Public Offering with Automatic Approval of corporate bonds: CNV Resolution No. 1047
Capital Markets Department Report | Public Offering with Automatic Approval of corporate bonds: CNV Resolution No. 1047.
1-Introduction
Resolution No. 1047 of the National Securities Commission (CNV), based on the draft submitted for public consultation through Resolution No. 1028, seeks to simplify regulatory procedures and promote access to financing through an automatic public offering procedure for corporate bonds and disposition of collateralized securities through auction.
Below is a summary of the most important aspects of this new regulation.
2-Automatic Authorization Procedures for Low and Medium Impact
a- General Characteristics
Resolution No. 1047 establishes two cases for the offering of corporate bonds and short-term negotiable debt securities (VCPs) issued as corporate bonds:
1-Public offering with automatic authorization due to its low impact.
2-Public offering with automatic authorization due to its medium impact.
The following table summarizes the main characteristics and differences between the two:
*The maximum permitted amount must consider all issuances by the same issuer in the last twelve months. The limit is revolving, meaning the issuer can reissue as long as debt is amortized, provided the total outstanding securities do not exceed the permitted limit.
** UVAs (Unidades de Valor Adquisitivo): UVAs are inflation-adjusted units of account used in Argentina. Their value is linked to the Reference Stabilization Coefficient (CER), which reflects inflation rates.
b- Regulatory Sanctions System
The sanctioning regime, in both cases, depends on the type of breach. Specifically:
-Non-compliance with essential requirements of these procedures will result in an irregular public offering unless a private offering under a safe harbor is proven. Refer to our report on Resolution No. 1016.
-Non-compliance with non-essential requirements will not result in an irregular public offering but may lead to sanctions imposed by the CNV.
-Non-compliance with the public offering requirement will expose the issuer to the loss of applicable tax benefits.
3- Auctions of Securities: Automatic Authorization Procedure
Resolution No. 1047 establishes an automatic authorization procedure for disposition of collateralized securities through auction (provided they are not shares or equity-representative securities) arising from the execution of real guarantees or trust guarantees, with the necessary involvement of an ALyC (Clearing and Settlement Agent) or AN (Negotiation Agent), both of which are registered agents in Argentina.
These processes will not require the issuer of the securities to enter the public offering regime, nor will fees be payable to the CNV for the same. However, in cases where the securities do not have a public offering, intervening agents must provide relevant information about the securities to the bidders.
Failure to comply with the essential requirements outlined in the project will result in the offering being considered irregular. Additionally, non-compliance with accessory requirements will subject the offeror to the CNV’s disciplinary powers.
4-Conclusion
Resolution No. 1047 introduces significant changes compared to the original project presented through Resolution No. 1028, mainly based on feedback received during the public consultation period. Among the most relevant adjustments, it is worth noting the exclusion of virtual assets as admissible securities under the low and medium impact regimes, authorization for issuing ESG corporate bonds (Environmental, Social, and Governance-oriented), and the possibility of reducing the marketing period to just one day. Additionally, the regulation allows issuers with a valid SME certificate to dispense with the supervisory committee requirement under the low-impact regime, clarifies the accumulation of amounts under the CNV Guaranteed SME and low-impact regimes, and requires greater transparency in disposition of collateralized securities through auction without a public offering.
With these modifications, the regulation aims to balance operational simplicity with regulatory objectives, promoting a more accessible and transparent market for issuers.
For further information on this regulation or advice on its implementation, please feel free to contact us.