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Guidelines for private placements

In a recent circular the Central Bank of Uruguay (BCU) has provided clear guidelines for the differentiation of a public offering from a private placement. This memorandum addresses the private placement of foreign funds.

Under the circular, the private placement of foreign funds must comply with the conditions set forth in Art.2.2 of law No. 16,749 of May 30 1996. Those conditions are:

  • the offering must explicity state its private nature;
  • the offering must be placed directly with certain individuals or legal entities, whether or not through the involvement of securities' intermediaries;
  • the securities may not be quoted on the stock exchange;
  • the placement or distribution should not be accompanied by any publicity; and
  • it must be clarified that the offering has not been registered with the BCU.

The documentation to be given to the investor must indicate or attach a clear statement that the fund offered has not been constituted under Uruguay's Investment Funds Act nor registered with the BCU.

The investor must execute a document acknowledging receipt of the offering documentation. Although the wording is confusing, we believe that the investor must furnish a receipt (i) listing the documents received by the investor, and (ii) specifically indicating that the investor has received a document stating that the fund offered has not been constituted under Law No. 16.744, and the fund is not registered with the BCU.

Jonás Bergstein

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