PERÚ Ministry of Economy and Finance
SMV
Superintendency of the Market in Securities

“Decade of Equal Opportunities for Women and Men” "Year of the Bicentennial, of the consolidation of our Independence, and of the commemoration of the heroic battles of Junín and Ayacucho"

Deputy Superintendency Resolution SMV No. 007-2024-SMV/11

Lima, 23 January 2024

Summary: The reconsideration appeal filed by Compañía Minera San Ignacio de Morococha S.A.A. against Deputy Superintendency Resolution SMV No. 124-2023-SMV/11 is declared partially founded

Administered party
:
COMPAÑÍA MINERA SAN IGNACIO DE MOROCOCHA
S.A.A.
Subject
:
Administrative Sanctioning Procedure
File No.:
2023006363

The Deputy Superintendent (e) of Supervision of Market Conducts

SEEN:

Administrative file No. 2023006363 and Report No. 16-2024-SMV/11 (hereinafter, the Report) issued by the General Intendancy of Conduct Compliance (IGCC) of the Deputy Superintendency of Supervision of Market Conducts (SASCM);

CONSIDERING:

I. Function and competence of the SASCM

1. That, administrative file No. 2023006363 contains the documentation and information regarding an administrative sanctioning procedure (hereinafter, PAS), which has been brought to the knowledge of the SASCM in observance of the exercise of the supervision function and the sanctioning power of the Superintendency of the Market in Securities - SMV established by the Concorded Single Text of its Organic Law, Legislative Decree No. 26126 (hereinafter LOSM), and in the Single Ordered Text of the Securities Market Law, Legislative Decree No. 861, approved by Supreme Decree No. 020-2023-EF (TUO of the LMV); as well as by the provisions of the Sanctions Regulation approved by SMV Resolution No. 035-2018-SMV/01 (hereinafter, Sanctions Regulation), in force at the date of occurrence of the facts and in articles 42 and 43 of the Regulation of Organization and Functions of the SMV, approved by Supreme Decree No. 216-2011-EF, in the sense that it is a specific function of the SASCM to resolve reconsideration appeals against the resolutions it issues;

II. Facts

2. That, by Deputy Superintendency Resolution SMV No. 124-2023-SMV/11 of 29 November 2023 (hereinafter, the

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Challenged Resolution), it was resolved to sanction Compañía Minera San Ignacio de Morococha S.A.A. (hereinafter, the Issuer) with: i) a fine of 3.57 UIT, equivalent to S/. 15,708.00 (Fifteen Thousand Seven Hundred Eight and 00/100 Soles), for having incurred in one (01) infraction of a minor nature typified in subsection 3.1 of numeral 3 of Annex I of the Sanctions Regulation, approved by SMV Resolution No. 035-2018-SMV/01 (hereinafter, Sanctions Regulation), for presenting late the Consolidated Interim Financial Statements as of 31 March 2021; and, ii) a fine of 3.06 UIT, equivalent to S/ 14,076.00 (Fourteen Thousand Seventy-Six 00/100 Soles), for having incurred in one (01) infraction of a minor nature typified in subsection 3.1 of numeral 3 of Annex I of the Sanctions Regulation, for presenting late the material fact about the start of the audit work corresponding to fiscal year 2022;

3. That, by brief presented on 22 December 2023, the Issuer filed an appeal against the Challenged Resolution, requesting the definitive archive of this PAS for the infractions to subsection 3.1 of numeral 3 of Annex I of the Sanctions Regulation. It should be noted that, although the brief presented by the Issuer indicated that it filed an appeal against the Challenged Resolution, however, in accordance with article 18 of the Sanctions Regulation, non-compliances for late presentation of financial information and material facts can only be challenged by means of a reconsideration appeal, since they are processed in a single instance.

4. That, also from the content of the brief it is seen that it has only presented arguments regarding one aspect of the Challenged Resolution, specifically regarding the commission of the infraction for presenting late the material fact about the start of the audit work corresponding to 2022;

5. That, the Issuer's appeal brief has been reclassified as a reconsideration appeal, in application of article 2231 of the Single Ordered Text of the General Administrative Procedure Law – Law No. 27444, approved by Supreme Decree No. 004-2019-JUS (hereinafter, TUO of the LPAG), and the arguments of the appeal filed have been subject to evaluation in the Report issued by the IGCC, which has been submitted to the knowledge of the SASCM;

6. That, according to the provisions of article 18 of the Sanctions Regulation, the Report was sent to the Issuer by means of Official Letter No. 094-2024-SMV/11 of 10 January 2024, so that it could submit its arguments within five (05) business days of notification, which to date have not been presented;

III. Question to be determined

7. That, it corresponds to determine whether or not it is appropriate to reconsider the sanction imposed in the Challenged Resolution;

IV. Analysis

4.1 Of the Reconsideration Appeal

[1] “Article 223.- Error in qualification.- The error in the qualification of the appeal by the appellant will not be an obstacle to its processing as long as the true nature is deduced from the brief”.

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8. That, in accordance with the provisions of article 2182 of the TUO of the LPAG, the reconsideration appeal must be filed within the term of fifteen (15) peremptory days from notification of the challenged administrative act, and must comply with the requirements set forth in articles 124, 2193, 2214 of the same Law;

9. That, in the present case it is observed that the Challenged Resolution was notified on 29 November 2023 to the Issuer, and the appeal was filed on 22 December 2023, that is, it was filed within the legal term established by the TUO of the LPAG;

10. That, it must be indicated that the other requirements for the filing of the reconsideration appeal, established by article 221 in conjunction with article 1245 of the TUO of the LPAG, have been verified and complied with; therefore, the evaluation of this reconsideration appeal is appropriate;

11. That, the Issuer in its reconsideration appeal stated the following:

Regarding the late submission of Consolidated Interim Financial Statements (Charge No. 01)

The Issuer has not made arguments regarding this part of the Challenged Resolution, even though in the petition of the brief submitted it states that it requests the definitive archive for the alleged infractions of subsection 3.1 of numeral 3 of Annex I of the Sanctions Regulation.

Regarding the late communication of the aforementioned material fact

[2] «Article 218.- Administrative appeals 218.2 The term for filing appeals is fifteen (15) peremptory days and they must be resolved within thirty (30) days».

[3] «Article 219.- Reconsideration appeal The reconsideration appeal shall be filed before the same body that issued the first act that is the subject of the challenge and must be supported by new evidence. In the case of administrative acts issued by bodies that constitute a single instance, new evidence is not required. This appeal is optional and its non-filing does not prevent the exercise of the appeal».

[4] «Article 221.- Requirements of the appeal The written appeal must state the act being appealed and must comply with the other requirements set forth in article 124».

[5] «Article 124.- Requirements of writings Every writing submitted before any entity must contain the following: 1. Full names and surnames, domicile and National Identity Document number or foreigner's card of the administered, and, where applicable, the capacity of representative and of the person represented. 2. The concrete expression of what is requested, the factual grounds supporting it and, when possible, the legal grounds. 3. Place, date, signature or digital fingerprint, in case of not knowing how to sign or being prevented from doing so. 4. The indication of the body, entity or authority to which it is addressed, understood as such, as far as possible, the authority closest in rank to the user, according to the hierarchy, with competence to hear and resolve it. 5. The address of the place where notifications of the procedure are to be received, when different from the real domicile stated under numeral 1. This designation of domicile takes effect from its indication and is presumed to subsist, as long as its change is not expressly communicated. 6. The list of documents and annexes accompanying it, indicated in the TUPA. 7. The identification of the file of the matter, in the case of procedures already initiated.».

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at the beginning of the audit work (Charge No. 02) In this regard, the Issuer states in its challenge appeal that by means of a material fact of 27 April 2022 it proceeded to inform the market “the appointment and initial date of Caipo y Asociados Sociedad Civil de R.L. for fiscal year 2022”; therefore, voluntary correction must be considered as an exemption from liability, as established in subsection f) of numeral 1 of article 257 of the TUO of the LPAG.

Likewise, the Issuer states that it has acted with the greatest diligence in order not to incur any fault before the SMV or the market and requests the application of the Principle of Reasonableness.

4.2 Evaluation of the Reconsideration Appeal

12. That, regarding the Issuer's arguments, we must state the following:

(i) Regarding the late submission of Consolidated Interim Financial Statements (Charge No. 01)

On this matter, in the Challenged Resolution the Issuer was sanctioned for failing to timely submit the Consolidated Interim Financial Statements as of 31 March 2021, which should have been approved and submitted no later than 17 May 20216; however, they were approved and sent to the SMV only on 16 August 2021 (File No. 2021031733). The submission of this financial information would be late, since it is the Issuer's obligation to submit it as soon as such fact occurs or the issuer becomes aware of it, and in no case beyond the day on which it occurred or was known; however, the Issuer communicated such fact after the date established by the current regulations.

Consequently, considering that the Issuer has not presented any argument or evidence in this regard, the administrative liability determined in the Challenged Resolution regarding the breach in the late submission of the Consolidated Interim Financial Statements as of 31 March 2021 has not been disproven; therefore, the reconsideration appeal filed in this part must be declared unfounded.

(ii) In relation to the untimely communication of the material fact referring to the start of the audit work (Charge No. 02)

The Issuer's communication of 08 July 2022 is untimely, since it is the Issuer's obligation to report as a material fact the date on which the audit work will begin, as soon as such fact occurs or the issuer becomes aware of it, and in no case later than the day on which it occurred or was known; however, the Issuer communicated such fact after its occurrence.

[6] According to Article 5 of the Rules on the Preparation and Presentation of Financial Statements and Annual Report by Entities Supervised by the Superintendency of the Securities Market, approved by SMV Resolution No. 016-2015-SMV/01 (hereinafter, Rules on the Preparation and Presentation of Financial Statements), in force at the date of the facts subject to evaluation, the deadline for the approval and presentation of consolidated financial statements for the first quarter is 15 May of each year; however, 15 May 2021 was a non-business day (Saturday), so the deadline was extended to the next business day, that is, 17 May 2021.

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On the other hand, and by way of comment, it is appropriate to note that with respect to the Issuer's argument that voluntary remediation should be considered for the untimely presentation of material facts, letter c) of Article 28 of the Sanctions Regulations establishes the following:

"Article 28.- Cases in which remediation does not apply as an exemption from liability The following are not eligible for remediation for the purposes of the provisions of letter f) of Article 27: (...) c) The untimely or incomplete presentation, or the non-presentation, of material facts, financial information and annual reports. (...)"

In that sense, according to the aforementioned regulations, it is not appropriate to exempt the Issuer from liability, since for the untimely presentation of material facts, voluntary remediation does not apply as an exemption from liability.

However, without prejudice to the foregoing, an analysis is made as to whether in the present case the Fifth Complementary Amending Provision contained in Superintendency Resolution No. 013-2023-SMV/01 of 06 December 2023, which approved the Rules on the Preparation, Presentation and Dissemination of Financial Statements, Annual Report and Management Report applicable to entities supervised by the Superintendency of the Securities Market, is applicable.

From the review of the aforementioned rule, it is observed that the first paragraph of Article 38 of the Financial Information Regulations7, approved by CONASEV Resolution No. 103-99-EF/94.10 (hereinafter, Financial Information Regulations), in force at the time this administrative sanctioning procedure began, was amended, and was drafted in accordance with the following text:

"Article 38.- Obligations related to the external audit Companies obliged to present audited financial information must communicate, as a material fact, the appointment of their independent auditors. (...)".

According to the foregoing, by virtue of the Fifth Complementary Amending Provision of Superintendency Resolution No. 013-2023-SMV/01, which entered into force as of 11 December 2023, it has been provided to amend the first paragraph of Article 38 of the Financial Information Regulations; consequently, as of the date, Issuers are no longer obliged to communicate as

[7] Before this amendment, the text of the first paragraph of Article 38 of the Financial Information Regulations was as follows: "Article 38.- Deadline for the appointment of Auditors Companies obliged to present audited financial information must communicate, as a material fact, the appointment of their independent auditors no later than 30 June of each year. Likewise, they must communicate as a material fact the date on which the audit work will begin. (...)".

a material fact the start of the audit work of its external audit firm.

In that sense, although the Issuer would have failed to timely submit the material fact regarding the start of the audit work corresponding to fiscal year 2022 and its conduct was classified under item 3.1 of Annex I of the Sanctions Regulations; as of the date of the Report, which rules on the appeal, the regulatory provision that established the Issuer's obligation has been repealed; therefore, the amendment of the aforementioned rule should be incorporated into the evaluation.

In this regard, it is necessary to specify that item 3.1 of Annex I of the Sanctions Regulations constitutes an infraction type that requires another rule for its configuration; these infractions are known as infraction types by reference, since the factual assumption is configured by reference to other rules that give it content by describing the mandatory or prohibited conduct. In the present case, the first paragraph of article 38 of the Financial Information Regulation is the norm that completed the infraction type in order to describe the mandatory conduct that issuers were compelled to comply with, specifically, the obligation to communicate as a material fact within the established deadlines the start of the audit work of their external audit firm.

Likewise, although it has been verified that the infracting conduct was carried out before the regulatory amendment of Superintendency Resolution No. 013-2023-SMV/01 in force as of 11 December 2023; to date, the obligation to communicate as a material fact the start of the audit work has been repealed, so it is appropriate to analyze whether the Principle of Favorable Retroactivity applies.

The Principle of Favorable Retroactivity, in administrative sanctioning law, is that by virtue of which, at the time of sanctioning conduct, the norm that was in force when it was committed should not be applied, but rather the one that would have been more favorable between that moment and the one in which the punishment is imposed, or even later, if it changes during its execution.

In this regard, in administrative matters, said principle is recognized in the provisions of numeral 5 of article 248 of the TUO of the LPAG, which states: “The sanctioning provisions in force at the time the administered party incurs the conduct to be sanctioned are applicable, unless subsequent ones are more favorable to it. Sanctioning provisions produce retroactive effect insofar as they favor the presumed infringer or the infringer, both with regard to the classification of the infraction and the sanction and its prescription periods, even with respect to sanctions in execution when the new provision enters into force”.

On this matter, Professor Baca Oneto states that in the case of blank or by-reference sanctioning norms: “(…) we are before a more complex form of classification, since the “type” is defined in both norms, so it could be stated that in general terms both principles or guarantees –non-retroactivity in unfavorable matters and retroactivity in beneficial matters– operate fully when what is modified is not the sanctioning norm itself

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but the one that provides the complement that comes to fill the blank type drawn by the former” 8 .

In that sense, with the amendment of the first paragraph of article 38 of the Financial Information Regulation, through Superintendency Resolution No. 013-2023-SMV/01 in force since 11 December 2023, it is no longer an obligation of the Issuer to communicate as a material fact the start of the audit work; therefore, to date, failing to present or presenting late the material fact regarding the start of the audit work would also not constitute an administrative infraction.

Along these lines, the Principle of Favorable Retroactivity should be applied to the infracting conduct under analysis, because, to date, the late presentation of the material fact regarding the start of the audit work of an external audit firm would no longer constitute a punishable regulatory infraction, so the corresponding archiving is appropriate in this aspect of the present PAS.

13. That, consequently, the reconsideration appeal referring to the late presentation of the material fact regarding the start of the audit work of an external audit firm must be declared founded in this aspect; and the Challenged Resolution must be modified, in the sense that the Issuer has not incurred a (1) infraction of a minor nature classified in subsection 3.1 of numeral 3 of Annex I of the Sanctions Regulation, by communicating late the material fact regarding the start of the audit work for fiscal year 2022, so no sanction is appropriate; and,

In accordance with the provisions of numerals 14, 22 and 36 of article 43 of the Regulation of Organization and Functions of the SMV, approved by Supreme Decree No. 216-2011-EF;

RESOLVES:

Article 1.- To declare UNFOUNDED the reconsideration appeal filed by Compañía Minera San Ignacio de Morococha S.A.A. against Deputy Superintendency Resolution SMV No. 124-2023-SMV/11, in the aspect referring to the late presentation of the Consolidated Interim Financial Statements as of 31 March 2021, in accordance with the considerations set forth in this Resolution.

Article 2.- To confirm Deputy Superintendency Resolution SMV No. 124-2023-SMV/11, in the aspect that sanctions Compañía Minera San Ignacio de Morococha S.A.A. with a fine of 3.57 UIT, equivalent to S/. 15,708.00 (Fifteen Thousand Seven Hundred Eight and 00/100 Soles), for presenting late the Consolidated Interim Financial Statements as of 31 March 2021.

Article 3.- To declare FOUNDED the reconsideration appeal filed by Compañía Minera San Ignacio de Morococha S.A.A. against Deputy Superintendency Resolution SMV No. 124-2023-SMV/11, in the aspect referring to the late presentation of the material fact regarding the start of the audit work corresponding to fiscal year 2022, in accordance with the

[8] Baca Oneto, V. (2016). Favorable retroactivity in administrative sanctioning law. THEMIS Revista De Derecho, (69), 27-43. Retrieved from https://revistas.pucp.edu.pe/index.php/themis/article/view/16709

considerations set forth in this Resolution; and, to order the filing of said charge, for which reason no sanction is applicable.

Article 4.- To declare the administrative remedy exhausted.

Article 5.- To notify this Resolution to Compañía Minera San Ignacio de Morococha S.A.A.

Signed by: MENESES CAMARGO Carlos Enrique
Reason:

Signed by: RIVERO ZEVALLOS Carlos Enrique
Reason:

Carlos Rivero Zevallos
Deputy Superintendent (e)
Deputy Superintendency for Market Conduct Supervision

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