General Resolution No. 1009 of the National Securities Commission (CNV): Proposed Regulation on Private Placement and Cross-Border Offer of Securities
Banking & Financial Institutions /Capital Markets department report | General Resolution No. 1009 of the National Securities Commission (CNV): Proposed Regulation on Private Placement and Cross-Border Offer of Securities
The National Securities Commission (CNV) has recently issued General Resolution No. 1009, which opens a public consultation on the regulation of private placement and cross-border offer of securities. Below, we provide a summary of the most important points.
The proposed regulation establishes a framework for private placements of securities, specific rules for private placements directed at employees, and cases of cross-border offers. If the requirements set forth by this regulation are met, the CNV would grant a safe harbor regime, preventing them from being considered an irregular public offer. However, if the requirements are not met, the proposal clarifies that it does not necessarily constitute an irregular public offer, as each case must be reviewed individually, allowing for private placements outside these requirements.
Furthermore, in all cases, participants must include the corresponding warnings about the private nature of the offer in the issuance documents.
The conditions provided for each type of offer are detailed below:
1- Private Placement:
-Authorized Subjects: Can be carried out by any person, whether resident or non-resident.
-Maximum Number of Investors: 35 investors can be reached by the offer, of which a maximum of 20 can subscribe, with up to 10 non-qualified investors. Although the rule does not clarify, we understand that this limit is per offer.
-Restrictions on Instruments: The private placement of shares in mutual funds constituted in Argentina or equity securities of companies that make a public offer of the same type of security is not allowed.
-Registered Agents: If the offer is made by an agent registered with the CNV, they cannot publicly offer the security.
-Prohibited Means of Distribution:
•National or international media.
•Printed and digital media in Argentina.
•Websites directed at residents.
•Advertising on social media directed at residents without a warning about the limitation of recipients.
•Promotional meetings with more than 10 investors.
-Authorized Methods of Distribution:
•Promotional meetings, either in person or virtual, with up to 10 investors.
•Sending and delivery of certain documentation related to securities.
-Information Requirements: At the investor’s request, the latest balance sheet must be disclosed.
-Confidentiality: Confidential by default, which can be waived by investors.
-Resale Restrictions: The acquired securities cannot be transferred during the 6 months following the subscription, except outside Argentina.
•This does not include conversion, exchange, or payment in kind of private fiduciary securities issued within the framework of financial trusts intended to pre-finance issues, by the fiduciary securities that are issued according to the authorization of the public offer of said financial trust.
2-Private Placement for Employees:
-Authorized Subjects: Can be carried out by a resident or non-resident company, directed at employees or non-independent directors, and also by a group company that offers securities to employees of other companies within the same group.
-Types of Securities Offered: Any type of security issued by the company or equity securities issued by third parties, including:
•Options to purchase equity securities.
•Participation certificates in financial trusts, mutual funds outside Argentina, vehicle companies, and special purpose vehicles (90% of the underlying must be composed of equity securities and cash deposits).
•Synthetic securities or contractual rights that replicate equity securities.
-Authorized Methods: Written or oral communications to eligible persons and internal communication means exclusive to the issuing company with its collaborators.
-Resale Restrictions: Prohibited within the 6 months following the subscription.
-Information Requirements: At the employee’s request, the latest balance sheet must be disclosed.
3-Cross-Border Offer:
-Authorized Subjects: Exclusively by non-residents.
-Types of Securities: Securities issued by residents cannot be offered.
-Prohibited Means of Distribution:
•Advertising in media directed at residents.
•Publications in printed media in Argentina.
•Web advertising directed at residents.
•Advertising on social media directed at residents.
•In-person meetings with residents. The rule does not clarify whether inside or outside the country.
-Explicitly Permitted Conduct:
•Educational events without an offer of securities.
•Institutional advertising without including web addresses for trading securities or contact addresses in Argentina.
•Sending account documentation to clients by agents registered abroad.
•Promotional meetings between non-residents and registered agents.
Interested parties can submit comments on the proposed regulation through the CNV website until August 7, 2024. For any questions or additional information, please do not hesitate to contact our team.
Sincerely,
Luciana Denegri
Felipe Videla
María Victoria Pavani