Resolution 291/97

CEDEAR Regulations
Certificados de Depósito Argentino

Ministry of Economy
and Public Works
and Services Argentine
Securities Commission
Buenos Aires, July 10th, 1997

HAVING SEEN THESE PROCEEDINGS entitled "CERTIFICADOS DE DEPÓSITO ARGENTINOS in re Draft Resolution," pending under Dossier N. 587/97 and the opinions of the Gerencia de Emisoras and Subgerencia de Assoramiento Legal (‘Issuers" Management Department and Legal Office, respectively), and

CONSIDERING

THAT Section 5 of the Rules of this Commission (as amended 1987 and modified by General Resolution N. 214) established that securities issued by entities not authorized to make public offerings thereof within the Republic of Argentina could be accepted as underlying assets of negotiable depositary receipts.

THAT such form of negotiation has been strongly accepted in other developed markets and is now in process of being implemented in some Latin American countries, such as Brazil and Mexico.

THAT, without prejudice to the existence of the above referenced rule, up to this date no Depositary Receipts Issue Program has been actually created in our markets.

THAT such circumstance would indicate the apparent need to introduce changes to the current regime.

THAT the introduction of new instruments into the local markets seems thus advisable.

THAT the current regulations, embodied in the RULES of the ARGENTINE SECURITIES COMMISSION, New Text 1997, require greater accuracy and flexibility as to create attractive and safe conditions in the development of these negotiations.

THAT the introduction of this regulation was decided in the light of the great development experienced by our market as a means to further attract foreign investors.

THAT in the inception of this new modality the role of the depositary receipts issuers as promoters thereof is deemed of great importance.

THAT a system has been therefore structured that contemplates the implementation of programs without the sponsorship (and, thus, without the cooperation) of issuers of underlying assets.

THAT this has determined the creation of a more flexible regime as concerns reporting requirements in those programs that are not backed by issuers of underlying assets.

THAT, anyhow, the foregoing does not impair the situation of investors willing to invest in those securities as compared to that of investors willing to directly invest in the country of origin of the underlying asset.

THAT these reporting differences should be notified to the investor community.

THAT as a consequence of the foregoing and among other aspects, it is deemed particularly in order to regulate in further detail the conditions and obligations to be satisfied by the issuer of negotiable depositary receipts.

THAT these presents is issued pursuant to the powers vested by Sections 6 and 7 of Law 17.811.

THEREFORE, THE ARGENTINE SECURITIES COMMISSION RESOLVED

 

SECTION 1

The following regulations applicable to the CERTIFICADOS DE DEPÔSITO ARGENTINOS (hereinafter, individually, a "CEDEAR" and, collectively, the "CEDEARs") shall be incorporated to Chapter VI of the RULES of the ARGENTINE SECURITIES COMMISSION, New Text 1997, (the "RULES"), as Sections 87 through 99 thereof.

Section 87

The entities listed in Section 88 may apply for the approval of Argentine Depositary Receipts Issue Programs evidencing the deposit of securities of other entities which are not authorized for purposes of a public offering within the Republic of Argentina.

The CEDEARs will be authorized for purposes of their public offering subject to the provisos hereof and to the rules applicable to the listing thereof to be therefor established by the stock exchanges within their jurisdiction.

Section 88

CEDEARs may be issued by:

  1. permitted custodians of the Republic of Argentina, and
  2. commercial or investment banks and financial institutions licensed to carry on business by the CENTRAL BANK OF THE REPUBLIC OF ARGENTINA.

The issuer of the CEDEARs shall, in all cases, have a networth equal to or higher than THIRTY MILLION PESOS ($30,000,000).

Section 89

The CEDEARs will evidence the deposit of a single kind and class of securities per program, all of which shall be freely available (except for the restrictions exclusively stemming from the program) and shall grant equal rights to the holders thereof.

The securities whose deposit is represented by CEDEARs shall be issued by an issuer:

  1. authorized to make public offerings and to list on any exchange supervised by a governmental regulatory entity with which the ARGENTINE SECURITIES COMMISSION has signed a Memorandum of Understanding providing for their mutual cooperation and information; or
  2. authorized to make public offerings and to list on any of the stocks or securities exchanges of BRAZIL, URUGUAY, PARAGUAY or CHILE; or
  3. whose securities, though not admitted for purposes of their public offering and listing on any of the above referenced stocks or securities exchanges, are accepted as underlying assets through a grounded resolution of this commission.

At the result of their lawful holder, the CEDEARs may be freely exchanged for the securities represented by the CEDEAR to be so exchanged. Upon delivery of the securities the relevant CEDEARs shall be cancelled and (as applicable) destroyed. Delivery of the securities may be either physically certificated or duly registered according to the nature thereof and/or to the characteristics of the deposit.

Pursuant to subsection (g) of Section 95 hereof, on the Program’s expiration date all CEDEARs then outstanding shall be exchanged and, accordingly, cancelled, the pertinent securities being then delivered.

New CEDEARs may be issued against deposit of the equivalent securities, provided the maximum permitted amount under the Program is not exceeded.

Issuers of CEDEARs shall at all times have, as from the issue thereof, as many unencumbered, unrestricted and freely available securities as CEDEARs of those securities are then outstanding (not having been cancelled by reason of the exchange).

The Commission may authorize, on a case by case basis, the execution of agreements contemplating the provisional and temporary existence of CEDEARs unbacked by deposited securities, provided there are sufficient guaranties therefor. In these cases the Commission shall establish the maximum permitted term for the subsistence of this situation and the maximum percentage that the provisionally unbacked CEDEARs may bear the total issue. To such end, the interested party shall ground the petition for any such exception, accompanying the relevant contract for purposes of its revision by the Commission.

Section 90

The securities may be deposited with:

  1. the issuer of the CEDEARs or;
  2. an eligible and permitted Custodian in the returns of Law 20.643, or
  3. the common depositary of securities acting in the country of issue of the securities; or
  4. a bank or custodian acting within the country of issue of the securities having a minimum networth of TWO HUNDRED MILLION PESOS ($200,00,000) or its equivalent in the currency of the country of issue.

In all cases a provision shall be included to the effect that the depositary may not acquire any interest in not use the deposited securities, which shall be immobilized to the same extent of a regular deposit, only for purposes of counterbalancing the CEDEARs.

The depositary of the securities may not be changed without the approval of the absolute majority of the holders of the CEDEARs of the relevant issue, prior notice thereof to the Commission evidencing the approval so obtained. Such approval may be given at a meeting of holders or, else, individually, provided it can be proved beyond any reasonable doubt the approximate simultaneity of the consultation to the holders of the CEDEARs. The meeting shall be governed by the rules established in the relevant CEDEAR issue agreement and, supplementally, by the Rules of Law 15.560 applicable to extraordinary meetings.

The anticipated and general approval of a changed depositary will in no case be permitted. The approval shall be in all cases expressed in respect of a specific proposal and upon identification of the prospective successor depositaries.

Section 91

The CEDEARs will be freely transferable and may be issued in registered non endorseable or book-entry form. Each CEDEAR will evidence one or more securities of the same class, kind, and issuer. In exceptional cases, the ARGENTINE SECURITIES COMMISSION may authorize the issue of CEDEARs evidencing fractions of securities, provided the relevant agreements reasonably guarantee the exercise of the rights stemming therefrom and the redemption contemplated under Section 89 by the participants in each unit security.

The general provisos governing registered or book-entry securities, as the case may be, as current on each occasion, will apply.

The registered CEDEARs shall contain at least:

  1. the name and main domicile of the issuer of the represented securities;
  2. the place of authorization of the issue of the securities represented by the CEDEARs, with the relevant identification of the said authorization by the applicable regulatory authority;
  3. the number of securities represented by each CEDEAR;
  4. the name and main domicile of the issuer of the CEDEAR;
  5. the number of authorization of the issue or program under which the CEDEAR was issued;
  6. the conspicuous legend to the effect that the said instrument does not evidence securities but a certificate of the existence of the deposited securities therein referred to in favor of the issuer of the CEDEAR; and
  7. the place of deposit of the securities so represented.

Records kept in respect of book-entry CEDEARs shall contain the data indicated in subsections (a), (b), (d), (e), and (g), as applicable.

The CEDEARs will grant their holders the benefit to all rights inherent in the securities represented by the said CEDEARs, without prejudice to the exercise thereof through the issuer of the CEDEARs.

Section 92

Either programs sponsored or unsponsored by the issuer of securities represented by the CEDEARs may be issued.

Unsponsored programs may either include or not an agreement concerning the program between the issuer of the CEDEARs and the issuer of the securities represented by the CEDEARs, yet the issuer of the CEDEARs shall comply with the reporting requirements of Section 93.

Sponsored programs shall, in addition, comply with the provisos specified in Section 94 of this Chapter.

Whenever the securities represented by the CEDEARs correspond to an initial public offering, only sponsored programs will be accepted.

The issue of a CEDEAR in respect of the same security will not be permitted if there already exists an authorized and outstanding program of the said security by an issuer other than the initially authorized issuer, with such exception as the Commission may grant under a grounded resolution.

Section 93

As concerns unsponsored programs, the reporting requirements shall be limited to the issuer of the CEDEARs and will exclusively establish:

  1. that the issuer of the CEDEARs shall file with the ARGENTINE SECURITIES COMMISSION and at the same time make available to the investors through the stocks or exchanges where the CEDEARs are traded:
    1. within TEN calendar (10) days from its publication, a copy of any information and documentation filed by the issuer of the securities whose deposit is represented by the CEDEARs vis à vis the stocks or exchanges where same are traded and any information and documentation published by any of same or by the issuer itself, when the information is not included in subsection (iii) of this Section; being required, within like term, to submit all publicly available even though not yet published data and documents theretofore filed with the regulatory authorities, in which case the term will be computed as from the relevant filing with the regulatory authority;
    2. Upon the Issuer of the CEDEARs being informed thereof in its capacity as shareholder (and in no case after TWENTY FOUR (24) hours as from receipt from the Issuer or published in the country where the issue of the represented securities was authorized or where the said securities are traded) any information or documentation relevant to the Issuer of the securities whose deposit is represented by the CEDEARs;
    3. within TEN (10 calendar days as from the filing vis-à-vis the regulatory authorities or exchanges or stocks where the securities are traded, the financial, accounting and/or income statements whether annual, quarterly or interim, as well as any other accounting information about the issuer of the securities represented by the CEDEARs. If the information so filed is not reconciled as required by the current accounting standards of this Commission, such omission shall be conspicuously notified in the Information made available to investors. The notice to be so included shall specify the bases used to prepare the information and, as applicable, shall also indicate that, if applied to those statements the rules of this Commission, certain differences could result in respect of the Information being furnished.
  2. furthermore, that the issuer of CEDEARs is subject, whenever applicable, to the provisos of Chapter XVII of the RULES, both in respect of facts or acts that effect or are connected with the Issuer of the CEDEARS or of facts or acts that effect or are connected with the issuer of the securities represented by the CEDEARs, of which it might have become aware either in its capacity as shareholder or upon their publication by the regulatory authority of the country of origin of the issuer of the securities represented by the CEDEARs or by the stocks or exchanges where same are traded.

    The submission by the issuer of the CEDEARs of the information and/or documentation about the issuer of the securities represented by the CEDEARs, shall qualify as an affidavit to the effect that it is true and accurate information published by or received from the issuer of the securities represented by the CEDEARs and that no other information has been obtained by the Issuer of the CEDEARs in its capacity as shareholder.

Section 94

Under CEDEARs sponsored issue programs, the issuer of the evidenced securities shall apply vis-à-vis the ARGENTINE SECURITIES COMMISSION for their acceptance into the public offerings regime under CEDEARs programs, therefore following the procedure indicated in Section 96 hereof. Once accepted to join this regime, the issuers of securities represented by CEDEARs shall comply with the periodic reporting requirements of Chapter XVII of the RULES. This information should be filed jointly with a certificate issued by an Argentine chartered accountant with any relevant adjustment resulting upon applying thereto the relevant rules of this Commission, of the stock exchange or market where the CEDEARs are traded and the then current Generally Accepted Accounting Principles of the Republic of Argentina. The information shall, in all cases, be filed and published in the Spanish language.

Section 95

In addition to the provisions of Section 93 hereof, the issuer of the CEDEARs shall in all cases within THIRTY (30) days as from the close of each calendar quarter inform the ARGENTINE SECURITIES COMMISSION and the stock or exchange where the CEDEARs are being then traded:

  1. the number of outstanding CEDEARs on the first day of the reported quarter under each program in which the issuer is participating;
  2. the number of securities corresponding to each program which have been exchanged for CEDEARs and withdrawn from the deposit during the reported quarter;
  3. the number of CEDEARs issued against deposit of the new securities under the program during the reported period;
  4. the number of outstanding CEDEARs per each program at the close of the last day of the reported quarter;
  5. the number of securities represented per each CEDEAR under each program that are deposited in the name of the issuer at the close of the last day of the reported quarter and the place of deposit. Whenever applicable, if the place of deposit were changed, the reasons that justified and authorizations granted to make any such change shall be duly informed.

Moreover, the issuer shall file with the ARGENTINE SECURITIES COMMISSION and with the stock exchange or market where the CEDEARs are traded:

  1. within SIXTY (60) days of the close of each fiscal quarter, its interim financial statements accompanied by a limited revision of an Argentine chartered accountant; and
  2. within ONE HUNDRED AND TWENTY (120) days of the close of each fiscal year, its complete financial statements, audited and approved by the relevant shareholders meeting.

The issuer of the CEDEARs will be likewise required to inform without delay upon becoming aware of its occurrence, any fact or likely to affect the issuer, the depositary of the represented securities (if other than the issuer) or the represented securities, as well as any other change to the compensation structure thereof or to that of the depositary.

If and to the extent the issuer and depositary are the same person, any changes to the compensation structure of the issuer or to that of the depositary shall only be effective THIRTY (30) days after being reported.

Section 96

The request for approval of the CEDEARs’ program and the admission thereof into the public offering regime shall be filed by the proposed issuer of the CEDEARs or by it and the issuer of the securities represented under the program.

Sponsored programs shall be filed by both said issuers.

The application shall be accompanied by the following documents and data:

  1. the contracts relevant to the program and of interest for the investors, between the issuer of the CEDEAR and the issuer of the securities represented by the CEDEAR (including the program sponsorship agreement, the CEDEAR underwriting agreement governing the relationship between the issuer of the CEDEARs and the holders thereof and any other agreement relative to the issue of the CEDEARs, as applicable) and between the issuer of the CEDEAR and the depositary of the represented securities, as applicable, that may be then current or that were current during the THREE (3) year period prior to the filing;
  2. the determination of the stock(s) and/or exchange(s) vis-à-vis which an authorization to list the CEDEAR will be applied for;
  3. the evidence of the authorization given for the securities represented by the CEDEARs to be publicly tendered in the country of origin. This submission shall import (no evidence to the contrary being admitted) the affidavit from the issuer of the CEDEARs and, as applicable, from the issuer of the securities represented by the CEDEARs, to the effect that the said authorization is in force and fully effective on the filing date;
  4. a description of the form of the securities (including a facsimile thereof) and, in the case of book-entry securities, the agreement executed with the Registrar, as applicable;
  5. a legal opinion to the effect of (i) the legality of the securities represented by the CEDEARs; (ii) the legality of the agreements between the issuer of the CEDEARs and the issuer of the securities represented by the CEDEARs and (iii) the enforceability by the lawful holder of the CEDEAR of the exchange referred to in Section 69 hereof;
  6. the declaration as to whether it is a sponsored or unsponsored program;
  7. the term during which the issuer of the CEDEARs undertakes to comply with the reporting requirements of Sections 93 and 95 hereof and, as applicable, the term during which the issuer of the securities represented by the CEDEARs undertakes to comply with the reporting requirements of Section 94. The term of the program may not exceed the shorter term of any such commitment. Sponsored programs shall as well accompany the information and documentation required under Chapter VI of the RULES, concerning the issuer of the securities represented by the CEDEARs which constitute the subject matter of the program. To such effect:
    1. the records of the members of the administration and supervision bodies shall not be required;
    2. the financial statements may be submitted according to the formalities of the country of origin yet shall include the relevant translations and any adjustment resulting upon application of the then current Generally Accepted Accounting Principles of the Republic of Argentina, certified by an Argentine chartered accountant;
    3. the provisos of Section 80 of Chapter VI of the RULES shall apply;
  8. the commissions and/or fees to be received by the issuer of the CEDEARs and, as applicable, those to be received by the depositary of the securities represented by the CEDEARs.

Unsponsored programs shall accompany, in addition to the information and documentation indicated in subsections (a) through (g) hereof, any other information and/or documentation to be filed, submitted, produced or otherwise disclosed to the investor community within the framework of the CEDEARs’ placement procedures.

Section 97

For all purposes of Section 6 of Law 24,083, the CEDEARs shall be deemed securities issued within the country.

Section 98

The filing of the program shall import the submission of the applicants to the proviso of Law 17,811 and to the regulatory rules thereof, as amended by this Section.

Section 99

The stocks and exchanges where the CEDEARs are traded shall provide for the appropriate mechanisms that will ensure full disclosure of each program’s terms and of the underwriting agreement governing the relationship between the issuer of the CEDEARs and the holders thereof. Likewise, same shall also provide for the appropriate mechanisms tat will permit the investor community to be informed, within the shortest possible term, of the quotations and traded volumes of the securities evidenced by the CEDEARs in the relevant exchanges where same are marketed and, as applicable, publish same in the bulletins or newspapers habitually used to report such market information.

 

SECTION 2

Subsection (d) of Section 60 of Chapter VI of the RULES of this Commission, New Text 1997, is repealed.

 

SECTION 3

This Resolution shall become effective on September 1, 1997.

 

SECTION 4

Be it informed, published, delivered to the NATIONAL BUREAU OF OFFICIAL RECORDS and filed thereat.

Signatures follow.

Terms and Conditions

The following Terms and Conditions of Use apply to use of the "Deutsche Bank AG CEDEAR Website" (the "Website"). more

FAQ
The following questions and answers were developed based on the most common inquiries received at Deutsche Bank as CEDEAR Issuer and Custodian. The answers should increase the understanding of the CEDEAR as a new Argentine security. more

Glossary

This glossary of terms is provided as an attachment for additional assistance in understanding the CEDEAR structure and dynamics. more

Contacts

Deutsche Bank CEDEAR/CEVA professionals will be pleased to discuss with investors and their brokers the material contained herein and to answer any questions that may arise related to CEDEARs/CEVAs, their features, uses and requirements. more

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