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 for employees. 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. In this regard, the Resolution specifies the circumstances under which a securities offering to employees will not be considered a public offering (“Private Offering for Employees”). This scenario constitutes a safe harbor, which provides 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 the Private Offering for Employees must inform the investor in the sales documentation or a written notice that the offering is a Private Offering for Employees 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 for Employees
The Resolution establishes that a private offering of securities to employees to constitute a safe harbor will be considered as such when it meets all of the following conditions:
- It is made by (i) a company that is the employee’s employer and (ii) by any other company of the employer’s group, which may be a company incorporated in Argentina or abroad.
- The following instruments are offered:
- Any security issued by a resident company that is the employer of the Eligible Person or of which the Eligible Person is an officer or member of the administrative body or by any other company in the employer’s group.
- Securities representing equity issued by entities other than the employer company or the employer’s group, including:
- Stock options on securities representing equity;
- Participation certificates or equity interests, as applicable, of financial trusts, mutual funds constituted outside the Argentine Republic, special purpose vehicles, and unique purpose entities, provided that the securities representing equity and cash deposits represent at least 90% of the value of the underlying assets; and
- Synthetic securities or contractual rights (such as phantom stock) replicating any securities representing equity or the instruments mentioned in this item.
- The offering is conducted exclusively through the following means:
- Written or oral communications from the offeror to the Eligible Person, including meetings with eligible persons or
- Internal communication means to which persons other than eligible persons do not have access, such as the employer’s or employer group’s intranet, circulars to eligible persons, internal newsletters, and other usual communication means between the employer and eligible persons.
It should be noted that the CNV did not limit the total price of the securities acquired by investors under this modality, nor did it establish restrictions on the number of eligible persons to whom the offering can be directed as long as the requirements above are met. 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.
