Amendment of Certain Provisions of the Public Registry of Commerce of the City of Buenos Aires Regarding the Registration of Trust Agreements

Resolution No. 9/2015, issued by the Public Registry of Commerce of the City of Buenos Aires (“Resolution No. 9/2015” and the “PRC”) on October 28, 2015, introduces changes to recent Resolution No. 7/2015 of the PRC (“Resolution No. 7/2015”) which implemented, inter alia,  the registration of trust agreements.

Since the enactment of Resolution No. 7/2015, another Register of Trust Agreement was implemented in the City of Buenos Aires by Decree No. 300/2015 issued by the Executive Power of the City of Buenos Aires and Resolution No. 566/SECLYT/15.  For further information on this issue, please see article “New regulations issued by the City of Buenos Aires regarding the registration of trust agreements” which is published in this edition.

Resolution No. 9/2015 does not refer to the Register established by the City of Buenos Aires. We understand that the PRC is reaffirming its understanding that it is the competent entity in the City of Buenos Aires to implement the registration of trusts.

Therefore, currently there are two registries in the City of Buenos Aires that govern the registration of trust agreements: the Registry of Trust Agreements implemented by Decree No. 300/15 and the one regulated by the PRC. The conflict as to which is the competent jurisdiction to implement the Public Registry of trust agreements regulated in article 1669 of the new Civil and Commercial Code should eventually be settled by the courts.

Scope of Contracts under the Jurisdiction of the PRC

Resolution No. 7/2015 established two situations where trust agreements come under its jurisdiction. The first one took place when a trustee had real or special domicile in the City of Buenos Aires.  The second one was when the trust agreement underlying assets were shares of corporations under the jurisdiction of the PRC. The Resolution used the conjunction “and” which led to confusion. In addition, it did not regulate trusts of shares of limited liability companies, which led to the belief that these contracts were excluded from the jurisdiction of the PRC.

Resolution No. 9/2015 addresses these concerns. In the first place, it changes the conjunction “and” for “or” when stating the types of trust agreements under its jurisdiction. It is now clear that it refers to two different types of trust agreements. The resolution expressly provides that the jurisdiction of the PRC also includes trusts whose underlying assets are shares of limited liability companies.

Resolution No. 9/2015 also establishes the obligation to register not only trust agreements, contractual amendments, the cease of the trustee, and the extinction of the agreement, but also the replacement of the trustee.

Trust Agreements Excluded from the Jurisdiction of the PRC

Resolution No. 7/2015 seemed to exclude from the jurisdiction of the PRC financial trust agreements in general, although its provisions were not very clear as it had used inconsistent language in different parts of the Resolution.

Resolution No. 9/2015 addresses these doubts and expressly states that financial trusts that are publicly offered are excluded from its jurisdiction. Therefore, financial trusts that are not publicly offered are undoubtedly included within its scope.

Other Issues

Resolution No. 9/2015 also includes new documentation and information to be submitted when fulfilling registration formalities of trust agreements, stating that the following documentation should be filed: (i) a sworn statement about the condition of Politically Exposed Person of the trustee and (ii) a sworn statement as to the final beneficiary stating who is the final beneficiary of the trust agreement. It also states that the final beneficiaries of the settlor, trustee and, if determined, the beneficiary and trustee should be individualized. The annual sworn statement of the compliance of regulations on Anti-Money Laundering and Financing of Terrorism required by the Resolution No. 7/2015 should also be filed.

The PRC also establishes that proceedings filed by trustees who do not submit the sworn statements included in the Section entitled "Prevention of Money Laundering and Financing of Terrorism" of Resolution No. 9/2015 will not be registered nor concluded until such sworn statement is filed, notwithstanding the applicable sanctions for the lack of submission.

Lastly, the PRC did not issue any clarifications regarding the registry of trustees.