Transparency regime - New requirements from the Securities Commission regarding environmental regulations

Within the Agreement of Inter-institutional Cooperation –celebrated between the Argentine Securities Commission (“Comisión Nacional de Valores” or “CNV”) and the Secretary of Environment and Sustainable Development to achieve mutual collaboration in the fulfillment of their duties- the CNV enacted on August 6, 2009, General Resolution No 559 (the “Resolution”).

The Resolution establishes that companies participating in the public offer regime with a corporate purpose including activities that may entail a risk to the environment must inform their shareholders, investors and the general public about the compliance of environmental laws in force.

Said law incorporates article 21 (under the Title XXX-11 “Information regarding Environmental Law”) to Chapter XXX –General Dispositions– of the CNV regulations.

The article stipulates that companies aforementioned must inform according to the instructions eventually established by the CNV: 

(i) The compliance of environmental audits; programs of adjustment and their respective schedule; the purchase of an environmental insurance set in article 22 of Law No 25,675 according to the requirements established by the enforcement agency, and the company’ measures to prevent environmental damage as relevant facts according to articles 2 and 3 of Chapter XXI;

(ii) In the prospectus or offering circulars in Key Information about the Issuer detail the information of paragraph (i) and the authorizations extended by the enforcement agency of the corresponding jurisdiction.

Finally, the Resolution re-lists the following points of Chapter XXX of the CNV Regulation.

The Resolution intends to bring transparency to companies participating in public offer whose activities may entail a risk to the environment.

Notwithstanding the above, it must also be considered that:

(i) The Resolution itself states that the duty to inform must be compelled “according to the instructions eventually established by the CNV”. It is possible to construe that the requirement is not binding, since there is still information that must be established to outline the extent of said duty.

(ii) The purchase of an environmental insurance contained in article 22 of the General Law on the Environment is included among the information required. The requirement of an environmental insurance is challenged by the authorities who intend to demand the insurance, the insurance market and the companies, since the available products are guaranties in favor of the Federal Government which do not comply with the requirement of the National Law on the Environment.