The CNV Hears Opinions and Proposals for a Separate Regime to Govern Public Offerings of Shares and/or Negotiable Bonds

On November 16, 2020, the Argentine Securities and Exchange Commission (the “CNV”  after its acronym in Spanish) published Resolution No. 867, which opened the procedure for public participation in the drafting of regulations, inviting opinions and/or proposals for the creation of a new public offerings regime, to be called the “Separate Intermediate Regime,” specifically applicable to productive and industrial activities (the “Proposal”).

The CNV has set a term of 30 business days to submit opinions and/or proposals through its website.

The Proposal focuses on the incorporation of Section XI, Chapter V, Title II of the CNV Regulations, establishing a “Separate Intermediate Regime for Public Offerings of Shares” and a “Separate Intermediate Regime for Public Offerings of Notes.”

The Separate Intermediate Regime will be available for entities that request admission to the public offerings regime for shares and/or notes (“First Time Issuers”) and for issuers that are already authorized to make public offerings of shares in the general regime.

 

1. First Time Issuers

First time Issuers can request admission to the Separate Intermediate Regime for public offerings if they meet the following conditions:

 

1. Their total income representing the simple average of the last 2 individual financial statements at the time of calculation expressed in pesos and measured in the closing currency of the last individual annual financial statement does exceed the values listed below, equivalent in Unit of Purchasing Value (“UVA” after its acronym in Spanish) adjusted by the Reference Stabilization Ratio (“CER” after its acronym in Spanish), converted to the value of the day of the calculation published by the Argentine Central Bank (the “BCRA” after its acronym in Spanish):

 

• Agricultural: 17.600.000
• Mining and Industry: 66.000.000
• Commerce: 67.600.000
• Services: 18.300.00
• Construction: 25.000.000

 

2. Their total assets, according to their last individual annual financial statement, does exceed the amount of Argentine pesos equivalent to 50.000.000 UVA adjusted by CER.

 

3. Their net profit does not exceed 15%.

 

4. They fit one of the following categories under the “Classifier of Economic Activities” (the “CLAE” after its acronym in Spanish)

 

• Agricultural: A
• Mining and Industry: B; C; J only codes: 592, 601, 602, 620 y 631; R except 920
• Commerce: G
• Services (except K – financial intermediation): D; E; H, rest of I, J, rest of k, L; M; N; P; Q; y S
• Construction: F

 

2. Issuers

Issuers who are already authorized to make public offerings of shares and are willing to switch to the Separate Intermediate Regime of public offerings of shares must:

 

1. Be issuers authorized to make public offerings under the general regime of public offerings and qualify as Small and Medium-Sized Companies (“PYME” after its acronym in Spanish) pursuant to CNV Regulations.

 

2. Meet the requirements set forth in points (iii) and (iv) of part 1.

 

3. Once the change of regime is in place, the issuer must also meet the requirements set forth in point (i) of part 1.

 

The following cannot request authorization to operate under this regime: entities whose activities qualify as “financial intermediation” under the CLAE classifier; companies with government funding; any other public entity; foreign companies including their branches or permanent offices; entities that make public offerings of shares in foreign countries (in any form); agents registered by the CNV and authorized markets.

The project also stipulates the procedures and conditions required for authorization of issuance under this regime, as well as the specific regulations that will apply to the authorized entities, and the specific provisions for every type of issuance.

At the same time, article 11, Chapter I, Title XVII of the CNV Regulations on exemptions from the payment of inspection and oversight fees and of authorization duties is also amended by incorporating a provision that issuers authorized under the new Separate Intermediate Regime who also qualify as Small and Medium-Sized Companies pursuant to CNV regulations (“PYME CNV” after its acronym in Spanish) are exempt from paying inspection and oversight fees but not from authorization duties.