What’s Changed Under the New CNV Regulation on Collective Investment Products for the Development of Public Infrastructure?

For more on the prior resolution, i.e. Resolution No. 852, see “New CNV Regulation on Collective Investment Products for Development of Public Infrastructure Released for Comments.”

Based on the opinions and proposals received in the prior consultation process, the Argentine Securities and Exchange Commission (the “CNV” after its acronym in Spanish) amended its proposal and issued a new regulation, Regulation No. 865. And what’s changed is detailed below:

 

1. The purpose of the new regulation states that closed mutual funds (“CMF”) and financial trusts (“FT”) must be authorized to make public offerings of their fiduciary securities.

 

2.The regulation establishes who can issue collective investment products for the development of public infrastructure. The underlying asset will consist of assets that must directly or indirectly relate to public infrastructure financing, issued by the Sponsor, the contractor, or a third party, in which cases payment is guaranteed by the public infrastructure project’s flow or by a specific flow.

 

3. The requirement from the prior regulation that the public work had to be duly tendered has been removed; and now the public work must be awarded.

 

4. The definition of “public infrastructure” has been broadened to include not only construction, but also improvements, maintenance, supply of equipment and exploitation of assets earmarked for public use. The definition of “public work” has been moved and the concept is now defined under “public infrastructure work.”

 

5. For Collective Investment Products in which the source of payment of the securities issued is the development of a work, the information requirements imposed on “Contractors” that must be included in a special section of the prospectus or prospectus supplement has been laxed.  

 

6. The requirement to have a project auditor has been removed. Nevertheless, when the source of payment of the securities issued is the development of a work, there is still an obligation to develop quarterly reports on the progress of the work, which must be published in the CNV’s website. In addition, any deviation from the information presented in the prospectus or prospectus supplement must be informed as a relevant fact.

 

7. The publication period of initial offerings of securities issued under the Collective Investment Products regime may be cut down to 1 business day.

 

8. Regarding CMFs, the following new provisions have been established: 

 

• They will be able to invest in shares of open mutual funds that are administered by another Management Company, whose purpose relates directly or indirectly to financing, investing in and/or developing Public Infrastructure at the national, subnational or municipal levels.
• In the event the investment of trust assets is foreseen in assets belonging to trust bodies and/or economic groups, the specific assets, acquisition price, and/or appraisal method, as well as any mechanisms aimed at mitigating associated risks must be detailed in the documents that contain the offer.
• The abovementioned circumstances, as well as asset ownership and how it relates to the entity that intervenes in the trust must be prominently reported in the corresponding prospectus.