Impact of Decree N° 596/19 on Mutual Funds. Reaction of the Argentine Securities and Exchange Commission: Regulation 806/19

The Argentine Securities and Exchange Commission (the “CNV” after its acronym in Spanish)  had to react to the impact that Decree N° 596/19 has had on the mutual fund industry. By Regulation 806/19 (“Regulation 806”), the CNV allowed those mutual funds which have in their portfolios government debt securities affected by Decree 596 (i.e., Letes, Lecaps, Lelinks and  Lecer) to decide to: (i) segregate between those groups of assets which are affected and those which are not affected by Decree 596, and among those persons who qualify or not as individuals who held quotas of the fund on July 31 and on August 28, 2019, (ii) make proportional payments to the quotaholders with those liquid assets, (iii)  make payments in kind, also in proportional manner, with the assets affected by Decree 596.

Even when Regulation 806 refers to “liquid” and “non-liquid” assets, the market consensus is leaning towards considering that the “non-liquid” category includes at least Letes, Lecaps, Lelinks and Lecers, mentioned in the whereas of Regulation 806.

The implementation of these measures is left to the decision of the governing bodies of the mutual funds, which may adopt different criteria or implement regulation 806 with a different scope.