CONASEV Resolution No. 062-2011

PERÚ Ministry of Economy and Finance

CONASEV
National Commission for the Supervision of Companies and Securities

DECADE OF PERSONS WITH DISABILITIES IN PERU - YEAR OF THE CENTENARY OF MACHU PICCHU FOR THE WORLD

CONASEV Resolution
No. 062-2011-EF/94.01.1

Lima, July 27, 2011

VIEWED:

The file No. 2008033536 with the legal opinion contained in Memorandum No. 1393-2011-EF/94.04.1 dated June 20, 2011 of the Legal Advisory Office and after hearing the oral report of the legal defense of Intradevco Industrial S.A.;

CONSIDERING:

That, by means of Resolution of the Administrative Tribunal No. 080-2009-EF/94.01.3, a sanction was imposed on Intradevco Industrial S.A., hereinafter INTRADEVCO, with a fine of 25,000 UIT for having failed to observe provisions regarding the communication of Important Events and the submission of Financial Information;

That, against the aforementioned sanction resolution, INTRADEVCO filed an appeal requesting the revocation of the appealed resolution;

That, as derived from the arguments of the administrative appeal filed by INTRADEVCO, it is found that there is no argument in it aimed at denying the imputations formulated by the instructing body nor the infractions declared by the administrative resolution subject to examination. That is, the appellant has not denied the commission of any of the infractions since its defense arguments are directed at questioning the application of the norms to establish the quantum of the sanction, so it is necessary to analyze the aforementioned arguments, without previously warning that from the proceedings contained in the administrative file, it is found that among the imputations formulated are those related to (i) the submission of the copy of the public deed for the increase in social capital agreed upon in the General Shareholders' Meeting of April 16, 2006, registered in the public records on June 05, 2007 and (ii) the submission of the copy of the public deed for the increase in social capital agreed upon in the General Shareholders' Meeting of May 18, 2007, registered in the public records on August 09, 2007;

That, with respect to the two infractions indicated in the preceding paragraph, it must be noted that by means of CONASEV Resolution No. 103-2009-EF/94.01.1, item i) was modified and a last paragraph was incorporated into item ii) of section C of Annex I of the Regulation of Important Events, approved by CONASEV Resolution No. 107-2002-EF/94.10, as follows:

“i. Modifications of statutes, other than those mentioned in the following items, of an issuer, such as change of name, corporate purpose, registered office, must submit a copy of the public deed within ten (10) business days of its registration in the Public Records.

PERÚ Ministry of Economy and Finance

CONASEV
National Commission for the Supervision of Companies and Securities

DECADE OF PERSONS WITH DISABILITIES IN PERU - YEAR OF THE CENTENARY OF MACHU PICCHU FOR THE WORLD

ii. Adoption of decisions on increase or reduction of capital, on grouping or splitting of shares, amortization or redemption of shares, or modifications of the nominal value of shares:
(...)
In the case of the aforementioned items, if these imply a modification of statutes, issuers are obligated to submit a copy of the Public Deed within ten (10) business days of its registration in the Public Records.”

That, with respect to INTRADEVCO's infractions for non-compliance in the submission of the public deeds for capital increases agreed upon in the General Shareholders' Meetings of April 16, 2006 and May 18, 2007 and registered in the Public Records on June 05, 2007 and August 09, 2007, respectively, it must be specified that although, according to Annex I of the Regulation of Important Events, in force at the time the facts were committed, INTRADEVCO violated the norm by presenting the public deeds outside the two (02) business days deadline established by the aforementioned regulation, thereby committing an administrative offense, it is no less true that with the modification established by CONASEV Resolution No. 103-2009-EF/94.01.1, the deadline for the submission of the public deed is now ten (10) business days from its registration in the Public Records, so the non-compliance subject to charge would not constitute an infringement of the Securities Market regulations, insofar as it has been verified that the information was presented within the new deadline, and therefore, under these circumstances, the principle of non-retroactivity established in item 5 of article 230 of the LPAG must be applied, which establishes that “sanctioning provisions in force at the time the administrator incurs the conduct to be sanctioned are applicable, unless subsequent ones are more favorable to him”;

That, in that order of ideas, as explained and as a result of the application of the aforementioned principle, it would be necessary to declare that it is not possible to sanction INTRADEVCO for the infractions alluded to in the preceding paragraph, due to its conduct not constituting an administrative offense under the new legal framework, and the declaration of infringement contained in the resolution subject to evaluation must be set aside and the procedure regarding these two charges must be archived;

That, with respect to the defense arguments, INTRADEVCO maintains that legal provisions have been infringed by accumulating infractions and summing the sanctions applying the Sanctioning Criteria, since in accordance with article 230 item 230.6 of Law No. 27444 - General Administrative Procedure Law, hereinafter LPAG, and article 15 of the Sanctioning Regulation approved by CONASEV Resolution No. 055-2001-EF/94.10, hereinafter the Sanctioning Regulation, it corresponds to impose only the sanction for the most serious infraction. In this way, it refers that in the procedure the number of infractions (18) has been multiplied when in reality, from the correct application of the norm on ideal concurrence, the sanction that would initially correspond to it is 12.75 UIT for five sanctionable facts. Additionally, it refers that said fine should be reduced further by the application of the norms on real concurrence of infractions;

PERÚ Ministry of Economy and Finance

CONASEV
National Commission for the Supervision of Companies and Securities

DECADE OF PERSONS WITH DISABILITIES IN PERU - YEAR OF THE CENTENARY OF MACHU PICCHU FOR THE WORLD

That, likewise, it specifies that although the LPAG does not contain a norm regarding the real concurrence of infractions, article 15 of the Sanctioning Regulation does contain a specific provision on this topic that adheres to the provisions of the Penal Code which only imposes the most serious sanction. Since this is the case, it considers that, in application of the real concurrence of infractions, the most serious sanction of 4 UIT should be imposed for the infraction that according to the Sanctioning Criteria, is equivalent to an omission;

That, in its opinion, the Sanctioning Criteria infringe what is established in article 15 of the Sanctioning Regulation which provides that in the case of real concurrence, the sanction corresponding to the most serious infraction will be imposed, however, the Sanctioning Criteria sum the sanctions established for each infraction;

That, the LPAG recognizes at the level of the principle of control of the sanctioning power, the ideal concurrence of infractions, by establishing that “When the same conduct qualifies as more than one infraction, the sanction provided for the most serious infraction will be applied, without prejudice to the possibility of demanding the other responsibilities established by the laws.”;

That, article 15 of the Sanctioning Regulation recognizes and establishes provisions regarding the concurrence of infractions both in the ideal and real character. As for the real concurrence, which is what concerns us, it states that “when several conduct qualify as more than one infraction, the sanction corresponding to the most serious infraction is imposed.”;

That, as established in article 15 of the Sanctioning Regulation, there will be real concurrence in those cases where an administrator has committed a plurality of actions constituting infractions, each of them independent of the other, and classified within the securities market order in different categories such as: Very Serious, Serious and Minor. That is, in cases where autonomous infractions of different classification concur, CONASEV must impose on the administrator the sanction corresponding to the infraction typified in the Sanctioning Regulation as the most serious;

That, within the legal scope of the securities market, CONASEV has regulated in a special way, in application of the last paragraph of article 6 of the Sanctioning Regulation, an enabling provision to establish Sanctioning Criteria for the determination of the sanction, those situations in which infractions concur for non-compliance with deadlines in the submission of financial information and communication of important events. This with the purpose of uniforming the sanctions to be imposed for this type of infractions;

That, for cases of concurrence of minor infractions for non-compliance with deadlines in the submission of financial information and communication of important events, as those involved in the present case (all of them minor), it is not possible to apply the provisions of article 15 of the Sanctioning Regulation by not presenting the real concurrence of infractions of different categories (very serious, serious or minor), therefore it is not legally possible to support the petitioned by INTRADEVCO;

PERÚ Ministry of Economy and Finance

CONASEV
National Commission for the Supervision of Companies and Securities

DECADE OF PERSONS WITH DISABILITIES IN PERU - YEAR OF THE CENTENARY OF MACHU PICCHU FOR THE WORLD

That, with regard to the ideal concurrence of infractions, it must be noted that in the case at hand, this postulate is not fulfilled insofar as the infractions observed in the administrative sanctioning procedure respond to independent infractions originating from failing to comply with obligations derived from the norms regulating the submission of financial information and communication of important events;

That, the figure of ideal concurrence of infractions regulated by the LPAG will occur when a single legal fact or action configures at the same time two or more infractions typified in the administrative order as infractions of different categories, which will make it possible to apply (correctly) the provision provided for in item 230.6 of article 230 of the LPAG, that is, the application of the sanction provided for the most serious infraction. Since this is the case, it is not possible to apply the precept of the ideal concurrence of the LPAG to the present case;

That, with regard to the other arguments of INTRADEVCO in which it refers that the Sanctioning Criteria do not have normative rank and cannot ignore the legal provisions indicated, nor establish exceptions, since the fact that the Sanctioning Regulation was approved by the Board of Directors of CONASEV, which is the same body that approved the Sanctioning Criteria, this does not constitute a valid argument for the latter to depart from the provisions contained in said regulation. Regarding this, it must be specified that this Collegiate disagrees with what was expressed by the appellant because the Sanctioning Criteria do not infringe the provisions of the Sanctioning Regulation as has been explained, since these originate in the Sanctioning Regulation itself which is it and not the Sanctioning Criteria that has given special treatment for the situations not foreseen in article 15 of the Sanctioning Regulation, since this is the case, it is also not true that the Sanctioning Criteria have established a differentiated treatment since we reiterate that these only regulate the mechanism to establish the amount of the sanction for cases of submission of financial information and communication of important events as minor infractions;

That, in that sense, it is possible to apply the sanctioning criteria in the manner proposed by the Directorate of Issuers and accepted by the Administrative Tribunal in its resolution subject to review;

That, on the other hand, INTRADEVCO maintains in its appeal that what was determined in the administrative procedure, in addition to incurring an illegality in its way of applying the Sanctioning Criteria, generates effects contrary to the purposes of the regulation since instead of incentivizing the submission of information, it generates the incentive for companies to choose not to do so;

That, it is pertinent to note that the mere fact of not applying the Sanctioning Criteria by CONASEV in cases of infractions referred to the submission of information, would be against the principle of predictability by which the administrator can anticipate the decision to be taken by the administration, since this National Commission would be departing from what is established by the Sanctioning Regulation for the determination of sanctions for non-compliance with the norms that establish deadlines to submit information to the

PERÚ Ministry of Economy and Finance

CONASEV
National Commission for the Supervision of Companies and Securities

DECADE OF PERSONS WITH DISABILITIES IN PERU - YEAR OF THE CENTENARY OF MACHU PICCHU FOR THE WORLD

market. In this way, CONASEV would act contrary to its position and without fulfilling the purpose of the Sanctioning Criteria;

That, likewise, it is important to clarify that the position of the appellant is not congruent in the sense of claiming, on the one hand, that the Sanctioning Criteria be disregarded when determining the sanction, by maintaining that, in its case, article 15 of the Sanctioning Regulation referred to the real concurrence of infractions is applicable, and on the other hand, claiming that the Criteria be applied for the purpose of grading the amount of the sanction corresponding to the most serious infraction (4 UIT for the information that has been presented with a delay of more than 15 days that, according to the Criteria, is equivalent to an omission);

That, with regard to INTRADEVCO's argument that the Sanctioning Criteria infringe legal provisions because the LMV requires CONASEV to analyze, among others, the damage caused and the repercussion in the market, as requirements for the imposition of a sanction, in such a way that CONASEV cannot decide not to analyze these two aspects claiming that they are implicit, it must be specified that these criteria are always considered when determining the sanction, in cases of submission of information regarding important events and financial information, the damage and the repercussion in the market is reflected in the impossibility that investors have to inform themselves about the situation of the issuer who, not having this information, are prevented from adopting investment decisions in a timely and efficient manner. That is, regardless of the type or size of the issuer, the damage is reflected in the information asymmetry that is generated every time the investor cannot access in real time the information they need to adopt an adequately informed investment decision, that situation, without a doubt, harms the transparency and confidence of the market;

That, in said sense, the Sanctioning Criteria establish a minimum parameter of the damage and repercussion that occurs when the normativity related to the submission of financial information and communication of important events is not observed, which can be aggravated, but never reduced. Therefore, the Sanctioning Criteria also have the purpose of serving as a corrective means to guarantee the principle of opportunity and the transparency of the securities market, as well as to grade the sanction objectively and fairly in cases of submission of financial information and communication of important events;

That, with regard to the argument according to which through the criteria related to the damage caused and the repercussion in the market CONASEV would have to conclude that the infractions imputed to it have the lowest possible level of gravity, given that there has only been one operation with the investment shares issued by INTRADEVCO, it is pertinent to note that the existence of damage and repercussion does not imply the configuration of quantifiable economic damage with respect to any investor, that is, these cited criteria should not be confused with the criterion referred to the economic damage that an infraction can generate for a certain investor, since while the first ones are configured with the commission of the infraction by violating the principles of transparency, timely disclosure of information and confidence, the criterion of economic

PERÚ Ministry of Economy and Finance

CONASEV
National Commission for the Supervision of Companies and Securities

DECADE OF PERSONS WITH DISABILITIES IN PERU - YEAR OF THE CENTENARY OF MACHU PICCHU FOR THE WORLD

damage implies the evaluation of the existence of some economic detriment towards an investor; and

Being in accordance with what is provided for in article 11 item k) of the Unified Text of the Organic Law of CONASEV, approved by Decree Law No. 26126, as well as what was agreed by the Board of Directors of CONASEV held in session on June 18, 2011.

IT IS RESOLVED:

Article 1°.- Set aside the declaration contained in Article 1 of the Resolution of the Administrative Tribunal No. 080-2009-EF/94.01.3 regarding the commission of infractions imputed to Intradevco Industrial S.A. related to the submission outside the deadlines established by article 7 of the Regulation of Important Events, Reserved Information and Other Communications, approved by CONASEV Resolution No. 107-2002-EF/94.10, in the extent referred to: (i) the copy of the public deed for the increase in social capital agreed upon in the General Shareholders' Meeting of April 16, 2006, registered in the public records on June 05, 2007 and (ii) copy of the public deed for the increase in social capital agreed upon in the General Shareholders' Meeting of May 18, 2007, registered in the public records on August 09, 2007.

Article 2°.- Declare unfounded the appeal filed by Intradevco Industrial S.A. against the Resolution of the Administrative Tribunal of CONASEV No. 080-2009-EF/94.01.3

Article 3º.- Declare the administrative route exhausted.

Article 4°.- Transmit this resolution to Intradevco Industrial S.A. and to the Lima Stock Exchange S.A.

Article 5°.- Order the dissemination of this resolution on the CONASEV Portal.

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Manuel Choy Vicente
Vice President