Financial Statements of Holding Companies’ that Control Financial Institutions and Insurance Companies

By means of General Resolution No. 595/2011 (“Resolution 595/2011”), the Argentine Securities Commission (Comisión Nacional de Valores or “CNV”) entitled issuers which investment in financial institutions or in insurance companies is their main asset, to file their financial statements following the regulations issued by the Argentine Central Bank (Banco Central de la República Argentina or “BCRA”) or the Argentine Superintendence of Insurance (Superintendencia de Seguros de la Nación or “SSN”), respectively, provided that the relevant issuer complies with the following conditions:

1. Its corporate purpose should be to carry out financial and investment activities exclusively;
2. The investment in financial institutions or insurance companies should be its main asset;
3. At least 70% of the issuer’s income shall derive from its participation in a financial institution or in an insurance company; and
4. The issuer shall control the relevant financial institution or insurance company.

In addition, Resolution 595/2011 dictates that the audit and limited review reports to be issued shall include an express statement regarding the issuer’s effective compliance with the foregoing conditions.

Previous regulations

Through General Resolution No. 562/2009, the CNV had determined that as from January 1, 2012, issuers had to prepare and file their financial statements following the International Financial Reporting Standards (“IFRS”).

Then, General Resolution No. 576/2010 of the CNV (“Resolution 576/2010”) enabled financial institutions and insurance companies to file their financial statements pursuant to the regulations of the BCRA and of the SSN, respectively. These regulations, however, brought uncertainty with respect to the accounting principles to be applied by holding companies controlling financial institutions and insurance companies, since such regulations did not specify whether these entities would use IFRS, or the BCRA or SSN rules.

Resolution 595/2011 finally settled the issue by extending the application of the provisions set forth in Resolution 576/2010 to holding companies that control financial institutions and insurance companies.