Crowdfunding: New Amendment Proposal

On February 24, 2022, the Argentine Securities Commission ("CNV", after its acronym in Spanish) issued General Resolution No. 922 by means of which it submitted for public consultation a draft resolution (the "Draft Resolution") to amend the regime for crowdfunding platforms ("PFC", after its acronym in Spanish).

It should be mentioned that on December 29, 2017, CNV had previously issued General Resolution No. 717-E/2017, establishing the Crowdfunding Systems regulation.

Among the amendments proposed by CNV through the Draft Resolution, the following are highlighted:

- Those entities registered as Broker-Dealer Agents, Trading Agents and Regional Representative Entities may act as PFCs, which must gather and submit only the required documentation that was not previously submitted before the CNV.

- The possibility that crowdfunding may be carried out through the issuance of equity securities, including shares, financial trust participation certificates or convertible loans.

- The exclusion from the crowdfunding category of: i) fundraising for charitable purposes; ii) donations; and iii) direct sales of goods and/or services.

- The increase in the amount of the minimum integrated net worth and net of investments in Crowdfunding Projects, which would become 65,350 Units of Acquisitive Value ("UVA") adjustable by the Reference Stabilization Coefficient ("CER").

- The determination of the functions of the PFC, including (i) the selection and publication of the crowdfunding projects; (ii) the establishment and operation of communication channels to facilitate the contracting of the Crowdfunding System and advertising of the crowdfunding projects (the PFC may not use other communication or advertising channels that have not been previously informed to the CNV); iii) the development of communication and direct consultation channels for investors; iv) the presentation of the information of each crowdfunding project in accordance with the provisions of the regulations issued by the CNV; and v) the preparation and availability of pro forma contracts for the participation of investors in the crowdfunding projects.

- The obligation of the PFC to maintain the historical publication of the financed projects, indicating their status or termination.

- The obligation of the PFC to foresee mechanisms to verify the adequate use of the funds for the investments indicated in the projects' prospectus.

- The prohibition for the PFC and/or its responsible to be a trustee of crowdfunding projects that use a trust as a vehicle for the investment, and the possibility of using as a vehicle a Payment Service Provider regulated and authorized by the Argentine Central Bank, provided that it is not a related or controlling company of PFCs.

- The prohibition for PFCs to participate in Crowdfunding Projects for amounts greater than 20% of the funds required by each project and/or to have direct or indirect control of the company or trust whose project requires financing. In case of participating in a Project, PFCs must clarify to prospect investors the amount of participation in such Project.

- The increase of the maximum amount of cumulative issuance among all the instruments issued over 12 months, which is set at 1,500,000 UVA.

- The increase of the percentages of the crowdfunding projects in which the following may participate: i) non-qualified investors, ii) qualified investors and iii) mutual funds and financial trusts subject to the regime Collective Investment Products for Entrepreneurial Capital and Entrepreneurial Capital Entities, setting such limits at 10% (or 30,000 UVA restated by CER, if this amount is lower), 20% and 25% of the subscription amount of each Crowdfunding Project, respectively.