market election (as discussed below), you will be subject to special tax rules with respect to any “excess distributions” received and any gain realized from a sale or other disposition, including a pledge, of such IRSA Securities. Distributions received in a taxable year will be treated as excess distributions to the extent that they are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the IRSA Securities. Under these special tax rules:
 
the excess distribution or gain will be allocated ratably over your holding period for the IRSA Securities;
 
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which IRSA was a PFIC, will be treated as ordinary income; and
 
the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year for individuals or corporations, as applicable, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
 
Although the determination of whether IRSA is a PFIC is made annually, if IRSA is a PFIC for any taxable year in which you hold IRSA Securities, you will generally be subject to the special tax rules described above for that year and for each subsequent year in which you hold the IRSA Securities (even if IRSA does not qualify as a PFIC in such subsequent years). However, if IRSA ceases to be a PFIC, you can avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if your IRSA Securities had been sold on the last day of the last taxable year during which IRSA was a PFIC. You are urged to consult your own tax advisor about this election.
 
In certain circumstances, in lieu of being subject to the excess distribution rules discussed above, you may make an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided that such stock is regularly traded on a qualified exchange. Under current law, the mark-to-market election is only available for stock traded on certain designated United States exchanges and foreign exchanges which meet certain trading, listing, financial disclosure and other requirements to be treated as a qualified exchange under applicable U.S. Treasury regulations. The IRSA Shares are listed on ByMA, which must meet the trading, listing, financial disclosure and other requirements under applicable U.S. Treasury regulations for purposes of the mark-to-market election, and no assurance can be given that the IRSA Shares are or will be “regularly traded” for purposes of the mark-to-market election. The IRSA GDSs are currently listed on the NYSE, which constitutes a qualified exchange under the U.S. Treasury regulations, although there can be no assurance that the IRSA GDSs are or will be “regularly traded.”
 
If you make an effective mark-to-market election, for each taxable year that IRSA is a PFIC you will include in ordinary income the excess, if any, of the fair market value of your IRSA Securities at the end of the year over your adjusted tax basis in the IRSA Securities. You will be entitled to deduct as an ordinary loss in each such year the excess, if any, of your adjusted tax basis in the IRSA Securities over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Any gain or loss on the sale or other disposition of the the IRSA Securities in a year that IRSA is a PFIC will be ordinary income or loss, except that such loss will be ordinary loss only to the extent of the previously included net mark-to-market gain. 
 
 
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Your adjusted tax basis in the IRSA Securities will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. If you make a mark-to market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the IRSA Securities are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation of the election. However, because a mark-to-market election cannot be made for any lower-tier PFICs that IRSA may own (as discussed below), you will generally continue to be subject to the special tax rules discussed above with respect your indirect interest in any such lower-tier PFIC. Mark-to-market inclusions and deductions will be suspended during taxable years in which IRSA is not a PFIC, but would resume if IRSA subsequently became a PFIC. You are urged to consult your tax advisors about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.
 
In some cases, holders of stock in a PFIC may be able to avoid the rules described above by electing to treat the PFIC as a “qualified electing fund” under Section 1295 of the Code. This option will not be available to you with respect to your IRSA Securities because IRSA does not intend to comply with certain calculation and reporting requirements necessary to permit you to make this election.
 
If IRSA is a PFIC for any taxable year during which you hold IRSA Securities and any of IRSA’s non-U.S. subsidiaries is also a PFIC, you would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of IRSA’s subsidiaries.
 
In addition, non-corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from IRSA (as discussed above under “—Distributions on IRSA Securities”) if IRSA is a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year. You will generally be required to file Internal Revenue Service Form 8621 if you hold IRSA Securities in any year in which IRSA is classified as a PFIC.
 
You are urged to consult your tax advisors concerning the U.S. federal income tax consequences of holding IRSA Securities if IRSA is considered a PFIC in any taxable year.

Taxation of Capital Gains
 
For U.S. federal income tax purposes, you will generally recognize capital gain or loss on any sale, exchange or other taxable disposition of IRSA Securities in an amount equal to the difference between the amount realized for the IRSA Securities (without reduction for any Argentine withholding taxes) and your tax basis in the IRSA Securities, both determined in U.S. dollars. Such gain or loss will generally be long-term capital gain or loss if you have held the IRSA Securities for more than one year. Long-term capital gains of non-corporate U.S. Holders are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations under the Code. Any gain or loss recognized by you will generally be treated as U.S.-source gain or loss for U.S. foreign tax credit purposes. Consequently, you may not be able to use the foreign tax credit arising from any Argentine tax imposed on the disposition of the IRSA Securities unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources.
 
Argentine Personal Assets Tax
 
Amounts paid on account of the Argentine personal assets tax, if any, will not be eligible as a credit against your U.S. federal income tax liability, but may be deductible subject to applicable limitations in the Code. See “Argentine Tax Consequences––Certain Tax Consequences Related to the IRSA Shares and the IRSA GDSs–– Personal Assets Tax.”
 
Information Reporting and Backup Withholding
 
In general, information reporting will apply to any cash received instead of fractional IRSA GDSs in the Merger, any dividends in respect of the IRSA Securities and the proceeds from the sale, exchange or other disposition of the IRSA Securities that are paid to you within the United States (and in certain cases, outside the United States), unless in each case you are an exempt recipient. A backup withholding tax may apply to such payments if you fail to provide a correct taxpayer identification number or certification of exempt status or fail to report in full dividend and interest income.
 
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.
 
You should consult your own tax advisors regarding any other information reporting requirements that may apply to you in connection with the Merger and the the ownership of IRSA Securities received pursuant to the Merger, including disclosure requirements relating to the ownership of “foreign financial assets.”
 
 
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ARGENTINE TAX CONSEQUENCES
 
The following description of certain Argentine tax matters is based upon the tax laws of Argentina and regulations thereunder as of the date of this prospectus and is subject to any subsequent change in Argentine laws and regulations that may come into effect after such date. This discussion does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of IRSA CP Shares or IRSA CP ADSs that receives IRSA Shares or IRSA GDSs pursuant to the Merger. No assurance can be given that the courts or Argentine tax authorities responsible for the administration of the laws and regulations described in this prospectus will agree with this interpretation.
 
Tax Consequences Related to the Merger
 
The Merger of IRSA CP and IRSA may qualify as a “tax-free reorganization” under the ITL, the Regulatory Decree, judicial decisions, and published rulings of the AFIP; therefore, we believe the shareholders will not have to recognize any Argentine-source income in connection with the exchange of IRSA CP Securities for IRSA Securities in the Merger.
 
In order for the Merger to qualify as a tax-free reorganization under the ITL and the Regulatory Decree, IRSA and IRSA CP must give formal notice of the Merger and submit other documentation to the AFIP within 180 calendar days from the Merger Effectiveness Date.
 
Additionally, the surviving company must comply with other requirements for a two-year period, such as remaining in the same line of business as IRSA CP prior to the Merger and maintaining the listing of the IRSA Securities on a self-regulated stock market from the date of reorganization. For these purposes, the Merger Effectiveness Date will be the first date on which IRSA will assume the activity or activities carried out by IRSA CP prior to such date.
 
Even though IRSA expects that the tax-free reorganization requirements will be met, no assurance can be given as to this fact. Since applicable regulations do not require the AFIP to issue a resolution confirming that the surviving company has effectively complied with the tax-free reorganization requirements and that, therefore, the Merger effectively qualifies as a “tax-free reorganization,” there can be no assurance that the AFIP will not challenge the Merger based on their interpretation that such requirements were not properly satisfied, until the five-year statute of limitations has lapsed.
 
If the Merger qualifies as a tax-free reorganization under Argentine law, no capital gains or withholding tax would apply to investors receiving IRSA Securities in the Merger in exchange for their IRSA CP Securities. In addition, the exchange of the IRSA CP Securities in the Merger is exempted from value added tax pursuant to Section 7(b) of the Argentine Value Added Tax Law (Ley de Impuesto al Valor Agregado No. 23,349).
 
Certain Tax Consequences Related to the IRSA Shares and the IRSA GDSs
 
The following summary contains a description of the principal Argentine tax consequences of the acquisition, ownership and disposition of IRSA Shares and IRSA GDSs, but it does not purport to be a comprehensive description of all the Argentine tax considerations that may be relevant for the holder of IRSA Shares and/or IRSA GDSs.
 
Dividends Tax
 
Dividend distributions which source are profits generated in fiscal years beginning before January 1, 2018, whether in cash, in shares or in kind, are not subject to income tax withholding except for the application of the “Equalization Tax” described below.
 
 
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An income tax withholding will be applied to the amount of dividends distributed in excess of a company’s net taxable income determined in accordance with general income tax regulations for the fiscal years preceding the date of the distribution of such dividends (the “Equalization Tax”). The legislation requires that companies withhold 35% of the amount of distributed dividends in excess of the net taxable income of such distribution, as determined in accordance with the Income Tax Law No. 20,628. Dividends distributed by an Argentine company are not subject to this tax to the extent that those dividends arise from dividend income or other distributions received by such company from other Argentine companies.
 
Dividend distributions made in kind (other than cash) will be subject to the same tax rules as cash dividends. Stock dividends on fully paid shares are not subject to Equalization Tax.
 
Equalization Tax will not be applicable on profits generated from fiscal years beginning on or after January 1, 2018.
 
Dividend distributions, other than stock dividends, which source are profits generated in fiscal years beginning on or after January 1, 2018, whether in cash, in shares or in kind, made by local entities to resident individuals, resident undivided estates and foreign beneficiaries are subject to a withholding tax at a rate of 7%.
 
Certain tax treaties contemplate the application of a ceiling tax rate on dividends (i.e. 10% on gross dividends).
 
Capital Gains Tax
 
Resident Individuals
 
The ITL provides for the taxation of resident individuals’ income resulting from the purchase and sale, exchange or other disposition of shares and other securities (including securities representing shares and deposit certificates such as GDSs) not listed on stock exchanges or securities markets under the supervision of the CNV, irrespective of the frequency or regularity of such operations. This income is subject in all cases to a 15% tax rate.
 
Losses arising from the sale, exchange or other disposition of shares and/or deposit certificates, can be applied only to offset such capital gains arising from the sale, exchange or other disposition of these securities, for a five-year carryover period.
 
Foreign Beneficiaries
 
Capital gains of Argentine source (as it is the case of the disposition of IRSA Shares and IRSA GDSs) obtained by non-Argentine individuals or non-Argentine entities from the sale, exchange or other disposition of shares are subject to income tax at a 15% rate on the net capital gain or at a 13.5% rate on the gross price at the seller’s election, unless an exemption applies.
 
Notwithstanding the above, Law No. 27,430 established an exemption for foreign beneficiaries participating in the sale of publicly traded shares traded in stock exchanges under the supervision of the CNV. Said Law also established an exemption for capital gains derived from the sale, exchange or other disposition of share certificates issued abroad that represent shares issued by Argentine companies (i.e. ADRs or GDRs), to the extent the underlying shares are authorized for public offering by the CNV. The exemptions will apply only if the foreign beneficiaries do not reside in, and the funds do not arise from, “non-cooperating” jurisdictions for tax transparency purposes.
 
 
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In the event foreign beneficiaries conduct a conversion process of shares that do not meet the exemption requirements into securities representing shares that are exempt from income tax, such conversion would be considered a taxable transfer for which the fair market value at the time the conversion takes place should be considered.
 
The sale of an equity interest in a foreign entity could represent a taxable indirect transfer of Argentine assets (including shares), if (i) the value of the Argentine assets exceed 30% of the transaction’s overall value, and (ii) the equity interest sold (in the foreign entity) exceeds 10%. The tax will also be due if any of these thresholds were met during the twelve month period prior to the sale. However, no withholding mechanism is currently available. The indirect transfer of Argentine assets within the same economic group would not trigger taxation, provided the requirements set by regulations have been met.
 
Argentine Resident Entities
 
Capital gains obtained in tax years beginning from January 1, 2021 by Argentine legal entities (in general, corporations organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine entities, entities included under Section 1 of Argentine Law No. 22,016, certain trusts created in accordance with Argentine law, certain mutual funds, sole proprietorships and individuals carrying on certain commercial activities in Argentina) that are derived from the sale, exchange or other disposition of IRSA Shares or IRSA GDSs are subject to the following tiered structure of corporate income tax rates for different brackets of earnings:
 
Annual taxable income (ARS)Tax due on lower limit (ARS)Marginal rate on the excess of the lower limit
0 to 5 millionARS 025%
Over 5 million to 50 millionARS 1.25 million30%
Over 50 millionARS 14.75 million35%
 
Losses arising from the sale, exchange or other disposition of common share rights, GDR rights, common shares and GDRs can be applied only to offset such capital gains arising from the sale, exchange or other disposition of these securities for a five-year carryover period.
 
Personal Assets Tax
 
Argentine entities, such as us, have to pay the personal assets tax corresponding to Argentine and foreign individuals and foreign entities for the holding of our shares at December 31 of each year. The applicable tax rate is 0.50% and is levied on the equity value, or the book value, of the shares arising from the last balance sheet. Pursuant to the Personal Assets Tax Law (Ley de Impuesto sobre los Bienes Personales No. 23,966 (texto ordenado 997)), the Argentine company is entitled to seek reimbursement of such paid tax from the applicable Argentine individuals and/or foreign shareholders or by withholding on dividend payments.
 
Transfer Taxes
 
The sale, exchange or other disposition of IRSA Shares or IRSA GDSs is not subject to transfer taxes.
 
 
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Stamp Taxes
 
Stamp taxes may apply in the City of Buenos Aires and in certain Argentine provinces in case transfer of IRSA Shares or IRSA GDSs is performed or executed in such jurisdictions by means of written agreements.
 
Gross Income Tax
 
The gross income tax is a local tax; therefore, the rules of the relevant provincial jurisdiction should be considered, which may levy this tax on the customary purchase and sale, exchange or other disposition of common shares and GDSs, and/or the collection of dividends at an average rate of 6%, unless an exemption is applicable. In the particular case of the City of Buenos Aires, any transaction involving common shares and/or the collection of dividends and revaluations is exempt from this tax.
 
Value Added Tax
 
The sale, exchange or other disposition of IRSA Shares or IRSA GDSs and the distribution of dividends are exempted from the value added tax.
 
Other Taxes
 
There are no Argentine federal inheritance or succession taxes applicable to the ownership, transfer or disposition of IRSA Shares or IRSA GDSs. The province of Buenos Aires established a tax on free transmission of assets, including inheritance, legacies, donations, etc. Free transmission of our shares could be subject to this tax.
 
In the event that it becomes necessary to institute legal actions in relation to the IRSA Shares and/or IRSA GDSs in Argentina, a court tax (currently at a rate of 3.0%) will be imposed on the amount of any claim brought before the Argentine courts sitting in the City of Buenos Aires.
 
Tax Treaties
 
Argentina has signed tax treaties for the avoidance of double taxation with several countries. There is currently no tax treaty or convention in effect between Argentina and the United States. It is not clear when, if ever, a treaty will be ratified or entered into effect. As a result, the Argentine tax consequences described in this section will apply, without modification, to a holder of IRSA Shares or IRSA GDSs that is a U.S. resident. Foreign shareholders located in certain jurisdictions with a tax treaty in force with Argentina may be exempted from the payment of the personal assets tax.
 
 
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REGULATORY AND ADMINISTRATIVE MATTERS
 
The Merger will be subject to the Companies obtaining the following administrative authorizations and approvals:
 
obtaining the administrative consent (conformidad administrativa) of the CNV with respect to the Merger;
 
the registration of the final Merger agreement with the Public Registry of Commerce; and
 
any other authorizations that may be necessary from any market or any other governmental or regulatory entities to consummate the Merger.
 
 
 
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INFORMATION ABOUT IRSA CP
 
Description of Business
 
A. History and Development of IRSA CP
 
General Information
 
The legal name of the company being acquired is IRSA Propiedades Comerciales S.A. Formerly, the legal name was Alto Palermo S.A., which was modified by vote of the special shareholders’ meeting (asamblea extraordinaria) held on February 5, 2015. IRSA CP was organized and incorporated on August 29, 1889, under Argentine law as a stock corporation (sociedad anónima), and was registered with the Public Registry of Commerce on February 27, 1976 under number 323, on page 6, book 85 of the stock corporations volume. Pursuant to IRSA CP’s bylaws, IRSA CP term of duration expires on August 28, 2087.
 
IRSA CP common shares are listed and traded on ByMA and IRSA CP ADSs representing its common shares are listed on NASDAQ, both under the ticker “IRCP”. IRSA CP’s headquarters are located at Carlos M. Della Paolera 261, 8th Floor (C1001ADA), City of Buenos Aires, Argentine. IRSA CP’s telephone is +54 (11) 4344-4600. IRSA CP’s website is www.irsacp.com.ar. Information contained in or accessible through IRSA CP’s website is not a part of this prospectus.
 
All references in this prospectus to this or other internet sites are inactive textual references to these URLs, or “uniform resource locators” and are for IRSA CP’s information reference only. IRSA CP assumes no responsibility for the information contained on these sites. IRSA CP’s depositary agent for the ADSs in the United States is The Bank of New York Mellon whose address is 240 Greenwich Street, New York, N.Y. 10286, and whose telephone numbers are +1-888-BNY-ADRS (+1-888-269-2377) for U.S. calls and +1-201-680-6825 for calls outside U.S.
 
History
 
IRSA CP was organized in 1889 under the name Sociedad Anónima Mercado de Abasto Proveedor (SAMAP) and, until 1984, IRSA CP owned and operated the main fresh products market in the City of Buenos Aires. IRSA CP’s main asset during that period was the historic Mercado de Abasto building which served as the location of the market from 1889 to 1984. In July 1994, IRSA acquired a controlling interest in us and, subsequently, IRSA CP concentrated on real estate operations. In April 1997, IRSA CP merged with fourteen wholly owned subsidiaries, including Alto Palermo S.A., and subsequently changed IRSA CP’s name to Alto Palermo S.A. Since then, IRSA CP has continued to grow through a series of acquisitions and the development of IRSA CP’s businesses.
 
Since 1996, IRSA CP has expanded IRSA CP’s real estate activities in the shopping mall segment, through the acquisition and development of the following shopping malls: Paseo Alcorta, Alto Palermo Shopping, Alto Avellaneda, Alto NOA, Abasto Shopping, Patio Bullrich, Mendoza Plaza Shopping, Alto Rosario, Córdoba Shopping Villa Cabrera, Dot Baires, Soleil Premium Outlet, La Ribera Shopping, Patio Olmos Shopping, Distrito Arcos and Alto Comahue Shopping.
 
On December 22, 2014, IRSA CP acquired from IRSA, IRSA CP’s controlling shareholder, 83,789 square meters of premium office space including the República Building, the Bouchard 710 building, (on July 30, 2020, IRSA CP sold to an unrelated third party of the entire Bouchard 710 building, for a total amount of approximately USD 87.2 million), the Della Paolera 261 building, the Intercontinental Plaza Building, the Suipacha 652 building and the land reserve “Intercontinental II” (the “Acquired Properties”) with the potential to develop up to 19,600 square meters, each located in the City of Buenos Aires. The acquisition was carried out as part of IRSA CP’s strategy to expand IRSA CP’s business of developing and operating commercial properties in Argentina and to create a unique and unified portfolio of rental properties consisting of the best office buildings in the City of Buenos Aires and the best shopping malls in Argentina. The total value of the transaction was USD 308.0 million, based on third party appraisals.
 
 
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In 2007, through Panamerican Mall S.A. (“PAMSA”), IRSA CP started the construction of one of IRSA CP’s most important projects called “Polo Dot”, a Shopping Mall, an Office Building and different plots of land to develop three additional office buildings (one of them may include a hotel). This project is located in Saavedra neighborhood, at the intersection of Avenida General Paz and the Panamerican Highway. First, the Shopping Mall Dot Baires was developed and opened in May, 2009 and then the Office Building was opened in July 2010, which meant IRSA CP’s landing on the growing corridor of rental offices located in the North Zone of Buenos Aires. In addition, on June 5, 2017, IRSA CP reported the acquisition of the historic Philips Building, adjacent to the Dot Baires Shopping Mall. Likewise, through PAMSA, IRSA CP developed the Zetta building, A+ and potentially LEED building, which was inaugurated on May, 2019, it has 11 office floors with a profitable area of 32,173 square meters, fully leased at the opening date.
 
As of June 30, 2021, IRSA CP’s main shareholder is IRSA which owns 79.92% of IRSA CP’s share capital outstanding. On September 30, 2021, IRSA CP informed that IRSA CP's Board of Directors has approved the beginning of the corporate reorganization process, by which IRSA CP will merge with and into IRSA, with IRSA as the surviving entity. Likewise, and within the framework of the reorganization process, the IRSA CP’s Board of Directors has approved the exchange ratio, which has been established at 1.40 IRSA shares for each IRSA CP share, which is equivalent to 0.56 IRSA GDS for each ADS of IRSA CP. For more information see “The Merger”
 
As of June 30, 2021, IRSA CP owns 15 shopping malls in Argentina, 14 of which are operated by us, totaling 334,826 square meters and 113,291 square meters of gross leasable in seven premium office buildings of rental office property.
 
Significant acquisitions, dispositions and development of businesses
 
The following is a description of the most significant events in terms of acquisitions, dispositions, real estate barter transactions and other transactions which occurred during the years ended June 30, 2021, 2020 and 2019:
 
Fiscal year ended as of June 30, 2021
 
Acquisitions
 
Acquisition of Hudson Property
 
On December 11, 2020, IRSA CP completed the acquisition of a property called “Casonas” located in Hudson, Berazategui, Buenos Aires for a total consideration of USD 1 million. Of this total consideration, IRSA CP paid USD 900,000 since IRSA CP had already paid the 10% during the fiscal year ended June 30, 2018.
 
We are Appa S.A. – Share capital increase
 
As of June 30, 2020, IRSA CP’s capital stock totalled 116,500 ordinary shares, each entitled to one vote and with a par value of ARS 1 per share.
 
On April 19, 2021, IRSA CP’s shareholders held an Ordinary and Extraordinary General Meeting and capitalized all IRSA CP’s share premium and inflation adjustment of share capital. In that meeting, IRSA CP’s shareholders also approved and capitalized new irrevocable contributions.
 
 
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As a result of both capitalizations, IRSA CP issued 517,722,151, each entitled to 1 vote and with a par value of ARS 1 per share. IRSA CP’s capital stock now totals 517,838,651, as per detail as follows:
 
 
 
Number  of shares
 
 
Share capital
 
June 30, 2020
  116,500 
  116,500 
Capitalization of share premium and inflation adjustment of share capital
  137,722,151 
  137,722,151 
Issuance of ordinary shares
  380,000,000 
  380,000,000 
June 30, 2021
  517,838,651 
  517,838,651 
 
Disposals
 
Sale of Boston Tower Building
 
As of June 30, 2021, IRSA CP completed the sale of several units from the Boston Tower Building, located at 265 Della Paolera (Catalinas District, Autonomous City of Buenos Aires). The details of the units IRSA CP sold is listed below.
 
On July 15, 2020, IRSA CP completed the sale with possession of a medium-height floor for a total area of approximately 1,247 square meters and 5 parking spaces located in the building. The total consideration of the transaction was ARS 666 million.
 
On August 25, 2020, IRSA CP completed the sale of other 5 floors for a gross rental area of approximately 6,235 square meters and 25 parking spaces located in the building. The total consideration of the transaction was ARS 3,574 million.
 
On November 5, 2020, IRSA CP completed the sale with possession of 4 floors for a gross rental area of approximately 3,892 square meters and 15 parking spaces located in the building. The total consideration of the transaction was ARS 2,271 million.
 
On November 12, 2020, IRSA CP completed the sale with possession with an unrelated third party of 3 floors for a gross rental area of approximately 3,266 square meters, a commercial space located on the ground floor of approximately 225 square meters, and 15 parking spaces located in the building. The total consideration of the transaction was ARS 1,906 million.
 
Sale of Bouchard building
 
On July 30, 2020, IRSA CP completed the sale to an unrelated third party of the entire “Bouchard 710” building located in the Plaza Roma District of the Autonomous City of Buenos Aires. The Tower consists of 15,014 square meters of gross rental area on 12 office floors and 116 parking spaces. The total consideration of the transaction was ARS 8,791 million.
 
Capital Expenditures
 
Fiscal year 2021
 
During the fiscal year ended June 30, 2021, IRSA CP incurred capital expenditures of ARS 1,284.0 million, of which: (i) ARS 993.0 million was used in the acquisition of investment properties, mainly, in the offices segment; and (ii) ARS 176.0 million was related to the acquisition of property, plant and equipment; and (iii) ARS 115.0 million was related to advanced payments.
 
Fiscal year 2020
 
During the fiscal year ended June 30, 2020, IRSA CP incurred capital expenditures of ARS 3,936.0 million, of which: (i) ARS 3,682.0 million was used in the acquisition of investment properties, mainly, in the offices segment; and (ii) ARS 237.0 million was related to the acquisition of property, plant and equipment; and (iii) ARS 17.0 million was related to advanced payments.
 
 
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Fiscal year 2019
 
During the fiscal year ended June 30, 2019, IRSA CP incurred capital expenditures of ARS 9,970.0 million, of which: (i) ARS 3,764.0 million was used in the acquisition of investment properties, mainly, in the offices segment; and (ii) ARS 134.0 million was related to the acquisition of property, plant and equipment; and (iii) ARS 6,072.0 million was related to advanced payments mainly by the acquisition of new units on the Catalinas building.
 
Recent Developments
 
Stock market capitalization, changes in Face Value and distribution of released shares
 
On July 6, 2021, IRSA CP announced to IRSA CP’s shareholders that as of July 19, 2021, was effected simultaneously the distribution of shares and the change in face value, where it was proceeded to make the exchange of 126,014,050 ordinary shares of nominal value ARS 1.00 each and one vote per share, for the amount of 541,230,019 ordinary shares of nominal value ARS 100 each and one vote per share. From the date indicated, the new shares distributed by the capitalization described have economic rights on equal terms with those currently in circulation. IRSA CP’s share capital after the operations indicated amounts to the sum of ARS 54,123,001,900 represented by 541,230,019 ordinary shares of nominal value ARS 100 each and one vote per share.
 
Fitch Ratings update
 
On July 26, 2021, IRSA CP announced that FIX SCR S.A. has decided to raise the rating of the company’s notes as detailed below:
 
- Issuer Rating: AA (Arg)
 
- Series Notes 2 for up to USD 470 MM due March 2023: AA (Arg)

 
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Shareholders’ Meeting
 
On October 22, 2021, IRSA CP’s informed that its shareholders meeting approved the following summary of the agenda: (1) Appointment of two shareholders to sign the meetings’ minutes; (2) Consideration of documents contemplated in paragraph 1, Section 234, Law No. 19,550 for the fiscal year ended June 30, 2021; (3) Allocation of net loss for the fiscal year ended June 30, 2021 for ARS 21,934,960,229; (4) Consideration of Board of Directors’ performance for the Fiscal Year ended June 30, 2021; (5) Consideration of Supervisory Committee’s performance for the fiscal year ended June 30, 2021; (6) Consideration of compensation payable to the Board of Directors (ARS 723,942,334 - allocated sum) for the fiscal year ended June 30, 2021, which recorded a computable tax loss pursuant to the rules of the Argentine Securities Commission; (7) Consideration of compensation payable to the Supervisory Committee (ARS 2,390,000, allocated sum) for the fiscal year ended June 30, 2021; (8) Determination of number and appointment of regular directors and alternate directors for a term of three fiscal years. It was approved by a majority vote: 1. Set at 12 (twelve) the number of directors and at 5 (five) the number of alternate directors.2. Renew in their positions as Non-independent Directors Mr. Eduardo Sergio Elsztain, Mr. Saul Zang, Mr. Marcos Moisés Fischman and Mr. Mauricio Elías Wior and 3. To approve the assumption as non-independent director of Mr. Ben Iosef Elsztain, current alternate director, with a mandate until 30/06/2024; (9) Appointment of regular and alternate members of the Supervisory Committee for a term of one fiscal year. It was approved by a majority vote to appoint José Daniel Abelovich, Marcelo Héctor Fuxman and Noemí Ivonne Cohn as Titular Trustees and those of Messrs. Roberto Daniel Murmis, Ariela Levy and Paula Sotelo as Alternate Trustees for the period of one year, highlighting that according to the regulations of the National Securities Commission the proposed persons have the character of independents; (10) Appointment of certifying accountant for the next fiscal year. It was approved by amajority vote to designate as certifying accountants for the 2021/2022 financial year the firms (a) Pricewaterhouse&Co. member of the firm PriceWaterhouseCoopers in the person of Walter Rafael Zablocky as Titular External Auditor and in the person of Carlos Javier Brondo as Alternate External Auditor; and (b) Abelovich Polano & Associates in the person of José Daniel Abelovich as Titular External Auditor and Noemi Ivonne Cohn and Roberto Murmis as Alternate External Auditors; (11) Approval of compensation payable (ARS 23,183,161) to certifying accountant for the fiscal year ended June 30, 2021; and (12) Authorization to carry out registration proceedings relating to this shareholders’ meeting before the argentine securities commission and the general superintendence of corporations.
 
Recent Sale
 
On November 2, 2021, IRSA CP sold and transferred three medium-height floors and 36 parking slots of the tower “261 Della Paolera”, located in Catalinas District, Autonomous City of Buenos Aires. The floors transferred have a total area of approximately 3,582 sqm. The total consideration for the transaction was set at approximately ARS 3,197 million – equivalent to USD 32.0 million – which means 8,950 USD per sqm, and has already been paid. After the transaction, IRSA CP retained its rights for 20 floors of the building with an approximate leasable area of 24,000 sqm, in addition to parking slots and other complementary spaces.
 
B. Business Overview
 
IRSA CP owns, develops and manages commercial real estate properties, which consist primarily of shopping malls and office buildings throughout Argentina. IRSA CP is currently the largest owner and operator of shopping malls and one of the largest owners of office buildings and other commercial properties in Argentina in terms of gross leasable area and number of rental properties according to data published by the Argentine Chamber of Shopping Centers.
 
IRSA CP operates IRSA CP’s business through IRSA CP’s principal business segments, namely “Shopping Malls,” “Offices,” “Sales and Developments” and “Others”:
 
Shopping Malls” includes the operation and development of shopping malls, through which IRSA CP generates rental income and fees charged for services related to the lease of retail stores and other spaces. IRSA CP’s Shopping Malls segment includes highly diversified, multi-format assets with a particular focus on retailers that cater to middle- to high-income consumers.
 
Offices” includes the lease of offices and other rental properties and services related to these properties.
 
Sales and Developments” includes the sales of undeveloped parcels of land and properties, and activities related to the development and maintenance of such properties.
 
Others” includes the entertainment activity throughout ALG Golf Center S.A. (La Arena), La Rural and others.
 
 
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Shopping malls
 
IRSA CP owns 15 shopping malls 14 of which IRSA CP manages directly, with an aggregate 334,826 square meters of GLA as of June 30, 2021. Of the 15 shopping malls IRSA CP owns, six are located in the City of Buenos Aires, two in the Greater Buenos Aires area, and the others in the provinces of Salta, Santa Fe, Mendoza, Córdoba and Neuquén. In addition, IRSA CP operates La Ribera Shopping in the City of Santa Fe which IRSA CP owns through a joint venture and own the historic building of Patio Olmos shopping mall in the Province of Córdoba, which mall is operated by a third party.
 
The following table shows selected information about IRSA CP’s shopping malls as of June 30, 2021:
 
Shopping mallsDate of acquisition/developmentLocation
 
GLA(sqm) (1)
 
 
Number of stores
 
 
Occupancy rate (%) (2)
 
 
IRSA CP’s ownership interest (%) (3)
 
 
Rental revenue (in millions of ARS)
 
Alto PalermoDec-97City of Buenos Aires
  20,045 
  132 
  98.4 
  100.0 
  790 
Abasto Shopping (4)
Nov-99City of Buenos Aires
  36,796 
  162 
  99.7 
  100.0 
  567 
Alto AvellanedaDec-97Buenos Aires Province
  39,838 
  126 
  64.8 
  100.0 
  461 
Alcorta ShoppingJun-97City of Buenos Aires
  15,812 
  112 
  90.6 
  100.0 
  483 
Patio BullrichOct-98City of Buenos Aires
  11,396 
  89 
  87.8 
  100.0 
  211 
Dot Baires ShoppingMay-09City of Buenos Aires
  47,493 
  164 
  80.7 
  80.0 
  445 
Soleil Premium OutletJul-10Buenos Aires Province
  15,158 
  78 
  90.3 
  100.0 
  248 
Distrito ArcosDec-14City of Buenos Aires
  14,335 
  65 
  100.0 
  90.0 
  415 
Alto Noa ShoppingMar-95City of Salta
  19,314 
  84 
  98.1 
  100.0 
  241 
Alto Rosario Shopping (4)
Nov-04City of Rosario
  33,731 
  138 
  95.4 
  100.0 
  735 
Mendoza Plaza ShoppingDec-94City of Mendoza
  43,312 
  129 
  97.3 
  100.0 
  386 
Córdoba ShoppingDec-06Córdoba
  15,361 
  104 
  91.4 
  100.0 
  235 
La Ribera ShoppingAug-11City of Santa Fé
  10,530 
  70 
  96.2 
  50.0 
  32 
Alto ComahueMar-15City of Neuquén
  11,705 
  94 
  92.4 
  99.9 
  84 
Patio Olmos (5)
Sep-07City of Córdoba
   
   
   
   
   
Total  
  334,826 
  1,547 
  89.9 
    
  5,333 
 
(1) Corresponds to gross leasable area at each property. Excludes common areas and parking spaces.
(2) Calculated dividing occupied square meters by leasable area as of the last day of the fiscal year.
(3) Company’s effective interest in each of its business units.
(4) Excludes Museo de los Niños which represents 3,732 square meters in Abasto
(5) IRSA CP owns the historic building of the Patio Olmos shopping mall in the Province of Córdoba, operated by a third party and does not include the rental revenue of Patio Olmos.
 
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Offices and other properties
 
IRSA CP owns, develops and manages seven office buildings and other rental and investment properties throughout Argentina as part of IRSA CP’s Offices and other properties segment.
 
As of June 30, 2021, IRSA CP owned and managed seven office buildings located in the City of Buenos Aires with 113,291 square meters of total gross leasable area.
 
The following table sets forth selected information regarding IRSA CP’s office buildings as of June 30, 2021:
 
 Date ofacquisition/development
 
GLA (sqm) (1)
 
 
Occupancy rate (2)
 
 
Ownership interest
 
 
Total rental income for the fiscal year ended June 30, 2021
 
  
 
 
 
 
(%)
 
 
(%)
 
 
(in thousands
of ARS)
 
Offices 
 
 
 
 
 
 
 
 
 
 
 
 
AAA & A buildings 
 
 
 
 
 
 
 
 
 
 
 
 
República Building Dec-14
  19,885 
  66.9 
  100 
  506,822 
Bankboston Tower (6) 
Dec-14
  - 
  - 
  - 
  120,982 
Intercontinental Plaza (3) 
Dec-14
  2,979 
  100.0 
  100 
  141,684 
Bouchard 710 (6) 
Dec-14
  - 
  - 
  - 
  43,344 
Dot Building Nov-06
  11,242 
  84.9 
  80 
  277,155 
Zetta May-19
  32,173 
  84.7 
  80 
  907,118 
Della Paolera 261 (5) 
Dec-20
  27,530 
  80.2 
  - 
  494,581 
Total AAA & A buildings 
  93,809 
  80.1 
    
  2,491,686 
B buildings 
    
    
    
    
Philips Jun-17
  8,017 
  93.1 
  100 
  139,307 
Suipacha 652/64 Dec-14
  11,465 
  17.3 
  100 
  56,765  
Total B buildings 
  19,482 
  48.5 
    
  196,072 
Total Offices 
  113,291 
  74.7 
    
  2,687,758 
 
    
    
    
    
Other rental properties (4)
 
    
    
    
  26,912 
Total Offices and Others 
    
    
    
  2,714,670 
(1) Corresponds to the gross leasable area of each property as of June 30, 2021. Excludes common areas and parking spaces.
(2) Calculated by dividing occupied square meters by gross leasable area as of June 30, 2021.
(3) IRSA CP owns 13.2% of the building that has 22,535 square meters of gross leasable area.
(4) Includes rental income from all those properties that are not buildings intended for rent, but that are partially or fully rented (Philips Deposit, Anchorena 665 and San Martin Plot)
(5) Includes 664 square meters of gross leasable area of the basement.
(6) The office buildings were sold during the fiscal year.
 
 
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Other assets
 
IRSA CP also has strategic investments in other businesses, which IRSA CP believes complement IRSA CP’s overall strategy and rental leasing operations. These other assets are La Rural, TGLT, DirecTV Arena, Pareto and Avenida Inc.
 
The following table sets forth certain operating and financial data by business segment for the fiscal years indicated:
 
 
 
For the fiscal years ended
 
 
 
June 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Shopping Malls
 
 
 
 
 
 
 
 
 
Revenue
  5,321 
  8,915 
  12,828 
Operating income
  4,456 
  8,064 
  11,662 
Segment Adjusted EBITDA
  2,661 
  5,997 
  9,588 
Segment Net Operating Income
  4,219 
  7,217 
  11,037 
Offices and Others
    
    
    
Revenue
  2,715 
  3,477 
  3,241 
Operating income
  2,499 
  3,268 
  3,064 
Segment Adjusted EBITDA
  2,009 
  2,870 
  2,672 
Segment Net Operating Income
  2,365 
  3,219 
  2,986 
Sales and Developments
    
    
    
Revenue
  78 
  466 
  87 
Operating income
  15 
  281 
  10 
Segment Adjusted EBITDA
  10,069 
  545 
  (226)
Segment Net Operating Income/ Loss
  10,210 
  679 
  (2)
Financial Operations and Others
    
    
    
Revenue
  29 
  93 
  251 
Operating income
  (187)
  (40)
  37 
Segment Adjusted EBITDA
  (177)
  (46)
  (628)
Segment Net Operating (Loss) / Income
  (121)
  21 
  27 
 
 
Composition of revenue for the fiscal year ended June 30, 2021
 
(in millions of ARS)
 
 
 
 
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The following table sets forth the book value of IRSA CP’s principal business as of June 30, 2021:
 
Fair value of investment properties
 
As of June 30, 2021
 
 
 
(in millions of ARS)
 
 
 
 
 
Shopping malls 
  50,815 
Offices 
  69,419 
Land reserves and properties under development and Others 
  24,630 
Total 
  144,864 
 
 
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Gross leasable area
 
The following graphic illustrates the growth trend in IRSA CP’s total gross leasable area over the years presented for both shopping malls and offices (in thousands of sqm).
 
Business strategy
 
IRSA CP’s business strategy is based on three fundamental pillars:
 
Operating profitability:
 
IRSA CP maximizes the return to IRSA CP’s shareholders by generating sustainable cash flow growth and increasing the long-term value of IRSA CP’s commercial properties.
 
IRSA CP’s privileged locations and IRSA CP’s leadership position in Argentina, together with IRSA CP’s knowledge of the shopping mall and office industry, allows us to maintain high occupancy levels and an optimal tenant mix.
 
IRSA CP seeks to strengthen and consolidate the relationship with IRSA CP’s tenants through attractive rental conditions, offering a wide range of products and services, as well as administrative and commercial advice to optimize and simplify their operations.
 
Growth and Innovation:
 
IRSA CP grows through the acquisition and Development of commercial properties and IRSA CP has a land reserve with premium locations in Argentina to continue expanding IRSA CP’s portfolio with mixed-use projects.
 
IRSA CP is a pioneer in innovative real estate developments due to their format and scale, due to their concept, due to the appreciation of the area where they are located and due to the search of future synergies.
 
IRSA CP quickly adapts to changes in context and consumption habits, always focusing on the customer to provide the best service through technology and thus enhance their purchasing experience within IRSA CP’s shopping malls.
 
Sustainability:
 
IRSA CP is part of the communities where IRSA CP’s business units operate. Through CSR actions in IRSA CP’s shopping malls and offices, places of high public attendance, IRSA CP spreads and makes visible issues of social interest such as inclusion and assistance to the neediest.
 
IRSA CP plans for the long term and work towards continuous improvement, environmental protection, and sustainable Development, seeking to achieve environmental certification standards in IRSA CP’s real estate projects
 
IRSA CP continuously works to achieve the highest standards of corporate Governance, with total transparency and responsibility. IRSA CP takes care of IRSA CP’s human capital and IRSA CP promotes inclusion and diversity both in the governing bodies and in the work teams.
 
 
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IRSA CP’s Shopping Malls
 
Overview
 
As of June 30, 2021, IRSA CP owned a majority interest in and operated, a portfolio of 15 shopping malls in Argentina, six of which are located in the City of Buenos Aires (Abasto, Alcorta Shopping, Alto Palermo Shopping, Patio Bullrich, Dot Baires Shopping and Distrito Arcos), two in the greater Buenos Aires area (Alto Avellaneda and Soleil Premium Outlet), and the rest in different provinces of Argentina (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera and Patio Olmos (operated by a third party) in the City of Córdoba, La Ribera Shopping in Santa Fe (through a joint venture) and Alto Comahue in the City of Neuquén).
 
As of June 30, 2021, IRSA CP’s portfolio’s leasable area totaled 334,826 sqm of GLA (excluding certain spaces occupied by hypermarkets, which are not IRSA CP’s tenants). The total tenants’ sales of IRSA CP’s shopping malls, according to data reported by the retailers, were ARS 75,795 million for fiscal year 2021 and ARS 105,043 million for fiscal year 2020, a decrease of 27.8% in real terms (+8.3% in nominal terms). The tenants’ sales of IRSA CP’s shopping malls are relevant to IRSA CP’s income and profitability because they are one of the factors that determine the amount of rent that IRSA CP can collect from them. They also affect the overall occupancy costs of tenants as a percentage of their sales.
 
Accumulated rental income
 
The following table sets forth total rental income for each of IRSA CP’s shopping malls for the fiscal years indicated:
 
 
 
For the fiscal years ended June 30, (1)
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Alto Palermo 
  790 
  1,497 
  2,115 
Abasto Shopping 
  567 
  1,283 
  1,971 
Alto Avellaneda 
  461 
  902 
  1,416 
Alcorta Shopping 
  483 
  799 
  1,040 
Patio Bullrich 
  211 
  462 
  606 
Dot Baires Shopping 
  445 
  981 
  1,669 
Soleil Premium Outlet 
  248 
  372 
  551 
Distrito Arcos 
  415 
  690 
  949 
Alto Noa Shopping 
  241 
  277 
  372 
Alto Rosario Shopping 
  735 
  781 
  1,025 
Mendoza Plaza Shopping 
  386 
  443 
  615 
Córdoba Shopping Villa Cabrera 
  235 
  266 
  370 
La Ribera Shopping (2) 
  32 
  88 
  131 
Alto Comahue 
  84 
  566 
  629 
Subtotal 
  5,333 
  9,407 
  13,459 
Patio Olmos (3) 
  9 
  10 
  15 
Reconciliation adjustments (4)                                                                     
  (21)
  (502)
  (646)
Total 
  5,321 
  8,915 
  12,828 
(1) 
Includes base rent, percentage rent, admission rights, fees, parking, commissions, revenue from non-traditional advertising and others. Does not include Patio Olmos.
(2) 
Through IRSA CP’s joint venture Nuevo Puerto Santa Fé S.A.
(3) 
IRSA CP owns the historic building where the Patio Olmos shopping mall is located in the province of Cordoba. The property is managed by a third party.
(4) 
Includes indirect incomes and eliminations between segments. In 2019, revenue from Buenos Aires Design are included. End of concession December 5, 2018.
 
The following table sets forth IRSA CP’s revenue from cumulative leases by revenue category for the fiscal years presented:
 
 
109
 
 
 
 
For the fiscal year ended June 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)  
 
Base rent 
  2,461 
  4,699 
  7,180 
Percentage rent 
  1,443 
  2,209 
  2,672 
Total rent 
  3,904 
  6,908 
  9,852 
Non-traditional advertising 
  110 
  277 
  334 
Revenue from admission rights 
  788 
  1,356 
  1,578 
Fees 
  135 
  157 
  177 
Parking 
  37 
  445 
  711 
Commissions 
  180 
  233 
  482 
Other 
  179 
  31 
  325 
Subtotal (1)
  5,333 
  9,407 
  13,459 
Patio Olmos 
  9 
  10 
  15 
Adjustments and eliminations (2) 
  (21)
  (502)
  (646)
Total 
  5,321 
  8,915 
  12,828 
(1)
Does not include Patio Olmos.
 
(2)
Includes indirect incomes and eliminations between segments. In 2019, revenue from Buenos Aires Design are included. End of concession December 5, 2018.
 
Tenant retail sales
 
For the 2021 fiscal year, IRSA CP’s shopping mall tenants’ sales reached ARS 75,795 million, a decrease of 27.8% in real terms compared to the previous fiscal year (+8.3% in nominal terms).
 
Tenant sales at the shopping malls located in the City of Buenos Aires and Greater Buenos Aires recorded year-on-year decreases of 39.5% in real terms (+4.7% in nominal terms), up from ARS 71,799 million to ARS 43,309 million during fiscal year 2021, whereas shopping malls in the interior of Argentina decreased approximately 2.5% in real terms (+44.4% in nominal terms) in comparison with the previous fiscal year, from ARS 33,244 million to ARS 32,386 million during fiscal year 2021.
 
 
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The following table sets forth the total retail sales of IRSA CP’s shopping mall tenants for the fiscal years indicated:
 
 
 
For the fiscal years ended June 30, (1)
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
 
 
 
 
 
 
 
 
 
 
Alto Palermo 
  7,299 
  12,822 
  17,401 
Abasto Shopping 
  6,354 
  13,039 
  18,455 
Alto Avellaneda 
  5,288 
  11,521 
  16,551 
Alcorta Shopping 
  5,546 
  7,645 
  9,816 
Patio Bullrich 
  3,571 
  5,200 
  6,448 
Buenos Aires Design (2) 
  - 
  - 
  844 
Dot Baires Shopping 
  4,866 
  10,242 
  14,143 
Soleil Premium Outlet 
  4,272 
  5,321 
  7,594 
Distrito Arcos 
  6,213 
  6,009 
  6,986 
Alto Noa Shopping 
  5,208 
  5,191 
  6,266 
Alto Rosario Shopping 
  11,092 
  10,853 
  13,948 
Mendoza Plaza Shopping 
  9,002 
  8,470 
  11,118 
Córdoba Shopping Villa Cabrera 
  3,694 
  3,343 
  4,550 
La Ribera Shopping (3) 
  1,368 
  2,215 
  3,255 
Alto Comahue 
  2,022 
  3,172 
  4,470 
Total 
  75,795 
  105,043 
  141,845 
(1) Retail sales based upon information provided to IRSA CP by retailers and prior owners. The amounts shown reflect 100% of the retail sales of each shopping mall, although in certain cases IRSA CP owns less than 100% of such shopping malls. Includes sales from stands and excludes spaces used for special exhibitions.
(2) End of concession term was December 5, 2018
(3) Owned by Nuevo Puerto Santa Fé S.A., in which IRSA CP is a joint venture partner.
 
 
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Total sales by type of business
 
The following table sets forth the retail sales of IRSA CP’s shopping mall tenants by type of business for the fiscal years indicated:
 
 
 
For the fiscal years ended June 30, (1)
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Department Store 
  1,839 
  5,594 
  7,677 
Clothes and footwear 
  43,424 
  57,474 
  78,818 
Entertainment 
  562 
  3,226 
  4,755 
Home and decoration 
  2,273 
  2,146 
  3,150 
Home Appliances 
  5,773 
  11,832 
  15,887 
Restaurants 
  12,100 
  14,975 
  17,781 
Miscellaneous 
  1,277 
  1,255 
  1,693 
Services 
  8,547 
  8,541 
  12,084 
Total 
  75,795 
  105,043 
  141,845 
 
(1) Includes sales from stands and excludes spaces used for special exhibitions.
 
Occupancy rate
 
The following table sets forth the occupancy rate of IRSA CP’s shopping malls expressed as a percentage of gross leasable area of each shopping mall for the fiscal years indicated:
 
 
 
As of June 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(%)
 
 
 
 
 
 
 
 
 
 
 
Alto Palermo 
  98.4 
  91.9 
  99.1 
Abasto Shopping 
  99.7 
  94.9 
  98.7 
Alto Avellaneda 
  64.8 
  97.4 
  98.6 
Alcorta Shopping 
  90.6 
  97.3 
  97.9 
Patio Bullrich 
  87.8 
  91.4 
  93.5 
Dot Baires Shopping 
  80.7 
  74.6 
  74.5 
Soleil Premium Outlet 
  90.3 
  97.1 
  99.0 
Distrito Arcos 
  100.0 
  93.8 
  99.4 
Alto Noa Shopping 
  98.1 
  99.0 
  99.5 
Alto Rosario Shopping 
  95.4 
  97.2 
  99.6 
Mendoza Plaza Shopping 
  97.3 
  97.8 
  97.3 
Córdoba Shopping Villa Cabrera 
  91.4 
  95.4 
  99.3 
La Ribera Shopping 
  96.2 
  99.0 
  94.6 
Alto Comahue 
  92.4 
  96.2 
  96.2 
Total 
  89.9 
  93.2 
  94.7 
 
 
 
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Rental price
 
The following table shows the annual average rental price per square meter of IRSA CP’s shopping malls for the fiscal years indicated:
 
 
 
For the fiscal years endedJune 30, (1)
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in ARS)
 
Alto Palermo 
  26,459 
  53,374 
  77,593 
Abasto Shopping 
  10,357 
  24,293 
  37,828 
Alto Avellaneda 
  7,213 
  17,390 
  29,044 
Alcorta Shopping 
  23,278 
  34,192 
  45,934 
Patio Bullrich 
  12,884 
  26,815 
  35,199 
Dot Baires Shopping 
  4,642 
  13,482 
  19,990 
Soleil Premium Outlet 
  13,020 
  19,078 
  29,686 
Distrito Arcos 
  25,583 
  37,636 
  54,595 
Alto Noa Shopping 
  10,641 
  12,231 
  16,328 
Alto Rosario Shopping 
  17,627 
  18,054 
  24,675 
Mendoza Plaza Shopping 
  7,520 
  8,306 
  11,840 
Córdoba Shopping Villa Cabrera 
  12,857 
  13,605 
  19,631 
La Ribera Shopping 
  2,184 
  6,794 
  10,235 
Alto Comahue 
  5,113 
  46,012 
  44,410 
 
(1) Corresponds to consolidated annual accumulated rental prices according to the IFRS divided by gross leasable square meters. Does not include revenue from Patio Olmos. Fiscal year 2020 reflects the impact of closures of operations due to COVID-19. For more information, see “Operating Results – The Ongoing COVID-19 Pandemic.”
 
 
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Lease expirations (1)(2)
 
The following table sets forth the schedule of estimated lease expirations for IRSA CP’s shopping malls for leases in effect as of June 30, 2021, assuming that none of IRSA CP’s tenants exercises its option to renew or terminate its lease prior to expiration:
 
 
 
As of June 30, 2021
 
Agreements’ Expiration
 
Number of agreements (1)
 
 
Square meters to expire
 
 
Due toexpire(%)
 
 
Total lease payments (in millions of ARS) (3)
 
 
Agreements(%)
 
Vacant Stores 
  116 
  33,682 
  10.1 
  - 
  - 
Expired in-force 
  441 
  80,503 
  24.0 
  923 
  29.2 
As of June 30, 2022 
  387 
  49,952 
  14.9 
  863 
  27.3 
As of June 30, 2023 
  262 
  43,834 
  13.1 
  582 
  18.4 
As of June 30, 2024 
  202 
  32,465 
  9.7 
  327 
  10.4 
As of June 30, 2025 and subsequent years
  139 
  94,390 
  28.2 
  464 
  14.7 
Total (4) 
  1,431 
  301,144 
  100 
  3,159 
  100 
(1) Includes vacant stores as of June 30, 2021. A lease may be associated with one or more stores.
(2) Does not reflect IRSA CP’s ownership interest in each property.
(3) The amount expresses the annual base rent as of June 30, 2021 of agreements due to expire.
(4) Does not include unoccupied stores.
 
Five largest tenants of the portfolio
 
The five largest tenants in IRSA CP’s portfolio (in terms of sales) account for approximately 15.5% of IRSA CP’s gross leasable area as of June 30, 2021 and represent approximately 17.2% of the annual basic rent for the fiscal year ending on that date.
 
The following table describes IRSA CP’s portfolio’s five largest tenants:
 
TenantType of BusinessSalesGross Leasable AreaGross Leasable Area
  (%)(sqm)(%)
ZaraClothes and footwear7.210,7713.2
NikeClothes and footwear5.97,6102.3
FravegaHome appliances4.63,5241.1
Falabella (1)
Department store2.328,8928.6
ClaroMiscellaneous1.91,0790.3
Total 21.951,87615.5
(1)
As at the date of presentation of this financial statements, Falabella is not operating in any shopping mall.
 
 
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New leases and renewals
 
The following table shows certain information about IRSA CP’s leases agreement as of June 30, 2021:
 
 
 
 
 
 
 
 
 
 
 
 
  Average annual baserent per sqm (ARS)
 
 
 
 
 
 
 
 Type of business
 
Number of agreements renewed 
 
 
Annual base rent (in millions of ARS) 
 
 
Annual admission rights (in millions of ARS) 
 
 
New and renewed 
 
 
Former agreements 
 
 
Number of non-renewed agreements (1) 
 
 
Non-renewed agreements (1)annual base rent amount (in millions of ARS) 
 
Clothing and footwear 
  275 
  550 
  48 
  15,260 
  12,630 
  514 
  1,193 
Miscellaneous (2) 
  90 
  177 
  36 
  10,426 
  6,327 
  145 
  359 
Restaurant 
  49 
  77 
  1 
  11,015 
  10,714 
  157 
  312 
Services 
  28 
  61 
  2 
  9,673 
  5,551 
  31 
  28 
Home appliances
  25 
  107 
  7 
  13,564 
  9,322 
  24 
  45 
Home and decoration 
  23 
  43 
  3 
  6,138 
  5,104 
  34 
  64 
Supermarket 
  2 
  20 
  - 
  1,862 
  1,262 
  - 
  - 
Entertainment 
  1 
  8 
  - 
  3,664 
  1,012 
  33 
  114 
Total 
  493 
  1,043 
  97 
  8,950 
  6,490 
  938 
  2,115 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
(2) Miscellaneous includes anchor store.
 
Principal Terms of IRSA CP’s Leases
 
Under the Civil and Commercial Code of Argentina, the term of the locations cannot exceed twenty years for the residential destination and fifty years for the other destinations. In general, IRSA CP’s lease agreements have three to ten-year terms.
 
Leasable space in IRSA CP’s shopping malls is marketed through an exclusive arrangement with IRSA CP’s wholly owned subsidiary and real estate broker Fibesa S.A., or “Fibesa.” IRSA CP uses a standard lease agreement for most tenants at IRSA CP’s shopping malls, the terms and conditions of which are described below. However, IRSA CP’s largest or “anchor” tenants generally negotiate better terms for their respective leases. No assurance can be given that lease terms will be as set forth in the standard lease agreement.
 
Rent amount specified in IRSA CP’s leases generally is the higher of (i) a monthly Base Rent and (ii) a specified percentage of the tenant’s monthly gross sales in the store, which generally ranges between 3% and 12% of tenant’s gross sales. Additionally, under the rent adjustment clause included in most of IRSA CP’s rental contracts, the tenant’s basic rent is generally updated quarterly and cumulatively by the CPI index. These terms and conditions have not been applied during a period when the shopping malls remained closed due to the Social, Preventive and Mandatory Isolation decreed by the government of Argentina as a result of the novel COVID-19 virus since IRSA CP decided to defer the billing and collection of the Base Rent until September 30, 2020, with some exceptions and IRSA CP also suspended collection of the collective promotion fund during the same period, prioritizing the long-term relationship with IRSA CP’s tenants.
 
 
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In addition to rent, IRSA CP charges most of IRSA CP’s tenants an admission fee that is payable upon execution of the lease agreement and upon its renewal. The admission fee is normally paid as a lump-sum payment or in monthly installments. Tenants who pay this fee in installments are liable for paying the outstanding balance if the agreement is terminated before the due date. In case of unilateral termination and/or termination due to a breach of obligations by the tenants, IRSA CP’s consent is required for the reimbursement of the admission fee.
 
IRSA CP is responsible, except in the mall Distrito Arcos, for providing each unit within IRSA CP’s shopping malls with electricity, a main telephone switchboard, central air conditioning and a connection to a general fire detection system. IRSA CP also provides the food court tenants with sanitation and with gas systems connections. In Distrito Arcos, the connections are managed by the tenants. Each tenant is responsible for completing all necessary installations within its rental unit, in addition to paying direct related expenses, including electricity, water, gas, telephone and air conditioning. Tenants must also pay for a percentage of total expenses and general taxes related to common areas. IRSA CP determines this percentage based on different factors. The common area expenses include, among others, administration, security, operations, maintenance, cleaning and taxes.
 
IRSA CP carries out promotional and marketing activities to draw consumer traffic to IRSA CP’s shopping malls. These activities are paid for with the tenants’ contributions to the Collective Promotion Fund, or “CPF,” which is administered by us. Tenants are required to contribute 15% of their rent (Base Rent plus Percentage Rent) to the CPF. IRSA CP may increase the percentage tenants must contribute to the CPF with up to 25% of the original amount set forth in the corresponding lease agreement for the contributions to the CPF. IRSA CP may also require tenants to make extraordinary contributions to the CPF to fund special promotional and marketing campaigns or to cover the costs of special promotional events that benefit all tenants. IRSA CP may require tenants to make these extraordinary contributions up to four times a year provided that each extraordinary contribution may not exceed 25% of the tenant’s preceding monthly lease payment.
 
Each tenant leases its rental unit as a shell without any fixtures and is responsible for the interior design of its rental unit. Any modifications and additions to the rental units must be pre-approved by us. IRSA CP has the option to charge the tenant for all costs incurred in remodeling the rental units and for removing any additions made to the rental unit when the lease expires. Furthermore, tenants are responsible for obtaining adequate insurance for their rental units, which must cover, among other things, damage caused by fire, glass breakage, theft, flood, civil liability and workers’ compensation
 
Control Systems
 
IRSA CP has computer systems equipped to monitor tenants’ sales (including some stands) in all of IRSA CP’s shopping malls. IRSA CP also conducts regular audits of IRSA CP’s tenants’ accounting sales records in all of IRSA CP’s shopping malls. Almost every store in IRSA CP’s shopping malls has a point of sale that is linked to IRSA CP’s main server. IRSA CP uses the information generated from the computer monitoring system to prepare statistical data regarding, among other things, total sales, average sales and peak sale hours for marketing purposes and as a reference for the internal audit. Most of IRSA CP’s shopping mall lease agreements require the tenant to have its point of sale system linked to IRSA CP’s server. During this fiscal year, IRSA CP started the renovation of IRSA CP’s payment terminals with contactless technology (Clover).
 
Detailed information regarding IRSA CP’s shopping malls
 
Set forth below is certain information regarding IRSA CP’s shopping mall portfolio, including certain key lease provisions.
 
 
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Alto Palermo, City of Buenos Aires
 
Alto Palermo is a 132-store shopping mall that opened in 1990 in Palermo, a well-known middle class and densely populated neighborhood in the City of Buenos Aires. Alto Palermo is located at the intersection of Santa Fe and Coronel Díaz avenues, only a few minutes from downtown Buenos Aires with nearby access from the Bulnes subway station. Alto Palermo has a total constructed area of 65,029 square meters (including parking) that consists of 18,655 square meters of gross leasable area spread out over six levels and has a 642-car pay parking space of approximately 30,000 square meters. Alto Palermo’s targeted clientele consists of middle-income individuals between the ages of 28 and 45. Alto Palermo is currently under expansion.
 
During the fiscal year ended on June 30, 2021, the public that visited the Alto Palermo shopping mall generated real retail sales totaling approximately ARS 7,299 million, 43.1% below the turnover in real terms the same period of fiscal year 2020. Sales per square meter reached ARS 364,130. Total rental income decreased from ARS 995 million in real terms for fiscal year ended June 30, 2020 to ARS 530 million for fiscal year ended June 30, 2021, which represents annual revenue per gross leasable square meter of ARS 53,374 in fiscal year 2020 and ARS 26,459 in fiscal year 2021.
 
As of June 30, 2021, Alto Palermo’s occupancy rate was 98.4%.
 
IRSA CP continues working on the expansion of Alto Palermo shopping mall, the shopping mall with the highest sales per square meter in IRSA CP’s portfolio, that will add a gross leasable area of approximately 3,900 square meters and will consist in moving the food court to a third level by using the area of an adjacent building acquired in 2015. Work progress as of June 30, 2021, was 88% and construction works are expected to be finished by October 2021, for more information see “—Projects under Development-Alto Palermo Expansion”.
 
 
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Alto Palermo’s tenant mix
 
The following table sets forth the tenant mix by type of business at Alto Palermo as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  4,728 
  64.8 
  12,963 
  64.7 
Home 
  115 
  1.6 
  173 
  0.9 
Restaurant 
  485 
  6.6 
  2,911 
  14.5 
Miscellaneous 
  1,288 
  17.6 
  1,551 
  7.7 
Services 
  203 
  2.8 
  1,730 
  8.6 
Home appliances 
  480 
  6.6 
  717 
  3.6 
Total 
  7,299 
  100.0 
  20,045 
  100.0 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
Alto Palermo’s revenue
 
The following table sets forth selected information relating to the revenue sources at Alto Palermo for the fiscal years indicated:
 
 
 
For the fiscal year endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  383 
  730 
  1,167 
Percentage rent (1) 
  148 
  265 
  279 
Total rent 
  530 
  995 
  1,446 
Non-traditional advertising 
  27 
  65 
  88 
Revenue from admission rights (2) 
  166 
  269 
  348 
Fees 
  21 
  23 
  26 
Parking 
  7 
  74 
  130 
Commissions 
  38 
  68 
  77 
Other 
  1 
  3 
  0 
Total (3) 
  790 
  1,497 
  2,115 
(1) Contingent rent is revenue based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees required from tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
 
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Abasto Shopping, City of Buenos Aires
 
Abasto is a 162-store shopping mall located in downtown Buenos Aires with direct access from the Carlos Gardel subway station, six blocks from the Once railway terminal and near the highway to Ezeiza International Airport. Abasto opened on November 10, 1998. The main building is a landmark building that, between 1889 and 1984 was the primary fresh produce market for the City of Buenos Aires. IRSA CP’s converted the property into a 114,312 sqm shopping mall (including parking and common areas) with 36,796 square meters of gross leasable area (40,500 square meters if IRSA CP considers Museo de los Niños). Abasto is the fourth largest shopping mall in Argentina in terms of gross leasable area.
 
Abasto has a 29-restaurant food court, a 12-screen movie theatre complex with seating capacity of approximately 2,900 people, covering a surface area of 8,021 sqm, entertainment area and Museo de los Niños with a surface area of 3,732 sqm (the latter is not included within the gross leasable area). The shopping mall is distributed over five stories and includes a parking space for 1,180 vehicles with a surface area of approximately 39,690 sqm.
 
Abasto’s target clientele consists of middle-income individuals between the ages of 25 and 45 which IRSA CP believes represent a significant portion of the population in this area of the City of Buenos Aires.
 
During the fiscal year ended June 30, 2021, the public visiting the Abasto shopping mall generated real retail sales that totaled approximately ARS 6,354 million, representing sales per square meter of approximately ARS 172,681, 51.3% lower than sales in real terms recorded in fiscal year 2020. Total rental income decreased from ARS 893 million in real terms for the fiscal year ended June 30, 2020 to ARS 381 million for fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 24,293 in fiscal year 2020 and ARS 10,357 in fiscal year 2021.
 
As of June 30, 2021, Abasto Shopping’s occupancy rate was 99.7%.
 
Abasto Shopping’s tenant mix
 
The following table sets forth the mix of tenants by type of business at Abasto Shopping as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  3,451 
  54.3 
  14,367 
  39.0 
Entertainment 
  94 
  1.5 
  12,264 
  33.3 
Home 
  125 
  2.0 
  807 
  2.2 
Restaurant 
  835 
  13.1 
  3,294 
  9.0 
Miscellaneous 
  823 
  13.0 
  3,029 
  8.2 
Services 
  39 
  0.6 
  365 
  1.0 
Home appliances 
  987 
  15.5 
  2,670 
  7.3 
Total 
  6,354 
  100.0 
  36,796 
  100.0 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
 
119
 
 
Abasto Shopping’s revenue
 
The following table sets forth selected information relating to the revenue of Abasto Shopping during the fiscal years indicated:
 
 
 
For the fiscal year endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  286 
  658 
  1,056 
Percentage rent (1) 
  95 
  235 
  336 
Total rent 
  381 
  893 
  1,392 
Non-traditional advertising 
  14 
  43 
  44 
Revenue from admission rights (2) 
  111 
  198 
  279 
Fees 
  23 
  25 
  28 
Parking 
  5 
  92 
  159 
Commissions 
  18 
  29 
  63 
Other 
  15 
  3 
  6 
Total (3) 
  567 
  1,283 
  1,971 
(1) Contingent rent is the revenue based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees required from tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
Alto Avellaneda, Greater Buenos Aires Area
 
Alto Avellaneda is a 126-store suburban shopping mall that opened in October 1995 and is located in the City of Avellaneda, which is on the southern border of the City of Buenos Aires. This shopping mall is next to a railway terminal and is close to downtown Buenos Aires. Alto Avellaneda has a total constructed area of 108,598 square meters (including parking) which consists of 39,838 square meters of GLA. The shopping mall has a multiplex cinema with six screens, the first superstore in Argentina, an entertainment center, and a food court with 21 restaurants. Walmart (not included in gross leasable area) purchased the space it occupies, but it pays for its pro rata share of the common expenses of Alto Avellaneda’s parking space. The shopping mall has a 2,400-car free parking spaces consisting of 53,203 square meters. Alto Avellaneda Shopping’s targeted clientele consists of middle-income individuals between the ages of 25 and 40.
 
During the fiscal year ended June 30, 2021, the public that visited the Alto Avellaneda shopping mall generated real retail sales of approximately ARS 5,288 million, which represents a year-on-year decrease of 54.1% in real terms. Sales per square meter was ARS 132,737. Total rental income decreased from ARS 667 million in real terms for fiscal year ended June 30, 2020 to ARS 287 million for fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 17,390 in fiscal year 2020 and ARS 7,213 in fiscal year 2021.
 
As of June 30, 2021, Alto Avellaneda’s occupancy rate was 64.8%.
 
 
120
 
 
Alto Avellaneda’s tenant mix
 
The following table sets forth the mix of tenants by type of business at Alto Avellaneda as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(In millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total
 
Clothes and footwear 
  2,708 
  51.2 
  13,297 
  33.4 
Department store 
  - 
  - 
  10,946 
  27.5 
Entertainment 
  18 
  0.3 
  7,354 
  18.5 
Home 
  180 
  3.4 
  578 
  1.5 
Restaurant 
  474 
  9.0 
  2,241 
  5.6 
Miscellaneous 
  626 
  11.8 
  2,614 
  6.6 
Services 
  20 
  0.4 
  426 
  1.1 
Home appliances 
  1,262 
  23.9 
  2,382 
  6.0 
Total 
  5,288 
  100 
  39,838 
  100 
 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
Alto Avellaneda’s revenue
 
The following table sets forth selected information relating to revenue for Alto Avellaneda for the fiscal years indicated:
 
 
 
For the fiscal years endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
 
 
 
 
 
 
 
 
 
 
Base rent 
  197 
  439 
  853 
Percentage rent (1) 
  90 
  228 
  249 
Total rent 
  287 
  667 
  1,102 
Non-traditional advertising 
  5 
  20 
  22 
Revenue from admission rights (2) 
  103 
  175 
  184 
Fees 
  18 
  21 
  24 
Commissions 
  19 
  17 
  78 
Other 
  28 
  2 
  6 
Total (3) 
  461 
  902 
  1,416 
(1) Contingent rent is based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees payable by IRSA CP’s tenants for entering into a lease agreement or a lease agreement renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
 
121
 
 
Alcorta Shopping, City of Buenos Aires
 
Alcorta Shopping is a 112-store shopping mall which opened in 1992, located in the residential area of Palermo Chico, one of the most exclusive areas in the City of Buenos Aires, and a short drive from downtown Buenos Aires. Alcorta Shopping has a total constructed area of approximately 87,554 square meters (including parking) that consists of 15,812 square meters of GLA. Alcorta Shopping has a cinema with two screens, a food court with ten restaurants, two exclusive restaurants, a Carrefour hypermarket on the ground floor and a Santander bank. The shopping mall is spread out over three levels and has a free for two hours parking spaces for 1,137 cars and an additional parking space in front of the main building with space for 435 vehicles. Alcorta Shopping’s targeted clientele consists of high-income individuals between the ages of 25 and 40.
 
Over the past years, Alcorta Shopping has become a symbol of fashion and avant-garde style in Argentina. It is the place of choice for emerging designers for promoting and selling their new brands.
 
During the fiscal year ended June 30, 2021, the public that visited the Alcorta shopping mall generated real retail sales that totaled approximately ARS 5,546 million, which represents fiscal year sales of approximately ARS 350,768 per square meter and a year-on-year decrease of 27.5% in real terms. Total rental income decreased from approximately ARS 538 million in real terms for fiscal year ended June 30, 2020 to ARS 368 million for fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 34,192 in fiscal year 2020 and ARS 23,278 in fiscal year 2021.
 
As of June 30, 2021, Alcorta Shopping’s occupancy rate was 90.6%.
 
Alcorta Shopping’s tenant mix
 
The following table sets forth the mix of tenants by type of business at Alcorta Shopping as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(In millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Clothing and footwear 
  3,761 
  67.9 
  8,006 
  50.6 
Entertainment 
  12 
  0.2 
  1,435 
  9.1 
Home 
  378 
  6.8 
  1,236 
  7.8 
Restaurants 
  169 
  3.0 
  1,135 
  7.2 
Miscellaneous 
  794 
  14.3 
  1,516 
  9.6 
Services 
  170 
  3.1 
  2,405 
  15.2 
Home appliances 
  262 
  4.7 
  79 
  0.5 
Total 
  5,546 
  100.0 
  15,812 
  100 
 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
 
122
 
 
Alcorta Shopping’s revenue
 
The following table sets forth selected information relating to the revenue of Alcorta Shopping during the following fiscal years:
 
 
 
For the fiscal years endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
 
 
 
 
 
 
 
 
 
 
Base rent 
  221 
  356 
  554 
Percentage rent (1) 
  148 
  182 
  168 
Total rent 
  368 
  538 
  722 
Non-traditional advertising 
  8 
  33 
  38 
Revenue from admission rights (2) 
  73 
  142 
  163 
Fees 
  11 
  8 
  8 
Parking 
  7 
  54 
  78 
Commissions 
  15 
  23 
  29 
Other 
  1 
  2 
  1 
Total (3) 
  483 
  799 
  1,040 
(1) Contingent rent is based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees payable by IRSA CP’s tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
123
 
 
Patio Bullrich, City of Buenos Aires
 
Patio Bullrich is the oldest shopping mall of the City of Buenos Aires and opened in 1988 and it is located in the neighborhood of Recoleta, one of the most prosperous areas of the City of Buenos Aires. This district is a residential, cultural and tourist center that includes distinguished private homes, historical sites, museums, theatres and embassies. The shopping mall has 89 stores and is located within walking distance of the most prestigious hotels of the City of Buenos Aires and the subway, bus and train systems.
 
Patio Bullrich has a total constructed area of 28,984 square meters (including parking) that consist of 11,396 square meters of GLA and common areas covering 12,472 square meters. The shopping mall is spread out over four levels and has a pay parking spaces for 206 cars in an area consisting of approximately 4,600 square meters. The shopping mall has a four-screen multiplex cinema with 1,381 seats and soon a fifth luxury screen will be incorporated. In addition, it has the first Food Hall in Argentina that offers French and Italian gastronomy, patisserie, seafood and grill cuisine, and a “gourmet” market with specially selected premium brand products. From the point of view of its tenant mix, it concentrates the most important international and national luxury brands such as LV, Salvatore Ferragamo, Hugo Boss, Bally, Omega, Etiqueta Negra, Jazmin Chebar, Calandra, among others.
 
During the fiscal year ended June 30, 2021, the public visiting the Patio Bullrich shopping mall generated real retail sales that totaled approximately ARS 3,571 million, which represents annual sales of approximately ARS 313,355 per square meter and a year-on-year decrease of 31.3% in real terms. Total rental income decreased from ARS 306 million in real terms for fiscal year ended June 30, 2020 to ARS 147 million for fiscal year ended June 30, 2021, which represents monthly revenue per gross leasable square meter of ARS 26,815 in fiscal year 2020 and ARS 12,884 in fiscal year 2021.
 
As of June 30, 2021, Patio Bullrich’s occupancy rate was 87.8%.
 
Patio Bullrich’s tenant mix
 
The following table sets forth the tenant mix by type of business at Patio Bullrich as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  2,553 
  71.6 
  5,645 
  49.5 
Entertainment 
  1 
  0.0 
  1,510 
  13.3 
Home 
  41 
  1.1 
  90 
  0.8 
Restaurant 
  43 
  1.2 
  1,556 
  13.7 
Miscellaneous 
  867 
  24.3 
  1,669 
  14.6 
Services 
  66 
  1.8 
  876 
  7.7 
Home appliances
  0 
  0.0 
  50 
  0.4 
Total 
  3,571 
  100.0 
  11,396 
  100.0 
 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
 
124
 
 
Patio Bullrich’s revenue
 
The following table sets forth selected information relating to the revenue of Patio Bullrich during the fiscal years indicated:
 
 
 
For the fiscal year endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rent 
  83 
  194 
  287 
Percentage rent (1) 
  64 
  112 
  114 
Total rent 
  147 
  306 
  401 
Non-traditional advertising 
  5 
  14 
  16 
Revenue from admission rights (2) 
  36 
  72 
  76 
Fees 
  9 
  18 
  20 
Parking 
  6 
  42 
  74 
Commissions 
  9 
  10 
  19 
Other 
  1 
  1 
  (2)
Total (3) 
  211 
  462 
  606 
(1) Contingent rent is based on a specific percentage of gross sales of IRSA CP’s tenants
(2) Admission rights are the fees payable by IRSA CP’s tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
Dot Baires Shopping, City of Buenos Aires
 
Dot Baires Shopping is a shopping mall that opened in May 2009. It has 4 floors and 3 underground levels, a covered surface area of 173,000 square meters, of which 47,493 sqm constitute Gross Leasable Area, comprising 164 retail stores, a 10-screen multiplex cinema and parking space for 2,042 vehicles in a surface of approximately 75,000 square meters.
 
Dot Baires Shopping is located at the spot where Avenida General Paz meets the Panamerican Highway in the neighborhood of Saavedra, City of Buenos Aires, and is the largest shopping mall in the city in terms of square meters. As of June 30, 2021, IRSA CP’s equity interest in Panamerican Mall S.A. was 80%.
 
During the fiscal year ended June 30, 2021, the public visiting the Dot Baires shopping mall generated real retail sales that totaled approximately ARS 4,866 million, which represents a year-on-year decrease of 52.5% in real terms and annual sales of approximately ARS 102,455 per square meter. Total rental income decreased from ARS 658 million in real terms in the fiscal year ended June 30, 2020 to ARS 220 million in the fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 13,482 in fiscal year 2020 and ARS 4,642 in fiscal year 2021.
 
As of June 30, 2021, Dot Baires Shopping’s occupancy rate was 80.7%.
 
 
125
 
 
Dot Baires Shopping’s tenant mix
 
The following table sets forth the tenant mix in terms of types of business in Dot Baires Shopping as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  2,599 
  53.4 
  24,010 
  50.6 
Department store 
  - 
  - 
  2,254 
  4.7 
Entertainment 
  37 
  0.8 
  8,519 
  17.9 
Home 
  131 
  2.7 
  3,222 
  6.8 
Restaurant 
  531 
  10.9 
  2,446 
  5.2 
Miscellaneous 
  665 
  13.7 
  3,129 
  6.6 
Services 
  94 
  1.9 
  2,093 
  4.4 
Home appliances 
  809 
  16.6 
  1,820 
  3.8 
Total 
  4,866 
  100.0 
  47,493 
  100.0 
 
(1) Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores Includes vacant stores as of June 30, 2021.
 
Dot Baires Shopping’s revenue
 
The following table sets forth selected information relating to the revenue of Dot Baires Shopping for the fiscal years indicated:
 
 
 
For the fiscal years endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
 
 
 
 
 
 
 
 
 
 
Base rent 
  157 
  461 
  708 
Percentage rent (1) 
  63 
  197 
  268 
Total rent 
  220 
  658 
  976 
Non-traditional advertising 
  9 
  31 
  41 
Revenue from admission rights (2) 
  69 
  118 
  142 
Fees 
  16 
  15 
  17 
Parking 
  3 
  139 
  202 
Commissions 
  19 
  16 
  56 
Other 
  108 
  4 
  235 
Total (3) 
  445 
  981 
  1,669 
(1) Contingent rent is based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees payable by IRSA CP’s tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
126
 
 
Soleil Premium Outlet, greater Buenos Aires, province of Buenos Aires
 
Soleil Premium Outlet is located in San Isidro, Province of Buenos Aires. It opened in Argentina in 1986, but in 2010 it began a process of change becoming the first Premium Outlet in the country. It has a surface area of 47,525 square meters, 15,158 square meters of which are GLA. It comprises 78 stores and 2,335 parking spaces.
 
During the fiscal year ended June 30, 2021, the public visiting the shopping mall generated real retail sales that totaled approximately ARS 4,272 million, which represents annual average sales of approximately ARS 281,831 per square meter and a year-on-year turnover decrease of 19.7% in real terms. Total rental income decreased from ARS 289 million in real terms for the fiscal year ended June 30, 2020 to ARS 197 million for the fiscal year ended June 30, 2021, representing annual income per gross leasable square meter of ARS 19,078 in fiscal year 2020 and ARS 13,020 in fiscal year 2021.
 
 As of June 30, 2021, Soleil Premium Outlet’s occupancy rate was 90.3%.
 
Soleil Premium Outlet’s tenant mix
 
The following table sets forth the tenant mix in terms of types of business in Soleil Premium Outlet as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  3,793 
  88.8 
  10,522 
  69.4 
Entertainment 
  18 
  0.4 
  3,262 
  21.5 
Home 
  14 
  0.3 
  - 
  - 
Restaurant 
  244 
  5.7 
  745 
  4.9 
Miscellaneous 
  190 
  4.4 
  395 
  2.6 
Services 
  13 
  0.3 
  234 
  1.5 
Total 
  4,272 
  100.0 
  15,158 
  100.0 
 
(1) Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores. Includes vacant stores as of June 30, 2021.
 
 
127
 
 
Soleil Premium Outlet’s revenue
 
The following table sets forth selected information relating to the revenue of Soleil Premium Outlet during the following periods:
 
 
 
For the fiscal years endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  139 
  179 
  290 
Percentage rent (1) 
  59 
  110 
  160 
Total rent 
  197 
  289 
  450 
Non-traditional advertising 
  3 
  10 
  6 
Revenue from admission rights (2) 
  39 
  52 
  66 
Fees 
  6 
  5 
  5 
Commissions 
  2 
  15 
  22 
Other 
  1 
  1 
  2 
Total (3) 
  248 
  372 
  551 
(1) Contingent rent is based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees payable by IRSA CP’s tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
128
 
 
Distrito Arcos, City of Buenos Aires
 
IRSA CP opened Distrito Arcos on December 18, 2014. Distrito Arcos is a premium outlet located in the neighborhood of Palermo, City of Buenos Aires. It has 14,335 square meters of GLA and it consists of 65 stores, 427 parking spaces and 36 selling stands.
 
During the 2019 fiscal year, Arcos District obtained the definitive enable of the Shopping Mall. This allowed adapting the spaces of the selling stands improving their location and size as well as the income of this business unit. The shopping mall was consolidated in its outlet concept, showing variables of the growing business and above inflation in stores, selling stands, Apsa Media and parking. IRSA CP worked strongly on spending efficiency by implementing LEAN, a system of standard cleaning.
 
During the fiscal year ended June 30, 2021, the public visiting the shopping mall generated real retail sales of approximately ARS 6,213 million, which represents a year-on-year increase of 3.4% in real terms and sales per square were approximately ARS 433,414. Total rental income decreased from ARS 539 million in real terms fiscal year ended June 30, 2020 to ARS 367 million in fiscal year ended June 30, 2021, representing annual income per gross leasable square meter of ARS 37,636 in fiscal year 2020 and ARS 25,583 in fiscal year 2021.
 
As of June 30, 2021, Distrito Arcos’ occupancy rate was 100%.
 
Distrito Arcos’ tenant mix
 
The following table sets forth the mix of tenants by type of business at Distrito Arcos as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  5,241 
  84.4 
  10,692 
  74.6 
Restaurant 
  353 
  5.7 
  728 
  5.1 
Miscellaneous 
  393 
  6.3 
  1,729 
  12.1 
Services 
  226 
  3.6 
  1,186 
  8.2 
Total 
  6,213 
  100.0 
  14,335 
  100.0 
 
 (1) Includes vacant stores as of June 30, 2021.
 
 
129
 
 
Distrito Arcos’ revenue
 
The following table sets forth selected information relating to the revenue from Distrito Arcos during the following periods:
 
 
 
For the fiscal year ended June 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  197 
  355 
  596 
Percentage rent (1) 
  170 
  185 
  187 
Total rent 
  367 
  540 
  783 
Non-traditional advertising 
  10 
  8 
  18 
Revenue from admission rights (2) 
  6 
  91 
  53 
Fees 
  4 
  3 
  4 
Parking 
  9 
  43 
  67 
Commissions 
  18 
  3 
  23 
Other 
  1 
  2 
  2 
Total (3) 
  415 
  690 
  949 
(1) Contingent rent is the revenue based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees required from tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
Alto NOA, City of Salta, Province of Salta
 
Alto Noa is an 84-store shopping mall that opened in 1994. Alto Noa is located in the City of Salta, the capital of the Province of Salta, in the northwest region of Argentina. The province of Salta has a population of approximately 1.3 million inhabitants with approximately 0.8 million inhabitants in the City of Salta. The shopping mall has a total constructed area of approximately 31,046 square meters (including parking) which consists of 19,314 square meters of GLA. Alto Noa has a food court with 12 restaurants, a large entertainment center, a supermarket and a multiplex cinema with eight screens. The shopping mall occupies one floor and has a free parking spaces for 520 cars. Alto Noa’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.
 
During the fiscal year ended June 30, 2021, the public visiting the shopping mall generated real retail sales that totaled approximately ARS 5,208 million, which represents fiscal period sales of approximately ARS 269,648 per square meter and a year-on-year increase of 0.01% in real terms. Total rental income decreased from ARS 236 million in real terms in fiscal year ended June 30, 2020 to ARS 206 million in fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 12,231 in fiscal year 2020 and ARS 10,641 in fiscal year 2021.
 
As of June 30, 2021, Alto Noa’s occupancy rate was 98.1%.
 
 
130
 
 
Alto NOA’s tenant mix
 
The following table sets forth the mix of tenants by type of business at Alto NOA as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  1,513 
  29.1 
  4,491 
  23.3 
Entertainment 
  182 
  3.5 
  6,507 
  33.7 
Home 
  98 
  1.9 
  270 
  1.4 
Restaurant 
  426 
  8.2 
  1,217 
  6.3 
Miscellaneous 
  188 
  3.6 
  302 
  1.6 
Services 
  2,102 
  40.4 
  5,780 
  29.9 
Home appliances 
  699 
  13.3 
  747 
  3.8 
Total 
  5,208 
  100.0 
  19,314 
  100.0 
 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
Alto NOA’s revenue
 
The following table sets forth selected information relating to the revenue of Alto NOA during the fiscal years indicated:
 
 
 
For the fiscal year ended June 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)  
 
Base rent 
  127 
  152 
  208 
Percentage rent (1) 
  78 
  85 
  108 
Total rent 
  206 
  237 
  316 
Non-traditional advertising 
  4 
  6 
  5 
Revenue from admission rights (2) 
  19 
  25 
  29 
Fees 
  3 
  2 
  3 
Commissions 
  6 
  6 
  18 
Other 
  4 
  1 
  2 
Total (3) 
  241 
  277 
  372 
(1) Contingent rent is on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees payable by IRSA CP’s tenants for entering into a lease or a lease renewal.
(3) Consolidated rents. Revenue relating to the collective promotion fund are not included.
 
131
 
 
Alto Rosario, City of Rosario, Province of Santa Fé
 
Alto Rosario is a 138-store shopping mall located in the City of Rosario, Province of Santa Fe, the third largest city in Argentina in terms of population. It has a total constructed area of approximately 100,750 square meters which consists of 33,731 square meters of gross leasable area (excluding Museo de los Niños). Alto Rosario has a food court with 20 restaurants, a large entertainment center, a supermarket, and a Showcase cinema with 14 state-of-the-art screens. The shopping mall occupies one floor and has a free parking spaces that can accommodate 1,700 cars. Alto Rosario’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.
 
During the fiscal year ended June 30, 2021, the public visitors to the shopping mall generated real retail sales of approximately ARS 11,092 million, which represents a year-on-year increase of 2.2% in real terms. Sales per square meter were approximately ARS 328,836. Total rental income decreased from ARS 608 million in real terms in fiscal year ended June 30, 2020 to ARS 595 million in fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 18,054 in fiscal year 2020 and ARS 17,627 in fiscal year 2021.
 
As of June 30, 2021, Alto Rosario’s occupancy rate was 95.4%.
 
Alto Rosario’s tenant mix
 
The following table sets forth the tenant mix by type of business at Alto Rosario as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(in millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  6,391 
  57.7 
  15,579 
  46.3 
Entertainment 
  52 
  0.5 
  9,586 
  28.4 
Home 
  604 
  5.4 
  1,192 
  3.5 
Restaurant 
  844 
  7.6 
  2,504 
  7.4 
Miscellaneous 
  1,243 
  11.2 
  2,258 
  6.7 
Services 
  123 
  1.1 
  1,180 
  3.5 
Home appliances 
  1,835 
  16.5 
  1,432 
  4.2 
Total 
  11,092 
  100.0 
  33,731 
  100.0 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
 
132
 
 
Alto Rosario’s revenue
 
The following table sets forth selected information relating to the revenue of Alto Rosario during the following periods:
 
 
 
For the fiscal years endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  299 
  353 
  525 
Percentage rent (1) 
  296 
  256 
  302 
Total rent 
  595 
  608 
  827 
Non-traditional advertising 
  9 
  16 
  20 
Revenue from admission rights (2) 
  98 
  124 
  135 
Fees 
  10 
  9 
  10 
Commissions 
  19 
  21 
  31 
Other 
  5 
  2 
  1 
Total (3) 
  735 
  781 
  1,025 
(1) Contingent rent is the revenue based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees required from tenants for entering into a lease agreement or a lease agreement renewal.
(3) Consolidated rents. Revenue relating to expenses and collective promotion fund are not included.
 
Mendoza Plaza, City of Mendoza, Province of Mendoza
 
Mendoza Plaza is a 129-store shopping mall which opened in 1992 and is located in the district of Guaymallén, in the Province of Mendoza. The city of Mendoza has a population of approximately 1.5 million inhabitants, making it the fourth largest City in Argentina. Mendoza Plaza Shopping consists of 43,312 square meters of GLA and has a multiplex cinema covering an area of approximately 3,659 square meters with ten screens, one of them a 4D being the first in the province, a food court with 24 restaurants, 5 restaurants on the street in the new sector called “Shopping District Food”, an entertainment center and a supermarket, which is also a tenant. The shopping mall has two levels and has a free parking spaces for 1,700 cars. Mendoza Plaza’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.
 
During the fiscal year ended June 30, 2021, the public visiting the shopping mall generated real retail sales that totaled approximately ARS 9,002 million, which represents annual sales for approximately ARS 207,840 per square meter and a year-on-year increase of 6.2% in real terms. Total rental income decreased from ARS 360 million in real terms in fiscal year ended June 30, 2020 to ARS 326 million in fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 8,306 in fiscal year 2020 and ARS 7,520 in fiscal year 2021.
 
As of June 30, 2021, Mendoza Plaza’s occupancy rate was 97.3%.
 
 
133
 
 
Mendoza Plaza’s tenant mix
 
The following table sets forth the mix of tenants by type of business at Mendoza Plaza as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(In millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA ( of total)
 
Clothes and footwear 
  2,417 
  26.9 
  10,349 
  23.8 
Department Store 
  1,839 
  20.4 
  9,176 
  21.2 
Entertainment 
  75 
  0.8 
  7,351 
  17.0 
Home 
  280 
  3.1 
  542 
  1.3 
Restaurant 
  664 
  7.4 
  4,276 
  9.9 
Miscellaneous 
  1,980 
  22.0 
  7,551 
  17.4 
Services 
  61 
  0.7 
  1,177 
  2.7 
Home appliances 
  1,686 
  18.7 
  2,890 
  6.7 
Total 
  9,002 
  100.0 
  43,312 
  100.0 
(1) 
Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
Mendoza Plaza’s revenue
 
The table sets forth selected information relating to the revenue of Mendoza Plaza during the fiscal years indicated:
 
 
 
For the fiscal years endedJune 30,
 
 
 
2021
 
 
2020
 
 
 2019
 
 
 
(in millions of ARS)
 
Base rent 
  208 
  227 
  314 
Percentage rent (1) 
  118 
  133 
  194 
Total rent 
  326 
  360 
  508 
Non-traditional advertising 
  8 
  11 
  13 
Revenue from admission rights (2) 
  29 
  40 
  49 
Fees 
  6 
  13 
  15 
Commissions 
  7 
  13 
  24 
Other 
  11 
  7 
  7 
Total (3) 
  386 
  443 
  615 
(1) Contingent rent is based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees payable by IRSA CP’s tenants for entering into a lease agreement or a lease agreement renewal.
(3) Consolidated rents. Revenue relating to expenses and collective promotion fund are not included.
 
 
134
 
 
Córdoba Shopping—Villa Cabrera, City of Córdoba
 
Córdoba Shopping Villa Cabrera is a shopping mall covering 35,000 square meters of surface area, with 15,361 square meters being gross leasable area. Córdoba Shopping has 104 commercial stores, a 12-screen multiplex cinema and parking spaces for 1,500 vehicles, located in Villa Cabrera, City of Córdoba, Province of Córdoba.
 
During the fiscal year ended June 30, 2021, the public visiting the shopping mall generated real retail sales of approximately ARS 3,694 million, which represents a year-on-year increase of 10.5% in real terms. Sales per square meter were approximately ARS 240,479. Total rental income decreased from ARS 209 million in real terms in fiscal year ended June 30, 2020, to ARS 197 million in fiscal year ended June 30, 2021, which represents annual income per gross leasable square meter of ARS 13,605 in fiscal year 2020 and ARS 12,857 in fiscal year 2021.
 
As of June 30, 2021, Córdoba Shopping’s occupancy rate was 91.4%.
 
Córdoba Shopping—Villa Cabrera’s tenant mix
 
The following table sets forth the tenant mix in terms of types of business in Córdoba Shopping as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(In millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA ( of total)
 
Clothing and footwear 
  2,523 
  68.4 
  6,414 
  41.8 
Entertainment 
  23 
  0.6 
  5,842 
  38.0 
Home 
  126 
  3.4 
  335 
  2.2 
Restaurant 
  225 
  6.1 
  740 
  4.8 
Miscellaneous 
  507 
  13.7 
  779 
  5.1 
Services 
  24 
  0.6 
  754 
  4.9 
Home appliances 
  266 
  7.2 
  497 
  3.2 
Total 
  3,694 
  100.0 
  15,361 
  100.0 
 
(1) Includes vacant stores as of June 30, 2021. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
 
 
135
 
 
Revenue from Córdoba Shopping—Villa Cabrera
 
The following table sets forth selected information relating to the revenue of Córdoba Shopping during the fiscal years indicated:
 
 
 
For the fiscal years endedJune 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  110 
  113 
  181 
Percentage rent (1) 
  88 
  96 
  121 
Total rent 
  197 
  209 
  302 
Non-traditional advertising 
  5 
  9 
  13 
Revenue from admission rights (2) 
  20 
  30 
  32 
Fees 
  3 
  10 
  11 
Commissions 
  6 
  6 
  12 
Other 
  3 
  2 
  0 
Total (3) 
  235 
  266 
  370 
(1) Contingent rent is the revenue based on a specific percentage of gross sales of IRSA CP’s tenants.
(2) Admission rights are the fees required from tenants for entering into a lease agreement or a lease agreement renewal.
(3) Consolidated rents. Revenue relating to expenses and collective promotion fund are not included.
 
La Ribera Shopping, City of Santa Fé, Province of Santa Fé
 
IRSA CP holds 50% of Nuevo Puerto Santa Fe S.A.’s (“NPSF”) shares, a corporation that is tenant of a building in which it built and currently operates “La Ribera” shopping mall, which has a surface area of 47,506 square meters, comprising 70 retail stores and seven 2D, 3D and XD-screen multiplex cinema with the latest sound and image technology. It also comprises a 510-square meter cultural center and 24,553 square meters in outdoor areas and free parking space. Its gross leasable area is approximately 10,530 square meters. The shopping mall is strategically located in Dock I of the port of the City of Santa Fe in the Province of Santa Fe, just 3 blocks away from its commercial and banking center, the place with the largest development in terms of real estate in the City of Santa Fe, 27 kilometers away from the City of Paraná and 96 kilometers away from the City of Rafaela, its range of influence represents a potential market of over one million people.
 
During the fiscal year ended June 30, 2021, the public visiting the shopping mall generated real retail sales of approximately ARS 1,368 million, which represents a year-on-year decrease of 38.2% and sales per square meter were approximately ARS 129,914. Total rental income decreased from ARS 71 million in real terms in fiscal year ended June 30, 2020 to ARS 23 million in fiscal year ended June 30, 2021, representing annual income per gross leasable square meter of ARS 6,793 in fiscal year 2020 and 2,184 in fiscal year 2021.
 
As of June 30, 2021, La Ribera Shopping’s occupancy rate was 96.2%.
 
 
136
 
 
La Ribera Shopping’s tenant mix
 
The following table sets forth the mix of tenants by type of business at La Ribera Shopping as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(In millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  662 
  48.4 
  3,277 
  31.1 
Entertainment 
  27 
  2.0 
  3,323 
  31.6 
Home 
  71 
  5.2 
  159 
  1.5 
Restaurant 
  174 
  12.7 
  2,227 
  21.1 
Miscellaneous 
  230 
  16.8 
  776 
  7.4 
Services 
  17 
  1.2 
  29 
  0.3 
Home appliances 
  187 
  13.7 
  739 
  7.0 
Total 
  1,368 
  100.0 
  10,530 
  100.0 
 
(1) Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores. Includes vacant stores as of June 30, 2021.
 
La Ribera Shopping’s revenue
 
The following table sets forth selected information relating to the revenue of La Ribera Shopping during the fiscal years indicated:
 
 
 
For the fiscal years endedJune 30 (4)
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  17 
  41 
  57 
Percentage rent (1) 
  6 
  31 
  51 
Total rent 
  23 
  72 
  108 
Non-traditional advertising 
  1 
  4 
  4 
Revenue from admission rights (2) 
  4 
  5 
  5 
Fees 
  1 
  2 
  2 
Commissions 
  2 
  5 
  12 
Total (3) 
  32 
  88 
  131 
 
(1) Contingent rent is the revenue based on a specific percentage of gross sales of IRSA CP’s tenants.
 
(2) Admission rights are the fees required from tenants for entering into a lease agreement or a lease agreement renewal.
(3) Consolidated rents. Revenue relating to expenses and collective promotion fund are not included.
(4) It does not reflect IRSA CP’s participation on this property.
 
 
137
 
 
Alto Comahue, City of Neuquén, Province of Neuquén
 
Alto Comahue, was inaugurated on March 17, 2015, and is located in the City of Neuquén, in the Patagonian region of Argentina. It has a total surface of 35,000 square meters and 11,705 square meters of GLA, approximately 1,066 roof-covered and open-air parking spaces and a large entertainment and leisure area. Alto Comahue offers 94 retail stores that house the most prestigious brands in Argentina and has a 6-screen multiplex cinema and a theme restaurant. It is a three-story building consisting of a basement where the parking space and a 1,000 square meters Food Hall are located; the ground floor consisting of 5,000 square meters for retail stores, and the first floor consisting of 1,000 square meters for restaurants with unique views of the city, 2,600 square meters of retail stores and 2,100 square meters of cinemas.
 
The development is a part of a mixed-use complex that further includes a supermarket that is currently in operation and 2 additional parcels of land. One of these parcels is assigned to development of a hotel and the other, which extends over 18,000 sqm –owned by the company-, to a future housing development.
 
During this fiscal year, visitors to the shopping mall generated real retail sales that totaled approximately ARS 2,022 million, which represent a year-on-year decrease of 36.3% and sales per square meter of approximately ARS 172,746. Total rental income decreased from ARS 538 million in real terms in fiscal year ended June 30, 2020 to ARS 60 million in fiscal year ended June 30, 2021, which represents total revenue for the period per gross leasable area of ARS 46,012 in fiscal year 2020 and ARS 5,113 in fiscal year 2021.
 
As of June 30, 2021, Alto Comahue’s occupancy rate was 92.4%.
 
Alto Comahue’s tenant mix
 
The following table sets forth the mix of tenants by type of business at Alto Comahue as of June 30, 2021:
 
Type of business (1)
 
Tenant Sales
(In millions of ARS)
 
 
Tenant Sales
 (%)
 
 
GLA (sqm)
 
 
GLA (% of total)
 
Clothes and footwear 
  1,079 
  53.4 
  5,576 
  47.6 
Entertainment 
  21 
  1.0 
  2,350 
  20.1 
Home 
  114 
  5.6 
  437 
  3.7 
Restaurant 
  309 
  15.3 
  2,014 
  17.2 
Miscellaneous 
  394 
  19.5 
  787 
  6.7 
Services 
  32 
  1.6 
  124 
  1.1 
Home appliances 
  73 
  3.6 
  417 
  3.6 
Total 
  2,022 
  100.0 
  11,705 
  100.0 
 
(1) Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores. Includes vacant stores as of June 30, 2021.
 
 
138
 
 
Alto Comahue’s revenue
 
The following table sets forth selected information relating to the revenue derived from Alto Comahue during the following periods:
 
 
 
For the fiscal yearsended June 30,
 
 
 
2021
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  40 
  445 
  385 
Percentage rent (1) 
  20 
  93 
  134 
Total rent 
  60 
  538 
  519 
Non-traditional advertising 
  2 
  5 
  7 
Revenue from admission rights (2) 
  14 
  16 
  15 
Fees 
  3 
  3 
  4 
Commissions 
  3 
  2 
  19 
Other 
  3 
  2 
  65 
Total (3) 
  84 
  566 
  629 
 
(1) Contingent rent is the revenue based on a specific percentage of gross sales of IRSA CP’s tenants.
 
(2) Admission rights are the fees required from tenants for entering into a lease agreement or a lease agreement renewal.
 
(3) Consolidated rents. Revenue relating to expenses and collective promotion fund are not included.
 
Administration and management of shopping malls
 
IRSA CP manages and operates each of the shopping malls in which IRSA CP has more than 50% ownership and in IRSA CP’s Joint Venture in NPSF (La Ribera Shopping). IRSA CP charges tenants a property monthly management fee, which varies from shopping mall to shopping mall, depending on the cost of administration and maintenance of the common areas and the administration of contributions made by tenants to fund promotional efforts for the shopping mall. IRSA CP charges a monthly management fee, paid prorated by the tenants, according to their particular lease rates. This management fee is a fixed amount in Alto Palermo, Alto Avellaneda, Abasto Shopping, Paseo Alcorta, Alto NOA, Dot Baires, Alto Rosario, Soleil Premium Outlet, Patio Bullrich, Distrito Arcos and Alto Comahue and a percentage of the common area maintenance expenses in Buenos Aires Design, Córdoba Shopping and Mendoza Plaza.
 
IRSA CP’s total revenue from management fees during fiscal 2021 were ARS 133.5 million, ARS 155.6 million during fiscal 2020 and ARS 184.0 million during fiscal 2019.
 
 
139
 
 
Competition
 
IRSA CP is the largest owner and operator of shopping malls, offices and other commercial properties in Argentina in terms of gross leasable area and number of rental properties. Given that most of IRSA CP’s shopping malls are located in highly populated areas, there are competing shopping malls within, or in close proximity to, IRSA CP’s targeted areas, as well as stores located on avenues or streets. The number of shopping malls in a particular area could have a material effect on IRSA CP’s ability to lease space in IRSA CP’s shopping malls and on the amount of rent that IRSA CP is able to charge. IRSA CP believes that due to the limited availability of large plots of land and zoning restrictions in the City of Buenos Aires, it is difficult for other companies to compete with us in areas through the development of new shopping malls. IRSA CP’s principal competitor is Cencosud S.A. which owns and operates Unicenter Shopping and the Jumbo hypermarket chain, among others.
 
The following table shows certain information concerning the most significant owners and operators of shopping malls in Argentina.
 
EntityShopping mallsLocation
 
GLA
 
 
Marketshare (1)
 
   
 
 
 
 
(%)
 
IRSA CP Alto PalermoCity of Buenos Aires
  20,045 
  1.54 
Abasto Shopping (2)
City of Buenos Aires
  36,796 
  2.83 
Alto AvellanedaProvince of Buenos Aires
  39,838 
  3.06 
Alcorta ShoppingCity of Buenos Aires
  15,812 
  1.22 
Patio BullrichCity of Buenos Aires
  11,396 
  0.88 
Dot Baires Shopping (3)
City of Buenos Aires
  47,493 
  3.65 
SoleilProvince of Buenos Aires
  15,158 
  1.17 
Distrito ArcosCity of Buenos Aires
  14,335 
  1.10 
Alto NoaCity of Salta
  19,314 
  1.49 
Alto RosarioCity of Rosario
  33,731 
  2.59 
Mendoza PlazaCity of Mendoza
  43,312 
  3.33 
Córdoba ShoppingCity of Córdoba
  15,361 
  1.18 
La Ribera ShoppingCity of Santa Fe
  10,530 
  0.81 
Alto ComahueCity of Neuquén
  11,705 
  0.90 
Subtotal   
  334,826 
  25.75 
Cencosud S.A.   
  277,203 
  21.33 
Other operators   
  687,823 
  52.92 
Total   
  1,299,852 
  100.0 
(1) Corresponding to gross leasable area in respect of total gross leasable area. Market share is calculated dividing sqm over total sqm.
(2) Does not include Museo de los Niños (3,732 sqm).
(3) IRSA CP’s interest in PAMSA is 80%:
Source: Argentine Chamber of Shopping Centers.
 
 
140
 
 
IRSA CP’s Offices segment
 
Overview
 
IRSA CP owns, develops, and manages office buildings and other rental properties throughout Argentina. As of June 30, 2021, IRSA CP owned and managed eight office buildings located in the City of Buenos Aires with an aggregate of 113,291 square meters of GLA and IRSA CP is working on the last phase of development of the Della Paolera 261 building.
 
IRSA CP’s Offices segment had a 74.7% occupancy rate as of June 30, 2021.
 
The following table shows certain information regarding IRSA CP’s office buildings, as of June 30, 2021:
 
 
 
As of June 30,
 
 
 
2021
 
 
2020
 
 
2019