Argentine Securities and Exchange Commission Amends Definition of Qualified Investors

On September 6, 2018, the the Argentine Securities and Exchange Commission (the “CNV” after its acronym in Spanish) published Resolution No. 761 (“Resolution 761”), modifying the definition of Qualified Investor.  Resolution 761 is the result of the public consultation process initiated by Resolution No. 734, published on May 23, 2018 (please see "CNV Proposes New Definition of Qualified Investor").

Originally, the definition of Qualified Investor was used to define investors who could purchase certain securities issued by Small and Medium-sized Enterprises. However, the CNV has been expanding the use of the definition of Qualified Investor. For instance, there are certain suitability procedures that brokers do not need to follow with Qualified Investors. In addition, certain provisions of the Productive Financing Law are applicable to Qualified Investors. For instance, the Productive Financing Law authorizes the CNV to waive certain regulatory requirement for mutual funds exclusively offered to Qualified Investors and to issue private placement regulations, which typically have references to Qualified Investors.

According the new definition, the following persons will be considered as “Qualified Investors”:

1. The Argentine Government, the Provinces and Municipalities, autarchic agencies, state owned companies and state enterprises;
2. International organizations and public law persons;
3. Public trust funds;
4. The Argentine Social Security Administration ( the “ANSES” after its acronym in Spanish) and The Sustainability Guaranty Fund (the “FGS” after its acronym in Spanish);
5. Pension Funds (Cajas Previsionales);
6. Banks and Public or Private Financial Entities;
7. Mutual Investment Funds;
8. Financial Trusts with public offering;
9. Insurance Companies;
10. Mutual Guarantee Companies (Sociedades de Garantía Recíproca);
11. Legal entities registered before the CNV as Agents, when acting on their own behalf;
12. Individuals who are registered as experts (Registro de Idoneos) with the CNV;
13. Individuals or legal entities, other than those listed in the preceding paragraphs, that at the time of making the investment have investments in securities and/or deposits in financial institutions for an amount equal to 350,000 acquisitive value units  (  “UVA” after their acronym in Spanish); and
14. Legal entities established abroad and individuals with real domicile abroad.

The agent acting in the purchase transaction on behalf of the qualified investor is responsible for the fulfilment of such requirements. Regarding individuals domiciled in Argentina, the investor has to prove that they have investments in securities and/or deposits in financial institutions for an amount equal to 350,000 UVA by means of a sworn statement. Such sworn statement must be updated at least annually or at the first opportunity when the client intends to operate after such term.