Circular 01/24 — Regulatory Indexation of the Maximum Issuance Amount for SMEs in Fixed Income Public Offering Securities with Voluntary Risk Rating and the Maximum Investment Amount for Small Investors

SW Superintendence of the Securities Market of the Dominican Republic

CIRCULAR No. 01/24

To: All participants in the Securities Market and the general public. Subject: Notification of regulatory indexation of the maximum amount to be issued by Small and Medium Enterprises (SMEs) in fixed income public offering securities with voluntary risk rating and the maximum investment amount for small investors.

Seen: a. Constitution of the Dominican Republic, voted and proclaimed by the National Assembly on the thirteenth (13) day of June two thousand fifteen (2015), published on the tenth (10) of July two thousand fifteen (2015). b. Law No. 249-17, of the Securities Market of the Dominican Republic, which repeals and substitutes Law No. 19-00 of the eighth (8) of May two thousand (2000), promulgated on the nineteenth (19) of December two thousand seventeen (2017) (hereinafter, “Law No. 249-17”). c. Law No. 107-13, on the Rights of persons in their relations with the Administration and Administrative Procedure, of the sixth (6) of August two thousand thirteen (2013). d. Law No. 479-08, General of Commercial Companies and Individual Limited Liability Enterprises, of the eleventh (11) of December two thousand eight (2008) and its modifications. e. Modification to the Public Offering Regulation approved by the Fourth Resolution of the National Securities Market Council of the thirteenth (13) of September two thousand twenty-two (2022), R-CNMV-2022-16-MV. f. Public Offering Regulation approved by the Sole Resolution of the National Securities Market Council of the fifteenth (15) of October two thousand nineteen (2019), R-CNMV-2019-24-MV. g. Circular No. 06/2023, on the notification of regulatory indexation of the maximum amount to be issued by Small and Medium Enterprises (SMEs) in fixed income public offering securities with voluntary risk rating and the maximum investment amount for small investors, approved by the Superintendent of the Securities Market, on the thirtieth (30) of March two thousand twenty-three (2023).

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Superintendence of the Securities Market of the Dominican Republic

Considering:

1. That the Superintendence of the Securities Market, in its capacity as the regulatory body of the Securities Market and in accordance with Article 7 of Law No. 249-17, shall have as its objective to promote an orderly, efficient, and transparent securities market, protect investors, ensure compliance with the law, and mitigate systemic risk, through the regulation and supervision of natural and legal persons operating in the securities market.
2. That Article 17, paragraphs 1 and 2 of Law No. 249-17 empowers the Superintendent of the Securities Market to: "1) Execute the securities market policy in accordance with the guidelines established by the Council." and "2) Comply with and enforce the provisions of this law and its regulations, ensuring the correct application of its principles, policies, and objectives."
3. That paragraph 14 of the aforementioned article attributes to the Superintendent of the Securities Market the power to "issue the resolutions, circulars, and instructions required for the development of this law and its regulations."
4. That the Superintendent is the highest executive authority of the Superintendence of the Securities Market, having charge of its direction, control, and representation.
5. That, in accordance with the exercise of regulatory power, the National Securities Market Council sanctioned the Modification to the Public Offering Regulation through its Fourth Resolution, R-CNMV-2022-16-MV, of the thirteenth (13) of September two thousand twenty-two (2022).
6. That Article 3 of the aforementioned Modification to the Public Offering Regulation resolution states:

"(1) The risk rating shall be voluntary on the part of the issuer for fixed income securities issued by SMEs for a total amount of approved public offerings up to Sixty Million Dominican Pesos (DOP 60,000,000.00), which may be indexed annually by the Superintendent according to the accumulated inflation published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year, or its equivalent in foreign currency as determined annually by the Superintendent based on the purchase exchange rate published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year. In the event that the issuer classified as an SME exceeds the amount indicated in this paragraph, it must effectuate a risk rating in the capacity of an issuing company."

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Superintendence of the Securities Market of the Dominican Republic

7. That, in view of what is stipulated in Article 4 of the aforementioned Modification to the Public Offering Regulation resolution:

"(1) A small investor is considered for Share issuances to be any natural person who requests the subscription of a Share issuance of public offering, for an amount that does not exceed Five Million Dominican Pesos (DOP 5,000,000.00), which may be indexed annually by the Superintendent according to the accumulated inflation published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year, for values denominated in Dominican pesos; or its equivalent in foreign currency. In the case of foreign currencies, the equivalence shall be determined annually by the Superintendent based on the purchase exchange rate published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year."

8. That, in the same way for public offerings of fixed income securities, in accordance with what is stipulated in Article 5 of the aforementioned resolution:

"(1) A small investor is considered to be any natural person who requests to subscribe to values of an issuance subject to public offering for an amount that does not exceed Five Million Dominican Pesos (DOP 5,000,000.00), which may be indexed annually by the Superintendent according to the accumulated inflation published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year, for values denominated in Dominican pesos; or its equivalent in foreign currency. In the case of foreign currencies, the equivalence shall be indexed annually by the Superintendent based on the purchase exchange rate published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year."

9. That it is the competence of the Superintendent to (i) index annually the maximum amount in Dominican pesos based on the accumulated inflation published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year and (ii) fix the equivalence of the maximum amount for values denominated in United States dollars based on the purchase exchange rate published by the Central Bank of the Dominican Republic corresponding to December 31 of the immediately preceding year, regarding the maximum amount to be issued by Small and Medium Enterprises (SMEs) in fixed income public offering securities with voluntary risk rating and the maximum investment amount for small investors, considering the variation made by Circular No. 06/2023.

10. That, according to the data published by the Central Bank of the Dominican Republic in the National Consumer Price Index, the accumulated inflation corresponding to the period December 2022 to December 2023 was three point five seven percent (3.57%), so it is necessary to increase the maximum limit to be subscribed by small investors and the maximum amount to be issued by SMEs in fixed income public offering securities with voluntary risk rating for the values.

11. That the purchase exchange rate published by the Central Bank of the Dominican Republic applicable to December 31, 2023 was DOP 57.8265/USD.

Therefore: The Superintendent of the Securities Market, in the use of the faculty conferred upon him by Article 17 paragraph 14 of Law No. 249-17 and the Public Offering Regulation, disposes the following:

I. Inform that the equivalence to the maximum amount to be issued by SMEs in fixed income public offering securities denominated in Dominican pesos with voluntary risk rating for the values, will be increased to sixty-seven million seven thousand seven hundred Dominican pesos with zero cents (DOP 67,007,700.00), indexed according to the accumulated inflation published by the Central Bank of the Dominican Republic corresponding to the period December 2022 to December 2023.

II. Inform that the equivalence to the maximum amount to be issued by SMEs in fixed income public offering securities denominated in United States dollars with voluntary risk rating for the values, will be of one million one hundred fifty-eight thousand seven hundred seventy-one United States dollars with zero cents (USD 1,158,771.00), updated based on the purchase exchange rate of one United States dollar, published by the Central Bank of the Dominican Republic corresponding to the close of December 31, 2023.

III. Inform that the equivalence to the maximum investment amount in a public offering issuance requested by a small investor for values denominated in Dominican pesos, will be increased to five million five hundred eighty-four thousand Dominican pesos with zero cents (DOP 5,584,000.00), indexed according to the accumulated inflation published by the Central Bank of the Dominican Republic corresponding to the period December 2022 to December 2023.

IV. Inform that the equivalence to the maximum investment amount in a public offering issuance requested by a small investor for values denominated in United States dollars, will be of ninety-six thousand five hundred sixty-five United States dollars with zero cents (USD 96,565.00), updated based on the purchase exchange rate of one United States dollar, published by the Central Bank of the Dominican Republic corresponding to the close of December 31, 2023.

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Superintendence of the Securities Market of the Dominican Republic

V. The provisions of this Circular shall enter into force from the next business day following its publication.

VI. Instruct the Regulation and Innovation Directorate to publish this Circular on the institution's website.

In Santo Domingo, National District, capital of the Dominican Republic, on the twenty-fifth (25) days of the month of January two thousand twenty-four (2024).

Er esto Bournigal Read Superintendent

V' EBR/<§/0 a/ru/dc Regulation and Innovation Directorate

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