Securities and Exchange Commission (Argentina)

Comisión Nacional de Valores (CNV)

Country

Location

Regulated area

Argentina

Buenos Aires

Banking

Useful pages on the regulator website

Key individuals

  • Adrián Cosentino, Chair CNV
  • Mónica Erpen, Vice-President CNV
  • Cristina G Tonini, Issuers Management

Regulatory oversight

The CNV is the primary regulator of the Argentine securities markets. The mission of the CNV is to protect investors and promote, oversee and regulate the securities markets.

The CNV oversees the key participants in the securities industry and the capital markets in Argentina, including issuers of securities (i.e., public companies), securities brokers and dealers, clearinghouses, securities exchanges, mutual funds and other key capital market participants. In Argentina, only capital market participants registered with the CNV may engage in the public offering of securities. To publicly issue securities, such securities offerings need the prior approval of the CNV. The term securities is defined in a broad manner and even includes certain types of instruments that may not qualify as securities in other jurisdictions, such as options and derivative contracts.

The CNV is also concerned with the flow of information, preventing the misappropriation of non-public information and guaranteeing fair trading in the securities market. The use of privileged information for the benefit of the persons who have access to such information or for the benefit of third parties is forbidden.

The securities markets in Argentina are primarily governed by Capital Markets Law No. 26,831 (as amended). The Capital Markets Law, which entered into force in early 2013, introduced a comprehensive modification of the then-existing public offering regime governed by Public Offering Law No. 17,811. The Capital Markets Law mainly modified the regulatory framework governing securities exchanges, securities brokers and dealers and other capital market participants by eliminating self-regulation and empowering the CNV with authorisation, registration and supervision powers over such capital market participants. The Capital Markets Law was further amended in 2018 by Productive Financing Law No. 27,440, which introduced significant reforms to the Capital Markets Law aimed at modernising the regulatory framework.

Other relevant laws in connection with the securities markets include:

  • Securities Collective Deposit Law No. 20,643;
  • Securities and Exchange Commission Law No. 22,169;
  • Negotiable Securities Law No. 23,576;
  • Mutual Funds Law No. 24,083;
  • Trust Law No. 24,441, as amended by the Civil and Commercial Code; and
  • General Companies Law No. 19,550, as amended.

The Capital Markets Law grants broad powers to the CNV with respect to the Argentine securities markets and their participants. Although the 2018 amendment reduced the scope of the powers of the CNV, the CNV’s powers with respect to the securities markets and their participants continue to be broad.

Given that the CNV is the government authority that implements and enforces the Capital Markets Law, the CNV has been granted rulemaking powers to implement the Capital Markets Law in specific circumstances, and enforcement powers that include the power to bring administrative proceedings and impose sanctions on breaching market participants (discussed further below). As part of its rulemaking process, the CNV issues regulations in the form of mandatory resolutions, the main one being CNV General Resolution No. 622/2013.

Overall, the powers of the CNV include, inter alia:

  • issuing mandatory regulations in furtherance of the Capital Markets Law;
  • authorising the public offering of securities,
  • granting to, and suspending and revoking licences of, securities brokers and dealers, clearinghouses, securities exchanges and other key securities market participants;
  • overseeing compliance with the Capital Market Law and CNV mandatory resolutions, especially by securities brokers and dealers, clearinghouses, securities exchanges and other key securities market participants;
  • supervising corporate affairs related to public companies, securities brokers and dealers, clearinghouses, securities exchanges and other key securities market participants; and
  • conducting inspections, bringing administrative proceedings and imposing sanctions as provided in the Capital Markets Law.

Reporting and disclosure obligations

In Argentina, issuers (ie, public companies) need to be authorised to make public offerings of securities, and securities offerings need the prior approval of the CNV. Requests for such authorisations must be filed, along with documents and information, with the CNV so that they can be reviewed and approved prior to the CNV granting such authorisations. Such information and documentation includes certain basic and general identification information about the issuer, information on shareholders, corporate governance information, and current and historical financial information. Moreover, a prospectus following the guidelines included in CNV regulations needs to be filed in connection with any new public offering of securities.

In addition, public companies must observe certain ongoing reporting requirements. The CNV is the government authority in charge of supervising compliance with such reporting obligations and reviewing documents filed by public companies in furtherance of such obligations. Such requirements include the following:

  • Financial reporting. Periodic financial reporting includes the filing of unaudited quarterly financial statements and audited annual financial statements. In each case, financial statements need to be accompanied by a brief summary by the board of directors regarding the company’s activities and perspectives (similar to a brief management discussion and analysis), a board of directors’ resolution approving such financial statements, a statutory auditors’ report and an external auditor’s report.
  • Appointment of officers. Public companies must provide the CNV, within 10 business days from the appointment of members of the board of directors and supervisory committee, and of managers, certain information on the appointed persons and the composition of said bodies after the relevant appointment.
  • Material event reporting. Public companies must inform the CNV of any fact or situation that, due to its importance, may substantially affect the placement of securities, the course of their negotiation or the development of the activities of the issuer. CNV regulations include a non-exhaustive list of important facts and situations that include, among other things:
    • changes in the corporate purpose of the issuer;
    • significant changes in its activities or the initiation of new ones;
    • the resignation or removal of members of the board of directors and supervisory committee;
    • losses exceeding 15% of the company’s net worth;
    • the disposal of fixed assets that represent more than 15% of its assets;
    • facts of any nature that may seriously hinder the development of the issuer’s activities;
    • lawsuits of any nature that may be of significant economic importance for the development of the issuer’s activities; and
    • the authorisation, suspension or cancellation of the negotiation of its securities in Argentina or abroad.
  • Shareholding reporting: the members of the board of directors and supervisory committee, managers and controlling shareholders of a public company must inform the CNV about their direct and indirect shareholdings in the company (including holdings of any convertible securities and options to buy or sell either shares or convertible securities) as well as any changes in their reported holdings.
  • Information required by foreign markets: public companies that list their securities in local and foreign markets must immediately send to the CNV a copy of all the financial documentation and relevant information that they send to these foreign markets.

Securities brokers and dealers, clearinghouses, securities exchanges and other securities market participants must also observe certain reporting requirements. Reporting requirements vary from one case to another, but in most cases include similar financial reporting and material event reporting as those outlined above for public companies. In addition, they must comply with certain more specific requirements related to the type of activity conducted by each participant. For example, securities brokers and dealers are also required to inform the CNV of the execution or termination of agreements with other local or foreign participants, the valuation of the aggregate portfolio that is being managed by the broker or dealer, the number of clients and the channels that are being used for taking orders from the clients.

Information and reports that issuers and other securities market participants need to file in compliance with the above ongoing reporting requirements are filed through the Autopista de la Información Financiera (AIF), or information highway, hosted on the CNV website, and are available for access to all securities market participants, investors and the public in general.

Sanctions and recent behaviour

The CNV has broad and comprehensive inspection, investigation and enforcement powers, including the power to investigate, bring administrative actions, and impose monetary and non-monetary sanctions on any person involved in offering him or herself or services in the public offering of securities without the proper authorisation of the CNV. In other words, the CNV has enforcement powers under the Capital Markets Law and CNV regulations, and may apply administrative sanctions as thereby provided in cases of violations of the securities laws and regulations (notwithstanding any criminal penalties that may apply).  

Prior to applying any administrative sanctions, the CNV must bring administrative proceedings (ie, enforcement actions) against the person or entity that has allegedly violated the Capital Markets Law or CNV regulations, or both. The CNV may decide to bring administrative proceedings based on investigations conducted at the CNV’s sole initiative or based on information or events reported by third parties (such as investors themselves).

Monetary sanctions include fines of up to 100 million pesos, which can be increased to up to five times the benefit obtained or the damage caused, if higher.

Non-monetary sanctions include:

  • written warnings;
  • disqualification for up to five years to act as a director, administrator, member of an audit or supervisory committee, accountant or external auditor, or manager of any entity subject to the supervision of the CNV (ie, any entities participating in the public offering of securities);
  • suspension for up to two years of the authorisation to make a public offering; and
  • a ban on making or participating in the public offering of securities.

Typical infractions include insider trading, non-authorised public offerings of securities and failing to disclose important events of the issuer.

The CNV may also refer cases for further prosecution before the relevant criminal courts if the infringements would also qualify as criminal offences. For example, the Argentine Criminal Code provides for possible criminal sanctions for a person who ‘collects savings from the public in the capital markets or provides services of intermediation for the acquisition of securities’ without having the proper licence. However, in practice, criminal sanctions and convictions for these types of charges are extremely rare, and even in the case of conviction, sanctions have generally been mild, while imprisonment has rarely been applied.

Recent and upcoming developments

Argentine presidential elections were held in October 2019, and were won by the opposing political party. The current administration, in office since December 2019, is of the same political party that used to be in office for more than 10 years (2003–2015) prior to the administration of Mauricio Macri (2015–2019).

Unlike in previous years, the CNV has been easy to approach recently to get guidance and counselling from CNV officials on issuers and participants (or prospective issuers and participants), interpretation of the laws and regulations, and compliance with reporting and disclosure requirements. As part of its rulemaking process, the CNV has introduced an initial stage where a regulation proposal is issued for the public’s input prior to its adoption. Given the recent political party change in Argentina’s administration, it is uncertain whether the CNV will continue with this open position in the coming years.

Moreover, during the past term of the previous administration of the party currently in office, inspections and supervising actions by the CNV had been intensified. For example, when the original text of the Capital Markets Law was enacted in 2013, the Capital Markets Law included (as per the specific request of the administration in office at the time) certain inspection and supervising powers in favour of the CNV: the power to appoint supervisors who could veto resolutions adopted by a board of directors, and the power to separate the board of directors for a period of 180 days when, at the CNV’s discretion, the interests of minority shareholders or security holders, or both, were infringed. Although those specific powers were eliminated by the 2018 amendment, it is uncertain whether the current administration (the same political party that had requested the introduction of such powers in the Capital Markets Law) would seek to reinstate those powers or go back to prior practices for inspections and supervising actions. 

Challenges

The Congress recently enacted Law No. 27,544, which approves the reorganisation of Argentina’s public debt. The process of this renegotiation will certainly impact the securities markets as well as the foreign exchange market. Depending on the approach to the renegotiation, Argentina may be at risk of falling into a new default on its public debt. Thus, during this period it will be difficult for new companies to be able to launch an initial public offering, and very few companies will be able to issue bonds to raise money in the international markets.

Interacting with the regulator

Interaction with the regulator is not very formal in Argentina. Many officers may be willing to receive parties with a reasonable interest in a matter following a telephone call to their secretaries or an email. Some officers may request a formal letter asking for an appointment and explaining the purpose of the meeting, but this is not the general practice. In the case of any actions by the CNV that may require that the rights of any person be defended (eg, investigations, decisions relating to the commencement or resolution of administrative proceedings or the enactment of administrative regulations), legal counsel should always be contacted in advance since there are strict expiration terms to file any relevant defences or adequate claims against such actions.

Notes for foreign investors

Foreign investors investing in Argentine public companies

There are no restrictions under the current securities market laws and regulations limiting the ability of foreign investors from investing in local securities. However, there are certain general limitations and restrictions that apply in the case of acquisitions of shares by a foreign investor in an Argentine company.

From a corporate perspective, any foreign company that becomes a shareholder in an Argentine company must register as a foreign shareholder with the Public Registry of Commerce of the relevant jurisdiction.

Moreover, there are certain industry-specific restrictions that prevent foreign investors from becoming shareholders in an Argentine company. Such industries include telecommunications, media, aviation, shipping, and certain matters related to national security and defence.

Public offerings in Argentina by foreign issuers

If a foreign entity intends to publicly offer securities in Argentina, such entity will need to be registered with the CNV, the public offering of such securities will need to be authorised by the CNV, and the offering and sale of such securities will need to be conducted by a registered broker. There are mainly two ways in which a foreign entity may publicly offer its securities in Argentina: by registering the foreign entity with the CNV as a foreign issuer, or offering the securities issued by the foreign entity through a certificado de depósito argentino (CEDEAR), which is the Argentine equivalent to American depositary receipt (ADR). The regulations of the CNV have additional specific rules applicable to the registration of foreign entities that are funds.

Although the CNV has regulations that would allow a foreign issuer to publicly offer securities in Argentina as explained above, the current regulations are so stringent that there has seldom been any security publicly offered by a foreign issuer in Argentina in the past few years.

Offshore public offerings

The Securities Law does not have extraterritorial effects; therefore, public offers that purely take place offshore are not regulated. However, offshore activities directed to Argentine residents could be subject to the supervision of the CNV if those activities qualify as a public offering of securities. Moreover, some recent regulations from 2018 allow certain market participants (such as global investment advisers, securities brokers and dealers, and asset managers) to provide advice regarding securities and receive instructions from their clients to carry out purchases and sales of financial products abroad.

Other regulators it works closely with

  • Unidad de Información Financiera (UIF): Financial Information Unit (Argentina); and
  • Banco Central de la República Argentina (BCRA): Central Bank of the Argentine Republic.

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