Understanding the CNV’s New Proposal on Sustainable Collective Investment Products

On January 15, 2021, the Argentine Securities and Exchange Commission (the “CNV,” after its Spanish acronym) published General Resolution No. 879 (the “Resolution”), which submits to public review a special regime on sustainable collective investment products. The CNV will receive opinions and/or proposals through its webpage for 15 business days starting January 19, 2020. The Resolution includes a special regime on the creation of mutual sustainable open-ended funds, mutual sustainable closed-ended funds, and sustainable financial trusts.

The Resolution clarifies that for a mutual open-ended fund to be considered sustainable, at least 45% of its assets must be invested in (i) securities listed in segments and/or social, green and/or sustainable panels, (ii) securities listed in panels highlighting corporate governance best practices and/or are included in sustainability indexes, (iii) securities with external reviews that are deemed social, green and sustainable, and/or (iv) socially-oriented financial trusts. Likewise, these funds may invest up to 30% of their assets in SME financial trusts.

Closed-ended funds and financial trusts will be deemed sustainable once the obtained funds are allocated either directly or indirectly to funding or refinancing new or existing projects or activities under the terms provided in the guidelines for the issuance of social, green and sustainable negotiable securities. When placing those instruments, the reporting period may be reduced to 1 business day when the offer is addressed to qualified investors.

In addition, the Resolution requires the prospectus and/or the prospectus supplement to include the identity of those who will perform the external review —who will have to file a report prior to the CNV’s authorization and then continue to file periodically. Those reports will be published in the CNV’s so-called “Financial Reporting Highway” within 3 days of issuance. Lastly, the CNV stipulated that sustainable financial trusts must be issued in tranches, subject to CNV analysis and approval, and their deferred integration from their subscription price will be subject to the provisions of their respective financial trust agreements.