CONASEV Resolution No. 032-2011 — SMV — PE

Lima, May 3, 2011

VISTOS:

File No. 2009000755 and Memorandum No. 324-2011-EF/94.04.1 dated February 10, 2011 from the Legal Advisory Office;

CONSIDERING:

That, through Resolution No. 020-2010-EF/94.01.3 dated March 1, 2010, the CONASEV Administrative Tribunal sanctioned Yura S.A., hereinafter Yura, for having committed minor infractions typified in Annex I, numeral 3, subsection 3.1 of the Sanctions Regulation, approved by CONASEV Resolution No. 055-2001-EF/94.10 and its modifying norms, with a) A fine of 2.72 UIT, equivalent to S/ 9,384.00 for having committed an infraction against the Regulation on Material Facts, Confidential Information and Other Communications, approved by CONASEV Resolution No. 107-2002-EF/94.10, hereinafter Regulation on Material Facts, for not timely communicating the partial amortizations of Series A of the Third Issuance of the First Corporate Bond Program dated April 30 and October 29, 2007; b) Ten (10) censures for having committed infractions against the Regulation on Material Facts, for not timely communicating: b.1) The agreement on the modification of the bylaws by expansion of the corporate purpose, b.2) The agreement on the distribution or application of profits, b.3) The agreement on the removal or election of directors, b.4) The agreement on the approval of the Audited Individual Financial Statements as of December 31, 2006, b.5) The agreement on the approval of the annual report as of December 31, 2006, b.6) The agreement on the dividend policy, b.7) The agreement on the designation of external auditors, b.8) The agreement on the redistribution of the dividend from Cemento Sur S.A., b.9) The partial amortization of Series A of the Second Issuance of the First Corporate Bond Program dated June 25, 2007, b.10) The partial amortization of Series A of the First Issuance of the First Corporate Bond Program dated October 30, 2007 and c) One (1) censure for having committed an infraction against the Financial Information Regulation, approved by CONASEV Resolution No. 103-99-EF/94.10 for not timely presenting the Audited Individual Financial Statements corresponding to the 2006 fiscal year;

That, with a writing dated March 23, 2010, Yura files an appeal against the Resolution of the CONASEV Administrative Tribunal No. 020-2010-EF/94.01.3;

That, Yura supports its appeal with the following arguments:

It states that due to force majeure it was materially impossible to send information regarding the agreements adopted in the Mandatory Annual Shareholders' Meeting, hereinafter MASM, due to an unforeseeable technical event related to the proper functioning of the Registration and Supervision Information System (SYRyS); constituting this circumstance an exemption from the infraction, and the sanctioning file should be archived;
It indicates that information regarding the partial amortizations that occurred in some series of the different corporate bond programs was known to the market in advance, as it is part of the conditions of the public offering of said bonds, which are of a public nature, so investors were sufficiently informed about all the characteristics and conditions of the bonds to be placed, which are also reflected in the information prospectus, and consequently the late submission of said information did not generate any harm to the market, nor is there any claim from any investor;
It refers that the charge imputation letter indicates that Yura did not timely present "The agreement on the designation of external auditors (...)"; however, it states that what was approved in the MASM was to delegate to the Board of Directors the authority to designate external auditors, so the Resolution subject to appeal omitted to value the mentioned argument;
It mentions that according to the Criteria Applicable to the Administrative Sanctioning Procedure for Non-compliance with Deadlines in the Submission of Periodic and Occasional Information, approved by CONASEV Board of Directors agreement of April 13, 2004, non-compliances should be sanctioned with a single censure and not with a censure in each case as occurs in the Resolution subject to appeal;
It holds that Report No. 188-2009-EF/94.06.3 of the Issuers Department dated April 24, 2009 did not take into account the new criteria indicated in Legislative Decree No. 1029, published on June 24, 2008, which modifies the General Administrative Procedure Law, hereinafter LPAG, despite having been elaborated on a date subsequent to the entry into force of said decree, from which it deduces its nullity;

That, the filed appeal meets the requirements established in articles 207 and 211 of the LPAG, since it was filed within the deadline of 15 business days of notifying the administrative act and was authorized by a lawyer;

That, article 7[1] of the Regulation on Material Facts establishes that material facts must be informed in the shortest possible time through the means established by CONASEV and before any other person or means of dissemination, as a maximum within the next business day of taking the agreement or decision or of the occurrence of the fact or act, as the case may be;

That, according to article 3[2] of CONASEV Resolution No. 103-99-EF/94.10, which approves the Financial Information Regulation, issuers must present their audited individual financial statements the day after they are approved, with the maximum presentation deadline being April 15 of each year;

That, according to the challenged Resolution, the following has been verified:

a) The material facts adopted in the MASM dated March 26, 2007 referred to the agreements on: i) The modification of the bylaws by expansion of the corporate purpose, ii) The distribution or application of profits, iii) The removal or election of directors, iv) The approval of the Audited Individual Financial Statements as of December 31, 2006, v) The approval of the annual report as of December 31, 2006, vi) The dividend policy, vii) The redistribution of the dividend from Cemento Sur S.A. and viii) The designation of auditors, were communicated on March 28, 2007, that is, in a late manner, as they should have been communicated on March 27, 2007, therefore they do not comply with what is provided in article 7 of the Regulation on Material Facts;

b) The material facts regarding the partial amortizations of: i) Series A of the Third Issuance of the First Corporate Bond Program dated April 30, 2007 were presented on May 9, 2007, when they should have been presented on May 2, 2007, so Late Submission E2[3] would have been incurred and the provision of article 7 of the Regulation on Material Facts would not be complied with; ii) Series A of the Third Issuance of the First Corporate Bond Program occurred on October 29, 2007 were presented on November 2, 2007, when they should have been presented on October 30, 2007, so Late Submission E2 would have been incurred and the provision of article 7 of the Regulation on Material Facts would not be complied with; iii) Series A of the Second Issuance of the First Corporate Bond Program carried out on June 25, 2007 were presented on June 27, 2007, when they should have been sent on June 26, 2007, so Late Submission E1[4] would have been incurred and the provision of article 7 of the Regulation on Material Facts would not be complied with and iv) Series A of the First Issuance of the Second Corporate Bond Program carried out on October 30, 2007 were presented on November 2, 2007, when they should have been sent on October 31, 2007, so Late Submission E2 would have been incurred and the provision of article 7 of the Regulation on Material Facts would not be complied with;

c) The audited individual financial statements corresponding to the 2006 fiscal year approved in the General Shareholders' Meeting of March 26, 2007 were sent together with the material fact letter on March 28, 2007, that is, in a late manner, since they should have been sent on March 27, 2007; consequently, the provision of article 3 of CONASEV Resolution No. 103-99-EF/94.10, which approves the Financial Information Regulation, would have been breached;

That, regarding what was stated by Yura that due to force majeure it was materially impossible to send information regarding the agreements adopted in the MASM, it must be noted that Yura has not presented any evidence to support such assertion, nor has it demonstrated the existence of technical difficulties with the functioning of the SYRyS, and even less has it accredited that on that occasion it attempted to bring to the knowledge of CONASEV the alleged difficulties that arose;

That, subject to the principle of informality, regulated in article IV of the Preliminary Title of the LPAG, a request was made to the CONASEV Information Technology Office for the access log of the MVNet System, in which the various events and actions carried out by Yura in the SYRyS on March 26 and 27, 2007 are recorded; having been determined, from the review of said log, that on March 27 on various occasions Yura successfully entered the MVNet system to prepare financial information and material facts to send, with no technical and/or computer difficulties registered, and it is also appreciated that the material facts prepared were only sent the following day;

That, regarding what Yura holds about the late submission of information regarding the partial amortizations of series of the different programs of corporate bonds not generating any harm to the market, since it is information known in advance by the market, it can be noted that article 24 of CONASEV Resolution No. 141-98-EF/94.10, which approved the Regulation on Primary Public Offering and Sale of Securities, establishes as an obligation of the issuer, to communicate as a material fact within the next day of being carried out, the reduction in the number of securities in circulation through buyback, redemption, amortization, conversion, among others, from the start of the placement stage and during the entire period in which the security is registered in the Public Registry of the Securities Market. Therefore, requiring the issuer to communicate the amortization of the issued securities aims to inform the market of the timely and diligent fulfillment of its obligations to investors, who will finally adopt their investment decisions based on all that available information including that referred to amortizations;

That, therefore, what Yura alleges regarding that when the securities were issued and placed in the market, investors were already informed through the prospectus of the conditions of the securities, as well as the payment and buyback methods thereof, is not valid, since what is stated in the information prospectus although it constitutes an instrument of recognition of obligations and fixing of conditions and deadlines that, in principle, the issuer must observe, does not necessarily imply that the deadlines and forms established there are observed by the issuer, placing there the need for investors to know timely that the assumed obligations were indeed fulfilled;

That, regarding what Yura pointed out regarding that the MASM approved delegating to the Board the authority to designate external auditors and not the designation of the auditors as the Charge Imputation Letter holds, it must be noted that it has been verified that Yura in the material fact that it communicated on March 28, 2008 indicated that in the MASM the agreement referred to the designation of external auditors was adopted, so the charge imputation carried out is valid; however, given that with a writing dated January 26, 2010, Yura informed the Administrative Tribunal that what was approved in the MASM was to delegate to the Board the authority to designate external auditors, attaching for such purposes the respective minutes, from whose review what Yura asserted is proven, it corresponds to declare the appeal filed against the challenged Resolution well-founded in this regard, leaving without effect the censure imposed;

That, regarding what Yura holds that, according to the Current Sanction Criteria, all non-compliances should be sanctioned with a single censure, it must be noted that such assertion does not stem from the reading of the mentioned criteria as the appellant intends, and furthermore, these are independent misconducts originating from failing to comply with obligations derived from the norms regulating the submission of financial information and communication of material facts, so each infraction must be sanctioned individually;

That, regarding the argument presented by Yura that Report No. 188-2009-EF/94.06.3 of the Issuers Department omitted to analyze the new sanction criteria indicated in the LPAG, it must be noted that, in accordance with what is provided in article 11, subsection 11.1 of the LPAG, nullity when raised through the administrative resources contemplated, must be subject to the same requirements and considerations regulated for them, so by establishing in article 206.2 of the LPAG that only definitive acts that end the instance and procedural acts that determine the impossibility of continuing with the procedure or produce defenselessness are appealable, it is not appropriate to support the nullity deduced against said Report;

That, furthermore, it has not been expressly indicated in the appeal filed by Yura the grievance or defenselessness that could have been generated to it by Report No. 188-2009-EF/94.06.3, nor how it made the continuation of the procedure impossible, in fact it has been verified that, after the aforementioned Report was issued, the company presented a writing of allegations, so the aspects under which the nullity of said report could be requested would be disproven;

That, likewise, it is necessary to highlight, as already pointed out in the challenged Resolution, that Report No. 188-2009-EF/94.06.3 only constitutes a proposal for sanction, which in no way binds or obliges the Administrative Tribunal, who according to the provisions established in the Statute governing its activity, has independence of criterion at the time of resolving matters within its competence; this latter is demonstrated by stating in the Resolution subject to appeal that even though in the mentioned Report the criteria introduced by the modification of the LPAG were not evaluated, they were applied to the present sanctioning procedure, and it is under this additional evaluation that the Administrative Tribunal resolves to reduce the fine proposed by the line organ from 3.40 UIT to 2.72 UIT; and,

Being in accordance with what is provided in 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 what was agreed by the CONASEV Board of Directors met in its session of March 14, 2011;

IT IS RESOLVED:

Article 1°.- To declare well-founded in part the appeal filed by Yura S.A. against the Resolution of the CONASEV Administrative Tribunal No. 020-2010-EF/94.01.3 in the regard referred to the late presentation of the agreement to designate external auditors adopted in the Mandatory Annual Shareholders' Meeting of March 26, 2007, and reforming it, it corresponds to sanction said company with a fine of 2.72 UIT, equivalent to S/. 9,384.00 (Nine Thousand Three Hundred Eighty-four with 00/100 New Soles), and with ten (10) censures.

Article 2°.- To consider the administrative route exhausted.

Article 3°.- To transcribe this resolution to Yura S.A. and to the Lima Stock Exchange S.A.

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


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Michel Canta Terreros
President

[1] Article 7 °.- TIME AND MEANS OF COMMUNICATION Material facts must be informed in the shortest possible time through the means established by CONASEV and before any other person or means of dissemination, as a maximum within the next business day of taking the agreement or decision or of the occurrence of the fact or act, as the case may be.
Exceptionally, in the cases that correspond and always that it is duly supported, the term of distance provided between the place of domicile of the persons obliged to inform within the national territory and the headquarters of CONASEV and, when applicable, to that of the Exchange or to that of the responsible of the centralized negotiation mechanism respective, will be applied to the deadline indicated above.

[2] Article 3º.- Issuers and legal entities registered in the Public Registry of the Securities Market (RPMV), as well as Collective Fund Management Companies must present to CONASEV and, if applicable, at the same time, to the entities responsible for the management of the centralized negotiation mechanisms, their annual audited individual financial information the day after it has been approved by the corresponding body, with the presentation deadline being April 15 of each year. In the case of issuers, the presentation of said information is considered a material fact.

[3] According to the current sanction criteria, non-compliances are qualified as E2 (Late 2) if the lateness is greater than one day and up to 15 calendar days from the expiration of the obligation.

[4] According to the current sanction criteria, non-compliances are qualified as E1 (Late 1) if the lateness is one day.