Small and Medium-sized Enterprises: CNV SME Guaranteed Notes

On June 15, 2017 the Argentine Securities and Commission (after its Spanish acronym "CNV") issued General Resolution No. 696 (the "Resolution") amending the rules for access of SMEs to financing through the capital markets.

The CNV issued the Resolution in order to promote the access of SMEs to the capital markets, create new investment instruments, and encourage the channeling of savings to finance productive projects and the development of regional economies, thus establishing an alternative regime for SMEs’ access to capital markets and help their development.

The Resolution incorporates a new regime, called “CNV SME Guaranteed Notes”, for the issuance of notes by companies considered SMEs under CNV Rules (the “CNV SMEs”), which has all the advantages of regular notes but carries an easier registration process and fewer information requirements for CNV SMEs while simplifying access to the public offering regime.

According to CNV Rules, companies looking to issue notes under the CNV SME Guaranteed Notes regime will have to prove their CNV SME condition and such certification will be valid for twenty four (24) months counted from the date of filing of all the documents required for the public offering of the notes.

Notes issued under the CNV SME Guaranteed Notes regime must be non-convertible notes; be guaranteed by either mutual guarantee companies, financial entities and/or guarantee funds; be represented in global notes; be placed only by public auction; and must only be subscribed by qualified investors (as defined in CNV Rules).

Moreover, the Resolution sets forth that the CNV SMEs which issue notes under the CNV SME Guaranteed Notes regime are exempt from complying with the CNV´s reporting obligations, that they have to file their financial statements annually with the CNV (rather than filing them on a quarterly basis), and it also reduces the scope of the relevant events that have to be informed to the CNV.

Finally, the Resolution sets forth that if CNV SMEs have any outstanding debt securities which were issued under a regime other than the CNV SME Guaranteed Notes, the strictest informative regime will apply.