Argentina: New Securities Law

Last Updated: 11 December 2012
Article by Juan M. Diehl Moreno, Clara Vela and Maria Manuela Lava

On November 29, 2012, the Argentine Congress passed the new "Securities Law", which modifies the public offer regime set forth by Law No.17, 811, as amended.

Although the Securities Law was intended to make a comprehensive modification of the public offer regime established by Law No. 17,811, as amended; in general terms it does not introduce substantial changes, except for the applicable regime to Markets, Stock Exchange and Agents and the powers conferred to the Argentine Securities Commission (Comisión Nacional de Valores) ("CNV").

Likewise, the Securities Law reflects most of the reforms introduced in the Transparency Decree No. 677/2001 (the "Transparency Decree") which, once the law is sanctioned, will obtain law status.

This report briefly analyzes the main amendments introduced by the Securities Law, with no reference to the modifications already introduced by the Transparency Decree.

1. Powers of the CNV

One of the most significant amendments introduced by the Securities Law refers to the powers of the CNV. The incorporation of Section 20, which was not foreseen in the original draft submitted by the National Executive and was not discussed in the meetings of the Commissions of Finance and Budget, raises concern in the market, especially among listed companies, since it entitles the CNV to (i) appoint supervisors with powers of veto of the resolutions adopted by the board of directors and (ii) separate the board of directors for a period of 180 days when, as determined by the CNV, the interests of the minority shareholders and/or security holders are infringed.

In addition, the Securities Law eliminates the markets' self-regulation and empowers the CNV to authorize, supervise, monitor, act as disciplinary authority and regulate participation in the capital markets.

Moreover, the CNV has the power to suspend the activities of the agents and markets, without prior notice, when it observes any breach to the requirements, conditions and obligations established by the CNV.

2. Markets and Agents

One of the most important modifications established by the Securities Law refers to the authorization of markets and agents. The Securities Law states that the agents and markets shall comply with the requirements determined by the CNV to apply for an authorization to operate and their respective registration.

In addition, it introduces different categories of agents, in accordance with the activities each of them complies with, and establishes that the agents and the individual and legal entities that advise the investors shall be registered before the CNV and shall prove their capacity and credentials.

Finally, the Securities Law states that the markets shall be constituted as corporations admitted by the public offer regime.

The amendments that we have briefly summarized raise concern among the current agents and markets that will have to require authorization from the CNV to continue their activities. There is uncertainty about the requirements that the CNV will request to grant such authorization, about how many licenses each agent may request, taking into account the new classification of agents established by the Securities Law, and about the performance of the agents during the transition period. Also, one of the articles that is receiving severe criticism is the CNV's powers to establish the requirements to authorize markets and agents.

3. Stock Market Confidentiality

The Agents are exempted from the obligation to keep the information confidential on the transactions they make on behalf of third parties when this information is requested by the CNV, the Central Bank, the Financial Information Unit and the Superintendence of Insurance. The Agents are also exempted from the obligation to maintain secrecy when requested by the Federal Tax Authority.

Likewise, the CNV is exempted from keeping confidential the information obtained from the exercise of its duties when such information is required by the Central Bank, the Federal Tax Authority, the Financial Information Unit and the Superintendence of Insurance.

These provisions create mistrust among the listed companies and could result in a disincentive to enter into the public offering regime.

4. Rating Agencies

The Securities Law establishes that Public Universities may act as rating agencies. Although the original project included Private Universities, these were not included in the bill approved by the Congress.

5. Mandatory Tender Offer

The mandatory tender offer provided in the Securities Law, which is similar to the one established in the Transparency Decree, will apply to all listed companies, including those that had opted out of its application under the previous regime. This implies a modification to the existing regulations whereby the companies was able to opt out of the tender offer regime, as most of the companies did.

As from the effective date of the Securities Law, all the companies that trade their shares in Argentina will be subject to a mandatory tender offer regime in the event of change of control or acquisition of a significant shareholding, as defined by the CNV.

6. Other Corporate Issues

Supervisory Committee: As a novelty, the Securities Law provides that companies that make public offering of shares and that have set up an Audit Committee are not required to have a Supervisory Commission. The decision to eliminate the Supervisory Committee shall be taken at an Extraordinary Shareholders' Meeting, which should have the presence of the shareholders who represent at least 75% of the shares entitled to vote. The resolutions in all cases will be made by an affirmative vote of 75% of the shares entitled to vote, without applying the plurality of votes.

In the cases where the Supervisory Committee exists, the Securities Law requires that all of its members must be independent.

Shareholders' Agreements: As currently indicated by the Transparency Decree, any individual or legal entity that executes shareholders' agreements with the purpose of exercising voting rights in a company whose shares are admitted to the public offering or in the controlling company, in any form whatsoever, is required to inform the CNV. The novelty is that the Securities Law provides that, in case of infringement of the obligation to inform, covenants or agreements will be of no value.

7. Jurisdiction

Section 143 of the Securities Law establishes that the Court of Appeals in Federal Administrative Litigation, in the jurisdiction of the City of Buenos Aires, shall have jurisdiction to hear on the following matters: (i) review of sanctions imposed by the CNV, including statements of irregularity for administrative purposes, and the suspension or revocation of registrations or authorizations; and (ii) review of the rejections of applications and authorizations.

For the provinces, the jurisdiction shall be the Federal Courts of Appeals.

The amendments described above are not intended to cover all the amendments established in the Securities Law, but only some of the most relevant aspects.

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 Mondaq.com.

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

Authors
 
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”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

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