Compilation of Securities Market Regulations - Definition of Qualified Investor

Montevideo, January 2, 2023
Ref: COMPILATION OF SECURITIES MARKET REGULATIONS - DEFINITION OF QUALIFIED INVESTOR.

The market is informed that the Financial Services Superintendence adopted the following resolution on December 19, 2022:

1. INCORPORATE into Title X – Definitions, of Book I – Authorizations and Registrations of the Compilation of Securities Market Regulations, the following article:

ARTICLE 141.1 (QUALIFIED INVESTOR – DEFINITION).

Qualified investors are considered to be natural or legal persons who possess the experience and/or knowledge necessary to understand, evaluate, assume, and adequately manage the risks inherent in any investment decision.

The following are included in this category:

1. Central Government, departmental governments, autonomous entities and decentralized services, parastatal treasuries and other non-state public law persons.
2. Financial intermediation institutions.
3. Savings and pension fund administrators for themselves and for the funds they administer.
4. Insurance and reinsurance companies.
5. Investment advisors.
6. Portfolio managers.
7. Securities intermediaries, when acting on their own account.
8. Investment fund administrators and financial trustees for themselves and for the funds or trusts they administer.
9. Representatives of foreign financial institutions that provide investment advice.
10. Foreign institutions that perform the activities corresponding to the entities cited in items 2 to 8 that are subject to regulation and supervision by the financial supervisory authority in their country of origin.
11. International organizations.
12. Natural or legal persons, national or foreign, who request to be considered as qualified investors to invest in instruments that require such qualification. To this effect, such persons must, on the date of the request, meet the following requirements:

i. Legal persons: have a balance of financial assets of no less than 4,000,000 UI (four million indexed units).
ii. Natural persons: have a balance of financial assets of no less than 4,000,000 UI (four million indexed units) or an annual income level of no less than 1,500,000 UI (one million five hundred thousand indexed units).

In addition to what is established in letters i. and ii., natural or legal persons must meet one of the following conditions:

a) Have a professional degree and demonstrate completion of any of the following training instances:

• Relevant courses in securities market matters, provided by universities or specialized financial or non-financial institutions, both local and foreign;
• Obtaining a postgraduate degree in the field of finance;
• Passing internationally recognized exams and routinely applied to develop activities in the securities market.

b) Have held, for at least 2 (two) consecutive years, a position related to investment decision-making, the provision of investment advisory services, or portfolio management at an institution that is regulated and supervised by the Central Bank of Uruguay or by the securities market regulatory authority in their country of origin.

c) That in the last year, on their own behalf and order, a minimum of 40 (forty) transactions have been concluded in the securities market for an accumulated amount equal to or greater than 8,000,000 UI (eight million indexed units) in instruments of similar nature and risk relative to the type of product to be acquired.

Operations executed within the framework of portfolio management mandates will not be counted.

In the case of legal persons, compliance with conditions a) or b) must be accredited by the person in charge of investment decisions in the company.

2. INCORPORATE into Chapter II - Investment Policy, of Title III – Investment Fund Administrating Companies, of Book II – Stability and Solvency of the Compilation of Securities Market Regulations, the following article:

ARTICLE 162.1 (INVESTMENT FUNDS DIRECTED AT QUALIFIED INVESTORS - INVESTMENT LIMITS).

The investment limits established in this chapter will not apply to investment funds directed at qualified investors, in accordance with the provisions of the final paragraph of Article 22 of Law No. 16.774 of September 27, 1996 as amended by Article 756 of Law No. 19.924 of December 18, 2020.

3. INCORPORATE into Chapter IV - Services provided by securities intermediaries, investment advisors and portfolio managers, of Title I – Client Relations, of Book IV – Protection of the user of financial services of the Compilation of Securities Market Regulations, the following article:

ARTICLE 209.1 (QUALIFIED INVESTORS - RESPONSIBILITY OF SECURITIES INTERMEDIARIES).

Securities intermediaries will be responsible for classifying as qualified investors the clients referred to in item 12. of Article 141.1 who so request, for the purpose of investing in instruments that require such qualification.

The investor's request to be considered qualified must be made in accordance with the instructions that will be issued.

Securities intermediaries must adopt the appropriate measures to verify compliance with the conditions established in the cited item by their clients.

Compliance with the requirements imposed by the regulations must be verified when new investments are made that require categorization as a qualified investor, provided that more than one year has elapsed since the initial qualification, unless before that period the securities intermediary has information that changes have occurred that make such verification necessary.

4. INCORPORATE into Chapter V – Administration of investment funds, of Title I – Client Relations, of Book IV – Protection of the user of financial services of the Compilation of Securities Market Regulations, the following article:

ARTICLE 220.1 (QUALIFIED INVESTORS - RESPONSIBILITY OF INVESTMENT FUND ADMINISTRATING COMPANIES).

Investment fund administering companies will be responsible for classifying as qualified investors the clients referred to in item 12. of Article 141.1 who so request, for the purpose of investing in investment funds directed at qualified investors. Such categorization will not correspond when the holding of shares is registered in the name of a securities intermediary on behalf of its clients, in which case the responsibility for the classification of clients will lie with the intermediary.

The investor's request to be considered qualified must be made in accordance with the instructions that will be issued.

Investment fund administering companies must adopt the appropriate measures to verify compliance with the conditions established in the cited item by clients.

Compliance with the requirements imposed by the regulations must be verified when new investments are made that require categorization as a qualified investor, provided that more than one year has elapsed since the initial qualification, unless before that period the investment fund administering companies have information that changes have occurred that make such verification necessary.

JUAN PEDRO CANTERA
Superintendent of Financial Services
2022-50-1-02489