CONASEV Resolution No. 045-2011 — SMV — PE

Lima, June 13, 2011

VISTOS:

File No. 2009029343 and Memorandum No. 500-2011-EF/94.04.1 dated February 25, 2011 from the Legal Advisory Office;

CONSIDERING:

That, by Resolution No. 318-2010-EF/94.01.3 of November 3, 2010, the Administrative Tribunal of CONASEV sanctioned Beckol Investments Corp., hereinafter Beckol, with a fine of two hundred fifty (250) Tax Credit Units in effect at the time the infraction was committed, equivalent to S/. 887,500.00 (Eight Hundred Eighty-Seven Thousand Five Hundred and 00/100 New Soles), for having acquired, in a concerted manner, a significant participation in Empresa Agraria Azucarera Andahuasi S.A.A., hereinafter Andahuasi, without previously making a Public Acquisition Offer, hereinafter OPA, thus incurring the very serious infraction provided for in Annex IV, numeral 1, 1.1, of the Regulations on Sanctions in the Securities Market, approved by CONASEV Resolution No. 055-2001-EF/94.10 and its modifying norms, hereinafter the Sanctions Regulations, and ordered, among other things, that Beckol is obliged to sell through a public offer the shares of its ownership issued by Andahuasi, within a period not exceeding two (02) months from the notification of said Resolution;

That, with a document dated November 30, 2010, Beckol files an appeal against Resolution No. 318-2010-EF/94.01.3 of the Administrative Tribunal of CONASEV;

That, Beckol bases its appeal on the following arguments:

It states that, according to the challenged Resolution, the concertation lies in the existence of a link between the acquirers, and that to determine the existence of a sanctionable conduct, it must first be verified whether the imputed facts are typified within the causes of linkage provided for in the Regulations on Indirect Ownership, Linkage and Economic Group, approved by CONASEV Resolution No. 090-2005-EF/94.10, hereinafter the Economic Group Regulations, considering that the types contained in said regulation are taxative per se; however, in a contradictory manner, the Administrative Tribunal would have established evaluation criteria different from those provided for in the norms regulating the linkage between companies, which implies a direct contravention of the principles that guarantee the administrative procedure;
It considers that it is intended to extend by analogy a supposed commercial linkage between the representative of Beckol with relatives in the fourth degree of consanguinity of the other acquirers, a situation that is in no way provided for in the Economic Group Regulations, so attempting to establish the existence of a concerted conduct based on this type of evidence constitutes a transgression of the principle of legality of the sanctioning procedure since the conduct is not typified as such within the Sanctions Regulations;
It states that, to consider the existence of any concerted activity imputable to Beckol, it is necessary to establish that there is some degree of control and/or relations of coordination and subordination between the companies and persons imputed; being that the "commercial" links and the "extensive" interpretation of the degrees of consanguinity for the application of kinship between the natural and/or legal persons involved do not prove the existence of said control and/or subordination;

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

That, regarding what was manifested by Beckol that since the concertation lies in the existence of linkage between the acquirers, to determine the existence of a sanctionable conduct it must be previously verified if the imputed facts are typified within the causes of linkage provided for in the Economic Group Regulations, it must be stated that the objective of the present sanctioning procedure did not consist of establishing whether Beckol together with the other acquirers form part of a certain economic group or if they are included within the presumptions of linkage established in article 5 of the Economic Group Regulations, but to determine if the operations of acquisition of shares of Andahuasi carried out by Beckol had as their object to achieve jointly and in concert a significant participation in the capital of the society;

That, in that line, the fault that has been attributed in the present procedure and under which the Resolution subject to appeal sanctions Beckol consists of having acted in concert with Zabuck International Inc., hereinafter Zabuck, Ducktown Holdings S.A., hereinafter Ducktown, Mrs. Claudia Romero Briceño, hereinafter Mrs. Romero, and Mr. Carlos Antonio Dellepiane Costa y Laurent, hereinafter Mr. Dellepiane, aspect different and not contained in the Economic Group Regulations, notwithstanding this, it is worth indicating that although according to article 5 of said regulation the linkage entails a systematically concerted behavior, it does not exclude other cases of joint action that the regulation of Public Acquisition Offers (OPA) - special norm and applicable to the present case – has proscribed, such as, for example, if through this type of action a significant participation in a listed company is acquired;

That, likewise, it must be stated that it is not verified that in the appeal presented Beckol intended to disprove said relations and/or links with the acquirers in a concrete way and with reliable evidentiary means, on the contrary it has been established that through the indications supported by sufficient evidentiary elements it was determined that Beckol and the other acquirers already sanctioned acted in concert with the object of obtaining significant participation in Andahuasi without carrying out an OPA, concerted action that when directed to that end constitutes a behavior proscribed by the securities market regulations;

That, in that sense it must be indicated as evidentiary elements that prove the concertation of Beckol with Zabuck, Ducktown, Mrs. Romero and Mr. Dellepiane the following facts:

i) According to power of attorney registered in the Public Registries of Lima, Mr. Sergio Willy Castilla Yáñez is attorney-in-fact with general powers for the companies Zabuck[1] and Beckol[2], both incorporated in Panama, so subject to the presumption of control established in article 8 of the Economic Group Regulations and commented in its Statement of Motives[3], according to which for the case of companies incorporated abroad or companies called offshore, it is considered that the legal representative of the same has control over them, so that since Mr. Castilla Yáñez is representative of both companies and, therefore, holds control of the same, both companies are considered linked and/or related;

ii) The transfers of funds between Beckol and Zabuck, and vice versa, carried out through the current account statements administered by Promotores e Inversiones Investa S.A. Stockbroker Agent, hereinafter Investa, for the sum of S/. 6,663,045.84 between January 2007 and April 2009, evidence the existence of business relations between both companies;

iii) The business relations that Mr. Castilla maintains with Mr. José Roberto de Romaña for several years denote a habitual relationship and the trust that exists between them, so it cannot be affirmed that it was a remote and circumstantial relationship;

iv) Mr. Castilla served as General Manager until 2008 of one of Mr. De Romaña's businesses, whose mother[4] also granted to Zabuck and Beckol (both represented by Mr. Castilla Yáñez) in August 2008 as collateral her portfolio to cover margin guarantees for as long as necessary;

v) Through letter[5] signed by Ducktown and through its legal representative Mrs. Elsa María Paola Bustamante Letts[6], the portfolio of Ducktown was granted as collateral to Zabuck, Beckol and Mr. De Romaña to cover operation margins for as long as necessary, that is, that Zabuck, Beckol and Mr. José Roberto De Romaña Letts were broadly guaranteed on the same terms by Ducktown and Mrs. Irene Florencia Letts Colmenares de De Romaña, evidencing a relationship of joint business among them;

vi) Mr. Castilla, representative of Beckol and Zabuck, had links of commerce or business with Mrs. Claudia Romero Briceño (sanctioned acquirer), in the transfer of funds of US$ 5,000.00 (Five Thousand US Dollars) that Beckol made to said lady, which is verified through the Current Account Statements of both persons, administered by Investa, money whose amount coincides with that used by said lady to execute a report operation on April 9, 2008;

That, therefore, the relations between Beckol and the other acquirers have been evidenced, which added to the operations carried out with the aim of acquiring significant participation in Andahuasi without carrying out the corresponding OPA, allow recognizing the existence of a concerted action destined to such end;

That, regarding what was sustained by Beckol that attempting to establish the existence of a concerted conduct based on indications of a supposed commercial linkage between the representative of Beckol with relatives of the other acquirers, constitutes a transgression of the principle of legality of the sanctioning procedure since the conduct is not typified as such in the Sanctions Regulations, it is worth clarifying that said regulation establishes in Annex IV, numeral 1, 1.1, that very serious infractions of natural or legal persons who acquire or increase significant participation are, "Not carrying out the OPA when corresponding or acquiring or increasing significant participation without observing the regulations", infraction that is verified when there is a transgression of article 68 of the Single Text of the Securities Market Law, approved by Supreme Decree No. 093-2002-EF and its modifying norms, hereinafter TUO of the LMV, which in a concordant manner with articles 1 and 4 of the Regulations on Public Acquisition Offer, approved by CONASEV Resolution No. 009-2006-EF/94.10, hereinafter ROPA, establishes the obligation to carry out an OPA to the person or group of persons who intend to acquire for valuable consideration, directly or indirectly in a single act or successive acts within a period of three years, significant participation equal to or greater than 25% of the social capital in a society that has at least one class of shares with voting rights registered in the stock exchange; acquisition that in turn can be carried out individually or jointly, in the latter case through the concert of wills to acquire a significant participation;

That, consequently, what is sanctioned in the challenged resolution is the acquisition of shares that allows it to reach significant participation in an enrolled company, which can be expressed in one or several acts as well as part of a person or a set of persons, therefore in the case analyzed, and as emerges from the proceedings and evidentiary means contained in the administrative file, it is held that there are acts, activities, behaviors and concrete operations carried out by Beckol together with the other acquirers that allowed to validly conclude that the acquisition of significant participation occurred jointly and in concert in Andahuasi;

That, therefore, there is no violation of the principle of typicity, taking into consideration that, from a concordant and systematic reading of the provisions of article 68 of the TUO of the LMV with articles 1 and 4 of the ROPA, as well as of numeral 1, 1.1. of Annex IV of the Sanctions Regulations, it is concluded that the concert of wills to acquire significant participation without observing the pertinent regulations is prohibited and sanctioned in the securities market;

That, additionally, it must be indicated that, in accordance with what is provided by article 353 of the TUO of the LMV, "CONASEV is empowered to typify the infringing conduct of the securities market and of the other matters under its competence in accordance with what is provided by its organic law" and also, letter o) of article 2 of the Concordant Single Text of the Organic Law of CONASEV establishes that it is a function of CONASEV to typify the infringing conduct of the securities market, product market and collective funds, as well as to issue the respective corrective measures when appropriate, so CONASEV is empowered to typify the conduct that it considers transgressive of the securities market regulations;

That, regarding the argument exposed by Beckol that to consider the existence of any concerted activity imputable to Beckol, it is necessary to establish that there is some degree of control and/or relations of coordination and subordination between the companies and persons imputed, it must be stated that Peruvian legislation considers concerted action as that mechanism of acquisition of shares carried out by a set of persons who act jointly and under a unit of purpose with the objective of reaching or increasing significant participation in the capital of a society, not unequivocally requiring that in all cases it is proven reliably the existence of relations of coordination and subordination between companies, so although it is correct to sustain that if persons act in concert in their policy of acquiring shares, this is carried out under a unit of action and objectives, whose purpose consists of putting their respective shareholdings at the service of a common purpose and to cooperate to obtain or consolidate control in a society, this does not imply that the actions and/or acquisitions of shares have to be parallel, carried out in the shortest time and materialized with joint and/or similar decisions of the companies involved as Beckol intends to establish;

That, likewise it has been proven that a few days after the start of the inspection visit carried out by the Issuers Department of CONASEV to Investa to verify compliance with the securities market regulations by Zabuck, Ducktown, Mrs. Romero and Mr. Dellepiane, Zabuck ceases its operations of acquiring shares of Andahuasi carried out through said intermediary, but instead on the next business day (June 8, 2009), Beckol, a company that like Zabuck as already mentioned, is represented by Mr. Castilla, began to buy shares of the company Andahuasi, acquisitions that continued until September 14, 2009, it being additionally considered that Beckol had never before bought shares of Andahuasi;

That, consequently, it is clearly demonstrated that the participation of Beckol in the acquisition of shares of Andahuasi responded to a joint and concerted behavior destined to obtain control of the society in reference, and that although the conduct of Beckol developed after the General Shareholders' Meeting held on April 30, 2009, it evidences an intention of the acquirers and of Beckol to consolidate or strengthen the position that they already held in the company Andahuasi, fact that finally allows Beckol, Zabuck, Ducktown, Mrs. Romero and Mr. Dellepiane to obtain stable control in the company; it being necessary to take into account that in the period in which the purchases by Beckol were made, the Resolutions of the Administrative Tribunal Nos. 156 and 157-2009-EF/94.01.3 had already been issued, which suspended the political rights of the shares acquired by Zabuck, Ducktown, Mrs. Romero and Mr. Dellepiane on the one hand and by Grupo Wong on the other, reason why for the first group of persons the presence and acquisition of shares by a third person not included in the sanctioning procedures already initiated for that group of persons was indispensable in order to obtain that significant participation in the society with violation of the OPA regulations;

That, for the reasons exposed, it is concluded that, in the case analyzed, Beckol has not disproven the arguments exposed in the challenged resolution; and,

Being in accordance with what is provided by letter t) of article 11 of the Concordant Single 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 April 11, 2011;

IT IS RESOLVED:

Article 1°.- Declare unfounded the appeal filed by Beckol Investments Corp. against Resolution No. 318-2010-EF/94.01.3 of the Administrative Tribunal of CONASEV for the reasons exposed in this resolution.

Article 2°.- Declare the administrative route exhausted.

Article 3°.- Transcribe this resolution to Beckol Investments Corp., to Empresa Agraria Azucarera Andahuasi S.A.A., to the Lima Stock Exchange and to CAVALI S.A. ICLV.

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

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Michel Canta Terreros
President

[1] Registered on March 24, 2008 in Part 12133001 of the Register of Legal Persons.
[2] Registered on February 22, 2008 in Part 12122023 of the Register of Legal Persons.
[3] Statement of Motives, "numeral 6.- Among the novelties of the Regulation are the two presumptions contained in article 8. That is, those referring to the presumption that linked companies are subject to common control and to the presumption of control by the representatives or attorneys-in-fact of a company (…)".
[4] Through letter of August 18, 2008 addressed to Investa, Mrs. Irene Florencia Letts Colmenares de De Romaña, authorized Investa, for as long as necessary, to dispose of the shares of her ownership for the replacement of margin guarantees required by CAVALI in favor of the following persons: Zabuck, Beckol, Roberto De Romaña Letts and Chistian Elie Retes, evidencing a business link between said persons.
[5] The authorization dated October 17, 2008 addressed to Investa by Mrs. Elsa María Paola Bustamante Letts, representative of Ducktown, to the effect that for as long as necessary the shares of her ownership be disposed of for the replacement of margin guarantees required by CAVALI in favor of Zabuck and Beckol among others.
[6] Mrs. Elsa María Paola Bustamante Letts is a relative of Mr. José Roberto De Romaña Letts through her mother Mrs. Irene Florencia Letts Colmenares de De Romaña, relative in the fourth degree of consanguinity of the spouse of Mr. Manuel Bustamante Olivares, father of the attorney-in-fact of Ducktown, Mrs. Elsa María Paola Bustamante Letts and father-in-law of María Beatrice Dellepiane Costa y Laurente and Claudia Romero Briceño.