Argentine Securities Commission Amends Legal Framework Applicable to Crowdfunding Platforms

On November 23, 2022, the Argentine Securities Commission (“CNV”, after its acronym in Spanish) issued General Resolution No. 942, updating certain regulatory aspects applicable to Crowdfunding Platforms (the "PFC", after its acronym in Spanish).

The Resolution arises from the draft resolution proposed in General Resolution No. 922 on February 24, considering some modifications, in accordance with the Participatory Policy Development Procedure (see our comments here).

The following are the main changes it introduced:

- The PFC must have a minimum integrated net worth (net of any investment in crowdfunding projects) set at 65,350 Units of Acquisitive Value ("UVA", after its acronym in Spanish) adjustable by the Reference Stabilization Coefficient ("CER", after its acronym in Spanish), instead of the previous minimum net worth of ARS 250,000.

- Regarding management, custody, and administration of funds transferred for each project, the PFCs must hire the services of either a financial trustee registered before the CNV, or a Payment Service Provider duly registered before the Argentine Central Bank.

- The PFC and their managers may subscribe up to 10% of each crowdfunding project. If the PFC and/or their managers participate in any project, that information must be disclosed to prospective investors, including the amount invested in such project.

- If the project raises funds for at least 80% of the original subscription amount, the entrepreneur may choose to continue the project without the previous consent of the project’s participants, provided that such condition was informed to the investor prior to the subscription period. If the entrepreneur decides to continue with this alternative, a new business plan must be submitted, adjusted to the final subscription amount. 

- The maximum issuance amount per project is established to be 1,500,000 UVAs, cumulative of all instruments issued over 12 months, instead of the previous maximum issuance amount of ARS 20,000,000.

- The maximum investment amount was established at 10% per crowdfunding project, or 150,000 UVAs, instead of the previous threshold set at 5% or ARS 20,000. These amounts are different in the case of qualified investors. Qualified investors may subscribe up to 20% of a crowdfunding project and they are not subject to the threshold determined in UVAs.

- Finally, as a diversification requirement, each project must have a minimum of 5 investors.