On September 18, 2018, General Resolution 763-E/2018 (the "Resolution"), issued by the Comisión Nacional de Valores ("CNV"), was published in the Official Gazette, which regulates the creation and performance of Closed-end Mutual Funds (the "Closed-end Funds"), according to the amendments introduced by the Productive Financing Law No. 27,440 to Law No. 24,083.
The Resolution regulates following matters:
(a) Investment Regime
Closed-end Funds may only invest in assets located, established, created, issued and/or based in Argentina, except for, inter alia, Closed-end Funds aimed at investing in technological innovation projects with the possibility of regional or global expansion.
(b) Minimum Holders Requirement
Closed-end Funds must have at least five (5) holders, and no holder may hold, directly and/or indirectly, more than fifty one percent (51%) of the units (cuotapartes). Failure to meet these requirements must be solved within a six (6)-month period, which may be extended for another six (6) months. Otherwise, the Closed-end Fund must be liquidated.
(c) Capitalization of Profits
The number of units may be increased as a result of the capitalization of the Closed-end Fund's profits, and units shall be proportionally allocated to the holders.
(d) Deferred Payment of Units
Closed-end Fund's management regulations (reglamento de gestión) may authorize the payment of units to be made in instalments, except for units payable in kind.
(e) Amendment of the Management Regulation
Meetings of holders may authorize amendments to the management regulations and extend the Closed-end Fund's term. Holders not approving the amendment or extension may request the early redemption of their units.
(f) Acquisition of Units by the Closed-end Fund
The management regulation may allow the purchase of units by the Closed-end Fund, which must be disposed within a year, subject to a preemptive right by the holders. The units kept in portfolio have no voting or profit rights.
If you wish to read the text of this Resolution, please click in the following link (available only in Spanish): Resolución General Nº 763.
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.