Regulation of Law No. 24,083


Buenos Aires, February 8, 1993

IN VIEW OF file number 586/92 of the NATIONAL SECURITIES COMMISSION and Section 39 of Law 24,083; and


As Law 15,885 has been enforced for a long period of time and the provisions thereof are very significant, it is necessary to consider those institutions already covered by the previous law which, due to the irrefutable role they play in safeguarding the shareholders’ interest, should be included in the management rules of procedure.

Specific circumstances need to be clarified always complying with the purposes and the spirit of this law, and the particular investment modalities arising thereof.

At this stage of market integration it is necessary to act towards foreign issuers, whose securities are traded in the country as a result of the regional integration of markets, in the same way as towards local issuers of securities.

To avoid excess shareholding in issuers’ capital, specific restrictions are applied.

It is also advisable to include the criteria adopted by the Supervisory organism, obtained from its experience in the enforcement of current applicable rules.

The method of assessing the portfolio through the weighted average price should be applied as a supplement to improve transparency and certainty in order to estimate the value of an asset rather than as an essential principle. Moreover, the criterion proposed herein may be changed whenever, in the opinion of the Supervisory organism, an equitable treatment among all participants is not guaranteed.

Likewise, both the existence of various markets in the country together with the possibility to trade securities abroad shall be considered, thus establishing clear valuation rules under these circumstances.

It is advisable to facilitate, through a policy aimed at promoting capital market securities, a wide participation of investors, specially of small and medium-sized investors to whom the Mutual Fund offers the possibility of taking part in a professionally managed diversified portfolio, and of reducing their operational costs by exempting some actions from the stamp tax, in agreement with the exemptions granted by Executive Order No. 2284 of October 31, 1991.

The NATIONAL EXECUTIVE is empowered to grant exemptions to the stamp tax by virtue of the powers granted by the NATIONAL CONGRESS in Section 59 of the Stamp Tax Law.

The provisions of this Executive Order shall be supplemented by any provision adopted by the NATIONAL SECURITIES COMMISSION in agreement with the provisions of Section 32 of the Law.

This Executive Order is adopted by virtue of the regulatory authority vested in the National Executive by Section 86, paragraph 2, of the NATIONAL CONSTITUTION.




Section 1: Supervisory organism. Powers. In agreement with the provisions of section 32 of the Law, the NATIONAL SECURITIES COMMISSION shall be the Supervisory and Record Agency of the Mutual Fund managing corporations and depositaries, and the former is empowered to adopt any regulation that may be necessary to supplement the provisions of this Executive Order, and to settle issues not regulated by the Law or this Executive Order, and to interpret the rules thereof within the prevailing economic context.

Section 2: Social Organization of Fund Organisms. The Mutual Fund managing corporations and depositaries must be corporations incorporated in provincial or national jurisdictions. However, when financial institutions act as managing or depositaries  by virtue of the provisions of Sections 3 and 14 of the Law, respectively, they may be incorporated in any other manner authorized by the laws applicable to the financial activity.

Section 3: Corporate Name of the Managing Corporations and Depositaries. Mutual Fund managing corporations and depositaries other than financial institutions shall solely act for the above-mentioned corporate purposes, and the expression MUTUAL FUND MANAGING CORPORATION or MUTUAL FUND DEPOSITARY, as applicable, shall be included in the corporate name thereof. Except when the duties of the managing corporation are discharged by a financial institution, in addition to the autonomy set forth by Section 3 of the Law, the managing corporation shall operate with full independence from any other corporation, whether it carries out the same business or not, and it shall duly prove such condition.

Section 4: Managing Corporation’s Minimum Net Worth. To the purposes of establishing the managing corporation compliance with the minimum net worth requirement set forth by Sections 3 and 5 of the Law, the same shall be estimated in the manner set forth by the Supervisory Agency. The mandatory minimum net worth shall be maintained throughout the duration of the managing corporation activities.

The increase of the minimum net worth referred to by Section 5, paragraph b) of Law 24,083, shall only apply when the managing corporation’s net worth is lower than the value resulting from adding to the mandatory FIFTY THOUSAND AMERICAN DOLLARS (US$ 50,000)  the increase required for each Fund under its management.

Section 5: Depositary’s Minimum Net Worth. To the purposes of establishing the Depositary’s compliance with the minimum net worth requirement set forth by Section 14 of the Law, the same shall be estimated in the manner set forth by the Supervisory Agency. The mandatory minimum equity shall be maintained throughout the duration of the Depositary’s activities.

The mandatory minimum net worth for Mutual Fund Depositaries other than financial entities shall be increased by an amount equal to the one established by section 14 of the Law per each Mutual Fund for which it acts as depositary.

Section 6: Commencement of activities. Mutual Funds shall not be entitled to start operating as such, nor shall they take the necessary steps towards the placement of Mutual Fund shares, until they have filed the relevant Management Rules of Procedure with the Commercial Registry after being approved by the NATIONAL SECURITIES COMMISSION.

Section 7: Mutual Funds Name. The names of Mutual Funds shall comply with the provisions of Section 2 of the Law.

Section 8: Management Rules of Procedure. The “Management Rules of Procedure”  shall conform to the provisions of section 11 et seq. of the Law and, similarly, shall include provisions concerning:

a) Limits regarding the Fund assets management powers, expressly establishing that under no circumstance the joint owners shall be liable or committed for amounts exceeding the Fund assets;

b) Prohibition of directors, trustees, advisors and employees of the Fund organisms to act as agents for shareholders, in the event of provisions regarding consultation with shareholders.

c) Minimum diversification guidelines for the investment of Fund assets; including a provision stating that no Fund may invest a percentage exceeding TWENTY PERCENT (20%) of its capital in bearer securities of the same issuer or of issuers belonging to the same economic group.

d) Mandatory requirements with respect to the assets making up the Fund, which should be fully paid-up upon purchase thereof, except for bearer securities purchased in due exercise of preferred underwriting rights. In such an event, payment may be settled in accordance with the relevant issuing terms;

e) When applicable, a listing of the foreign markets where investments will be made, specifying measures to be adopted in order to obtain the price value sufficiently in advance so as to establish the share price;

Mutual Fund shares to be issued as book-entry shares, shall be registered in compliance with any formality as the Supervisory organism may provide, and  underwriting and redemption bookkeeping shall be mandatory.

Section 9: Valuation of the Fund’s Net Worth. The valuation of the fund’s net worth shall be performed for underwriting, redemption and any other purpose, and shall take into account any asset making up the Fund assets, the average price arising from the closing price of the market or markets where they are traded in significant amounts, in agreement with the following guidelines:

a) Public offering of bearer securities. When Fund assets are made up of bearer securities transacted in the Argentine Republic, the NATIONAL SECURITIES COMMISSION shall determine the market or markets whose closing price shall be taken into account for weighting the price of the relevant bearer securities in accordance with the provision of Section 20 of the Law. If a percentage exceeding EIGHTY PERCENT (80%) of the bearer securities were to be traded in a market, the closing price weighting may be omitted, and the closing price of the bearer securities in that market may be used. For bearer securities not traded within the Argentine Republic, the managing corporation shall, before purchase thereof, submit the name of the market whose closing price will be considered for the estimation for approval by the NATIONAL SECURITIES COMMISSION.

b) Precious Metals. When the “Management Rules of Procedure” establish that the assets of the Fund shall be made up of precious metals, it shall, before purchasing thereof, submit the name of the market whose closing price will be considered for the estimation for approval by the NATIONAL SECURITIES COMMISSION.

c) Foreign Exchange. Whenever the “Management Rules of Procedure” establish that the assets of the Fund shall be made up of foreign exchange, the valuation shall be performed in agreement with the purchasing exchange rate of the BANCO DE LA NACION ARGENTINA applicable to financial transfers.

d) Instruments issued by financial institutions. Unless these instruments are included in paragraph a) herein, whenever the “Management Rules of Procedure” establish that the Fund assets shall be made up of these instruments, the latter shall be valued at their value of origin, plus any accrued interest, discounted from the interest rate prevailing upon the relevant valuation.

e) Rights and duties arising from futures and options. Whenever the “Management Rules of Procedure” establish that the Fund assets shall be made up of rights arising from futures and options, only those traded in markets subject to the jurisdiction of the NATIONAL SECURITIES COMMISSION or any other market authorized by such Supervisory organism shall be purchased. In that event, the valuation thereof shall be carried out in accordance with the provisions of Section 20 “in fine” of the Law.

Whenever underwriting or redemption requests are made on a day when the market or markets in which any or all of the Fund portfolio assets are traded do not operate, the value shall be estimated on the basis of the closing prices of the day of normal resumption of market or markets operation. If the portfolio is made up of bearer securities, and one or more certificates are not traded on the day when the underwriting or redemption is requested, the value to be considered to estimate the share value shall be the one recorded for such purpose the last day on which said securities were traded, except for fixed-income securities, which shall be valued according to their value of origin plus any interest then accrued.

Section 10: Issuing Prospectus. The NATIONAL SECURITIES COMMISSION shall establish the contents to be included in the Mutual Fund issuing prospectus.

Section 11: The Fund’s cash, referred to in section 17 of Law 24,083, shall be deposited in financial institutions, other than the Depositaries thereof, approved by the CENTRAL BANK OF THE ARGENTINE REPUBLIC.

The relevant accounts must be individualized under the name of the Depositary, including a statement indicating its capacity as a Fund organism.

Section 12: Placement of shares among investors. Placement of Mutual Fund shares may be directly carried out by the Depositary or through authorized brokers. Depositaries and authorized intermediaries may use electronic means for said placement, in compliance with any precaution as may be established by the Supervisory Agency.

Section 13: Integration among markets. Whenever the Argentine Republic is member of international economic integration treaties, providing for the integration of the relevant capital markets, and/or the NATIONAL SECURITIES COMMISSION has undersigned related agreements with the relevant authorities of the member countries signing such treaties, securities issued in any of the member countries shall be regarded as assets issued in the country to the purposes of fulfilling the investment percentages established by Section 6 “in fine” of the Law, provided that said securities are traded in the countries of origin of their issuers in markets approved by the relevant National Securities Commissions or similar Agencies.

Section 14: Portfolios Integration. Whenever the Fund portfolio is made up of shares, equity shares, debentures, corporate bonds, and commercial papers of a same issuer, the holding thereof shall not represent more than TEN PERCENT (10%) of the corporate stock, for shares, and up to TEN PERCENT (10%) of the total liabilities of the issuer for debt securities; both percentages may be simultaneously held in the portfolio. The fact that these holdings do not exist simultaneously does not allow them to exceed the above-mentioned percentages. Unaccountable excesses shall be reported to the NATIONAL SECURITIES COMMISSION within FORTY-EIGHT (48) hours and shall be immediately settled, notwithstanding any other applicable penalty.

Section 15: Closed-end Mutual Fund. In order to guarantee an adequate secondary market, any Fund established with a maximum number of shares shall request, together with the authorization thereof, the relevant public offering authorization. Said authorization shall be effective until the effective dissolution of the Fund, or until the termination of the investment fund. In order to grant the relevant authorization for public offering, the Supervisory organism may issue the regulations regarding minimum spread applicable to shareholding. These funds may have special investment purposes.

If the public offering is discontinued for any reason, the “Management Rules of Procedure” shall establish the method to be applied for the immediate liquidity of the shares.

The terms of the “Management Rules of Procedure” may not be amended until the Fund investment plan is fulfilled, unless the amendment only affects non-substantial clauses of the investment plan and is beneficial to the shareholders. Under these circumstances, the Management Rules of Procedures shall set forth the applicable procedure, which shall provide for the right of first refusal by the dissenting underwriter .

Section 16: Government bonds. Different series of similar government bonds in which only the issuing date has been changed shall be regarded as government bonds having the same issuing terms. Whenever the series of government bonds –although maintaining the same name- change one or more different terms regarding rate, payment of profits, retirement, or redemption, it shall be regarded as a different bond to the purposes of Section 7, paragraph e) of the Law.

Section 17: Suspension of redemption. The managing corporation is empowered to specify in the Management Rules of Procedures that redemption shall be suspended - under the terms set forth in Section 23 of the Law – in order to protect the Mutual Fund, whenever  the share value cannot be determined as the result of war, domestic convulsion, exchange or bank holiday, or any other serious event affecting self-regulating and financial markets.

Section 18: Redemption. In exceptional circumstances and after approval by the NATIONAL SECURITIES COMMISSION, Mutual Funds shall be entitled to  pay any redemption out of portfolio values.

Section 19: Permanent Government Supervision. Managing corporations and depositaries other than financial institutions are subject to the provisions of Section 299 of Law 19,550.

Section 20: Shareholders Tax Obligations. In agreement with the provisions of Section 1 of the Law, Mutual Funds are not legally incorporated and are not legal persons to the purposes of tax laws. Shareholders shall be the only individuals liable regarding taxes applicable to profits realized due to the allocation of shares. Under no circumstances the Fund bodies shall have the duty to act as withholding agent or any responsibility whatsoever regarding discharge of any tax obligation as may be applicable to any shareholder.

Section 21: The following actions and operations are hereby exempted from the taxes established by the Stamp Tax Act No. 18,524 (Consolidated Text – 1997), as amended:

a) Instruments, actions and operations of any nature, including delivery and collection of money, related to and/or necessary for the creation of Mutual Funds, as well as the underwriting and redemption of the shares thereof, and their issuing under the provisions of Law 24,083. This exemption applies  to the instruments, actions, contracts, transactions and pledges related to the above-mentioned creation of Mutual Funds, the underwriting and redemption of shares and/or issues, the same being previous, simultaneous, or posterior to  the occurrence of these facts, or any renewal thereof.

Section 22: The Provinces and the MUNICIPALITY OF THE CITY OF BUENOS AIRES are hereby invited to grant, within their relevant jurisdictions,  the same exemptions and treatment as those corresponding to shares, government bonds and other securities.

Section 23: Disclosure. Any disclosure or announcement made by the Mutual Funds shall be reported to the supervisory organism within the THREE (3) days following its occurrence.  If the disclosure, in the opinion of the Agency, does not comply with the requirements established by Section 29 of the Law,  the Supervisory organism shall order managing corporation  to discontinue the same without prejudice of any applicable penalty.

Section 24: Discontinuation of Action by One of the Fund Organisms. If one of the Fund bodies no longer meets the legal requirements, the NATIONAL SECURITIES COMMISSION shall order the same to correct its situation within a fixed period of time. Should this not to be complied with, a summary proceeding shall be filed forthwith, suspending the activities of said body.

Throughout the duration of the suspension, only actions related to serving the redemption calls of the Fund shall be performed.

If one of the Fund organisms unexpectedly discontinues its activities by decision of the relevant supervisory organism, or due to a duly justified reason, the remaining body shall, upon request of the NATIONAL SECURITIES COMMISSION, propose a substitute, undertaking any redemption that may be requested in the meantime, as provided by the Management Rules of Procedure. If such substitution does not take place within the time period established by the NATIONAL SECURITIES COMMISSION, the latter may adopt any measure it may deem necessary for the safeguard of shareholders’ interest, including the withdrawal of the operation approval.

Upon simultaneous insolvency of both Fund bodies, the NATIONAL SECURITIES COMMISSION shall adopt the necessary measures to ensure the preservation of the share liquidity, being empowered to appoint as liquidator a local banking institution  already acting as a Fund depositary. Said appointment may not be rejected.

No replacement shall be effective after the NATIONAL SECURITIES COMMISSION has approved the same and the stipulated formalities have been fulfilled.

Section 25: Liquidation. Whenever the rules of procedure do not establish a date or deadline for the Fund’s liquidation, the same may be decided at any time by both bodies thereof, as long as there are well-grounded reasons for doing so, and the shareholders interest are guaranteed.

To such purposes, the simultaneous replacement of both Fund bodies shall be understood as an advanced liquidation thereof, and the relevant steps shall be followed.

No liquidation may be performed unless the NATIONAL SECURITIES COMMISSION has previously approved the decision.

Section 26: The extended periods of time allowed for requesting and implementing the redemption shall be determined by the “Management Rules of Procedure”, and such periods shall relate to the purpose of the Fund and to the impossibility of realizing liquidity in shorter terms. The supervisory organism shall prevent share liquidity from becoming deceptive - through longer terms - or the untimely redemption by enforcing minimum holding terms.

Section 27: Provisional Section. Those Funds which shall only amend, in their rules of procedure, those sections related to the share assessment methodology and the fees of the bodies thereof, may apply the new provisions, without being required to amend the relevant rules of procedure. However, they shall disclose to the shareholder a summary stating the new applicable criteria.

Section 28: Effective date. This Executive Order shall be effective as of its publication.

Section 29: Be noticed, published, referred to the National Board of Official Registration and filed. MENEM. Domingo F. Cavallo