The Argentine Securities Commission Established a New Simplified and Guaranteed Regime for Negotiable Bonds with Social Impact

The Argentine Securities Commission (CNV) issued General Resolution No. 940, which seeks to facilitate the issuance of negotiable bonds with a positive socio-economic impact. The ICMA Social Bond Principles define these bonds as those whose resources will be exclusively used to finance or refinance, in part or in full, new or existing social projects, which must be aimed at addressing or mitigating a particular social problem and achieve positive social results.

The Resolution established a simplified and guaranteed regime for entities intending to finance social projects through the issuance of negotiable bonds, either individually or as part of global programs.

Companies that issue negotiable bonds under the new regime will be exempted from the general Periodic Information Regime, as well as from certain provisions regarding transparency in public offerings. The Resolution also states that the annual financial statements of such companies must be available at the investors’ request, and that they must inform the following relevant facts:

1.  Facts related to insolvency and bankruptcy proceedings.
2. Facts of any nature and unforeseeable events that hinder or may seriously hinder the development of the company’s activities or those of the social project.

To be admitted to the regime, companies must:

1. Be included in Section 1 of the Negotiable Bonds Law No. 23576.
2. Comply with the Guidelines for the Issuance of ESG Securities in Argentina (see our article here) and with the Sustainable Guidelines (see our article here), which are included in CNV Regulations.
3. Clearly state in the negotiable bonds prospectus the social project and the social group targeted by the expected positive socio-economic impact, including a description of the expected social impact.
4. Clearly state the characteristics of the issued negotiable bonds and their potential risks in their prospectus and prospectus supplements, so that investors are fully informed.
5. Obtain a socio-economic impact evaluation issued by a risk-rating agency registered with the CNV, prior to its authorization.
6. Refrain from issuing negotiable bonds under the proposed regime exceeding 10,000,000 Units of Acquisition Value (UVA) or its equivalent in other currencies.
7. Be fully guaranteed by at least one of the guarantee entities authorized by the CNV. These include reciprocal guarantee companies, financial entities, and national or provincial public guarantee funds.

Regarding the supervision of the companies included in the regime, the applicable provisions are those in the CNV SMEs Regime (Régimen PYME CNV). Accordingly, these companies must appoint at least one statutory auditor and an alternate. This requirement is optional for limited liability companies (sociedades de responsabilidad limitada).

Companies qualifying as CNV SMEs will be exempted from paying the CNV control and oversight fee.