Financial Trusts: New Public Offering Regime

Through General Resolution 1031, issued on November 25, 2024, the Argentine Securities Commission (CNV) presented to public consultation the regulation of a new Public Offering Regime with Automatic Authorization for financial trusts. With it, the CNV emphasizes its commitment to the deregulation measures promoted by the Federal Government, introducing simplified regimes applicable to various financial instruments. According to the CNV, these measures are designed to make it easier for new companies to enter the capital markets, fostering their participation and growth.
 

The main aspects of the Resolution are:

1. Public Offering with Automatic Authorization due to its Low and Medium Impact. General provisions for both regimes.

A financial trust securities offering will be considered a public offering with automatic authorization due to their low or medium impact and will automatically qualify for public offering authorization if all these conditions are met:

1. 1. the offering of trust securities is carried out within the framework of a financial trust, either as an individual issuance or as part of a series of a global program—approved or not—with the participation of an unlimited number of agents registered before the CNV,
   2. only qualified investors may participate in the initial offering and secondary negotiation, with no limitation on their number,
   3. financial trusts classified as solidary financial trusts, closed real estate mutual funds, real estate financial trusts, closed infrastructure mutual funds, infrastructure financial trusts, venture capital mutual funds, venture capital financial trusts, and direct investment funds are not eligible. Similarly, trusts with underlying assets consisting of securities or virtual assets (as defined in Law 27739) convertible into shares or representing interests in these trusts are also excluded,
   4. compliance with the conditions regarding the calculation period for maximum issuance amounts and aggregation (detailed below),
   5. fulfillment of the requirements related to investor warnings (detailed below),
   6. payment of applicable fees, as per Chapter I, Title XVII of the CNV Rules, within five business days after the closing of the placement period for each issuance.

 

Calculation period for maximum issuance amounts and aggregation

 

All offerings of trust securities by the same settlor (regardless of the trustee) will be considered part of the same offering, regardless of the underlying asset. If multiple settlors participate in the same financial trust, the total nominal amount issued will be attributed to each participating settlor, irrespective of their contribution percentage to the trust's assets.

The aggregation period will cover the 12 months preceding the start date of the corresponding dissemination period under this regime. Reissuance within the maximum amount will be allowed once the initial issuance has been fully or partially amortized.

 

Automatic authorization

 

Public offerings with automatic authorization due to their low or medium impact that meet the requirements in this regime will:

1. receive automatic public offering authorization from the CNV,
    
2. be deemed authorized and regular public offerings, exempt from penalties for irregular public offerings of securities,
    
3. not be subject to additional reporting requirements beyond those established in the regime,
    
4. Be considered public offerings, provided that their placement efforts are duly substantiate

 

Placement efforts

 

The trustee must have documentation of the placement efforts available for CNV review within five business days after the placement period ends.

 

Financial trust agreement – publishing obligation

 

The trustee must publish the signed financial trust agreement through the CNV’s Information Reporting System (AIF) and the information systems of authorized markets where the trust securities are listed and/or traded before the start date of the dissemination period.

 

Listing obligation and secondary negotiation of trust securities

 

Trust securities issued under this regime must be listed and negotiated on a CNV-authorized market within 30 calendar days from the day the dissemination period starts. Markets may not impose additional requirements for listing and/or negotiating trust securities authorized under this regime.

However, markets may establish additional requirements for financial trusts issued under the Guidelines for Thematic Securities Issuance in Argentina to ensure transparency and alignment with International Capital Markets Association (ICMA) principles.

 

Investor warnings

 

The trustee, placement and distribution agents, and any other parties involved in the issuance must include in the prospectus, sales materials, and/or any other distributed documents, if such documents exist:

a. An affidavit stating that the offering has automatic public offering authorization,
b.   A clarification stating that, although the trustee is registered as a financial trustee before the CNV, the specific trust issuance is not subject to the general or periodic reporting regime.
c.   A disclaimer stating that the CNV has neither reviewed nor issued an opinion on the issuance or the accuracy of the financial, economic, accounting, or other information in the offering documents, which remain the sole responsibility of the trustee, settlor, and other accountable parties.

 

Irregular public offering

 

Failure to meet the requirements outlined in the common provisions of the Resolution, the limits on maximum issuance amounts, or the aggregation or accumulation timelines will render the offering irregular unless it falls within a safe harbor under the Private Offering Regime outlined in the CNV Rules.

If the public offering requirements are breached, the trustee will also be subject to the consequences outlined in article 83 of Law 24441 and the in the CNV Rules. Any other non-compliance will subject the trustee to disciplinary sanctions under the Capital Markets Law and the CNV Rules.

1. Public offering with automatic authorization due to its low impact

 

Maximum issuance amount

 

The total nominal amount of trust securities issued at the time of calculation must not exceed 1,000,000 Acquisition Value Units (UVA) or its equivalent in ARS or foreign currency.

 

Notification

 

Under this regime, before the start date of the dissemination period, the trustee must:

(a) upload the structured data required for this regime,
(b) publish the notification form for public offerings with automatic authorization due to its low impact on the AIF
(c) in the case of securities issued under the Guidelines for Thematic Securities Issuance in Argentina, include an external review certifying the thematic label of the security.

This notification will not be subject to the CNV’s control or oversight.

 

Prospectuses, approvals, reporting regime, and Title XV obligations of CNV rules

 

The trustee issuing under this regime will be exempt from the reporting obligations established in the CNV Rules for such issuances. Only the reporting requirements outlined in this section will apply. The trustee will not be required to prepare, submit, or publish on the CNV website any prospectuses, prospectus supplements, or similar documents (if they exist) for approval. Should any such documents be prepared, they will not be subject to the CNV’s approval or review but must be published at the start of the dissemination period on the information systems of authorized markets where the trust securities are listed and/or traded.

2. Public offering with automatic authorization due to its medium impact

 

Maximum issuance amount

 

The total nominal amount of trust securities issued at the time of calculation for the issuance of a new class or series must not exceed 7,000,000 UVAs, or its equivalent in ARS or foreign currency.

 

Prospectus

 

The trustee must prepare a prospectus with the minimum content the CNV requires for this regime. The prospectus will not be subject to the CNV’s approval or review, but it must be published at the start of the dissemination period through the AIF and on the information systems of authorized markets where the trust securities are listed and/or negotiated.

Notification

 

Under this regime, no later than the start date of the dissemination period, the trustee must:

1. upload the structured data required for this regime to the AIF,
    
2. publish the prospectus on the AIF,
    
3. in the case of securities issued under the Guidelines for Thematic Securities Issuance in Argentina, include an external review certifying the thematic label of the security.

 

Reporting Regime

The trustee must present the following financial statements annually:

a) Balance Sheet.
b) Statement of changes in equity.
c) Income Statement.
d) Cash flow Statement.

The trustee must publish, control, and review reports quarterly through the AIF.

 

Relevant matters

 

The trustee must report relevant matters exclusively under the following circumstances:

1. Initiation of negotiations to formalize an out-of-court settlement agreement; request for the opening of preventive bankruptcy proceedings; rejection, withdrawal, ratification, compliance with, and annulment of the agreement; request for group bankruptcy proceedings; ratification of out-of-court settlement agreements; request for bankruptcy by the entity or third parties; declaration of bankruptcy or its rejection; specifying the reasons or conversion into bankruptcy proceedings; mode of conclusion: payment, settlement, closure, requests for extension of bankruptcy, and resulting liabilities.
    
2. Events of any nature and unforeseen circumstances that hinder or may seriously hinder the development of any of the trustees.
    
3. Events of any nature and unforeseen circumstances that may seriously affect the assets comprising the trust’s estate.