Public Offering Regulation, modified by Resolution R-CNMV-2022-16-MV

This document was prepared by the Securities Market Superintendence with the purpose of facilitating the consultation of the current provisions of the Public Offering Regulation approved by the Single Resolution of the National Securities Council, R-CNMV-2019-24-MV, dated fifteen (15) October two thousand nineteen (2019) and the Fourth Resolution of the National Securities Council, R-CNMV-2022-16-MV, dated thirteen (13) September two thousand twenty-two (2022); which are published at https://simv.gob.do/resoluciones/

PUBLIC OFFERING REGULATION

TITLE I
GENERAL PROVISIONS

CHAPTER I
OBJECT AND SCOPE OF APPLICATION

Article 1. Object. This Regulation aims to develop the provisions regarding Public Offering of Securities (hereinafter, "Public Offering") as established by Law No. 249-17 on the Securities Market promulgated on nineteen (19) December two thousand seventeen (2017) (hereinafter, the "Law").

Article 2. Scope. It shall apply to all natural or legal persons who carry out a public offering and those linked to said process, as well as to those persons who carry out securities offerings that, due to their characteristics or conditions, are considered public in accordance with the Law and this Regulation.

Paragraph. Autonomous estates and securities issued against them are excluded from the provisions of this Regulation, applying only what is established in Chapter III of Title I of this Regulation.

CHAPTER II
DEFINITIONS

Article 3. Definitions. In addition to the definitions established in Article 3 of the Law and the General Law of Commercial Companies and Limited Liability Individual Enterprises No. 479-08 modified by No. 31-11 (hereinafter, the "Companies Law"), for the purposes of this Regulation, the terms shall have the following definitions:

a) Shares. Variable income securities that represent an aliquot part of the share capital of a joint-stock company and may be ordinary, also called common, or preferred.

b) Preferred Shares. Those that incorporate into their holder particular rights of any nature, in accordance with the Companies Law and the Law.

c) Bonds. Fixed income securities issued by legal entities for a term greater than one year.

d) Mortgage Bonds. Long-term fixed income public offering securities, issued by authorized financial intermediation entities for that purpose, guaranteed by existing mortgage loans registered in their assets, whose conditions are compatible with those stated in said titles, provided that the provisions of Law No. 189-11 for the Development of the Mortgage Market and Trust in the Dominican Republic, the Unified Regulation of Securities and Mortgage Instruments issued by the Monetary Board, and other applicable regulations are complied with.

e) Class. Set of similar rights and obligations in the same form of transfer conferred on Shares of the same nature originating from the same issuer.

f) Placement. Act by which securities subject to an already authorized and registered public offering are made available to the public for acquisition or subscription in the primary market.

g) Share Subscription Rights. Right to subscribe to new Shares derived from a capital increase that is granted preferentially to certain shareholders as provided by the company bylaws or the Shareholders' Assembly of the company and the applicable current regulations.

h) Subordinated Debt. Fixed income securities whose payment by the issuer is subject to the prior satisfaction of obligations derived from other preferential and common debts of the entity.

i) Recurrent Issuers. Those who issue only fixed income securities as provided by item 4 of Article 50 of the Law. Likewise, a fixed income issuer shall be considered recurrent if it is registered in the Securities Market Registry (hereinafter, the "Registry") and whose securities are in circulation, provided they have not been sanctioned by the Securities Market Superintendence (hereinafter, the "Superintendence") in the twelve (12) months prior to the submission of the authorization request.

j) Issuance Date. Date on which the securities of an issuance or class begin to generate obligations and economic content rights.

k) Convertible Bonds. Fixed income securities that grant their holder the right to exchange for Shares to be issued or issued, according to the conditions established in the issuance prospectus.

l) Offeror. Natural or legal person who makes the public offering, whether issuer, differentiated issuer, or a third party distinct from the issuer.

m) Commercial Paper. Fixed income securities issued by legal entities for a term of up to one year.

n) Issuance Program. Plan to place in the primary market one or multiple issuances of securities of the same issuer, within a period of time and up to a determined or indicative amount or range.

o) SMEs. Small and medium-sized enterprises constituted according to Law No. 488-08, for the Development and Competitiveness of Micro, Small, and Medium Enterprises (MSMEs) and its modifications.

p) Auction. A procedure for price formation of the securities of a public offering.

q) Tranches. Each of the successive acts or stages by which Shares are issued in an issuance.

r) Warrants. Derivative instrument whose underlying asset is a security that grants the right, but not the obligation, to acquire or sell said asset according to the conditions of the issuance prospectus.

CHAPTER III
SCOPE AND EXCEPTION OF FORMULATION OF A PUBLIC OFFERING

Article 4. Scope of a public offering. Any offer, direct or indirect, made by any person to the general public or to specific sectors or groups thereof, through any means of communication or dissemination, for them to subscribe, acquire, alienate, or negotiate individually an undetermined number of securities, shall be considered a public offering.

Paragraph I. Means of communication or dissemination shall be understood as publications in the press, radio, telephone, or television transmissions, cinematographic projections, placement of posters, signs, or billboards, programs, electronic media including the use of email and social networks, circulars, and printed communications to undetermined recipients.

In-person meetings directed to an undetermined public shall have the same consideration.

Paragraph II. The Superintendence, in response to consultations made to it or ex officio, may determine that an offer does not have public consideration when it deems that, from the joint valuation of all elements comprising the offer, one is not in the presence of an unauthorized public offering.

Paragraph III. It shall be presumed that a public offering exists when the offeror's intention is to raise funds from third parties in general, without complying with the rules established in the sectoral regulation of the securities market.

Paragraph IV. In any case, the Superintendence may request from any person, authorized or not, who operates or holds securities, all information it deems necessary to determine the existence of a possible public offering.

Article 5. Exception to the formulation of Public Offering. Without prejudice to what is established in Article 4 (Scope of a public offering) of this Regulation, the following shall not have the consideration of public offering:

a) The offer of Shares made by joint-stock companies constituted in accordance with the Companies Law, including the offer of Shares or bonds mandatorily convertible into Shares that is directed to the shareholders of the issuing company.

b) The offer by financial entities subject to sectoral regulations that, by way of example and not limitation, refers to shareholding change processes.

c) The offers or subscriptions made under the protection of plans or programs applicable generally to employees or groups of employees of the company issuing the securities or legal entities that it controls or that control it, provided that the employees have access to periodic financial information on the company's performance for investment decision-making.

d) The capitalization of profits from previous periods.

Paragraph I. For listed companies, it shall not be necessary to formulate a public offering in those operations where a capital increase does not imply a cash counter-performance, such as, in the capital increase derived from the conversion of other securities and as established in item c) of this article.

Paragraph II. In the excepted cases previously mentioned for listed companies, they must directly request from the centralized securities depository the allocation of Shares to their owners.

CHAPTER IV
TYPES OF PUBLIC OFFERING

Article 6. Types of public offering. This Regulation specifically regulates:

a) Public offerings of negotiable fixed income securities, Shares, and Warrants;

b) Exchange public offerings;

c) Public offerings for the acquisition of Shares; and

d) Public offerings for the acquisition of treasury Shares.

Article 7. Securities subject to public offering. Every public offering shall have as its object securities that, having the consideration of financial instruments of identical nature, are subscribed en masse to form an issuance program and are dematerialized through an accounting system managed by an authorized centralized securities depository.

Paragraph I. The Superintendent, through technical or operational norms, may consider any other contract that gives rise to a financial asset and simultaneously to a financial liability or an equity instrument in a third party as a financial instrument.

Paragraph II. Fixed income securities and Warrants are considered to be of identical nature when they have the same common characteristics regarding rights and obligations for their holders, type of security, currency, nominal value, and issuer.

Paragraph III. A listed company may issue different classes of Shares, when each of them incorporates different social or economic rights.

Article 8. Characteristics of securities subject to public offering. All securities subject to a public offering must:

a) Be represented by book entries in the terms established by the Law.

b) Not include in the issuance prospectus restrictions that prevent or hinder their free transferability, without prejudice to the corresponding limitations if the offer is directed to a specific public.

c) Include the same rights so that all holders of the securities of each class or issuance, as applicable, are in identical conditions.

d) Define the amount to be issued or the indicative range, as applicable, the nominal value of each security, and the number of securities to be issued.

CHAPTER V
DUTY OF CONFIDENTIALITY AND RESERVE

Article 9. Consideration of the preparation of a public offering as confidential and reserved information. The information used during the design, formulation, or structuring phase of a public offering is considered reserved, confidential, and privileged information, and is therefore subject to the restrictions established in the Law and the applicable current regulations, until the Offeror is notified of the Superintendent's resolution resolving their authorization request. This obligation applies to the following situations, when:

a) The issuer with securities in circulation makes a new public offering;

b) The Offeror is an issuer with securities in circulation; and,

c) The Offeror is a third party distinct from the issuer who makes a public offering on an issuer that has securities in circulation.

Paragraph I. Any natural or legal person who becomes aware of, participates in, or is linked to the design, formulation, or structuring process of a public offering shall not use for their own benefit, directly or indirectly, nor communicate to a third party outside the process, any non-public information to which they have had access, regardless of the possible benefit they might obtain.

Paragraph II. The Offeror and the rest of the persons indicated in Paragraph I shall refrain from carrying out any operation that could have an effect on the price of the public offering and the own negotiation of the security or any other related financial instrument, in the centralized negotiation mechanisms or in the OTC market, as applicable; unless they are securities purchase and sale operations agreed upon prior to this period or that are necessary for the correct negotiation of the security or any related instrument.

Paragraph III. Offerors must develop policies to prevent the improper use of information in the design, formulation, and structuring process of a public offering.

Article 10. Obligations of the Offeror to preserve the confidentiality of information. The Offeror who formulates a public offering must establish an internal procedure that guarantees the confidentiality and reserve of information, including a register containing all persons, internal or external, who have or have had access to the information, regardless of their hierarchical position within the Offeror or the external advisor. This register shall be appropriately updated until the market is informed as a relevant event of the intention to formulate a public offering of securities.

Paragraph I. Securities intermediaries who collaborate directly or indirectly in the design, advisory, structuring, placement, and distribution of the public offering must establish the necessary internal controls, including the list of persons who have access to the reserved information and shall refrain from carrying out operations based on such knowledge.

Paragraph II. The Superintendence may request any internal information from the Offeror, guarantor, securities intermediary, or those linked to said process to verify compliance with the confidentiality of all relevant information in the terms established in this article.

CHAPTER VI
AUTHORIZATION REGIME, FUNCTIONS, AND RESPONSIBILITIES OF THE SUPERINTENDENCE

Article 11. Powers of the Superintendence. It corresponds to the Superintendence the authorization and registration in the Registry of any public offering, throughout the territory of the Dominican Republic.

Paragraph I. Every request for authorization and registration of a public offering must be signed by the Offeror or general or special attorney constituted for such purposes, who must provide the information and documents required in this Regulation and its Instruction, truthfully, timely, accurately, and sufficiently. The request must expressly indicate the person responsible for the documentation deposited with the Superintendence.

Paragraph II. The Superintendence may request from the persons responsible or linked to the authorization request of a public offering all the necessary information for its evaluation, processing, authorization, and registration.

Paragraph III. The Superintendence may request the clarifications or corrections it deems necessary regarding the information contained in the issuance prospectus and other documentation of the authorization request; as well as require the documentation supporting the information revealed by the Offeror or require its incorporation in the issuance prospectus and other corresponding documents, as well as include or have included warnings or explanations for the adequate information and protection of investors and market transparency.

Paragraph IV. All information provided to the Superintendence, and to the market in general for its dissemination to investors, in the framework of a public offering must be truthful, sufficient, timely, adequate, clear, and complete, without containing subjective assessments, partial, false, or misleading information.

Paragraph V. In addition to what is established in Paragraph II of Article 50 of the Law, the Superintendence may deny, through a reasoned decision, the authorization and registration of a public offering request for the following reasons:

a) The information contained in the issuance prospectus does not comply with what is indicated in Chapter V of Title II of this Regulation regarding its content, authenticity, or validity.

b) The public offering does not meet the requirements for its authorization and registration as established in the Law, this Regulation, and other applicable regulations.

c) When the applicant does not correctly and completely remedy the observations or requirements made by the Superintendence.

d) When, upon reviewing and examining the authorization and registration request, it is identified that the qualities of the applicant, its board of directors members, or principal executive could be unsuitable for the securities market.

e) For any other relevant fact or cause that affects in a conclusive manner the functioning of the securities market in the interest of its preservation.

Paragraph VI. The information that must contain every issuance prospectus is regulated in Chapter V, of Title II of this Regulation.

Article 12. Securities Market Registry. Every issuer or Offeror is obliged to register in the Registry:

a) The issuances and public offering securities, including the corporate, economic, and financial data of the issuer, the characteristics of the securities and their guarantees, and the corresponding issuance prospectus or prospectuses.

b) The acts, facts, documents, and communications related to any public offering, with the exception of those considered as reserved.

c) The relevant facts and periodic information linked to the different Offerors of a public offering.

d) The information on shareholding participation in listed companies registered in the Registry as established in item 3) of Article 245 of the Law and which will include:

1. Shareholders who directly or indirectly hold ten percent (10%) or more of the capital.

2. Operations on Shares of board of directors members and general attorneys.

3. Purchase and sale operations of treasury Shares.

Article 13. Deadlines for the authorization of the public offering. In accordance with what is established in Article 51 of the Law, the Superintendence must resolve the authorization request of a public offering within a period of twenty-five (25) business days, counted from the next business day following the formal and complete receipt of the authorization request for registration in the Registry.

Paragraph I. The Superintendence shall have a period of three (3) business days, counted from the next business day following the formal deposit date of the authorization request, to verify that the same is complete, in accordance with the requirements established in this Regulation and other applicable regulations.

Paragraph II. In the event that the authorization request and the accompanying documentation are incomplete, the Superintendence will require the missing documents, and the applicant must respond to the requirements within a period of fifteen (15) business days, counted from the next business day following the receipt of the communication sent by the Superintendence. If the Offeror does not send the requested documentation or requirement within the established deadline, the Superintendence will automatically dismiss it, without the need for notification to the applicant. If the applicant remedies the observations and requirements made by the Superintendence within the established deadline, the process developed in Paragraph IV of this article will be carried out, starting the Superintendence's deadline to resolve the request on the next business day of the complete receipt of the requirements.

Paragraph III. The deadline with which the applicant has to complete the information established in the previous paragraph may be extended by the Superintendence, provided there are causes duly justified in writing by the applicant; however, the additional deadline may never exceed thirty (30) business days, understanding that it applies to exceptional cases.

Paragraph IV. If the authorization request and the accompanying documentation are complete, the following procedure shall be followed:

a) The Superintendence must resolve the authorization request of public offerings within a period of twenty-five (25) business days, as established by Article 51 of the Law, counted from the next business day following the expiration of the three (3) business days indicated in this article.

b) The twenty-five (25) business day deadline may be exceptionally extended by the Superintendence based on the complexity of the request or other circumstances that must be adequately motivated. Such extension may not exceed twenty-five (25) business days.

c) The deadline for authorization established in the previous items will be suspended only once, if the Superintendence requires the applicant to modify or complete their request and will only resume from day one (1), when the applicant has complied with said procedure correctly and completely within the deadline indicated in paragraphs II and III of this article.

d) In the event that the applicant does not respond within the granted deadline or responds incompletely or incorrectly, the request will be dismissed.

Paragraph V. The Superintendence must resolve the authorization request of public offerings that have the simplified regime and recurrent issuer regime within a period of ten (10) business days counted from the expiration of the three (3) business days that the Superintendence has to verify that the request is complete, which may be exceptionally extended ex officio based on the complexity of the request or other circumstances that must be adequately motivated as provided in item b) of the previous paragraph. In the event that the Offeror is required to modify or complete their request, it will be subject to the provisions of Paragraph I of Article 51 of the Law and this article.

Paragraph VI. When the Superintendence does not adopt its decision within the established deadline, the public offering will be registered as established in Paragraph II of Article 51 of the Law. For said registration, the Offeror must make the payment of the fee for registration as stipulated in the Regulation of fees for regulation and for the services of the Superintendence.