Outline of the New Separate Intermediate Regime to Govern Public Offerings of Shares or Notes

On August 13, 2021, the Argentine Securities and Exchange Commission (“CNV,” after its acronym in Spanish) issued General Resolution No. 899 (the “Resolution”) approving a new separate intermediate regime for the public offering of shares and/or notes (the “Regime”).

The Resolution was preceded by Resolution No. 867, by means of which the preliminary General Resolution was submitted to public consultation.

The CNV handed down the Resolution with the purpose of making it easier to access the capital market for issuers of new shares and/or notes that are similar to Small and Medium-sized Companies (“PYME,” after its acronym in Spanish) and/or family businesses, which because of their administrative or staff structure or economic conditions, find it difficult to comply with the regulatory requirements of the general regime applicable to large issuers; but which, at the same time, need to access the capital market to gain financing from the largest possible number of investors (the “Issuers”).

The Resolution mainly sets forth the following regulations:

• the total income of entities wishing to access the Regime is restricted by applicable productive sector;
• the burdens imposed on the Issuers are reduced, with a oneyear grace period to submit financial statements drawn in accordance with International Financial Reporting Standards (“IFRS”);
• Issuers must sufficiently disclose, in their prospectuses and prospectus supplements, the Regime’s particular characteristics for investors’ knowledge;
• exemption from the limitation on trading with qualified investors provided in the CNV PYME regime; and
• Issuers are subject to revalidate compliance with established requirements to remain in the Regime after two fiscal periods have elapsed since the granting of the respective authorization.

Among the main regulations implemented for the issuers of shares are the following:

• the constitution of the Audit Committee will be optional for Issuers of shares that qualify as “CNV PYME”; and
• the functions within the powers of the Committee must be assumed by the Issuer’s board of statutory supervisors, which must be a collegiate body with an odd number of members.

Among the main regulations established for issuers of notes are the following:

• limitation of the amount of indebtedness, setting a maximum issuance cap, which is established on the basis of the economic and financial capacity of the Issuer, resulting from the last annual financial statement;
• the issuance of notes may be made in legal tender, in other currencies and denominated in Units of Purchasing Value (“UVA”);
• the Issuers included in this section must have a Supervisory Committee or Supervisory Board. Limited liability companies or any entity other than a corporation admitted to this Regime for the sole purpose of issuing negotiable obligations must have —at least— a statutory receiver (locally known as síndico) and an alternate statutory receiver; and
• issues under this Regime —whether on an individual basis or under a global program— must be previously authorized by the CNV.

Finally, the Resolution exempts from the payment of oversight and supervision fees those Issuers who, in addition to complying with the requirements of the Regime, qualify as CNV PYMEs.