CNV Proposes to Continue its Reforms to the Mutual Funds Placement Regime

General Resolution No. 748 of the Argentine Securities and Exchange Commission (the “CNV” after its acronym in Spanish), dated June 22, 2018,  updated the legal regime applicable to the placement abroad of Open-end Funds (see Open-End Mutual Investment Funds: Extension of Shares’ Distribution and Placement Channels). Now, the CNV by General Resolution No. 768 (the “Resolution”) calls for comments on certain proposed amendments to the legal regime applicable to the placement of Open-end Funds abroad. The deadline for comments from the general public expires on December 10, 2018. Below is a description of the amendments proposed by the CNV.

In the first place, the Resolution proposes to include in the Rules[1] an exception for the allocation of Open-end mutual funds’ units through brokers and/or entities abroad, according to which the underwriting of said units will be deemed completed when the corresponding custodian receives an irrevocable underwriting order, in which case the necessary funds for the underwriting must be made available within 72 hours after the order has been received. This procedure differs from the general rule, under which the underwriting is deemed completed on the day that the funds are effectively made available. The Resolution also states that, in all cases, principles such as equal treatment between investors and transparency must be complied with.

Similarly, the date of reception of the irrevocable underwriting order will be used for the determination of the amount of units underwritten by investors abroad. On the other hand, the general rule is that the amount of units that each investor underwrites will be determined by dividing the funds invested by the price of each unit on the date of the effective underwriting; that is, on the date the funds are effectively made available by the investor.

Finally, the CNV proposes that when placements take place abroad, the units be issued and registered against reception of the irrevocable underwriting order by the Custodian, while, for the rest of the cases, the general rule states that the units are issued and registered only against payment of the full underwriting price. The CNV must determine a procedure applicable to cases in which the Custodian receives an irrevocable underwriting order, but the corresponding funds (or at least part of them) are not made available within 72 hours of said reception.