CNV Flexes Deferred Payment Checks and Promissory Notes Regime

On August 19, 2021, the Argentine Securities and Exchange Commission (the “CNV,” after its acronym in Spanish) issued Resolution No. 902/2021 (the “Resolution”) to promote the growth of Small and Medium-Sized Enterprises (“PyMEs,” after its acronym in Spanish) by amending current regulations for the negotiation of deferred payment checks and promissory notes.

This new Resolution is preceded by Resolution No. 888/2021, through which the preliminary draft of the Resolution under analysis was submitted for consideration to the interested sectors and to the general public within the framework of the “Participative Elaboration of Rules” procedure.

The Resolution enables CNV-registered markets to regulate the negotiation of checks whose drawers do not fulfil all the requirements established for the risk assessment. To that effect, purchasers of the instruments in question must be previously informed of the situation and be qualified investors. These instruments must be traded in a special and duly differentiated segment so as to avoid confusion among investors.

In addition, the minimum issuance amount applicable to promissory notes is reduced to five thousand Argentine pesos (ARS 5,000) and the minimum maturity for secondary trading is reduced to fifteen (15) days, which will make it possible to use these instruments as surety in microcredit transactions. Also, for the purpose of secondary trading of these instruments, their issuance in favor of a third party and their endorsement are allowed, provided it is stated in the endorsement that they are delivered “For trading in CNV-registered markets.”

Lastly, in the case of promissory notes issued in foreign currency, the Markets are authorized to regulate the exchange rate to be used for the calculation of the amount to be paid in legal tender at expiration.