General Resolution No. 1016 of the National Securities Commission (“CNV” for its spanish acronym): Regulation of Private Placement and Cross-Border Offer of Securities
Capital Markets department report | General Resolution No. 1016 of the National Securities Commission (“CNV” for its spanish acronym): Regulation of Private Placement and Cross-Border Offer of Securities
The CNV has recently issued General Resolution No. 1016, which regulates the private placement and cross-border offer of securities, following the public consultation initiated by General Resolution No. 1009.
Below, we provide a summary of the most important points.
The 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 will grant a safe harbor regime, preventing the offers from being considered an irregular public offer.
If the safe harbor requirements are not met, the issuer will be subject to sanctions and will be excluded from the safe harbor benefits for two years. However, this will not affect other issuances already made by the issuer in compliance with this private placement regime, which will continue to benefit from the safe harbor.
The regulation also clarifies that non-compliance with the requirements does not necessarily result in 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. The regulation clarifies that when a third party acts on behalf of the issuer, they will be subject to the issuer’s obligations.
Maximum Number of Investors:
For the offering:
No limitation applies for offers made to financial institutions, non-financial credit providers, registered agents, mutual guarantee companies, and insurance companies.
Up to 35 qualified investors (excluding those mentioned above) and 15 non-qualified investors.
For mutual fund units and evergreen securities issued by non-resident portfolio managers, the maximum number of potential investors will be calculated per product offered, not per issuance, considering the potential investors contacted during the 365 days following the date of contact.
For subscription:
Up to 35 subscribers, 10 of which may be non-qualified investors, excluding holders of capital securities of the issuer being offered.
For mutual fund units and evergreen securities issued by non-resident portfolio managers, the maximum number of potential investors will be calculated per product subscribed, not per issuance, considering the investors who subscribed during the 365 days following the subscription of a new investor.
Except for the cases of mutual fund units and evergreen securities issued by non-resident portfolio managers, if more than one issuance is made within a three-month period, the maximum number of investors will be calculated collectively.
Responsible for Verifying the Maximum Number of Investors: The person selling the securities. A written declaration from the issuer confirming that the maximum number of investors has not been exceeded is sufficient to comply.
Instrument Restrictions: Private placement of securities authorized for public offering in Argentina or securities requiring public offering under Argentine regulations is not permitted.
Registered Agents: If the offer is made by an agent registered with the CNV, they cannot publicly offer the securities, and potential investors must be informed that these securities are not being publicly offered, as well as the limitations under this regime.
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 recipient limitations.
Promotional meetings with more than 35 investors at a time (excluding registered agents).
General invitations via automated or mass processes.
Permitted Means of Distribution (provided the maximum number of investors is respected):
Promotional meetings, in person or virtual, with up to 35 investors at a time, excluding registered agents who may participate without limitation.
Sending and delivering certain documents related to securities to a registered agent (excluding orders).
Sending and delivering certain documents related to securities to potential investors upon request (excluding orders). Investor subscription to a mailing list or response to unsolicited calls will not be considered a request.
Personalized invitations to carry out securities transactions by any means.
Invitations to securities transactions advertised via social media, websites, apps, or similar platforms, provided access is restricted.
Information Requirements: Upon request from the investor, the latest financial statements and other relevant information must be provided.
Confidentiality: Confidential by default, waivable by the investors.
Resale Restrictions: Acquired securities cannot be transferred within 3 months after subscription for non-qualified investors, or 6 months for qualified investors, unless outside Argentina.
This restriction does not apply to:
Conversion, exchange, or payment in kind of privately placed securities by publicly offered securities from the same issuer.
Private fiduciary securities issued within financial trusts for pre-financing issues, replaced by publicly offered fiduciary securities of the same trust.
Closed mutual fund units.
Redemption of mutual fund units.
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 offering 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 consist of equity securities and cash deposits).
Synthetic securities or contractual rights replicating equity securities.
Permitted Methods: Written or oral communications to eligible persons and internal communication channels exclusive to the issuing company with its collaborators.
Resale Restrictions: Prohibited within 6 months following the subscription, unless the transfer occurs outside Argentina or to the issuer. This limitation is independent of any restrictions imposed by the applicable plan.
Information Requirements: Upon request from the employee, the latest balance sheet and other relevant information must be provided.
3-Cross-Border Offer:
Authorized Subjects: Exclusively by non-residents.
Types of Securities: Securities issued by residents cannot be offered.
Maximum Number of Investors: Not applicable.
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 in Argentina.
General invitations via automated or mass processes directed at residents (including distribution lists and cold calling).
Explicitly Permitted Conduct:
Educational events without an offer of specific securities.
Institutional advertising without including physical addresses in Argentina.
Institutional advertising without including web addresses for trading securities, unless access is restricted (e.g., password-protected).
Sending account documentation to clients by agents registered abroad.
Promotional meetings outside the country between non-residents and potential resident investors.
Promotional meetings within the country between non-residents and registered agents. No invitations can be made to registered agents during these meetings without it being considered a “Cross-Border Offer,” although if it meets the requirements, it may be considered a “Private Placement.”
For any questions or additional information, please do not hesitate to contact our team.
Sincerely,
Luciana Denegri
Felipe Videla
María Victoria Pavani