On March 31, 2023, General Resolution No. 955/2023 (the “Resolution”) issued by the Argentine Securities Commission (“CNV”) was published in the Official Gazette of the Argentina Republic, which defines the regulatory framework applicable to the private offering of securities.
Pursuant to Article 82, third paragraph of Law No. 28,831 (the “Capital Markets Law”), the CNV has the power granted by the legislator through Law No. 27,440 (the “Productive Financing Law”) to establish the specific circumstances under which securities are considered private offerings.
Consequently, the CNV, by means of the Resolution, defines when the offering of securities constitutes a private offering, even in those cases in which such offerings of securities are included in the concept of public offering as defined in Article 2 of Law No. 26,831. For such purpose, the means and mechanisms of diffusion, offering, distribution and the number and type of investors to whom the offering is addressed shall be taken into consideration.
A. Proposed conditions to consider a private offering of marketable securities:
Within Article 146, Section XIII, Chapter V, Title II of the CNV Rules, the conditions for considering a private offering of marketable securities are set forth, among which are:
(i) Number and type of investors to whom the offering of securities is addressed:
The offering of marketable securities to be considered a private offering must be addressed to a maximum of fifteen qualified investors, pursuant to the definition set forth in Article 12 of Section I of Chapter VI of Title II of the CNV Rules (N.T. 2013, as amended).
The following are included within the definition of qualified investor: a) The National State, the Provinces and Municipalities, Autarchic Entities, State Corporations and State Enterprises; b) International Organizations and Legal Entities under Public Law; c) Public Trust Funds; f) The National Administration of Social Security (ANSeS) – Sustainability Guarantee Fund (FGS); e) Pension Funds; f) Banks and public and private financial entities; g) g) Mutual Funds; h) Financial Trusts with public offering; i) Insurance Companies, Reinsurance Companies and Labor Risk Insurance Companies; j) Mutual Guarantee Companies; k) Legal Entities registered by the Argentine Securities Commission as agents, when acting on their own account; l) Individuals who are definitively registered in the Registry of Suitable Persons in charge of the National Securities Commission; m) Individuals or legal entities, other than those mentioned in the preceding paragraphs, which at the time of making the investment have investments in marketable securities and/or deposits in financial institutions for an amount equivalent to THREE HUNDRED AND FIFTY THOUSAND ACQUISITIVE VALUE UNITS (UVA 350. 000); n) Legal entities incorporated abroad and human persons with real domicile abroad.
(ii) Form and means used for the private offering of marketable securities
The Resolution requires that the offering be made through direct contact with the potential investor, exclusively by means of e-mail and/or any other electronic or printed means of direct and personal communication.
(iii) Maximum amount of the securities offered under a private offering
The maximum amount of securities offered, calculated based on the equivalent values in purchasing value units (UVA) adjusted by the Reference Stabilization Coefficient (CER), converted at the value of the day of calculation published by the Argentine Central Bank, may not exceed UVA seven million or its equivalent in other currencies.
B. Information obligations:
The issuer of the marketable securities must include in a prominent manner, in any communication it makes, for the knowledge of potential investors, a warning stating:
(i) That it is a private offering in the terms defined by the CNV in Section VIII of Chapter V of Title II of the Rules (N.T. 2013 as amended), pursuant to the provisions of the third paragraph of Article 82 of the Capital Markets Law.
(ii) That the offering is not authorized by the CNV and, therefore, the issuance is not subject to the general and periodic information and supervision regime established in the CNV regulations, which has not issued a judgment on the data contained in the offering documents or on the veracity of the accounting, financial and economic information, as well as any other information provided therein, which is the sole responsibility of the issuer and the other parties involved.
(iii) That the securities may not be publicly traded in authorized markets and may only be acquired by qualified investors as indicated in point A (i).
C. Consequences for non-compliance with the conditions for making a private offering of negotiable securities.
The Resolution provides that in the event of non-compliance with the conditions set forth in section A above, the offering will not qualify as a private offering, and the offerors and any other parties involved in the offering and/or placement of securities will be subject to the disciplinary sanctions corresponding to irregular public offerings of securities.
D. Regime of information and accreditation of the private offering of marketable securities
The CNV proposes by means of the Resolution that within five days of the placement, the offerors must inform and evidence before the CNV:
(i) Compliance with the requirements set forth in Article 146, Section XIII, Chapter V, Title II of the CNV Rules;
(ii) The identity, quantity and quality of the investors;
(iii) The amount placed; and
(iv) The parties involved in the placement, custody, registration and payment of the marketable securities.
E. Applicability of tax benefits
The Resolution provides that the requirement of placement by public offering will not be considered fulfilled in the case of issues of marketable securities placed by private offering under the terms of Article 82, third paragraph of the Capital Markets Law.
F. Exclusion from private offering qualification of marketable securities
The Resolution provides that the offering of shares, subscription rights or options on shares, convertible debt securities or other similar marketable securities that, directly or indirectly, may give the right to the subscription, acquisition or conversion into shares of a company whose shares are admitted to the public offering regime are excluded from the private offering qualification, as provided in Article 82, third paragraph, of the Capital Markets Law and its regulations.
The Resolution is subject to the “Participatory Rule Making” procedure approved by Decree No. 1172/2003 , for a period of fifteen business days, in order to express opinions and/or proposals through the Web Site www.argentina.gob.ar/cnv , regarding the adoption of a regulation on “DRAFT GENERAL RESOLUTION ON PRIVATE BIDDING – EXCEPTIONS TO THE REQUEST FOR PUBLIC BIDDING”.
Access the complete text of the Resolution here.
This publication does not constitute a legal opinion on specific issues. If necessary, specialized legal advice should be sought.
For further information, please contact:
Sebastián Luegmayer