Rotation and Maximum Term for Risk Rating Agents are Amended

On June 3, 2021, the National Securities and Exchange Commission (“CNV,” after its acronym in Spanish) issued General Resolution No. 893 (the “Resolution”) repealing the provisions that established a maximum term and rotation regime for hiring Risk Rating Agents —that is, companies registered with the CNV to provide rating services for securities and other types of risks (the “ACRs”).

When there were qualification agreements, the regime, which was applicable until the issuance of the Resolution, provided:

• A maximum 8year term for each agreement. ACRs were precluded from reissuing a risk rating report of the contracting company, of the securities it issued or other risks, for a minimum period of 4 years.
   
• A rotation regime that prevented the ACRs from issuing reports on company risk ratings, securities or other risks, or any controlling, controlled or related company after the expiration of the 8year term of the agreement by a minimum term of 4 years.
   

According to the CNV, the effective implementation of the rotation requirements was difficult on account of the characteristics of the national capital market, internationally adopted measures, implicit costs, and operational and economic inconveniences necessarily linked to this requirement. Thus, there was a need to repeal Articles 22 and 48 of Chapter I of Title IX, Articles 21 and 47 of Chapter II of Title IX and Article 1 of Chapter VII of Title XVIII of the CNV Regulations, which established the requirements detailed above.

The Resolution was published in the Argentine Official Gazette on June 7, 2021, entering into force the day after that date.