CNV regulates “safe harbors” for private offerings and extraterritorial offerings

On September 18, 2024, the Argentine National Securities Commission (“CNV”, by its Spanish acronym), through General Resolution CNV 1016/2024 (“Resolution”), established the parameters for safe harbors regarding the private offering of securities (“Private Offering”) and the offering of securities without sufficient contact with the Argentine Republic (“Extraterritorial Offering”). In this regard, through this Resolution, the CNV concluded the process initiated under the “Elaboración Participativa de Normas” as provided by General Resolution CNV 1009.

Both scenarios constitute what is referred to as a safe harbor, which provides legal certainty meaning that, if they strictly comply with the established requirements, they will be exempt from the oversight and administrative sanctions of the CNV.

Private Offering of securities

The Resolution establishes that an offering of securities will be considered as a Private Offering when it meets all of the following conditions:

5. The offering is made by:
   • The issuer of the securities, regardless of whether they are Argentine residents or not;
   • Any other person authorized for such purposes by the issuer;
   • Any acquirer of the securities in the secondary market, not acting on behalf of or in the interest of the issuer.
6. The offered security:
   • Is not authorized for public offering under the terms of current regulations; and
   • Current regulations do not require to be authorized for public offerings.
7. The offering is conducted exclusively through the following means of communication:
   • In-person or virtual promotional meetings;
   • Sending and delivering to a CNV-authorized agent documentation related to specific securities, or any other informative document that contains all relevant details of the offering, either in-person or remotely, and by any electronic, digital, or physical means;
   • Sending documentation related to specific securities at the request of one or more potential investors;
   • Personalized invitations to engage in transactions with securities delivered either in-person or remotely, by any electronic, digital, or physical means; or
   • Invitations to engage in transactions with securities advertised through social media, websites, applications, or similar platforms, provided that access is restricted.
8. The following limitations on the number of investors are met:
   • Maximum number of potential investors reached with the Private Offering:
     • Unlimited in the case of financial entities, non-financial credit providers, authorized agents, mutual guarantee companies, or insurance companies.
     • 35 potential qualified investors and 15 potential non-qualified investors.
   • Maximum number of acquirers:
     • Up to 35 investors, of which no more than 10 may be non-qualified investors. Notwithstanding the above, for the purposes of these numbers, all investors who are already owners of the securities in question are excluded.
9. The authorized agents participating in Private Offerings must refrain from making a public offering of such securities.

Additionally, the Resolution does not limit the volume to be distributed, so prices and amounts may be freely determined by the offerors.

Regarding the maximum number of potential investors and acquiring investors, the Resolution establishes that in the case of (i) units of open-end mutual funds and products managed by mutual fund management companies that are not mutual funds; (ii) securities that can be subscribed to at any time, issued by portfolio managers, financial assets, or collective investment products; the maximum quantities provided for will be calculated for each collective investment product offered, rather than per issuance, taking into account potential investors and acquiring investors during the 365 consecutive days immediately preceding the date on which the potential investor is contacted.

Furthermore, the Resolution establishes that acquirers of securities in a Private Offering may not transfer (resell) such securities to qualified investors within the following 3 months, or to non-qualified investors within the following 6 months, both periods starting from the end of the subscription period of such securities or from the date of their acquisition. Notwithstanding the above, this limitation will not apply when the transfer is made outside the Argentine Republic.

Finally, the Resolution establishes that the persons making the offer must inform the investor of:

1. The existence of the resale restriction mentioned in the previous paragraph;
2. Whether the issuer is or is not under the public offering regime; and
3. That it is a Private Offering.

Extraterritorial Offering of securities

The Resolution establishes that an offering of securities will be considered an Extraterritorial Offering when it meets all of the following conditions:

1. It is made by one or more non-resident persons;
2. The securities offered are issued by non-resident issuers;
3. The invitation is not made through the following means:
   • Web advertising targeted at residents of the Argentine Republic;
   • Advertising or dissemination in national media, either printed or digital, or in international media when circulating in the Argentine Republic, where the advertising is clearly directed at residents; or
   • Promotional meetings with residents in the Argentine Republic.
4. No invitations are made through automated and mass procedures targeted at residents; and
5. No commercial agreements with third parties, subsidiaries, or affiliates exist that would allow them to receive funds or assets from residents in the Argentine Republic for the purpose of conducting securities transactions.

Additionally, the Resolution clarifies that points 1 and 2 above do not in any way limit the possibility for residents to offer securities abroad, as they will be subject to the regime applicable in the countries with jurisdiction over such offerings.   Furthermore, the Resolution establishes that, notwithstanding other actions that may be considered as not creating sufficient contact with the Argentine jurisdiction, the following acts do not generate sufficient contact:

1. The organization, participation, or sponsorship of educational events or those related to economic or financial current affairs, whether local or global, provided that no offers of specific securities are made;
2. Institutional advertising, as long as such advertising does not include physical addresses or any form of contact within the Argentine Republic, nor web addresses that provide access to securities trading, unless access is restricted by a password (or similar mechanisms);
3. Allowing the download of materials related to securities or services from a website, application, or platform that is not included in point 3 above;
4. Sending account summaries and/or statements, transaction confirmations, or other documentation related to the operation of their account to clients by an agent registered with a foreign regulatory body, a foreign financial entity, or asset managers, provided that such communication does not violate any applicable regulations of the Argentine Central Bank or any other competent authority;
5. Promotional meetings held outside the Argentine Republic between non-residents and residents, for the purpose of providing information about issued securities, or financial products and services offered by non-residents of the Argentine Republic; or
6. Promotional meetings with authorized agents within the Argentine Republic for the purpose of enabling and facilitating the latter in obtaining information and resources to provide capital markets advisory services to their clients. No invitations may be made to authorized agents at such meetings, notwithstanding that such invitations may fall within the scope of the Private Offering.

Finally, the Resolution establishes that persons making the offering must inform investors that it is an Extraterritorial Offering.