On July 12, 2024, through General Resolution CNV 1009/2024 (“Resolution”), the Argentine National Securities Commission (“CNV” by its Spanish acronym) established the initial parameters to regulate the private offering of securities. In this regard, through applying the “Participatory Norms Development” (Elaboración Participativa de Normas) procedure, the CNV set a deadline of August 6th for the public to express their opinions and proposals regarding the Resolution. The Resolution stipulates two scenarios under which an offering of securities will not be considered a public offering:
- Private offerings, either because they are directed to a limited circle of investors or employees (“Private Offering”); and
- Extraterritorial offerings are exempt from the CNV’s control, as they are conducted outside the territory of the Argentine Republic and do not have sufficient points of contact with it (“Extraterritorial Offering”).
Both scenarios constitute what are known as safe harbors, which provide legal certainty to the administered parties that, if they strictly comply with the established requirements, they will be exempt from the CNV’s control and administrative sanctions. Also, the Resolution establishes that those who make Private or Extraterritorial Offerings must inform the investor in the sales documentation or in a written notice that the offering is a Private or Extraterritorial Offering within the Argentine Republic, specifying that the issuance will not be subject to the informational, general, and periodic reporting and supervision regime established by the CNV.
Private Offering
The Resolution establishes that an offering of securities will be considered private when it meets the following requirements:
- Invitations are directed to a maximum of 35 people per issuance, whether qualified or non-qualified. However, transactions with securities may be conducted with a maximum of 20 investors per issuance, of which no more than 10 may be non-qualified.
- It does not involve:
- Share units of mutual funds established in the Argentine Republic or
- Securities representing equity in companies that have already publicly offered their equity-representative securities.
- They are expressly conducted through the following means:
- Promotional meetings, either in person or virtual, with up to 10 potential qualified or non-qualified investors at a time, regardless of whether one or more registered agents participate.
- Sending and delivering to a registered agent documentation related to specific securities (orders are not included among this documentation), such as offering memorandums or similar documents and fact sheets, either in person or remotely, by any electronic, digital, or physical means, whether they are registered or not in the Argentine Republic.
- Sending documentation related to specific securities (orders are not included in this documentation) at the request of one or more qualified investors. The request must be for a specific security or an asset class with characteristics specified by the qualified investor. Generic expressions of interest, such as subscribing to a mailing list, are insufficient, whether registered or not in the Argentine Republic.
Finally, the Resolution establishes that investors who acquire securities in a private offering may not transfer those securities or rights over them during the six months following the end of the subscription period of those securities. However, this restriction is not applicable when the transfer is made abroad.
Extraterritorial Offering
The Resolution establishes that an offering of securities will be considered extraterritorial when it meets the following requirements:
- The securities are offered by one or more persons residing abroad, and no resident person participates.
- The invitation is not made through one or more of the following means:
- Advertising or dissemination in national or international media directed at residents.
- Publications in printed media, including newspapers, magazines, and journals, when printed in the Argentine Republic.
- Web advertising directed at residents.
- Advertising on social networks or digital platforms, as long as it is directed to Argentine residents.
- Holding in-person meetings where invitations to conduct transactions with securities are made.
- Promotional meetings with residents.
Furthermore, for the Extraterritorial Offering, (i) any security may be offered as long as the issuer is non-resident in Argentina, and (ii) there is no limitation on the number of potential investors or the total amount of securities acquired by the investors.
