PERÚ Ministerio de Economía y Finanzas
SMV
Superintendency of the Market de Valores

“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"

SMV Deputy Superintendent Resolution

No. 056-2024-SMV/10

Lima, 11 November 2024

WHEREAS:

File No. 2023048124, regarding the application for authorization to organize an investment fund management company to be named “Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C.” and Memorandum No. 4696-2024-SMV/061 issued by the Legal Advisory Office;

CONSIDERING:

That, by writings submitted up to 09 January 2024, Mr. Arthur Do Nascimento Silva and Mr. Álvaro Eduardo Gálvez Fernández, hereinafter the ORGANIZERS, requested authorization for the organization of an investment fund management company to be named “Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C.”, which may use the abbreviated name “Zest Capital SAFI SAC”;

That, according to the information submitted, the organizers mentioned in the preceding paragraph will have a participation of 56% and 44%, respectively, in Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C.;

That, the General Superintendency of Entity Supervision (IGSE), by General Superintendency of Entity Supervision Resolution No. 017-2024-SMV/10.2, denied the organization authorization application submitted by the APPELLANTS;

That, the ORGANIZERS filed a reconsideration appeal against said resolution, which was declared unfounded by the IGSE by General Superintendency of Entity Supervision Resolution No. 085-2024-SMV/10.2 (hereinafter, the SECOND RESOLUTION); on the basis that sufficient information was not provided to support the increase in the equity balance and economic solvency of the applicants and that the APPELLANTS were shareholders, attorneys-in-fact and managers of Zest Capital Perú S.A.C., a company that was sanctioned for carrying out activities exclusive to persons authorized by the SMV, without said company having previously obtained organization and operation authorization from the SMV to be able to manage investment funds whose certificates were placed by public offering;

That, on 03 July 2024, Mr. Silva and Mr. Gálvez filed an appeal against said resolution; submitting additional writings up to 24 October 2024;

[1] File No. 2024035700.

That, in the processing of their appeal, the APPELLANTS submitted the following information: (i) a query of results in current accounts at Scotibank of Zest Capital Perú as of the close of February 2024 and an account statement of Zest Capital LLC at XP Investments as of the close of February 2024, (ii) Reports of sworn income tax returns (Form 710) before the National Superintendency of Customs and Tax Administration (SUNAT) for 2023 of Zest Capital Perú; (iii) management reports as of the close of 2021, 2022, and May 2024 of Zest Capital LLC; (iv) reports of account statements from the close of August 2023 to the close of February 2024 of Zest Capital LLC at XP Investments; (v) Reports of sworn income tax returns before SUNAT for 2022 of Zest Capital Perú; (vi) General Balance Sheet as of the close of 2023 of Zest Capital LLC, and (vii) Declaration of tax payments Form 1065 of Zest Capital LLC before the tax authority of the United States of America (Internal Revenue Service; acronym: IRS);

That, economic solvency must be understood from two aspects, one of an objective nature and the other of a subjective nature. The first of these is aimed at complying with the minimum parameters required by the regulations, that is, having the minimum capital established by the securities market regulations; while the second seeks that the organizers who will have direct or indirect ownership (shareholders) of the legal person or entity to be created must at all times have the economic capacity to face the implementation costs of the business they intend to develop and the capacity to mitigate the risks inherent in the securities market, even more so if the business, being an investment fund management company, will capture resources from investors participating in the securities market;

That, the foregoing is framed within the Objectives and Principles for the Regulation of Securities Markets defined by the International Organization of Securities Commissions (IOSCO), which state that the supervision and regulation of investment fund managers must have as objectives investor protection and confidence in financial markets, for which effective mechanisms must be in place to protect client assets from the risk of loss and from the insolvency of investment entities, considering for this that client assets encompass money, securities and positions, including, in the case of derivative products, accrued amounts or net proceeds thereof, which are held or controlled on behalf of investors in a collective investment institution, as well as other risks related to other irregularities in portfolio management, or fraud by the manager or its employees;

That, the APPELLANTS have submitted additional information to that submitted as part of the evaluation of their reconsideration appeal, in order to support their economic solvency;

That, from the information presented, it is observed that both Mr. Silva and Mr. Gálvez have an equity and liquidity position that would allow them to cover their obligations related to the incorporation of an investment fund management company; that is, in addition to having equity backing, to have the capacity; i) to make the initial contribution equivalent to their percentage participation to constitute the share capital of the potential entity to be authorized; and, ii) to make subsequent capital increases, in order to face losses, during the first years of operation, with the purpose of not putting at risk the continuity of the entity and avoiding a suspension or revocation of its operating authorization;

That, through Superintendencia Adjunta SMV Resolution No. 031-2021-SMV/10 and Superintendente Resolution No. 057-2024-SMV/02, it was declared that Zest Capital Perú S.A.C. made public offerings of the participation certificates of the Zest Income Liquid and Zest Bond Liquid Funds; therefore, it incurred two (2) very serious infractions typified in Annex III, literal A), numeral 1, subparagraph 1.1 of the SANCTIONS REGULATIONS, for making public offerings without having previously registered the securities in the Registry or having registered the corresponding prospectus;

That, the legal system must provide a sufficient degree of legal certainty to the administered party, it is considered that to apply the impediment established in literal q) of Annex B of the NORMS, it is indispensable that there exists an administrative resolution of the SMV or the Superintendencia de Banca, Seguros y AFP (hereinafter, SBS), which has become final in the administrative venue, therefore, said resolution must contain a formal pronouncement of the competent authority determining that the applicant has carried out or carries out an activity exclusive to persons authorized by the SMV or SBS without the respective authorization;

That, regarding whether the referred impediment is met when someone has incurred the very serious infraction typified in Annex III, literal A), numeral 1, subparagraph 1.1 of the Sanctions Regulations, approved by SMV Resolution No. 035-2018-SMV/01 (hereinafter, SANCTIONS REGULATIONS), that is, when in its criteria, the entity, having to carry out a prior procedure (registration of the security) does not do so, it is observed that the factual assumption of such infraction is the making of a public offering without the securities having been previously registered in the Public Registry of the Securities Market (RPMV) or without the corresponding prospectus having been registered.

That, the factual assumption of the aforementioned infraction can be carried out both by an entity that has authorization of organization and operation, and by one that does not have it. This is because both types of entities can participate in a public offering of securities without previously registering the securities or the prospectus in the RPMV;

That, in that sense, in accordance with the provisions of Memorandum No. 4696-2024-SMV/06, the proposed assumption does not qualify as an impediment, according to the previously indicated, because it is required, for legal certainty, and for a guarantee of due process, to have an administrative sanctioning resolution of the SMV (in this case) that has become final in the administrative venue. In the proposed assumption, the infraction for which the natural or legal person is sanctioned will be that of carrying out unauthorized operations or activities as established in subparagraph 1.1. of numeral 1 of Annex I of the SANCTIONS REGULATIONS, 2 sanction that must be final in the administrative venue. If these conditions are not met, the existence of such impediment could not be assumed;

[2] “Annex I - Of General Infractions They are common infractions to Participants and liquidators, as applicable: 1.- Very Serious 1.1 Carry out functions, operations, activities, acts or contracts, not authorized or that do not comply with the requirements established in the regulations.”

PERÚ Ministry of Economy and Finance
SMV
Superintendency of the Market of 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"

That, therefore, to apply the impediment established in literal q) of Annex B of the NORMS, it is indispensable that there exists a resolution issued by the SMV or SBS, final in the administrative venue, that expressly resolves that the administered party has carried out or carries out an activity exclusive to persons authorized by the SMV or SBS without the respective authorization;

That, from the evaluation of the documentation in the file and the indicated in Memorandum No. 4696-2024-SMV/06, it has been determined that the organizers of Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C have complied with the requirements for obtaining the organization authorization established in articles 5 and 6 of the Norms on the organization of entities that require authorization from the SMV, approved by SMV Resolution No. 039-2016-SMV/01 and its amendment, as well as with the indicated in the Single Text of Administrative Procedures of the Superintendency of the Securities Market, approved by Superintendente Resolution No. 023-2015-SMV/02;

That, likewise, as no objections have been presented to the formation of the management company or to the persons who organize it, within the term established by article 6 of the Norms on the organization of entities that require authorization from the SMV, it is appropriate to grant the requested authorization; and,

In accordance with the provisions of article 12 of the Investment Funds and their Management Companies Law, Legislative Decree No. 862 and its amendments, and subsection 26 of article 32 of the Rules of Organization and Functions of the Superintendency of the Securities Market, approved by Supreme Decree No. 216-2011-EF

RESOLVES:

Article 1.- Declare founded the appeal filed by Mr. Arthur Do Nascimento Silva and Mr. Álvaro Eduardo Gálvez Fernández against Resolution of the General Intendancy of Supervision of Entities No. 085-2024-SMV/10.2.

Article 2.- Grant to Mr. Arthur Do Nascimento Silva and Mr. Álvaro Eduardo Gálvez Fernández the authorization for the organization of an investment fund management company to be named “Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C.”, and which may use the abbreviated name “Zest Capital SAFI SAC”.

Article 3.- The organization authorization referred to in the preceding article shall have a non-extendable validity of one (01) year from the entry into force of this resolution.

Article 4.- This resolution does not empower Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C. to begin investment fund management activities. For this purpose, it must first obtain the respective operating authorization from the Superintendency of the Securities Market.

Article 5.- This resolution must be published in the official newspaper El Peruano within a period no greater than fifteen (15) business days.

Article 6.- Order the dissemination of this resolution on the SMV Institutional Website on the Single Digital Platform of the Peruvian State.

Article 7.- Consider the administrative procedure exhausted.

Article 8.- Transcribe this resolution to Mr. José Francisco De la Colina Mercado, in his capacity as representative of the organizers.

Register, communicate and publish.

Signed by: GUTIERREZ OCHOA Omar Dani Reason:

Omar Gutiérrez Ochoa
Deputy Superintendent
Deputy Superintendency of Prudential Supervision