Bill For The Reform Of The Capital Markets Law: A New Opportunity For International Private Banking

Author:Mr Carlos Alfaro and Pedro Mazer

On November 16, 2016, Argentine government has sent to Congress a bill for the reform of Law No. 26,831 as amended (the "Capital Markets Law"). The reform is aimed at developing the weak Argentine capital markets, taking advantage of the boost derived from the ongoing tax-amnesty program, and opening-up to international private banking.

Among the main relevant topics of the reform, we can outline:

The powers of the Argentine Securities and Exchange Commission (Comisión Nacional de Valores or "CNV") to intervene listed companies shall be significantly reduced from the current very broad scope that has been generally regarded as inconvenient for the market. As from the reform, intervention shall only be allowed in cases of violation of minority shareholders' rights. The severe restrictions for the sale of stock held by the Argentine State through the State Official Pension Fund ("ANSES") are suppressed. Tax treatment of mutual investment funds in general is modified to provide broad tax exemptions concerning VAT and Income Tax. Tax treatment of closed-end mutual investment funds is modified to incentivize investment of money derived from the ongoing tax-amnesty program. The Income Tax shall not be levied on the funds themselves but on their investors, thus permitting set-off deductions. The "economic and financial crimes law", which had modified the Penal Code to contemplate several conducts of asset managers and market analysts as crimes, will be repealed (abrogated). There is a new definition of market agents, including, but not limited to, asset managers (they shall be those acting on a usual basis in rendering financial advice or asset management services comprising assets authorized for public offering by the CNV). Scope and extent of the activities shall have to be further regulated by the CNV, thus opening the market once again to international private banking. Sales and other dispositions of stock of...

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