Argentina: Decree 677/2001 On Transparency And Better Practices In The Capital Markets ®

Last Updated: 6 June 2001
Article by Mariano P. González

The Executive Power of Argentina passed on May 22, 2001, a decree related to the Transparency and Better Practices in the Capital Markets (the "Decree") which introduces certain changes to the public offering regime in Argentina.

The main purpose of the Decree is to protect investors, to reduce the cost of capital by strengthening the legal and institutional framework of the capital markets and to grant more flexibility to the corporate structures, particularly to the sociedad anónima ("corporation"), in order to update the corporate structures to the modern mechanisms used in some of the more developed corporate systems.

The main measures introduced by the Decree are as follow:

  1. New concept of "negotiable value". The new concept of negotiable value will include the concept of securities (promissory notes, debt and equity securities and obligations) together with new instruments such as "investment contracts" which can be issued in series and traded as such.
  2. This new concept, which is much closer to the term "security" as defined by the Securities Act of 1933 and the Exchange Act of 1934 of the U.S., will enable the Argentine issuers to identify new instruments within the financial markets.

  3. Transparency in the Public Offering Regime. This constitutes the main issue of the Decree and will enable the National Securities Commission (CNV) to enforce the market control mechanisms more efficiently. The Decree:
    1. defines inter alia, the concepts of "control", "privileged information" and "concerted actions";
    2. supports the concept of "freedom in the creation of securities";
    3. reinforce the disclosure information of the issuers;
    4. regulates the standard of secrecy of any person with access to corporate information;
    5. regulates the behavior of broker/dealers with respect to the allocation of securities and the obligations of the issuers;
    6. refers to the insufficient disclosure or misleading information of issuers and classifies the different conduct against the transparency of the markets.
  1. Reinforcement of Loyalty Duties. The Decree includes the concept of "social interest" and "common interest of all the shareholders" of public companies.
  2. Auditing Committee. The Decree creates the institution of Auditing Committee in order to guarantee the authenticity of the information disclosed. The majority of its members must be "independent", meaning that such members must not have any labor relationship with the company or the controlling shareholders.
  3. Tender Offers. The Decree amends the legislation regarding tender offers. In such regard, the Decree chooses for a mechanism of compulsory public offers, to be done previously to the take over. It establishes that 35% will be a significant participation, over which this new compulsory mechanism will apply. However, the Decree provides that the companies (whether currently in the public offering regime or those that decide to go into it) may choose not to adhere to this tender offer system created by the Decree.

As a consequence of the aforementioned, the tender offer will have to be performed by the acquirer previously to the take over. The intention of this rule is to allow the shareholders to participate in taking the decision of the transaction, and also, to let the minority shareholders liquidate their participation in the company by means of a fair procedure, should they intend to do so. Another important characteristic that this previous tender offer has, is that it is based in an intentional will, that is the will to acquire the control, and thus, excludes the unexpected take over (for example, the case in which one shareholder goes beyond the significant participation but does not acquire the control or the case of the acquisition of the control as a consequence of a corporate reorganization).

In addition, the Decree establishes a system of partial tender offers. The flexibility of the rule will contemplate that when certain margin is passed through, the tender offer must be done over all the capital stock of the company tendered.

  1. Residual Participations. The Decree establishes a system in which the minority shareholders can have the right to buy or sell at a fair price, after a tender offer takes place, in the case of a group of related shareholders hold an "almost total control" of the company. The estimated holding which is considered to be an "almost totally controlled" company has been set in 95% of the capital stock and voting rights.
  1. Delisting. The Decree guarantees for the minority shareholders which want to sell their holdings in case of delisting of the company, a "fair price" in according with market standards, which could be never less than the average price of the stock on the six months previous to the date in which the decision of delisting the stock is taken.
  2. Mandatory Arbitration. The Decree imposes to all self-regulated markets (stock exchanges and OTC markets) to create a permanent arbitration court. All actions derived from the Companies Law (Law 19,550) in respect of public companies shall be subject to the jurisdiction of such arbitration court.
  3. Sanctions. The Decree introduces more and new sanctions to the persons and institutions within the public offering regime, by amending the Public Offer Law 17,811 and Mutual Funds Law 24,083.
  4. Amendment to Public Offer Law 17,811("POL"). By amending the POL, the Decree introduces several changes as follow:
    1. increases the term for calling a shareholders' meeting;
    2. establishes the proxy public request;
    3. enables the CNV to regulate exchange offers;
    4. allows the shareholders and board meetings to be held through video conferences and other electronic devices;
    5. possibility, with certain limits, that a corporation purchases its own shares and to hold treasury stocks;
    6. regulates the transactions of a corporations with "related parties" and on an "arm's length" basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions