Consultation Procedure to Create a Safe Harbor for Securities Offers Without Sufficient Contact with Argentina

On June 12, 2024, the Argentine Securities Commission (CNV) issued General Resolution 1009, submitting to public consultation a new regulation for Securities Offers Without Sufficient Contact with the Argentine Republic, under the framework established in the Capital Markets Law.

 

Through the Resolution, the CNV seeks to provide legal certainty to those offers of securities that may be considered as private placements (because they are addressed to either a limited number of investors or to employees), regulating specific cases, and considering the means and mechanisms of dissemination, offering, and distribution, and the number and type of investors to whom the offer is addressed. It also provides a safe harbor for offshore offers carried out outside Argentina and that do not have sufficient points of contact with this commission.

 

The CNV also states that, internationally, it is a common practice to establish specific regulations that provide the parties involved with legal certainty. If they strictly comply with the requirements in them, they will be exempt from the comptroller of the competent authority. Such regulations are known as “safe harbor.”

 

According to the Resolution, for an offer to be considered a security offer without sufficient contact with Argentina, to the effects of the safe harbor, the security offer must be made by one or more persons that residents of a foreign country. Thus, no Argentine resident may participate in the offer.

There is no established limitation in terms of how many securities may be offered, as long as the issuer is not an Argentine resident. There are also no limits on the number of potential investors or on the total value of the securities acquired by the investors, whether qualified or not.

Likewise, regarding the dissemination of said securities, it is explicitly regulated that, in a non-excluding manner, the following actions do not generate sufficient contact with the Argentine jurisdiction:

1. The organization, participation, or sponsorship of educational events or events related to economic or financial news, local or global, provided that no information on securities in particular is offered.
2. Institutional advertising in any media considered unauthorized, provided that such advertising does not include websites that allow access to the negotiation of securities nor physical addresses nor any form of contact within Argentina.
3. Allowing the downloading of material on securities or services related to such securities from a website or platform that is not directed to residents.
4. Sending summaries and/or account statements, confirmation of transactions, or other documents related to the operation of your account to customers by a registered agent of a foreign regulatory agency or a foreign financial institution.
5. Promotional meetings held in or outside of Argentina between non-residents and agents registered exclusively before the CNV, to provide information on securities issued, or financial products and services provided, by persons who reside outside of Argentina.

The investor must be advised, in the sale documentation or in a written notice, that this is an offering without sufficient contact with Argentina, that it was not subject to the CNV’s audit, and that it is not subject to the information and control regime provided by the CNV’s rules.

Transparency: the issuer and all the participants in the primary placement must comply at all times with the regulations regarding transparency in article 117 of Law 26831 and those in the CNV’s regulations.

 Confidentiality: it will apply to the issuers and all the participants in the respective offer. Investors can expressly waive it.

 

The private offers that meet these dispositions will not be considered public offers according to the Capital Markets Law, and will be considered private offers. Thus, these will not be considered irregular or unauthorized public offers, nor will they be subject to disciplinary sanctions corresponding to the irregular or unauthorized public offering of securities, nor will they be automatically subject to disciplinary sanctions corresponding to irregular public offering of securities. Infractions will apply solely in the case of securities as defined and regulated by Law26831 and the CNV’s regulations. This must be assessed for each specific case. If so, only offerors and, in solidarity, registered agents who participated in the emission, will be responsible for any irregular public offer.

The Resolution, likewise, submits the following sub-regimens to public consultation:

1. Private Placement of Securities (for more information, see to the following article),
2.       Securities Offers Directed to Employees (for more information, see the following article).