On January 15, 2004, the Argentine National Securities and Exchange Commission ("CNV") issued General Resolution Nbr. 454 amending Articles 5, 6, 9 and 10 of Chapter XV of the CNV regulations referring to Trusts. Such resolution was published in the Official Gazette on January 20, 2004.

In this sense, it is worth noting that through General Resolution Nbr. 437 of January 23, 2003, the CNV had already amended the amounts of net worth requirements for registration before the Ordinary Public and Financial Trustees Register, as well as the adequate administrative requirements to render such services.

The new amendments may be summarized as follows:

(a) Foreign companies filing for registration before the Ordinary Public and Financial Trustees Register, must produce evidence of their incorporation in countries with capital markets authorized by an organization recognized by the CNV or with which the CNV has entered into a memorandum of understanding.

(b) In case of registration before the Ordinary Public Trustees Register, the minimum net worth shall be $500,000 (five hundred thousand Pesos), and for each new trust agreement entered into thereafter, net worth shall be increased in $25,000 (as of this date, approx. exchange rate US$1 = 2,9). Such increase may only be done with liquid assets.

(c) In case of registration before the Financial Trustees Register, the minimum net worth shall be $2,000,000 (two million Pesos), of which (i) 50% shall be composed of liquid assets; (ii) any balancing entry with respect to liquid assets may be replaced by a bank guarantee (of an entity duly authorized by the Argentine Central Bank), including a principal payer section and as approved by the CNV, and (iii) up to 50% of the net worth may be constituted by real estate.

(d) In case of sub-contracting with third parties the administration of the assets forming the trust, the trustee shall be liable for the acts of such sub-contractors.

The CNV shall not authorize new trusts nor the term extension or continuance of existing trusts, when the trustee does not comply with the above requirements.

(e) If the requester is an Argentine corporation (sociedad anónima), its by-laws shall establish a plural and odd number of corporate comptrollers (síndicos) and a minimum of three directors for the Board.

(f) The corporate comptrollers (síndicos), directors and executive managers shall evidence qualifications in corporate, financial and accounting issues. They shall also file, in the form of a sworn statement, any personal records and incompatibilities pursuant to the Argentine Financial Entities Law, as well as criminal records.

(g) In case of Argentine corporations, evidence of their minimum net worth may be produced with the financial statements of such entity, dated not more than 4 months as of request for registration in the appropriate registry.

Although the above amendments increase the requirements necessary to publicly offer trustee services or to act as a financial trustee under the public offering regime in Argentina, they seek for a better protection of investors or individuals contracting with such entities. The new requirements regarding net worth, number of corporate comptrollers and directors and qualifications for Board members and executive managers, tend to improve the "guaranty" of parties entering into agreements with trusts in Argentina.

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.