CONASEV Resolution No. 029-2011 — SMV — PE

Lima, April 7, 2011

HAVING SEEN:

File No. 2009003412, the Memorandum No. 176-2011-EF/94.04.1 dated January 20, 2011 from the Legal Advisory Office, and, after hearing the report from the lawyer for Banco Continental S.A.;

CONSIDERING:

That, by Resolution of the CONASEV Administrative Tribunal No. 185-2010-EF/94.01.3, hereinafter, the RESOLUTION, dated July 22, 2010, the Administrative Tribunal resolved to sanction Banco Continental S.A., hereinafter, BANCO CONTINENTAL, with three (03) warnings for failing to timely present the Individual Interim Financial Statements and Management Report as of December 31, 2007, as well as the agreement approving said information; and with a fine of 6.3 UIT, equivalent to S/. 21,917.50 (Twenty-One Thousand Nine Hundred Seventeen and 50/100 New Soles), for having communicated out of deadline the appointment of Mr. Héctor Izaguirre Maguiña in the position of Technology and Exploitation Manager, Mr. Rolando Rojas Guerra in the position of Design and Development Manager, and the termination in the position of Centralized Operations Manager of Mr. Francisco Cano Delgado;

That, on August 17, 2010, BANCO CONTINENTAL filed an appeal against the aforementioned resolution;

That, by writings dated October 04 and 07, 2010, BANCO CONTINENTAL expands and complements the arguments presented in its appeal;

That, the arguments formulated in the appeal, as well as in the aforementioned writings, state the following:

Regarding the appointment of Messrs. Héctor Izaguirre Maguiña, Rolando Rojas Guerra, and the termination of Mr. Francisco Cano Delgado

The appointments of officials Izaguirre Maguiña and Rojas Guerra were known to the Board of Directors of BANCO CONTINENTAL on August 23, 2007, and disclosed to the market on August 24, 2007; likewise, the termination of Mr. Cano Delgado was known to the Board of the company on January 17, 2008, and disclosed to the market on January 18, 2008; therefore, there would be no non-compliance with securities market regulations.
The aforementioned acts of appointment and dismissal were informed to the market in the context of a transparency policy, as such acts do not constitute Important Events according to what is established in the Regulation of Important Events and SBS Resolution No. 1913-2004, which establishes that “the designation of Managers of a company in the financial system is only considered materially relevant when it concerns the General Manager and first-level managers, in their case, the General Manager and Assistant General Managers”.
The disclosure of the information in reference does not directly or indirectly affect the company, its economic group, its business, nor the price, offer, or negotiation of its securities.
If it is estimated that by application of Article 17 of the Regulation of Important Events, the disclosed information constitutes an important event qualified as such by BANCO CONTINENTAL, it must be concluded that the obligation to inform the market timely of the “Result or effect of agreements adopted in Shareholders’ Meeting, Board of Directors session, and Bondholders’ Meeting” has been fully complied with, according to Annex I, Literal E, subsection ii) of the aforementioned Regulation, since it was complied with by communicating the results of the Board of Directors sessions on August 23, 2007, and January 17, 2008, within the established deadlines.
The RESOLUTION has not taken into account that according to Annex I, literal C), numeral iv) of the Regulation of Important Events, it is only mandatory to inform about the appointments or dismissals of officials “who have the power to dispose of the issuer’s assets or obligate it”, a situation that is not observed in the present case.
According to the modification of Annex I, literal C), numeral vi) of the Regulation of Important Events, approved by Article 2 of CONASEV Resolution No. 103-2009-EF/94.01.1, the obligation to inform the market also arises with the acceptance by the corresponding corporate body of the resignations submitted, which implies that in the case of the resignations of BANCO CONTINENTAL’s officials, the disclosure deadline to the market is calculated from the Board of Directors session that formalized them, a parameter that must be applied in the same way for the case of appointments; therefore, by application of the principle of benign retroactivity, BANCO CONTINENTAL would not have incurred a sanctionable offense.
The Notice of Charges No. 3402-2009-EF/94.06.3 does not observe what is established by Article 234, numeral 3 of the LPAG, by not determining nor clearly specifying the preventive imputation against BANCO CONTINENTAL, as it omits to indicate which or what would have been the important events whose obligation to inform would have been fulfilled late. It considers that, as the RESOLUTION did not evaluate this argument, it is not sufficiently motivated and founded in law, thus becoming null for having violated what is established in the LPAG.
In its amplifying writing, BANCO CONTINENTAL states that it is only from the modification of the Regulation of Important Events dated December 30, 2009, that the case of resignation is clearly and unquestionably regulated, so that at the time the facts occurred, the aforementioned Regulation did not contemplate the case of resignation clearly and predictably, as CONASEV recognizes, so it could not be demanded that the regulated parties strictly observe the norm.

Regarding the approval and information of individual interim financial statements and the management report as of December 31, 2007

The financial information was disclosed timely on January 18, 2008, on the next business day after the agreement approving it by the Board of Directors of BANCO CONTINENTAL, January 17, 2008, with which the deadline provided in the Regulation of Important Events was complied with, in accordance with Articles 6 and 7 of the Financial Information Regulation, as can be seen from the CONASEV website and the receipt charges of the MVNet System in the file, in which it appears as received on January 18, 2008.
The RESOLUTION has not valued the fact that, as it appears in the receipt charge of the MVNet System, part of the management report was received by CONASEV on January 18, 2008, limiting itself solely to sustain that the financial information was presented late on January 21, 2008. Therefore, if CONASEV considered that, despite the above, the infringement existed, such alleged infringement should have referred to the incomplete presentation of said information, and not as the RESOLUTION sustains by stating that BANCO CONTINENTAL “incurred in the infringement typified in Annex I, numeral 3, subsection 3.1, of the Sanctions Regulation”; having not taken into account that the aforementioned Annex I, numeral 3, subsection 3.1, of the Sanctions Regulation also includes, as a minor infringement, that said financial information is presented incompletely.
Regarding the presentation of the management report, the RESOLUTION has incurred a vice of nullity according to Article 10, subsection 1, of the General Administrative Procedure Law (LPAG), by improperly typifying (and sanctioning) the alleged infringement as if said report had been presented late, when in rigor it was presented – according to CONASEV – at the due time but incompletely, a circumstance that is provided for and differentiated even in the Criteria Applicable to the Administrative Sanctioning Procedure.

Regarding the antecedents of the regulated party

The antecedents considered by the RESOLUTION correspond to a sanction of a different nature from the facts referred to alleged non-compliance in the disclosure of important events and in the presentation of financial information as an issuer and not in its capacity as custodian, so it constitutes a vice to consider them as sanction antecedents according to what is established by the Sanctions Regulation.

That, it has been verified that the appeal filed has observed what is established by Articles 207 and 211 of the LPAG, has been filed within the established deadline, and meets the requirements set forth in Article 113 of the aforementioned law;

That, regarding the appointment of Messrs. Héctor Izaguirre Maguiña, Rolando Rojas Guerra, and the termination of Mr. Francisco Cano Delgado, it is necessary to clarify, first of all, that, according to Article 28 of the Securities Market Law (LMV), the registration of a certain value or issuance program entails for its issuer the obligation to inform CONASEV and, if applicable, the respective stock exchange or entity responsible for conducting the centralized mechanism, of the important events, including ongoing negotiations, about itself, the value, and the offer made thereof, as well as to disclose such events truthfully, sufficiently, and timely, being that the information must be provided to said institutions and disclosed as soon as the fact occurs or the issuer takes knowledge of it, as the case may be;

That, likewise, Article 3 of the Regulation of Important Events, approved by CONASEV Resolution No. 107-2002-EF/94.10, establishes that issuers of securities registered in the RPMV are obliged to inform CONASEV of the acts, facts, agreements, or decisions, and other communications referred to in the Regulation;

That, according to the cited norm, it corresponds to the issuer to determine in a first instance whether a fact qualifies or not as an important event, being that if considered as such, it originates the obligation for the issuer to communicate said fact to CONASEV for the purpose of making the referred information available to the public and investors;

That, likewise, Article 4 of the Regulation of Important Events establishes that important events are considered: “1. Acts, facts, decisions, and agreements that may affect an issuer and its business, as well as the companies that make up its economic group; 2. Information that affects directly or may significantly affect the determination of the price, offer, or negotiation of securities registered in the RPMV; 3. In general, information necessary for investors to form an opinion about the implicit risk of the company, its financial situation, and its operating results, as well as of the issued values”, so it is considered that the appointments and termination in the position of managers constitute important events from the moment they occur, independent of whether the same is subordinated or not to an approval by the corresponding corporate body, since, in accordance with Article 28 of the LMV cited above, the information must be provided as soon as the fact occurs;

That, on the other hand, the Regulation of Important Events specifies that Annex I includes an enumerative, non-limitative list of acts, facts, agreements, or decisions that must be considered as important events, that is, the issuer of securities registered in the RPMV is authorized to communicate about the occurrence of any act, fact, agreement, or decision that also qualifies as an important event, not included in the aforementioned list;

That, in view of what is stated in the preceding paragraph, BANCO CONTINENTAL qualified as an important event the appointment of Mr. Héctor Izaguirre Maguiña in the position of Technology and Exploitation Manager, and of Mr. Rolando Rojas Guerra in the position of Design and Development Manager, by letter dated August 24, 2007; and the termination in the position of Centralized Operations Manager of Mr. Francisco Cano Delgado, by letter dated January 18, 2008;

That, on the other hand, the fifth consideration of CONASEV Resolution No. 103-2009-EF/94.01.1, which modified, among others, subsection vi) of section E of Annex 1 of the Regulation of Important Events, expressly indicates that: “(...) the important events indicated in Annex I of the Regulation of Important Events, Reserved Information and Other Communications, are enumerative and not taxative, which supposes that issuers are obliged to reveal to the market any act, agreement, or decision that qualifies as material according to Article 4 of the same regulation, it is considered necessary, for a better application of the norm, to incorporate in a taxative and indubitable manner some cases not included expressly”, that is, even the aforementioned resolution itself recognizes the enumerative quality of the list contained in Annex I and, in addition, specifies that the referred resolution is issued with the purpose that the Regulation of Important Events can be applied efficiently;

That, consequently, the publication of CONASEV Resolution No. 103-2009-EF/94.01.1 does not imply that only from that moment it constitutes an important event that must be informed as such;

That, regarding the argument referred to that the Notice of Charges does not observe what is established in numeral 3 of Article 234 of the LPAG, we must indicate that it is verified from the review of the Notice of Charges that it does comply with stating that said society would not have complied with presenting, within the deadline established by securities market regulations, the important events referred to the appointment of Mr. Héctor Izaguirre Maguiña, Mr. Rolando Rojas Guerra, and the termination in the position of Mr. Francisco Cano Delgado, non-compliance that would have configured the infringements typified as minor offenses according to what is stated in Annex I, numeral 3, subsection 3.1, of the Sanctions Regulation, which are sanctionable with a warning or fine of one (01) up to twenty-five (25) UIT, reiterating that the list of important events contained in Annex I of the respective regulation constitutes an enumerative, non-limitative list of acts, agreements, or decisions that must be considered as important events, so that, despite some non-compliances at the time of their commission not being included in said list, this does not limit their relevance and the requirement for timely communication of the information;

That, consequently, no violation is verified of what is established in the LPAG, which constitutes a cause of nullity of the referred Notice of Charges;

That, now, it has been ascertained that said argument was evaluated by the Administrative Tribunal when issuing the RESOLUTION, taking into consideration for this purpose the analysis carried out in the penultimate paragraph of page 4 of Report No. 030-2010-EF/94.06.3, to which express reference is made in the subsection “HAVING SEEN” of the RESOLUTION, finally concluding that, as a consequence of the late communication of the aforementioned important events, it was feasible to impose a sanction;

That, with regard to the approval and information of individual interim financial statements and the management report as of December 31, 2007, it has been verified from the MVNet System Log that on January 18, 2008, BANCO CONTINENTAL only communicated as an important event changes and appointments of directors, managers, administrators, liquidators, legal representatives, or attorneys, ascertaining that it was only complied with communicating the approval of the Individual Interim Financial Statements as of December 31, 2007, occurred on January 17, 2008, on January 21, 2008, so the infringement is understood to be configured;

That, although, as BANCO CONTINENTAL alleges, the date of the format of communication of the referred important event appears as January 18, 2008, said format was only signed and sent on January 21, 2008, as can be observed from the MVNet System;

That, BANCO CONTINENTAL alleges that by having presented part of the Management Report on January 18, 2008, as evidenced in the Receipt Charge, the infringement should have referred to the incomplete presentation of said information, so the RESOLUTION incurs a vice of nullity for not valuing said circumstance and applying the corresponding sanction;

That, regarding this, Article 6 of CONASEV Resolution No. 103-99-EF/94.10, which approves the Financial Information Regulation, establishes that issuers and legal entities registered in the RPMV are obliged to prepare individual interim and consolidated financial statements and that these will refer to the closing dates of March 31, June 30, September 30, and December 31 of each year, and that, additionally, issuers must prepare and present the Management Report referred to in Chapter VIII of the Financial Information Regulation, according to the guidelines indicated in the Third Section of the Manual, approved by said resolution, together with the individual interim financial statements;

That, in that sense, Article 35 of the Financial Information Regulation establishes that the Management Report that issuers must prepare comprises together the Responsibility Declaration and the Management Analysis and Discussion, therefore, only the Management Report will be understood as validly presented when both documents are sent;

That, it has been verified that BANCO CONTINENTAL complied with sending both documents on January 21, 2008, so it is only on that date that the Management Report must be considered as validly presented, not resulting applicable to impose a sanction for incomplete presentation of information when the same has been presented late according to securities market regulations;

That, therefore, no vice of nullity is verified in the RESOLUTION, since it validly concluded that the individual interim financial statements as of December 31, 2008, as well as the important event referred to its approval and the respective management report were presented late;

That, with regard to the sanction antecedents of BANCO CONTINENTAL, Article 17 of the Sanctions Regulation, approved by CONASEV Resolution No. 055-2001-EF/94.10, establishes that the sanctions imposed during the three (03) years prior to the date on which the infringement was detected are considered as antecedents of the offender;

That, in the same sense, the Current Sanction Criteria, approved by the Board of Directors of CONASEV on April 13, 2004, state that it is understood that a participant has sanction antecedents when at the time of imposing a sanction, it is detected that it has been sanctioned previously;

That, from the review of the aforementioned norms, it is concluded that no distinction can be made where the norm itself does not make it, that is, sanction antecedents must be considered those final resolutions that have as their object to sanction a certain issuer either for non-compliance with its information obligations or for non-compliance with minority shareholder protection norms, since both sanctionable conduct are under the supervision and sanctioning scope of CONASEV, an institution that demands from issuers a standard of observance of all provisions and obligations under its competence;

That, in that sense, it is correct to establish that the Resolution of the Administrative Tribunal of CONASEV No. 014-2007-EF/94.12 must be considered as a sanction antecedent in the present administrative sanctioning procedure, no vice being verified in this regard in the RESOLUTION;

That, consequently, no vice of nullity is evidenced in the present procedure; and

Being in accordance with what is established by subsection t) of Article 11 of the Unified Text of the Organic Law of CONASEV, approved by Legislative Decree No. 26126 and its modifications, as well as by what was agreed by the Board of Directors of CONASEV met in its session of February 14, 2011;

IT IS RESOLVED:

Article 1°.- Declare unfounded the appeal filed by Banco Continental S.A. against the Resolution of the Administrative Tribunal of CONASEV No. 185-2010-EF/94.01.3.

Article 2°.- Consider the administrative route exhausted.

Article 3°.- Transcribe this resolution to Banco Continental S.A. and to the Lima Stock Exchange S.A.

Article 4°.- Order the dissemination of this resolution on the CONASEV Portal.

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Manuel Choy Vicente
Vice President