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Superintendency Adjunct Resolution SMV No. 045-2024-SMV/11

Lima, 25 de julio de 2024

Summary: To sanction Shougang Generación Eléctrica S.A.A. with a total fine of 6.83 UIT for having committed two (2) minor infractions typified in item 3.1, subsection 3 of Annex I of the Sanctions Regulations

Administered: SHOUGANG GENERACIÓN ELÉCTRICA S.A.A.
Asunto
:
Single-instance Administrative Sanctioning Procedure Main Type: Item 3.1 of subsection 3 of Annex I of the Sanciones INFRACCIONES LEVES File No.: 2023048807

VISTOS:

Deputy Superintendent (e) of Market Conduct Supervision

Administrative File No. 2023048807 of the administrative sanctioning procedure initiated by the General Directorate of Conduct Compliance of the Securities Market Superintendency – SMV (hereinafter, the IGCC), against Shougang Generación Eléctrica S.A.A. (hereinafter, the Issuer); as well as Report No. 778-2024-SMV/11.2 (hereinafter, the Report), issued by the IGCC;

CONSIDERANDO:

I. Function and competence of the SASCM

1. That the IGCC —the investigating body of the administrative sanctioning procedures (hereinafter, the PAS) referred to in this case— has brought the PAS of Administrative File No. 2023048807 to the attention of the Deputy Superintendent of Market Conduct Supervision of the SMV (hereinafter, SASCM), in order for it to issue a decision as the single-instance sanctioning body in the case of the infringements concerning

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timeliness in the submission of periodic and occasional information. In this way, the SASCM assumes competence in compliance with the exercise of the supervisory function and the sanctioning power of the Superintendency of the Securities Market – SMV, established by the Single Concorded Text of its Organic Law, Decree Law No. 26126 (hereinafter, LOSMV) and the Single Ordered Text of the Securities Market Law, Legislative Decree No. 861, approved by Supreme Decree No. 020-2023-EF- 1 1 (hereinafter, TUO LMV); as well as by the provisions of the Sanctions Regulation, approved by SMV Resolution No. 035-2018-SMV/01 (hereinafter, Sanctions Regulation); and in articles 42 and 43 of the Regulation of Organization and Functions of the Superintendency of the Securities Market – SMV, approved by Supreme Decree No. 216-2011-EF (hereinafter, ROF-SMV), in the sense that it is a specific function of the SASCM to impose sanctions in a single administrative instance for the commission of infractions whose compliance control corresponds to the referred Deputy Superintendency. Likewise, the SASCM has the powers to issue corrective measures aimed at reversing the situation altered by the commission of the infraction;

II. Facts, charges, defenses and allegations of the Administered

2.1 Hechos

2. That, it was determined that the Issuer did not comply with timely submitting its financial information and annual report, both corresponding to the 2022 fiscal year, in accordance with the provisions of the current regulations of the Superintendency of the Securities Market – SMV;

2.2 Cargos

3. That, as a result of said evaluation, by means of Official Letter No. 184-2024-SMV/11.2 of 13 March 2024 (hereinafter, Letter of Charges), two (2) charges were formulated, being these:

• Presenting extemporaneously its Individual Annual Audited Financial Statements for the 2022 fiscal year, which should have been presented at the latest on 31 March 2023; however, they were presented on 10 April 2023. (File No. 2023015729)

• Presenting extemporaneously its Annual Report for the 2022 fiscal year, which should have been presented at the latest on 31 March 2023; however, it was presented on 10 April 2023. (File No. 2023015729);

  4. That, these non-compliances are typified in numeral 3.1 of subsection 3 of Annex I of the Sanctions Regulation;

2.3 Descargos y alegatos

5. That, by means of a writing presented on 19 March 2024, the Issuer presented its defenses regarding the imputations formulated against it, stating the following:

(i) In March 2023, the audit firm Caipo y Asociados, members of KPMG

[1] By Supreme Decree No. 020-2023-EF, published on 10 February 2023 in the Official Gazette El Peruano, the Single Ordered Text of the Securities Market Law, Legislative Decree No. 861, was approved.

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of the Issuer, found differences in its notes and accounting assets such as depreciation and others; and that due to the loss of the files by the person in charge, all the information corresponding to the assets and depreciation of the year 2022 had to be reconstructed.

Due to the above, the audit firm could not validate the information and would wait until the reconstruction of the aforementioned information was completed, which took until 13 March 2023, with the validation and delivery of the auditors' opinion.

(ii) A second argument sustained by the Issuer is that, according to the fourteenth article of its bylaws, which they attached to their defense, the Issuer had a minimum period of twenty-five (25) days in advance to publish the notice of call for the holding of its shareholders' meeting. According to the foregoing, the legal advisory area of the Issuer indicated that they had to comply with the deadline to convene the general shareholders' meeting, which is why the Issuer could not hold said meeting before 31 March 2023, it being held on 10 April 2023;

6. That, by Supreme Decree No. 004-2019-JUS, the Single Ordered Text of the General Administrative Procedure Law – Law No. 27444 (hereinafter, TUO of the LPAG) was approved, which contains common rules for the actions of the administrative function of the State and regulates all administrative procedures developed in the entities, including special procedures. Likewise, numeral 3) of article 248 of the TUO of the LPAG indicates the criteria regarding the graduation of the sanction: (a) The illicit benefit resulting from the commission of the infraction, (b) The probability of detection of the infraction, (c) The severity of the damage to the public interest and/or protected legal right, (d) The economic harm caused, (e) The recidivism for the commission of the same infraction within the period of one (1) year from when the resolution that sanctioned the first infraction became final, (f) The circumstances of the commission of the infraction; and, (g) The existence or not of intentionality in the conduct of the offender;

7. That, the charges formulated and the criteria regarding the graduation of the sanction have been subject to evaluation in the Report, which has been brought to the knowledge of the SASCM;

8. That, in observance of the provisions of numeral 5 of article 255 of the TUO of the LPAG, by Official Letter No. 2929-2024-SMV/11.2 of 09 July 2024, the Report was sent to the Issuer, so that it may submit its arguments within the period of five (05) business days from notification, which have been presented by the Issuer;

9. That, on 16 July 2024 the Issuer presented its arguments which are summarized below:

(i) It states that although in its defense dated 19 March 2024, they accepted that the deadline for the timely presentation of financial information and annual report corresponding to fiscal year 2022 was breached, it states that the provisions of subsection b) of article 257 of the TUO of the LPAG should not be overlooked, which determines as an exemption from liability, acting in compliance with a legal duty or the legitimate exercise of the right of defense.

It states that this falls within said legal figure since, as detailed in its original defense, the non-compliance was due to having to comply with

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the provisions of article 113 of the General Corporations Law No. 26887, regarding the call to the meeting, which in a certain way made it an irresistible fact, since its represented party found it impossible to act otherwise; because if it had done so, the minimum period established to call the shareholders' meeting would not have been met.

(ii) Finally, the Issuer argues that the imposition of a sanction by the administration must consider the principle of proportionality that limits the repressive function of the authority and that the imposition of a disproportionate sanction on the Issuer could constitute an excessive act of punishment that vitiates the administrative act that imposed it with nullity.

III. Issues to be determined

10. That, in the present PAS it corresponds to determine the following:

(i) Whether or not the Issuer incurred in the infractions indicated in the Charge Letter and Report.

(ii) Whether or not it corresponds to impose a sanction on the Issuer;

IV. ANALYSIS

4.1 Applicable Regulations

11. That, article 31 of the TUO of the LMV states: “The provisions of the previous article do not relieve the issuer from the timely delivery to the SMV and, where appropriate, to the respective stock exchange or entity responsible for the conduct of the centralized mechanism, of the information that one or the other may require and, necessarily, that indicated below:

a) Its financial statements and indicators, with the minimum information generally indicated by the SMV, with a frequency no greater than quarterly;

b) Its annual report, with the minimum information generally established by the SMV (…)” (Underline added);

12. That, in relation to the deadline for the approval and presentation of annual individual audited financial statements, article 6 of the Rules on 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, in force at the date of the commission of the facts (hereinafter, Rules on Preparation and Presentation of EEFF) establishes that issuers with securities registered in the RPMV must present their annual individual audited financial information on the day it has been approved by the corresponding body, the deadline for these purposes being until 31 March of each year;

13. That, on the other hand, article 12 of the Rules on Preparation and Presentation of EEFF, in force at the date of the commission of the facts, establishes that the annual report must be presented on the day it has been approved by the corresponding body, the deadline for these purposes being until 31 March of each year;

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14. That, it should be noted that on 10 December 2023, the Rules on Preparation, Presentation and Dissemination of Financial Statements and Annual Report and Management Report applicable to entities supervised by the SMV were published, approved by Superintendency Resolution No. 013-2023-SMV/01 and in force as of 11 December 2023 (hereinafter, New Rules on Preparation, Presentation and Dissemination of FS);

15. That, in this regard, it should be noted that according to articles 132 and 203 of the New Rules on Preparation, Presentation and Dissemination of FS, the same deadlines are maintained with respect to the presentation of the annual audited individual financial statements and annual report contained in the Rules on Preparation and Presentation of FS, in force at the time of the commission of the infractions;

16. That, in accordance with the foregoing, for the purposes of determining possible sanctions, these infractions are classified in subsection 3.1 numeral 3 of Annex I of the Sanctions Regulation, which states that the following constitute minor infractions: “3.1 Presenting outside the established deadline, or doing so incompletely, or, without observing the technical specifications approved by the SMV or without communicating the approval by the corresponding corporate body, to the SMV, to the Exchange, to the entity in charge of the centralized negotiation mechanism or to any other entity or subject of the securities market, the audited individual or consolidated financial information, the individual or consolidated interim financial statements, management report, special audit report, material events and annual reports.” (Subrayado agregado);

17. That, in accordance with article 35 of the Sanctions Regulation, these infractions are punishable with a warning or a fine of no less than one (1) UIT and up to twenty-five (25) UIT;

4.2 Evaluación del caso

18. That, in administrative file No. 2023048807, which contains the documentation of this PAS, it is observed that

[2] “Article 13.- Approval and deadline for presentation of annual individual or separate financial statements 13.1 The audited annual individual or separate financial statements have as closing date 31 December. 13.2 The annual individual or separate financial statements and the corresponding audit report must be approved by the general shareholders' meeting or equivalent body of the obligated subject or that is empowered in accordance with the legislation applicable to it. 13.3 In the case of issuers, the annual individual or separate financial statements with their corresponding audit report must be presented to the SMV on the date of their approval for their respective dissemination. 13.4 The expiration date of the deadline for the submission and dissemination of the annual individual or separate financial statements with their corresponding audit report is March 31 of each year. In the case of collective fund management companies, the expiration date of said deadline is April 30 of each year.”

[3] “Article 20.- Approval and submission deadline 20.1 The annual report must be approved by the general shareholders' meeting or equivalent body of the obligated subject or one that is empowered, in accordance with the legislation applicable to it. 20.2 In the case of issuers, the annual report must be submitted and disseminated to the SMV on the date of its approval. 20.3 The expiration date of the deadline for the submission and dissemination of the annual report is March 31 of each year. In the case of collective fund management companies, the expiration date of said deadline is April 30 of each year.”

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by means of Memorandum No. 1942-2023-SMV/11.1 of May 23, 2023 (File No. 2023021366), the General Superintendence of Conduct Supervision (hereinafter, IGSC) —an organ of the Superintendence of the Securities Market – SMV which has among its functions and powers the supervision of compliance with the rules applicable to issuers with securities registered in the RPMV, evaluating indications of possible infractions, and forwards, for its consideration, the respective reports of indications of infraction to the IGCC—, forwarded to the IGCC the result of its evaluation, and specifically that referred to the present PAS;

19. That, it must be borne in mind that the procedures and legal forms with which the IGSC conducts its inspection and/or supervision activity and upon concluding it with a report of indications of infraction, determine that its pronouncement or opinion on a specific supervision matter —which may even contain a decision, such as, for example, the adoption of corrective measures—, is an opinion on the merits of the matter; it being necessary to specify that said opinion and the report of indications of infraction of the IGSC is not binding on the IGCC, as established in the second paragraph of article 9 of the Sanctions Regulation45;

20. That, in this way, in the evaluation of the facts related to the present PAS, two (2) other bodies of the Superintendency of the Securities Market – SMV, functionally independent from each other and from this Office, have intervened and participated prior to the issuance of this Resolution; first the IGSC, which in due course reported the indications of infringement, through Memorandum No. 1942-2023-SMV/11.1, and then the IGCC, which, as a result of its evaluation, formulated the Statement of Charges and the Report; and at this point of the PAS, it corresponds to the Office of the SASCM to issue a pronouncement containing its decision regarding the aforementioned charges, it being necessary to indicate that by its nature, as previously stated, it will be a single-instance administrative decision for the charges subject to the present PAS;

21. That, prior to the corresponding analysis, it must be noted that the formulation of the charges was based on the fact that the Issuer presented its audited annual financial information and annual report late

[4] Article 245 of the TUO of the LPAG states as forms or modes in which the inspection activity could be concluded the following: 1) Record of conformity of the activity carried out by the administered party; 2) Recommendation of improvements or corrections of the activity carried out by the administered party; 3) The warning of the existence of non-compliances not susceptible of warranting the determination of administrative responsibilities; 4) The recommendation of the initiation of a procedure in order to determine the corresponding administrative responsibilities; 5) The adoption of corrective measures and 6) Other forms as established by special laws.

[5] «Article 9.- PRELIMINARY INQUIRIES AS A CONSEQUENCE OF SUPERVISION ACTIONS (…) When said bodies conclude that there are sufficient indications of possible administrative infractions, they refer the corresponding reports to the General Compliance Intendancies, which determine whether or not to initiate a sanctioning administrative procedure. If applicable, the General Compliance Intendancies may carry out additional inspections or investigations of the reported indications. In the case of possible infractions in the scope of the Regulation of the Financial Participatory Financing Activity and its Managing Companies, the preliminary inquiries are carried out by the General Intendancy of Research and Innovation, a dependency that, if there are sufficient indications of possible administrative infractions, will determine whether or not to initiate a sanctioning administrative procedure. (…)».

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detailed in section 2.2 of this Resolution;

22. That, the first argument of the Issuer's defenses is to point out that the late presentation was due to the loss of accounting information, specifically, that referring to depreciation and fixed asset information, which caused its external audit to extend until 13 March 2023;

23. That, in this regard, article 31 of the TUO of the LMV transcribed above, clearly states that it is the obligation of issuing companies to present their financial statements and annual report in a timely manner. Likewise, it must be indicated that this obligation is a periodic obligation and of vital importance during the permanence of any issuer in the securities market;

24. That, therefore, in order to ensure timely compliance with the presentation of their financial information, issuers must have backups or copies in physical or digital media, which guarantee compliance with the obligations contained in the TUO of the LMV and current regulations;

25. That, in addition, article 27 of the Sanctions Regulation6 identifies the six exempting conditions of liability for infractions that could be applicable in order to avoid a sanction for non-compliance with the obligations typified in said Regulation. As can be seen in the aforementioned article, the loss of financial information or negligence in the handling of highly sensitive information of an issuer, whether by a person or area in charge, is not an exempting condition of liability for issuing companies, so it is not applicable in the present case;

26. That, the second argument of the Issuer is to indicate that, according to the fourteenth article of its bylaws, the mandatory shareholders' meeting could not be held without first publishing its call with an anticipation of twenty-five (25) calendar days;

27. That, regarding this point, it is considered pertinent to note that this Deputy Superintendency has had before it the fourteenth article of the Issuer's bylaws, which states: “(…) The notice of call for the holding of general meetings must be published at least once in the official newspaper El Peruano and in one of the newspapers with the largest circulation, with an anticipation of no less than 25 calendar days. (…)”

28. That, although the information contained in the Issuer's bylaws has been corroborated, it must be indicated that, based on what has been observed, this

[6] Article 27.- EXEMPTIONS FROM LIABILITY FOR INFRACTIONS The following constitute conditions exempting from liability for infractions: a) Fortuitous event, force majeure or another exceptional situation that, in the opinion of the SMV, is comparable to duly proven fortuitous event or force majeure. b) Acting in compliance with a legal duty or the legitimate exercise of a right of defense. c) Mental incapacity duly proven by the competent authority, provided that it affects the aptitude to understand the infraction. d) The mandatory order of a competent authority, issued in the exercise of its functions. e) The error induced by the Administration or by a confusing or illegal administrative provision. f) The voluntary correction by the possible sanctioned party of the act or omission imputed as constituting an administrative infraction, prior to the notification of the imputation of charges referred to in the LPAG and provided that no communication demanding compliance with the obligation has been sent.

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provision is not a recent modification, but dates back years. Consequently, the Issuer was aware of this statutory provision and therefore should have taken it into account for the timely fulfillment of its obligations;

29. That, on the other hand and regarding the same point, it is necessary to remind the Issuer of the provisions of article 116 of the General Corporations Law, Law 26887 (hereinafter, LGS), which states: “The notice of call for the mandatory annual general meeting and for the other meetings provided for in the bylaws must be published with an anticipation of no less than ten days prior to the date set for its holding. In all other cases, except those in which the law or the bylaws establish longer periods, the anticipation of the publication shall be no less than three days.” (El subrayado es nuestro)

30. That, the current LGS requires for the call to the mandatory annual shareholders' meeting, the publication of the meeting with an anticipation of no less than ten (10) days. However, in the case of the Issuer, its current bylaws require a publication with an anticipation of no less than twenty-five (25) days, that is, the Issuer's current bylaws have a stricter period than the period indicated by the LGS;

31. That regarding the allegations presented by the Issuer, it is appropriate to reiterate what was referred to that in the present PAS it is not observed that there exists any assumption of exemption from liability in the sense that the Issuer refers that its action was framed within the provisions of its bylaws. In this regard, and as already reiterated in this Resolution, the Issuer was aware of the bylaw provision and therefore should have taken it into account for the timely fulfillment of its obligations and not incurred in breaches of securities market regulations;

32. Finally, regarding the Issuer's allegation that the principle of proportionality should be considered when determining the applicable sanction, it should be noted that in the corresponding part of the sanction determination, the sanction criteria will be evaluated within the framework of the applicable sanctioning rules and considering the principles of administrative sanctioning procedures;

33. That, in accordance with the foregoing, having verified that the Issuer has incurred in two (2) conducts constituting infractions, by not having timely submitted its Annual Audited Individual Financial Statements and its Annual Report, both corresponding to fiscal year 2022; the applicable sanction will be determined, for which purpose the principle of reasonableness and the sanction criteria contained in article 344 of the TUO of the LMV, in article 25 of the Sanctions Regulation and the provisions of numeral 3 of article 248 of the TUO of the LPAG will be taken into consideration, which will be developed in the following section;

V. Determination of the Sanction

34. That, in this regard, the failure to timely submit periodic information is typified in numeral 3.1 of subsection 3 of Annex I of the Sanctions Regulation, which states that it constitutes a minor infraction: “Submit outside the established deadline, or do so incompletely, or, without observing the technical specifications approved by the SMV or without communicating the approval by the corresponding corporate body, to the SMV, to the Exchange, to the

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entity in charge of the centralized negotiation mechanism or any other entity or subject of the securities market, the individual or consolidated audited financial information, the individual or consolidated interim financial statements, management report, special audit report, material events and annual reports.” (Subrayado agregado);

35. That, in relation to the sanction, according to article 35 of the Sanctions Regulation, a minor infraction is punishable with a warning or a fine of not less than one (1) UIT and up to twenty-five (25) UIT;

36. That, for the purposes of analyzing the corresponding sanction for these types of non-compliance, the Criteria applicable to the administrative sanctioning procedure for non-compliance with the rules governing the submission of periodic or occasional information, approved by SMV Resolution No. 006-2012-SMV/01 (hereinafter, Old Sanction Criteria), in force at the time of the commission of the infractions subject to this PAS, must be taken into account;

37. That, it should be noted that, on 08 September 2023, the New Regime of Graduality of Sanctions for late submission of financial information, annual report and material events, approved by SMV Resolution No. 007-2023-SMV/01 (hereinafter, New Regime of Graduality of Sanctions), was published, whose article 2 repealed the Old Sanction Criteria and article 4 provided that it would be in force as of 01 January 2024;

38. That, in view of the foregoing, it is appropriate to analyze whether in the present case the provisions of the New Regime of Graduality of Sanctions should be applied by virtue of the Principle of Favorable Retroactivity, established in 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”;

5.1 Old Sanction Criteria

39. That, in this sense, the aforementioned rules are consistent with the provisions of numeral 3) of article 248 of the TUO of the LPAG and article 344 of the TUO of the LMV, which develop the criteria for grading the sanction: (i) the issuer's sanction record, (ii) recidivism, (iii) the circumstances of the commission of the infraction, (iv) the economic damage caused and its impact on the market, (v) the illicit benefit resulting from the commission of the infraction, (vi) the probability of detection of the infraction, (vii) the seriousness of the damage to the public interest and/or protected legal interest and (viii) the existence or not of intent in the conduct of the offender;

40. That, in relation to the seriousness of the damage to the public interest and/or protected legal interest, it should be noted that the timely submission of periodic or occasional information is intended to allow investors to make investment decisions adequately informed. In this way, investors are protected and the asymmetry in access to information is reduced; therefore, the protected legal interest is the transparency of the securities market, which, when transgressed, affects the public interest;

41. That, with respect to the sanction record, literal a) of article 25 of the Sanctions Regulation establishes that these are the final sanctions imposed by the Superintendency of the Securities Market – SMV within the

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period of four (4) years prior to the commission of the infraction to be sanctioned; and specifies that the commission of the same infraction in the year prior to the infraction to be sanctioned is not considered as a record;

42. That, in application of said criterion, it has been verified that the Issuer has a sanction record, according to the SMV Sanctions Query, as detailed below:

(i) By Deputy Superintendency Resolution SMV No. 021-2020-SMV/11 of 04 February 20207 , the Issuer was sanctioned for having incurred an infraction of a minor nature classified in subsection 3.1, numeral 3 of Annex I of the Sanctions Regulation, for the late submission of the material event referring to the agreements of the mandatory annual shareholders' meeting, held on 27 March 2019, regarding ratification of its board of directors and dividend policy. This resolution became final on 27 February 2020.

(ii) By Deputy Superintendency Resolution SMV No. 050-2021-SMV/11 of 14 May 20208 , Shougang was sanctioned for having incurred an infraction of a very serious nature classified in subsection 1.4, numeral 1 of Annex I of the Sanctions Regulation, for having submitted inaccurate information in the material event of 27 March 2019 referring to the distribution of dividends. This resolution became final on 09 June 2020.

43. That, it should be noted that, because the Deputy Superintendency Resolution SMV No. 050-2021-SMV/11 of 14 May 2020 is presented as a record, for having incurred an infraction of a very serious nature classified in subsection 1.4, numeral 1 of Annex I of the Sanctions Regulation; this Deputy Superintendency cannot impose the sanction of warning on the Issuer, since the Issuer does not meet the requirement of not having a record or, if it has one, that it involves infractions classified as minor offenses imposed in the four (4) years prior to the commission of the infractions being evaluated;

44. That, the foregoing is prescribed both in subsection (ii)9 of numeral 4.2 of the Old Sanction Criteria and in numeral 6.110 of article 6 of the New Regime of Graduality of Sanctions;

[7] File 2019039113. Notified on 05 February 2020.

[8] File 2020031588. Notified on 18 May 2020.

[9] “4.2. GUIDELINES FOR THE APPLICATION OF THE CRITERIA (…) (ii) The sanction of a warning may be applied when the following is concurrently met: (i) the impact on market transparency is minimal; ii) the infraction committed has not caused a specific harm to investors or associates; (iii) the offending subject does not have a record or, if they do, it involves infractions classified as minor offenses imposed in the four (4) years prior to the commission of the infraction being evaluated; (iv) the offending subject has not obtained a benefit from their illegal conduct; and (v) it has not been proven that the offender acted with intent in the commission of the infraction.”

[10] “Article 6.- GUIDELINES FOR THE APPLICATION OF THE GRADUALITY REGIME 6.1 CONSIDERATIONS FOR THE APPLICATION OF THE SANCTION OF A WARNING The sanction of a warning may be applied when the following assumptions are concurrently met: a. When the impact on market transparency is minimal. This statement is linked to the criterion of the severity of the damage to the public interest and/or protected legal interest; b. The infraction committed has not caused a specific harm to investors or associates; c. The offending subject does not have a record or, if they do, it involves sanctions corresponding to minor infractions imposed by the SMV that have become final in the four (4) years prior to the commission of the infraction being evaluated;

PERU Ministry of Economy and Finance
SMV
Superintendency of the Market in Securities
“Decade of Equality of 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"

45. That, in relation to the antecedents, subsection (v)11 of numeral 4.2 of the Old Sanction Criteria, establishes that the fine will be “increased by two percent (2%) if it is determined that the offending subject has a record of sanction and by three (3%) if they have a record of the same conduct that is intended to be sanctioned”. On the other hand, numeral 6.3.112 of subsection 6.3 of article 6 of the New Regime of Graduality of Sanctions, states that: “The amount resulting from the application of the guidelines contemplated in numeral 6.2 may be increased up to five percent (5%) if it is proven that the offending subject has a record of sanction (…)”

46. That, in order to apply the provisions of the New Regime of Graduality of Sanctions, this Deputy Superintendency will increase by one percent (1%) for each sanction resolution that constitutes an antecedent up to a maximum of five percent (5%). In the present case, since two (02) antecedents of sanction have been identified, two percent (2%) was applied;

47. That, in relation to recidivism for the commission of the same infractions, literal b) of article 25 of the Sanctions Regulation establishes that the final sanction imposed by the Superintendency of the Market in Securities – SMV within the period of one (01) year prior to the commission of the infractions to be sanctioned is taken into account. In application of said criterion, it has been verified that there is no recidivism on the part of the Issuer in relation to the infractions referred to the late presentation of individual annual audited financial statements and annual report;

48. That, in relation to the circumstances of the commission of the infractions, it has been verified that the Issuer presented its Individual Annual Audited Financial Statements and its Annual Report, both corresponding to fiscal year 2022, with twelve (10) calendar days of delay;

49. That, regarding the existence of economic harm caused and impact on the market, it has not been evidenced that the non-compliances have produced a quantifiable harm, understood as an economic damage caused to one or several investors;

50. That, regarding the illicit benefit resulting from the commission of the infractions, in the present case, it has not been proven that as a consequence of the infractions committed, the Issuer has obtained or generated an illicit benefit;

51. That, on the criterion of probability of detection

[d] The offending subject is not a recidivist;

[e] The offender has not obtained benefits from their administrative infraction; and,

[f] It has not been proven that the offender acted with intent in the commission of the infraction.”

[11] 4.2. GUIDELINES FOR THE APPLICATION OF THE CRITERIA (…) (v) The amount resulting from the guidelines contemplated in the preceding numeral (iv) will be increased by two percent (2%) if it is determined that the offending subject has a record of sanction of sanction and by three (3%) if they have a record of the same conduct that is intended to be sanctioned.

[12] Article 6.- GUIDELINES FOR THE APPLICATION OF THE GRADUALITY REGIME 6.3. AGGRAVATING FACTORS 6.3.1. The amount resulting from the application of the guidelines contemplated in numeral 6.2 may be increased up to five percent (5%) if it is proven that the offending subject has a record of sanction and up to ten percent (10%) if it is verified that the offending subject is a recidivist.

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Electronic document digitally signed within the framework of Law No. 27269, Law of Signatures and Digital Certificates, its Regulation and amendments. The integrity of the document and the authorship of the signature(s) can be verified at https://apps.firmaperu.gob.pe/web/validador.xhtml

of the infraction, it must be noted that the failure to timely present periodic information (financial information and annual report) or occasional information (material events) is verified through internal control systems, so the probability of detection is high;

52. That, regarding the existence or not of intent in the offender's conduct, it is considered that the Issuer's action was not intentional, but negligent, by not having acted with due diligence in complying with its obligation to timely present its periodic information;

53. That, in addition to the foregoing, it should be noted that in this PAS it has been verified that no exemptions or mitigating circumstances of liability established in article 2613 of the Sanctions Regulation, in accordance with article 25714 of the TUO of the LPAG, have been presented;

5.2. Evaluation of the Principle of Favorable Retroactivity

54. That, in application of the principle of benign retroactivity, indicated in numeral 515 of article 230 of the TUO of the LPAG, by which it is possible to apply sanctioning norms subsequent to the commission of the illicit act provided they benefit the administered party, the corresponding sanction shall be graduated, taking into account the Old Sanction Criteria and also the New Regime of Graduality of Sanctions. Once the fines have been calculated, the one most beneficial to the administered party shall be calculated and the most beneficial fine shall be imposed;

[13] “Article 26.- MITIGATING CIRCUMSTANCES OF LIABILITY FOR INFRACTIONS The following constitute mitigating conditions of liability for infractions: a) Recognition of liability by the offender expressly and in writing, once the administrative sanctioning procedure has begun. When the applicable sanction is a fine, it is reduced, taking into account the following: (…) 3. If the recognition is presented after the expiration of the term granted to formulate allegations to the instruction report and up to before the issuance of the sanction resolution, the reduction amount shall be ten percent (10%).”

[14] “Article 257.- Exemptions and mitigating circumstances of liability for infractions 1.- The following constitute exempting conditions of liability for infractions: a) Fortuitous event or duly proven force majeure. b) Acting in compliance with a legal duty or the legitimate exercise of the right of defense. c) Mental incapacity duly proven by the competent authority, provided that it affects the aptitude to understand the infraction. d) The mandatory order of a competent authority, issued in the exercise of its functions. e) The error induced by the Administration or by a confusing or illegal administrative provision. f) The voluntary correction by the possible sanctioned party of the act or omission imputed as constituting an administrative infraction, prior to the notification of the imputation of charges referred to in subsection 3) of article 235. 2.- The following constitute mitigating conditions of liability for infractions: a) If, once an administrative sanctioning procedure has begun, the offender recognizes its liability expressly and in writing. In cases where the applicable sanction is a fine, it is reduced to an amount not less than half of its amount. b) Others established by special norm.

[15] “Article 230.- Principles of the administrative sanctioning power The sanctioning power of all entities is additionally governed by the following special principles: (…).” 5. Irretroactivity.- 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. (…)”

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55. That, in this sense, from the review of the Old Sanction Criteria and the New Regime of Graduality of Sanctions, it is observed that for the infractions subject to charges, the graduation of the Old Sanction Criteria, in force at the time of the commission of the infractions, is more favorable, as observed in the Annex of the IGCC Report, so in accordance with this evaluation carried out by this Deputy Superintendence, the Issuer must be imposed a fine of 6.83 UIT16 equivalent to S/ 33,808.50 (Thirty-Three Thousand Eight Hundred Eight and 50/100 Soles);

56. That, the Issuer is reminded that the final resolutions of sanctions imposed by the competent authorities must be reported as a material event, within the framework of the provisions of article 5 of the Regulation of Material Events, and;

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

RESOLVES:

Article 1.- Declare that Shougang Generación Eléctrica S.A.A. has incurred in two (2) infractions of a minor nature typified in subsection 3.1 of numeral 3 of Annex I of the Sanctions Regulation, for the late communication of its Individual Annual Audited Financial Statements for fiscal year 2022, which should have been presented at the latest on 31 March 2023, however, they were presented on 10 April 2023; and, its Annual Report for fiscal year 2022, which should have been presented at the latest on 31 March 2023; however, it was presented on 10 April 2023.

Article 2.- Sanction Shougang Generación Eléctrica S.A.A. with a total fine of 6.83 UIT equivalent to S/ 33,808.50 (Thirty-Three Thousand Eight Hundred Eight and 50/100 Soles), for the provisions of article 1 of this Resolution.

Article 3.- This Resolution does not exhaust the administrative remedy, and it may be challenged before this Deputy Superintendency for Supervision of Market Conduct by filing a motion for reconsideration, an administrative remedy recognized in Article 218 of the Single Ordered Text of the General Administrative Procedure Law – Law No. 27444, approved by Supreme Decree No. 004-2019-JUS, within a period of fifteen (15) business days counted from the day following its notification. If this Resolution is not challenged, the corresponding sanction reduction regime may be applied.

Article 4.- If this Resolution is not subject to challenge, it must be published on the “Institutional Page of the SMV on the Single Digital Platform of the Peruvian State for Citizen Guidance (www.gob.pe/smv)”, in compliance with the provisions of numeral 1 of Article 7 of the “Policy on the dissemination of regulatory projects, general legal norms, early agenda and other administrative acts of the SMV”, approved by Resolution

[16] Value of the UIT (2023): S/ 4 950 (Supreme Decree No. 309-2022-EF)

Electronic document digitally signed under Law No. 27269, Law on Signatures and Digital Certificates, its Regulations and amendments. The integrity of the document and the authorship of the signature(s) can be verified at https://apps.firmaperu.gob.pe/web/validador.xhtml

SMV No. 014-2014-SMV/01, and by the provisions of the last paragraph of Article 14 of the Sanctions Regulations, approved by Resolution SMV No. 035-2018-SMV/01.

Article 5.- Transcribe this Resolution to Shougang Generación Eléctrica S.A.A.

Register, communicate and publish.

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