New Regulation on Collective Investment Products for Real Estate Development released for comments

On June 26, 2020, the Argentine Securities Commission (the “CNV”, after its acronym in Spanish) issued Resolution No. 844 (the “Resolution”), by means of which it submitted the new regulations applicable to Collective Investment Products (trusts and mutual funds) for real estate development, for public consultation.

The CNV implemented the Resolution submitting the new regulation to be applicable to closed mutual funds (the “Mutual Funds”) and to financial trusts (the “Trusts”) for real estate development, which falls within the characteristics of the real estate industry, to public consultation with the purpose of boosting real estate development in every way, providing the tools and assets to allow financing through the capital markets.

The Resolution mainly sets forth the following regulations applicable to both the Mutual Funds and the Trusts:

• that the underlying asset must be constituted with the development, acquisition, investment and/or the income from the real estate assets;

• the acknowledgment of the figure of the Developer as an essential participant in these structures and the creation of a special informative regime for those who carry out that role;

• the appointment of a technical auditor to monitor the progress of the construction; and

• the possibility of reducing to one business day the diffusion phase in the negotiable securities public offering when the offer is directed to qualified investors.

Among the main regulations implemented by the Resolution regarding the Mutual Funds, are the following:

• the procedures of expendability of the quota holders meeting when the Fund Manager has obtained the consent of the relevant majority by a demonstrable means that ensures it;

• the possibility to establish the issuance of joint ownership and income quotas;

• the possibility for those Mutual Funds that have the purpose to develop real estate projects, to issue quotas that give the right to acquire a unit or equal; and

• the incorporation of a simplified procedure for the issuance or placement of quotas in one or more tranches, within the authorized maximum amount.

Finally, among the main regulations found in the Resolution regarding the Trusts for real estate development, are the following:

• the possibility of issuing certificates of participation that give the right to acquire a unit or equal; and

• the possibility of reopening the placement phase of the business trust shares within a term that must not exceed five (5) years as from its constitution or until reaching the amount authorized under the Trust.