The trust (fiducia means "faith, trust") is a widely used instrument in the world. Its Anglo-Saxon counterpart is the trust and it has ancient roots in Roman law.
- Law 24,441 establishes the figure of the Trust and the Financial Trust. These legal forms allow the generation of highly flexible investment and financing instruments through innovative risk management schemes. The possibility of achieving a tailor-made instrumental design allows reconciling expectations return rate adjusted by the investor's risk and the requirements of the financing claimants (payment terms). It is important to highlight that a financing or investment trust does not need to be established as a financial trust.
Law 24,441
- Art. 1 There will be a trust when a person (settlor) transfers the fiduciary property of certain assets to another (trustee), who is obliged to exercise it for the benefit of whoever is designated in the contract (beneficiary), and to transmit it to the fulfillment of a term or condition to the trustor, the beneficiary or the trustee. 14.- The trust assets constitute an equity separate from the assets of the trustee and the trustor. Art. 15.- The trust assets will be exempt from the singular or collective action of the trustee's creditors. The trustors' creditors may not attack the trust assets either, the fraud action being safe.
The creditors of the Trust may exercise their rights over the fruits of the trust assets and subrogate their rights.
Parts of a trust
In our current legal system, the intervention of at least three parties is required: the Trustor, settlor or constituent: is the owner of the property that is transferred in trust and is the one who instructs the trustee about the order to be fulfilled, the latter is who assumes the fiduciary property and the obligation to give it the intended destination in the contract until it must be transferred to a third party who receives the name of Beneficiary or trustee (traditionally they are the same person), that is, that beneficiary of the business.
By law 24441, the beneficiary is authorized to be a person other than the trustee, the first then, would be the one in whose benefit the trust assets are administered (that is, he is the one who receives the fruits of the trust's management) and the second would be the final recipient of said assets, once the trust agreement has ended.
- From the beneficiary
Article 2 of the aforementioned rule continues to clarify that the contract must identify the beneficiary, who may be a natural or legal person, who may or may not exist at the time the contract is awarded; in the latter case, the data that allows their future individualization must be recorded (the law does not authorize absolute indeterminacy but requires the possibility of individualizing the initially anonymous beneficiary).
More than one beneficiary may be designated, who unless otherwise provided will benefit equally; substitute beneficiaries may also be designated in the case of non-acceptance, resignation or death. If no beneficiary accepts, all resign or do not come into existence, it will be understood that the beneficiary is the trustee. If the trustee also does not come into existence, resign or not accept, the beneficiary will be the trustee.
The right of the beneficiary may be transferred by acts inter vivos or by cause of death, unless otherwise provided by the settlor.
- Trustee
The law deals with the figure of the fiduciary from article 5, it establishes that any natural or legal person may be fiduciary, clarifying that only financial entities authorized to operate as such subject to the provision of their respective law and may be offered as fiduciaries to the public legal entities authorized by the CNV (the latter establishing the requirements that must be met).
Private fiduciaries (that is, those who are not authorized to make a public offer of their services) will require the general capacity to contract and fulfill the intended destination in the contract regarding the trust assets.
The present norm is extensive regarding the duties, obligations and rights of the trustee, for which reason it is necessary to read them, although for their clarity said articles do not need any interpretation.
Assets object of the trust
All kinds of assets can be object of the trust. For the transfer of the fiduciary property, the trust contract must contain: a) The individualization of the assets object of the contract.
In the event that such identification is not possible at the date of the trust, the description of the requirements and characteristics that the assets must meet will be recorded; b) The determination of the way in which other assets may be incorporated into the trust; c) The term or condition to which the fiduciary domain is subject, which may never last more than thirty (30) years from its constitution, unless the beneficiary is incapable, in which case it may last until his death or cessation. of his incapacity; d) The destination of the assets at the end of the trust; e) The rights and obligations of the fiduciary and the way to replace it if it ceases.
Fiduciary property is established on the trust assets, which is governed by the provisions of title VII of book III of the Civil Code. When it comes to things, fiduciary property will be governed by Law 24441, if it is not about things, it will be governed by the laws corresponding to the nature of the property (Art. 11).
Although all kinds of property may be the object of the trust, the law that regulates it does not establish the way in which the act of transfer of property must be carried out, except as established in articles 12 and 13 thereof.
Article 12 provides that the fiduciary nature of the domain will take effect against third parties from the moment the required formalities are fulfilled according to the nature of the respective assets, but it does not specify what those formalities are (we assume that it refers to the particular conditions of each asset, depending on whether it is registrable assets or not).
In addition, article 13 of the same law establishes that in the case of registrable assets, the corresponding registries must take into account the fiduciary transfer of the property in the name of the trustee. It also clarifies that if it is established by contract, the trustee will acquire the fiduciary property of other assets that are acquired with the fruits of the trust assets or with the product of acts of disposition on them, recording this in the act of acquisition and in the respective records. Regarding the previous paragraph, analysts agree to make certain constructive criticisms of the aforementioned trust law.
The first of these refers to the fact that the law does not establish any type of formality with respect to non-registrable assets (Absence of any formality, according to Silvio Lisoprawski). Another criticism of this law is the lack of a regulatory framework for non-registrable assets that, due to having this condition, the granting of property by public instrument does not correspond.
The two criticisms mentioned do nothing more than deal with the neglect of non-registrable assets by the law.
Types of trusts
The varieties of trusts that can be carried out (as the means chosen to achieve the purpose pursued by the parties) can be mainly grouped into four general groups: investment, guarantee, management and mixed trusts. Let's take a closer look at each of these types of trusts.
- Investment Trust: it is any business (where the trust property is transferred) whose specific or main purpose is the investment of financial resources, according to the instructions, guidelines or regulations established by the taxpayer (trustors) for their own benefit or for the benefit of third parties (beneficiary or trustee) to apply it for predetermined purposes.
Through its constitution and execution the trustee captures sums of money or other assets from the trustors and allocates them by precise instructions of the latter to investments that are economically profitable for the trustee or beneficiary, which in most cases turns out to be the same trustor.
Guarantee trust: with this type of trust what is done is to transfer to the trustee assets by means of which (or through its product) the fulfillment of certain obligations by the trustor or third parties will be guaranteed, designating the creditor as beneficiary or to a third party. In the event of default, the latter will be paid, once the assets object of the trust have been made, the value of the obligation contracted or the unpaid balance thereof as provided in the contract.
This type of trust is a substitute for the traditional system of real guarantees. The difference with these lies in that, in the event of non-compliance, the fiduciary sale is not a forced execution but simply the fulfillment of an alternative obligation.
In other words, the assets placed as collateral for the obligation contracted are transferred to the trustee so that in the event of non-compliance with said obligation, the sale or delivery of the property to the beneficiary or a third creditor, as established.
Administration trust: are those trusts in which the ownership of property is transferred to a trustee so that it can be managed according to what is established by the trustor, with the proceeds of the trust being destined to fulfill a certain purpose.
Mixed trust: in this type of contract the characters of two or more specific trusts participate.
Execution. Assets are transferred and the Trustee, in addition to being a depository agent, acts in the event of a default by the debtor, selling the same
Export. They may only involve the act of foreign trade, but in practice they cover the entire production cycle, making them more attractive and profitable. (Pre and post financing).
Financial trusts
Law 24441 defines financial trust in its article 19 as that trust contract subject to the preceding norms of the aforementioned law, in which the trustee is a financial entity or company specially authorized by the CNV to act as financial trustee and the beneficiaries are the holders of certificates of participation in the fiduciary domain or of debt representative securities guaranteed with the goods thus transmitted. The aforementioned article also clarifies that said participation certificates and debt securities will be considered securities and may be the subject of a public offering, further clarifying that the enforcement authority will be the CNV, the latter being able to issue regulations in this regard.
- Distinctive features
1. In contrast to what has been seen so far, the main difference lies in the figure of trustee. This must be a financial entity or a company specially authorized by the CNV to serve as a financial trustee. This figure was intended, at least initially, to preserve its business-neutral character through prudent regulations, except for commissions and remuneration of the professional trustee.
2. The certificates of participation in the fiduciary domain and the debt representative securities guaranteed with trust assets must have two independent risk ratings through the companies that are registered with the CNV for this purpose.
3. The objective of a financial trust is to issue or guarantee with trust assets, debt securities or certificates of participation in the fiduciary domain of the assets.
4. The placement of these securities may be made either by public offer for private placement.
Of certificates of participation and debt securities
The law continues the regulations of the financial trust, clarifying that the participation certificates will be issued by the trustee. The debt securities guaranteed by the trust assets may be issued by the trustee or by third parties, as the case may be. Both certificates and titles may be bearer or nominative, endorsable or not or deeds in accordance with Article 8 of Law 23576.
The certificates will be issued on the basis of a prospectus in which the issuance conditions will be stated and will contain the necessary enumerations to identify the trust to which they belong, with a detailed description of the rights they confer.
In turn, the law allows global certificates of participation certificates to be issued for registration in collective deposit regimes. To this end they will be considered definitive, negotiable and divisible.
The law also admits that different classes of participation certificates may be issued with different rights, but clarifying at all times that within each species the same rights will be granted. The law also provides that the issue can be divided into series.
The Fund Offer - Basic Funding Conditions
- The characteristics of the business, duly accredited in a good Business Plan and the guarantee scheme, must be translated into a coherent and "salable" scheme for investors / funders. The design of the financing scheme must reconcile the expectations of the potential financier with the requirements and repayment capacity of the claimants of funds. Public, private, institutional, individual or mixed investors suppose, in each case, designs of differentiated and differentiable schemes. The guarantee scheme and the strategy to minimize risks are the main factors that they define the differential attractiveness of a structured instrument for the Investor.
The Fund Offer - Basic Funding Conditions
The Offer of Funds- Argentine Context
Present availability of funds:
- Public sector: low availability, optimizable through structured products. Alternative to improve efficiency and transparency. (See annex) Commercial banks: a small group (the future survivors) with an increasing participation in structured products and high operational complexity. Institutional investors (AFJP, insurance companies): high availability but with regulatory investment restrictions and bad experiences.
The Offer of Funds- Argentine Context
Captive individual private sector in the corralito:
Acceptable availability of bank money (in the corralito) due to the lack of investment alternatives and given the high degree of mistrust in the banking system. Articulation challenge by the structurers to gather critical mass.
Private sector with money out of the system: high availability but very difficult to capture, given that a significant portion is off-shore.
Commercial suppliers: they can be a very attractive source of funding (eg agrochemicals). Very specific designs, which require very attractive and well-consolidated projects to attract them, as interested parties.
Investor Requirements in the Argentine Context
The conditions demanded by private investors in the context of current uncertainty are:
- Capital preservation in dollars or euros and measured performance in those currencies (even when it may imply losing in real terms, that is, compared to the Consumer Price Index, for example). Limited return terms (not higher, on average, than 12 months). Certainty of collection through guarantee schemes that mix real assets and capture the flow of funds. Legal structure that allows minimizing exogenous risks to the business given the high uncertainty of the environment.
The Structuring of the Financing Scheme
- The first objective is to define which will be the assets and liabilities of the Trust, who will be the Trustor, the Beneficiary and what functions the Trustee must fulfill.A financing transaction, normally can involve more than one Trust for its correct structuring.
E xample of Atypical Trust
Type of trust: private, the qualities of the trustors and beneficiaries coincide in the same people. In this way, the trust does not pay income tax (each trustee-beneficiary in proportion to the profits received). Its purpose is to manage the sales of products produced by the trustors-beneficiaries, and guarantee the financial entity in the credit origination process.
Trustees / Beneficiaries: The companies that produce household items.
Trustee: Corporation to be established.
Financing bank to final buyers and the Trust.
Instruments and Services of the Study: 1) Trust Agreement; 2) Agreement with distributors; 3) Agreement with the Financing Bank. 4) Constitution of the Trust. 5) Negotiation with the Bank. 6) Advice on "marketing system", already agreed with Banks and credit cards.
