13 Nov 24 The CNV Regulates the Public Offering of Open-Ended Mutual Funds Targeted at Qualified Investors

By Agustín L. Cerolini, Valentina Circolone, and Tomás Mingrone.

By means of General Resolution No. 1,030 (hereinafter, the “Resolution”), the Argentine Exchange Commission (hereinafter, the “CNV” for its acronym in Spanish language) repeals Section II of Chapter VIII, Title II of the CNV Regulations and replaces it with a new regime for investment funds constituted abroad. The Resolution further regulates the special regime applicable to open-ended mutual funds targeted at qualified investors (hereinafter, the “Mutual Funds”).

Firstly, the Resolution implements a new regime for Mutual Funds constituted abroad, establishing, among other provisions, that any form of public offering, including the underlying assets of Argentine Depository Receipts (hereinafter, “CEDEARs” for its acronym in Spanish language) or any other representative security of investment funds, such as Exchange-Traded Funds (hereinafter, “ETFs”) and/or securities issued by entities incorporated and/or registered abroad that seek to raise funds or securities domestically for portfolio investment, must be conducted exclusively through Mutual Funds.

Consequently, modifications to the CEDEARs regulations are introduced. In this regard, the Resolution establishes that a public offering of CEDEARs representing ETFs which passively tracks widely disseminated indexes related to equity (understood as representative of shares), virtual assets, and/or commodities is permitted, provided these indexes meet a minimum liquidity level equal to or higher than the MERVAL index.

Additionally, the Resolution creates a new special regime for open-ended Mutual Funds targeted at qualified investors, specifying differentiated guidelines based on the currency in which they are denominated.

Finally, for Mutual Funds created under this regime whose currency is not the country’s legal tender and which contemplate the acquisition of a single ETF passively tracking indexes meeting the same conditions as those allowed for the issuance of CEDEARs, the Resolution stipulates that the local fund units may also be subscribed by investors who do not qualify as “qualified investors”. However, these investors must be clearly informed of the legal restrictions and associated risks and must unequivocally confirm their intention to acquire such fund units.