On September 18, 2024, the Argentine Securities and Exchange Commission (CNV) issued Resolution No. 1016 (the Resolution), which regulates the country’s framework for the private placement of securities and cross-border transactions.
The Resolution aligns Argentina’s legal framework with international standards by defining "safe harbors" that provide clarity regarding certain private placements that are exempt from the rules governing public offerings. It also establishes criteria for placements that lack sufficient connection to Argentina.
In this alert, we take a concise look at the regulation and its implications.
Background
The Resolution outlines the rules for private placements in general, placements aimed at employees, and cross-border placements that lack sufficient connection to Argentina.
A placement that meets the safe-harbor requirements or qualifies as a cross-border placement is not exempt from CNV oversight. However, even if all the requirements are not met, the placement will not necessarily be deemed improper or subject to penalties.
Instead, it will be evaluated on a case-by-case basis to determine whether it qualifies as a public offering under the Capital Markets Law.
Safe harbor for private placements in general
The Resolution provides the following guidelines for the safe harbor applicable to private placements in general:
- Maximum number of investors: A maximum of 35 investors per issuance is allowed, of which up to 15 may be non-qualified investors. The responsibility for ensuring compliance with these limits rests solely with the selling party.
- Communication channels: Promotional meetings (in-person or virtual) with no more than 35 potential investors are permitted, along with the distribution of documentation to authorized agents or upon investor request. The use of mass media, such as social networks, public websites, or general-access media, is prohibited.
- Information requirements: The issuer must provide its most recent financial statements, detailed information about the offering, and any other relevant documentation.
- Transfer restrictions: As a general rule, securities acquired in a private placement cannot be transferred to qualified investors within the first three months, nor can it be transferred to non-qualified investors within the six months following the end of the subscription period or the date of acquisition on the secondary market.
Safe harbor for private placement of securities to employees
The Resolution sets forth the following rules for the safe harbor applicable to the private placement of securities to employees:
- Eligible individuals: Employees, officers, or non-independent board members of the employer or its corporate group are exclusively eligible.
- Communication channels: Communication may be conducted through meetings with employers or internal channels such as the intranet, bulletins, or internal memos.
- Information requirements: The most recent financial statements of the issuer, detailed information about the offering, and any other relevant documentation must be provided.
- Transfer restrictions: Generally, securities acquired through a private placement directed at employees cannot be transferred to any individual within the six months following the end of the subscription period or the date of acquisition on the secondary market.
Safe harbor for cross-border placements
The Resolution specifies that a placement of securities is considered to lack sufficient connection with Argentina when conducted by one or more foreign residents without any advertising or promotion targeting Argentine residents. No funds or assets related to these transactions may be received in the country, nor can any activities be conducted in Argentina that would create a significant point of contact.
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