R-CNMV-2024-09-MV — Regulation on Change of Control, Merger, Supervision, Administrative Intervention, Dissolution and Liquidation of Securities Market Participants

SCY Superintendencia del Mercado de Valores de la República Dominicana CERTIFICATION The undersigned, Mr. Ervin Novas Bello, manager of the Central Bank of the Dominican Republic (hereinafter "Central Bank"), representing the Governor of the Central Bank, ex officio member and President of the National Securities Market Council (hereinafter "Council"); and Ms. Fabel María Sandoval Ventura, Secretary of the Council, CERTIFY that the text below constitutes a faithful copy transcribed in its entirety in accordance with the original of the First Resolution, R-CNMV-2024-09-MV, adopted by the Council in the meeting held on the seventeenth (17) day of September of the year two thousand twenty-four (2024), which is kept in the archives of this Secretariat, namely:

"FIRST RESOLUTION OF THE NATIONAL SECURITIES MARKET COUNCIL OF THE SEVENTEENTH (17) DAY OF SEPTEMBER OF THE YEAR TWO THOUSAND TWENTY-FOUR (2024). R-CNMV-2024-09-MV REFERENCE: Regulation on Change of Control, Merger, Supervision, Administrative Intervention, Dissolution and Liquidation of Securities Market Participants.

WHEREAS: That by communication received on the twenty-sixth (26) day of August of the year two thousand twenty-four (2024), the Superintendent of the Securities Market (hereinafter, "Superintendent") brought to the knowledge and consideration of the National Securities Market Council (hereinafter, "Council") the draft Regulation on Change of Control, Merger, Supervision, Administrative Intervention, Dissolution and Liquidation of Securities Market Participants (hereinafter, "Draft Regulation").

That the Council, in compliance with the powers conferred by Law No. 249-17 of the Securities Market of the Dominican Republic, which repeals and substitutes Law No. 19-00 of the eighth (8) day of May of the year two thousand (2000), promulgated on the nineteenth (19) day of December of the year two thousand seventeen (2017) (hereinafter, "Law No. 249-17"), and, in attention to what is provided by the Internal Regulation of the National Securities Market Council, adopted by the First Resolution, R-CNMV-2018-06-MV, of the twenty-ninth (29) day of November of the year two thousand eighteen (2018) (hereinafter, "Internal Regulation of the Council"), duly convened with the corresponding supporting documentation, deems it appropriate to state the following:

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Swz Superintendencia del Mercado de Valores de la República Dominicana

CONSIDERING:

1. That, in accordance with Article 6 of Law No. 249-17, the Securities Market Superintendence (hereinafter, "Superintendence"), is an autonomous and decentralized organism of the Dominican State, endowed with legal personality, own assets, and administrative, financial, and technical autonomy.
2. That as provided by Article 7 of the aforementioned legislative piece, the Superintendence aims to promote an orderly, efficient, and transparent securities market; to protect investors, ensure compliance with the aforementioned legal statute, and mitigate systemic risk through the regulation and oversight of natural and legal persons operating in the securities market of the Dominican Republic.
3. That, in attention to what is provided by Article 10 of Law No. 249-17, the Superintendence is integrated by a collegiate body, the Council, and an executive official, the Superintendent.
4. That the aforementioned law, in the main part of its Article 13, establishes that the Council is the superior body of the Superintendence, with functions essentially of a normative, supervisory, and control nature.
5. That, likewise, the aforementioned Article 13, in its items 4 and 5, confers upon the Council the attribution to issue the regulations for the application of Law No. 249-17, as well as to periodically review the regulatory framework of the securities market, adapting it to market trends and realities; at the same time, it empowers it to propose, on its own initiative or upon proposal of the Superintendent, the modifications that are necessary.
6. That, parallelly, item 8 of the aforementioned article confers upon the Council the attribution to know and approve the intervention, exclusion, suspension, merger, change of control, and liquidation of the participants of the securities market, in accordance with what is established in Law No. 249-17, which must be approved by a qualified majority of two-thirds (2/3) of the members of the Council.
7. That, in that order of ideas, by virtue of Article 25 of Law No. 249-17, the Council is the competent body to establish the Regulations relative to the activities of the securities market indicated in this law; corresponding to the Superintendence the development of technical or operational norms derived from the aforementioned legislation and the applicable regulations.

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SQÍ Superintendencia del Mercado de Valores de la República Dominicana

8. That, added to the above, by virtue of what Article 17, item 14, of the aforementioned legal norm establishes, the Superintendent is invested with the faculty to issue the resolutions, circulars, and instructions required for the development of Law No. 249-17 and its application regulations.
9. That Article 25, paragraph I, of the aforementioned Law No. 249-17 provides that "[i]n the exercise of regulatory power, the Council and the Superintendence will observe the principles of legality and the rules of public consultation, participation, and transparency contained in the Constitution of the Republic and the laws in force."
10. That Article 4 of the aforementioned legal provision establishes that the securities market will be governed with strict adherence to the Constitution of the Republic, to what is prescribed in said law and in the regulations and resolutions issued by the Council and the Superintendence, in the area of their respective competencies; being applicable subsidiarily, in matters not specifically provided for in the aforementioned norms, the general provisions of administrative law, corporate, commercial, monetary, and financial legislation, trust law, common law, and commercial usages, in the cited order.
11. That it is worth highlighting that Article 2 of Law No. 249-17 reveals that the provisions contained in said statute apply to all natural and legal persons that carry out activities, operations, and transactions in the securities market of the Dominican Republic, with public offering securities that are offered or negotiated in the national territory.
12. That, additionally, in the paragraph of the aforementioned article, it is established that "[n]atural and legal persons that carry out any of the activities or services provided for in this law will be subject to the regulation, supervision, and oversight of the Securities Market Superintendence, regarding the exercise of those mentioned activities or services."
13. That among the faculties that invest the Superintendent, in accordance with Article 17 of Law No. 249-17, items 2, 8, 9, and 11, the following stand out: "2) Comply and enforce the provisions of this law and its Regulations, ensuring the correct application of its principles, policies, and objectives.

8. Supervise, inspect, and oversee the activities and operations of the participants of the securities market.
9. Know and approve the merger and change of control of the participants of the securities market subject to its approval, in accordance with what is established in this law.

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SW Superintendencia del Mercado de Valores de la República Dominicana

11. Request the information that must be supplied by the natural and legal persons registered in the Registry."

14. That, for its part, Article 36 of Law No. 249-17 expresses that "[t]he Superintendence will have a Registry available to the public, which may be electronic, and in it will be registered the natural and legal persons that participate in the securities market, as well as the public information regarding the values registered in the Registry and the participants of the securities market regulated by this law."
15. That, according to what Article 3, item 33, of the aforementioned legal precept states, participants of the securities market are the natural or legal persons registered in the Securities Market Registry and regulated by the Superintendence.
16. That by communication received in the Council's Secretariat on the twenty-sixth (26) day of August of the year two thousand twenty-four (2024), the Superintendent brought to the knowledge and final approval of this collegiate body the draft Regulation on Change of Control, Merger, Supervision, Administrative Intervention, Dissolution and Liquidation of Securities Market Participants.
17. That in said missive, it is informed that the object of the draft Regulation is to develop the provisions in matters of change of control, merger, supervision, administrative intervention, dissolution, and liquidation of the participants of the securities market, in accordance with what is established by Law No. 249-17.
18. That the aforementioned communication states that, in accordance with what is provided by the Second Resolution, R-CNMV-2023-20-MV, emanated from the Council on the twenty-sixth (26) day of September of the year two thousand twenty-three (2023), the draft Regulation was placed in public consultation from the twenty-ninth (29) day of November of the year two thousand twenty-three (2023), until the sixth (6) day of February of the year two thousand twenty-four (2024), receiving comments from different actors of the private sector.
19. That from the documents accompanying the Superintendent's communication, it stands out that, as a result of the aforementioned consultative process, comments were received from the Dominican Association of Investment Fund Management Companies, Inc. (ADOSAFI); Dominican Association of Stock Exchanges, Inc. (APB); BHD Financial Center; CEVALDOM Centralized Securities Depository, S.A.; Stock and Securities Markets, S.A. (BVRD); AFI Universal, S.A.; and SCRiesgo Risk Rating Society, S.R.L.
20. That it is important to highlight that the technicians involved in the analysis of the observations and comments presented in the public consultation include collaborating officials from the Directorates of Participants, Regulation and Innovation, Public Offering, Legal, and Risk Analysis and Economic Studies.

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SCY Superintendencia del Mercado de Valores de la República Dominicana

21. That from the pieces that make up the file, a matrix stands out that collects the observations and comments presented, duly analyzed and responded to by the technical team of the Superintendence; subsequently, as part of the administrative procedure and in attention to the principles of transparency and participation, a working table -in virtual modal- was held with the interested sectors on the twenty-third (23) day of August of the year two thousand twenty-four (2024).
22. That, likewise, among the documents presented to the Council is a list of relevant data in which it is explained that the aforementioned draft Regulation contemplated the following improvements from the consultation process, namely:

• The wording of the Scope is adapted.
• Price-providing companies are included with the exceptions of paragraph II on Scope.
• The definition of resulting entities is adapted, to weigh the term beneficiary companies.
• An article titled "bureaucratic relief" is included, in accordance with Law No. 107-13.
• The wording in the paragraphs of the article related to change of control is modified, to link them to the provisions of the Corporate Governance Regulation.
• The wording is adjusted to detail the "general data" that must be included regarding the parties involved in the change of control transaction.
• The text is adjusted to indicate that the action plan required in the change of control must include a schedule with the detail and deadline of the activities to be executed.
• The wording of the Title on Merger is comprehensively reviewed, to provide greater clarity on the object of each stage, establishing that the initial authorization falls on the draft merger project.
• The wording is adapted to highlight the duty of collaboration and information delivery of service providers.
• The articles highlighting the duty of collaboration and information delivery of service providers and on Technical and operational norms for the development of intervention are eliminated.
• The content of the article "Situations in which administrative intervention with management supervision is appropriate" is eliminated and refers to Article 205 of Law No. 249-17.
• Recovery plans and resolution plans are included."

23. That, according to what is explained in the report drafted by the Directorate of Regulation and Innovation, the draft Regulation has a scope that includes all natural and legal persons registered

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SCV Superintendencia del Mercado de Valores de la República Dominicana

in the Securities Market Registry, excepting, among others, the issuers of securities that are governed by the Regulation on Supervision, Change of Control, Merger, Administrative Intervention, Suspension and Exclusion of Issuers and Public Offering Values, and the anonymous societies that voluntarily register in the Registry to dematerialize their shares in accordance with Article 37 of the Law. 24. That, in accordance with what is reasoned in said document, the draft Regulation does not require the update of internal processes nor entails an initial impact on the operability of the entities subject to its scope, since the regulated topics respond to specific administrative and corporate processes that arise from supervision, control needs, or generated by the entities themselves. In that sense, it does not foresee an economic cost for the participants of the securities market. 25. That it is also explained that, in accordance with what is provided by Law No. 249-17, the draft Regulation substitutes and leaves without effect chapters II.5 (On the faculties of investigation, supervision and inspection), II.6 (On the regime of supervision and inspection), of chapter II (Superintendence of Values) of Title IV (On the National Council of Values and the Superintendence of Values) of the Application Regulation of the Securities Market Law No. 19-00, approved by Decree No. 664-12, issued by the Executive Power on the seventh (7) day of December of the year two thousand twelve (2012). 26. That, in the same way, the report states that, in accordance with what is provided by Law No. 249-17, the draft Regulation repeals articles 218 and 219 of the aforementioned Decree No. 664-12. 27. That, in parallel, the report expresses that, in accordance with what is provided by Law No. 249-17, the draft Regulation repeals and substitutes the following provisions:

• Title VII of the First Resolution, R-CNMV-2019-21-MV, issued by the Council on the thirteenth (13) day of August of two thousand nineteen (2019), which approves the Regulation for Securities Intermediaries.
• Chapter VI of Title II of the First Resolution, R-CNMV-2019-28-MV, of the Council of the fifth (5) day of November of two thousand nineteen (2019); and the Second Resolution, R-CNMV-2021-16-MV, of the Council of the sixteenth (16) day of July of two thousand twenty-one (2021), which approves the Regulation for Management Companies and Investment Funds.
• Title V of the Third Resolution, R-CNMV-2022-03-MV, of the Council of the twenty-fourth (24) day of March of two thousand twenty-two (2022), which approves the Regulation for Risk Rating Companies.
• All regulatory provisions and any norm that opposes what is provided by the draft regulation, once it is in force.

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SW Superintendencia del Mercado de Valores de la República Dominicana

28. That, by virtue of wording adjustments made orally in the Council meeting held on this same date, an updated version of the draft Regulation was introduced.
29. That, in attention to everything previously exposed, weighing the reports and documentation presented by the technical area of the Superintendence, this collegiate body is of the opinion that the draft Regulation on Change of Control, Merger, Supervision, Administrative Intervention, Dissolution and Liquidation of Securities Market Participants can be favorably accepted.

HAVING SEEN; a. Constitution of the Dominican Republic, voted and proclaimed by the National Assembly on the thirteenth (13) day of the month of June of the year two thousand fifteen (2015), published on the tenth (10) day of July of the year two thousand fifteen (2015). b. Law No. 249-17, of the Securities Market of the Dominican Republic, promulgated on the nineteenth (19) day of December of two thousand seventeen (2017) and its modification, which repeals and substitutes Law No. 19-00, of the eighth (8) day of May of the year two thousand (2000). c. Law No. 107-13, on the Rights of Persons in their Relations with the Administration and Administrative Procedure, promulgated on the sixth (6) day of the month of August of the year two thousand thirteen (2013). d. Law No. 479-08 General of Commercial Societies and Individual Limited Liability Enterprises, of the eleventh (11) day of December of the year two thousand eight (2008), and its modifications. e. Communication received in the Council's Secretariat on the twenty-sixth (26) day of August of the year two thousand twenty-four (2024), signed by the Superintendent, and attached documentation. f. Report on the draft Regulation on Change of Control, Merger, Supervision, Administrative Intervention, Dissolution and Liquidation of Securities Market Participants, of the tenth (10) day of September of the year two thousand twenty-four (2024). g. The other documents that make up the file.

THEREFORE: After having studied and deliberated on the matter, the Council, in the exercise of the faculties conferred by Law No. 249-17, by unanimous vote of its members, attending to the motives exposed,

RESOLVES: FIRST: APPROVE the definitive version of the draft Regulation on Change of Control, Merger, Supervision, Administrative Intervention, Dissolution and Liquidation of Securities Market Participants; in accordance with the document presented by the Directorate of Regulation and Innovation, through the Superintendent, whose content is copied textually below:

"DRAFT REGULATION ON CHANGE OF CONTROL, MERGER, SUPERVISION, ADMINISTRATIVE INTERVENTION, DISSOLUTION AND LIQUIDATION OF THE PARTICIPANTS OF THE SECURITIES MARKET"

TITLE I GENERAL PROVISIONS CHAPTER I OBJECT, SCOPE OF APPLICATION AND FORMALITIES OF DOCUMENTS

Article 1. Object. This Regulation aims to develop the provisions in matters of change of control, merger, supervision, administrative intervention, dissolution and liquidation of the Securities Market Participants, in accordance with what is established by Law No. 249-17, of the nineteenth (19) day of December of two thousand seventeen (2017), of the Securities Market of the Dominican Republic, which repeals and substitutes Law No. 19-00 of the eighth (8) day of May of two thousand (2000) (hereinafter, the "Law").

Article 2. Scope. The provisions of this Regulation will be applicable to all natural and legal persons registered in the Securities Market Registry (hereinafter, the "Registry"). Paragraph I. The Issuers of securities that are governed by what is provided in the Regulation on Supervision, Change of Control, Merger, Administrative Intervention, Suspension and Exclusion of Issuers and Public Offering Values, and the anonymous societies that voluntarily register in the Registry to dematerialize their shares in accordance with Article 37 of the Law, are excepted from the scope of this Regulation. Paragraph II. For external auditors, price-providing companies, risk rating companies, investment advisors, and Investment Promoters legal persons, the following exceptions will apply:

1. In matters of supervision, what is provided in this Regulation will only be applicable regarding the services provided to the Participants of the Securities Market for which they are legally authorized;
2. In matters of administrative intervention with management supervision, what is provided in this Regulation will only be applicable to the extent that they have as their object that the Securities Market Superintendence (hereinafter, the "Superintendence") can oversee and establish limitations to the provision of their services to the Participants of the Securities Market or Autonomous Patrimony registered in the Registry with the object of ensuring their independence and professionalism;
3. In matters of dissolution and liquidation, they will be governed by what is provided in common law;
4. In matters of change of control and Merger, they will be governed by the provisions of their sectoral regulation or, in default, by the provisions of common law in the matter, without prejudice to the duty of information and update of the information in the Registry and before the investors, when applicable.

Article 3. Formalities of foreign documents. All documentation sent to the Superintendence must be drafted in the official language of the Dominican Republic, Spanish. Paragraph I. Documents and information drafted in another language must be translated into Spanish by a judicial interpreter. In case that the original documents are sent together with their translation, in case of any inconsistency or error, the Superintendence will only admit the validity of the document in Spanish. Paragraph II. Documents originated abroad must be duly legalized by the competent authorities of the country of origin.