New Regulation on Retirement Mutual Funds

On November 28, 2019, the Argentine Securities Commission (the “CNV”, after its acronym in Spanish) issued General Resolution No. 819 (the “Resolution”), by means of which it submitted the new regulations applicable to Retirement Mutual Funds (“Retirement Funds”), introduced by Law No. 27,440 of Productive Financing, for public consultation.

 

The CNV implemented the Resolution submitting this regulation to public consultation with the purpose of boosting demand for securities traded in local capital markets, as well as increasing the strength and liquidity of such markets, on the understanding that Retirement Funds are a fundamental means of raising investment for the development of economies.

 

The Resolution mainly provides the following regulations for Retirement Funds:

 

- the procedure required to constitute and operate Retirement Funds;

 

- the denomination which Retirement Funds must use, which must expressly include the term of “Retirement Mutual Funds”;

 

- that shareholders of the Retirement Funds must be any of the following (i) individuals, (ii) employers which hold such shares for the benefit of their employees, through the creation of a management trust and its registration as a shareholder and (iii) qualified investors (Public Trust Funds, the Federal Social Security Administration, Pension Plan funds, Public and Private Banks and Financial Institutions, Insurance Companies, Reinsurance Companies and Occupational Hazards Insurers and Mutual Guarantee Societies). ;

 

- that Standard Management Regulations (Reglamento de Gestión Tipo) must be applied, highlighting the features of such Retirement Funds, taking into account that the constitution of such funds is made with the objective of achieving the investment of voluntary savings destined to the retirement of its shareholders;

 

- the possibility of establishing an individual retirement framework (through subscriptions of shares by individuals acting on their own behalf) or a collective retirement framework (i.e., by employers and employees subscriptions);

 

- that the fund manager must implement an investment policy on the basis of the features of the special regime contemplated for Retirement Funds;

 

- that a minimum of thirty calendar days be allowed for the payment of the redemption of shares of such Retirement Fund and the possibility of establishing period for such requests and/or a term for notice not exceeding 25 calendar days; and

 

- a minimum holding term of five years for shares of Retirement Funds.

 

Finally, the Resolution also includes provisions concerning the reinvestment of the funds redeemed from one fund into another Retirement Fund.