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Superintendency Resolution Adjunta SMV No. 059-2024-SMV/11

Lima, 23 September 2024

Summary: Sanction Compañía Minera San Ignacio de Morococha S.A.A. with a (1) fine of 5 UIT for having incurred in a (1) infraction of a minor nature, typified in subsection 3.7 numeral 3 of Annex I of the Sanctions Regulation.

Administered : COMPAÑÍA MINERA SAN IGNACIO DE MOROCOCHA S.A.A.
Subject
: Administrative Sanctioning Procedure of double administrative instance Main Type :
Subsection 3.7 of numeral 3 of Annex I of the Sanctions Regulation MINOR INFRACTION File No. : 2024006221

The Deputy Superintendent of Supervision of
Market Conducts

VIEWS:

Administrative file No. 2024006221, containing the administrative sanctioning procedure initiated by the General Intendancy of Compliance of Conducts of the Superintendency of the Securities Market – SMV (hereinafter, the IGCC), against Compañía Minera San Ignacio de Morococha S.A.A. (hereinafter, the Issuer); as well as Report No. 749-2024-SMV/11.2 (hereinafter, the Report), issued by the IGCC;

CONSIDERING:

I. FUNCTION AND COMPETENCE OF THE SASCM

1. That, the IGCC —instructing body of the administrative sanctioning procedures (hereinafter, the PAS) referred to in the present case—, has brought to the knowledge of the Deputy Superintendency of Supervision of Market Conducts of the SMV (hereinafter, SASCM), the PAS of administrative file No. 2024006221 in order for it to issue a decision as sanctioning body of first administrative instance in said PAS. In this way, the SASCM assumes competence in observance of the exercise of the supervision function and the sanctioning power of the Superintendency of the Securities Market - SMV established by the Single Concorded Text of its Organic Law, Legislative Decree No. 26126 (hereinafter, Organic Law of the SMV), and in the Single Ordered Text of the Securities Market Law, Legislative Decree No. 861, approved by Supreme Decree No. 020-2023-EF (hereinafter, 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) and in articles 42 and 43 of the Regulation of Organization and Functions of the SMV, approved by Supreme Decree No. 216-2011-EF (hereinafter, ROF of the SMV), in the sense that it is a specific function of the SASCM, to impose sanctions in first administrative instance, for the commission of infractions whose compliance control according to its competences, corresponds to said Deputy Superintendency. Likewise, the SASCM has the powers to dictate corrective measures tending to revert the situation altered by the commission of the infraction;

II. FACTS, CHARGE, DISCHARGES AND ALLEGATIONS

2.1 Fact

2. That, it was evaluated whether the Issuer complied with its obligation to present or keep updated the information about its Economic Group;

2.2 Charge

3. That, from the verification of the information about economic group published in the section of Economic Group of the Institutional Page of the SMV it was observed that the Issuer sent on 29 March 2022 the Report on its Economic Group according to the Information Formats on Economic Group (File No. 2022012661), registering as of 31 December 2020 the concepts of total amount of assets and equity of the companies that make up its economic group;

4. That, on 30 March 2023 it sent to the SMV the report of its economic group (File No. 2023013997), in which the same data of total assets and equity reported on 29 March 2022 with relation to fiscal year 2020 were noticed, data that appear in File No. 2022012661, as can be seen below:

Image No. 1: Information of total assets and equity contained in the Economic Group Report

5. That, as of the date of imputation of charges, the total amount of assets and equity recorded in the Annual Individual Financial Statements of fiscal year 2022 presented in File No. 2023009412, were different or had varied with relation to the amount indicated in the Economic Group Report presented jointly with said financial statements; therefore, having produced a change in relation to the section “II.a Entities that make up the Economic Group” the Issuer should have updated the information about its Economic Group and not record the same data presented at the close of fiscal year 2020;

6. That, by means of Official Letter No. 1061-2024-SMV/11.2 of 04 April 2024 (hereinafter, Charge Official Letter), the commission of the infraction typified in subsection 3.7 of numeral 3 of Annex I of the Sanctions Regulation was imputed;

2.3 Discharges and allegations

7. That, the Issuer has not presented its discharges despite having been validly notified with the Charge Official Letter, via the MVNet System, on 04 April 2024, in accordance with article 241 of the Regulation of the MVNet and SMV Virtual System, approved by Superintendent Resolution No. 092-2020-SMV/02, in force at the time of notification (hereinafter, MVNet Regulation)2 ;

8. That, the TUO of the LPAG 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 term 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;

9. That, the charge formulated and the criteria regarding the graduation of the sanction have been subject to evaluation in the Report, which has been brought to the attention of the SASCM;

[1] Article 24.- Moment and effectiveness of Notifications Notifications to obligated entities produce legal effects when they are deposited in the electronic domicile of the obligated entity. The term for the exercise of actions by the administered is computed from the business day following the deposit made in the electronic domicile. The means to prove the receipt of information by the obligated entities will be given by the respective records contained in the MVNET log, which will be available to the obligated entities when they require it." (Underline added).

[2] As of March 20, 2024, the new Regulation of the MVNet and SMV Virtual System is in force, approved by SMV Resolution No. 004-2024-SMV/01, except for the articles on electronic notifications, which entered into force on April 30, 2024. It should be noted that article 25 of the new Regulation of the MVNet and SMV Virtual System, contains the same meaning, stating: "Article 25.- Moment and effectiveness of Electronic Notifications 25.1 The Electronic Notification procedure is initiated by the SMV with the deposit of the administrative act or administrative action in the Electronic Box of the Obligated Entities. The MVNet System automatically generates the Electronic Notification Certificate. Likewise, the SMV communicates to the email and mobile phone of the Obligated Entities registered for such purpose, the data of the validly effected notification. (...)".

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10. That, in observance of the provisions of numeral 5 of article 255 of the TUO of the LPAG, through Official Letter No. 2984-2024-SMV/11 of July 11, 2024, the Report was sent to the Issuer so that it formulates its allegations within the term of five (05) business days; however, to date it has not presented allegations to the Report;

III. ISSUES TO DETERMINE

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

(i) Whether or not the Issuer incurred in the infraction 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

12. That, article 13 of the TUO of the LMV, establishes that:

"(...) The legal persons registered in the Registry and the issuer of registered securities are obligated to present the information that this law and other general provisions establish, being responsible for the veracity of such information."

13. That, article 7 of the Regulation of Indirect Property, Linkage and Economic Groups, approved by SMV Resolution No. 019-2015-SMV-01 and amendments (hereinafter, the Economic Group Regulation), establishes the definition of Economic Group:

"Article 7.- DEFINITION OF ECONOMIC GROUP Economic Group is the set of entities, national or foreign, conformed by at least two entities, when one of them exercises control over the other or others or when the control over the entities corresponds to one or several natural persons acting as a decision unit. Natural persons do not form part of the economic group."

14. That, in relation to the obligation of presenting information of the Economic Group, article 8 of the Economic Group Regulation, provides:

"The issuers of securities registered in the Registry, the legal persons registered in it, and the EAFC are obligated to present to the SMV and when applicable to the entity responsible for a centralized negotiation mechanism in which such securities are registered, the reports on their Economic Group, in accordance with the formats established by the SMV. (Underline added);

15. That, regarding the opportunity of the presentation of information, the second paragraph of article 9 of the Economic Group Regulation, establishes3:

[3] Second paragraph of article 9 of the Economic Groups Regulation modified by Article 6 of SMV Resolution No. 019-2021-SMV/01, published on October 30, 2021, whose previous text is the following: "In case any change occurs in the reported information on economic group, the information must be updated no later than March 31 of the following year of occurrence, unless the

“In the event that any change occurs in the reported information on the economic group, the information must be updated and submitted at the same opportunity and jointly with the Annual Report of the obligated subject, unless the change qualifies as a material fact or relevant fact, in which case, without prejudice to the respective communication, the obligated subject must update said information within fifteen (15) calendar days. Said update must be made in accordance with the formats indicated in the first paragraph of the preceding article and, when applicable, must also be sent to the entity responsible for the centralized trading mechanism in which the securities are registered.” (Underline added).

16. That, in relation to the form of presentation of the Economic Group information, the provisions of articles 8 and 9 above are pertinent, as well as the provisions of article 10 of the Economic Group Regulation:

“Article 10.- TECHNICAL SPECIFICATIONS FOR SUBMITTING INFORMATION ON ECONOMIC GROUPS The information submitted to the SMV in compliance with the provisions of the preceding articles must observe the formats and technical specifications approved by the Superintendent of the Securities Market.”

17. That, in that sense, the obligated entities must comply with the updating and submission of information on their economic group through the Economic Group Report, in accordance with the Economic Group Information Formats, approved by Superintendent Resolution No. 083-2016-SMV/02 of 15 June 2016;

18. That, in this regard, section “II.a Entities that make up the Economic Group” of the Economic Group Information Formats contains numeral “vii. Total value of assets and equity: Indicate amount and currency” and it states “Note (1) The data on Total Assets and Equity shall refer to the fiscal year immediately preceding the date of submission of the Economic Groups information”, so this information may be updated periodically each year with data on total assets and equity as of the fiscal year immediately preceding the date of submission;

4.2 Evaluation of the case

19. That, in file No. 2024006221 containing the documentation of this PAS, it is observed that by Memorandum No. 3040-2023-SMV/11.1 of 24 July 2023 (File No. 2023031681), the General Superintendence for 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—, sent to the IGCC the result of its evaluation, and specifically the referred

[Subrayado agregado] change qualifies as a material fact or relevant fact, in which case, without prejudice to the respective communication as such, the obligated subject must update said information within fifteen (15) calendar days. Said update must be made in accordance with the formats indicated in the first paragraph of the preceding article and, when applicable, must also be sent to the entity responsible for the centralized trading mechanism in which the securities are registered.” (Underline added).

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PERU Ministry of Economy and Finance
SMV
Superintendence 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"

to the present case;

20. That, it must be kept 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 infringement, 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 IGSC's report of indications of infringement is not binding on the IGCC, as established in the second paragraph of article 9 of the Sanctions Regulation4 5 ;

21. That, in this way, it follows that in the evaluation of the facts related to this PAS, two (2) other organs of the Superintendence 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 the aforementioned memorandum 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 charge, it being necessary to indicate that by the nature thereof, it will be a first-instance administrative decision;

22. That, previously, it must be noted that the Issuer has not submitted its defenses regarding the imputations formulated against it in this file;

23. That, the Issuer did not send the arguments corresponding to the Report, despite being duly notified, on 15 July 2024;

24. That, as of the date of imputation of charges, the total amount of assets and the equity recorded in the Annual Individual Financial Statements for fiscal year 2022 submitted in File No. 2023009412 were different or had varied in relation to the amount indicated in the Economic Group Report submitted jointly with said financial statements; therefore, having occurred a

[4] In article 245 of the TUO of the LPAG, the following are indicated as forms or modes in which the inspection activity could be concluded: 1) Record of conformity of the activity carried out by the administered party; 2) Recommendation of improvements or corrections to the activity carried out by the administered party; 3) The warning of the existence of non-compliances not susceptible to warranting the determination of administrative responsibilities; 4) The recommendation to initiate 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

[5] (…) 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 an administrative sanctioning procedure. If applicable, the General Compliance Intendancies may conduct 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 an administrative sanctioning procedure. (…).

change in relation to the section “II.a Entities that make up the Economic Group” the Issuer should have updated the information on its Economic Group and not record the same amounts presented at the close of fiscal year 2020 and 2021;

25. That, although, on April 1, 2024, the Issuer sent the SMV the report of its economic group jointly with the Annual Report and Annual Individual Financial Statements of fiscal year 2023 (File No. 2024014514), it can be verified that it again sent the same data of total assets and equity reported on March 29, 2022, in relation to fiscal year 2020;

26. That, in that sense, it is observed that the Issuer to date has still not complied with correcting the imputed infraction, since even the last update date still appears as March 29, 2022, recording as of December 31, 2020 and 2021 the concepts of total amount of assets and equity of the companies that make up its economic group;

27. That, consequently, having accredited the conduct constituting the infraction and determined the administrative responsibility of the Issuer, it is appropriate to analyze the proposed sanction in accordance with the provisions of the principle of reasonableness and the sanction criteria, which will be evaluated in the section on determination of the sanction;

V. DETERMINATION OF THE SANCTION

28. That, having determined the existence of administrative responsibility on the part of the Issuer, for the commission of one (1) infraction typified in subsection 3.7 of numeral 3 of Annex I of the Sanctions Regulation, which states that it constitutes a minor infraction:

“Not presenting to the SMV or, when applicable, to the entity responsible for a centralized negotiation mechanism, or not keeping updated, the information on its Economic Group, as well as not informing the SMV, the share transfers that imply a change in the decision or control unit, or any modification of the data appearing in the Public Registry of the Securities Market, within the period or form established in the regulations on the matter.” (Underline added);

29. That, in accordance with article 35 of the Sanctions Regulation, said infraction is sanctionable with a warning or fine of not less than one (01) UIT and up to twenty-five (25) UIT;

30. That, in that sense, it is appropriate to determine the sanction to be imposed on the Issuer considering the sanction criteria established in article 344 of the TUO of the LMV, numeral 3) of article 248 of the TUO of the LPAG and the provisions of article 25 of the Sanctions Regulation, which develop the criteria for grading the sanction, these being: (i) the issuer's sanction history, (ii) recidivism, (iii) the circumstances of the commission of the infraction, (iv) the economic harm caused and its repercussion on the market, (v) the illicit benefit resulting from the commission of the infraction, (vi) the probability of detection of the infraction, (vii) the severity of the damage to the public interest and/or protected legal interest and (viii) the existence or not of intentionality in the conduct of the offender (hereinafter, Sanction Criteria);

31. That, in relation to the severity of the damage to the public interest and/or protected legal interest, it is relevant to note that in relation to the severity of the damage to the public interest and/or protected legal interest, it must be indicated that the presentation

timely presentation of the Economic Group Report by the issuers of securities registered in the Public Registry of the Securities Market constitutes a fundamental obligation in the transparency of the securities market, so that market participants can make their investment decisions adequately informed. Therefore, although a seriousness of the damage to the public interest is not evidenced, the breach of the obligation to inform the market within the deadlines on the part of the affected issuers affects market transparency, which is considered a protected legal interest;

32. That, regarding the sanction antecedents, literal a) of article 25 of the Sanctions Regulation establishes that they are the final sanctions imposed by the Superintendency of the Securities Market – SMV within the term of four (4) years prior to the commission of the infraction to be sanctioned (in the present case, on 29 March 2022); notwithstanding this, it is specified that the commission of the same infraction in the year prior to the infraction to be sanctioned is not considered as an antecedent. On this matter, from the verification carried out in the SMV Sanctions System, it has been determined that the Issuer has sanction antecedents, as detailed in the Report; That, regarding the recidivism of the offender, literal b) of article 25 of the Sanctions Regulation establishes that the final sanction imposed by the SMV within the term of one (1) year prior to the commission of the infraction to be sanctioned is taken into account. In this regard, it has been verified that there is no recidivism on the part of the Issuer;

33. That, in relation to the circumstances of the commission of the infraction, it has been verified that the Issuer would not have updated the information about its group by having submitted its Economic Group Report on 29 March 2022, recording total assets and equity as of 31 December 2020 of the Issuer itself, which should have been updated as of 31 December 2021; likewise, by having submitted the Economic Group Report presented on 30 March 2023 recording total assets and equity of the companies that make up its economic group for fiscal years 2020 and 2021, which should have been updated as of 31 December 2022. It should be noted that, as of the date of preparation of this report, the Issuer has not complied with correcting the imputed infraction;

34. That, regarding the economic harm and its impact on the market, it has not been evidenced that the breach has produced a quantifiable harm, understood as an economic damage caused to one or several investors;

35. That, in relation to the illicit benefit resulting from the commission of the infraction, it can be stated that there are not sufficient elements to indicate that the Issuer obtained an illegal benefit as a consequence of the commission of the infraction under evaluation in the present PAS;

36. That, regarding the probability of detection of the infraction committed, it must be pointed out that the probability is high, because this class of breaches are corroborated by the SMV itself through periodic control actions;

37. That, in relation to the existence or not of intentionality in the conduct of the offender, it can be stated that there are not sufficient elements to indicate that the Issuer acted with intent in the commission of the infractions, so this criterion would not have been configured. However, it is necessary

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indicate that although there are no indications to state that the Issuer acted with intentionality, it can be affirmed that the Issuer's conduct was negligent, by not having acted with the required diligence before obligations already known to the Issuer;

38. That, in this sense, in application of the Sanction Criteria previously developed, it is observed that the infraction committed has not caused a concrete harm to the investors, the Issuer has not obtained a benefit from its illegal conduct, nor has it been proven that it acted with intent. However, the Issuer has two (2) sanction antecedents, as indicated in the Report. Likewise, it must be taken into account that the Issuer to date has still not complied with correcting the infraction subject to imputation in the present case;

39. That, taking into account the Sanction Criteria detailed previously and the evaluation carried out by this Deputy Superintendency, it corresponds to impose on the Issuer a fine of 5 UIT6 equivalent to S/. 23,000.00 (Twenty-Three Thousand and 00/100 Soles), in accordance with article 35 of the Sanctions Regulation, and;

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

RESOLVES:

Article 1.- Declare that Compañía Minera San Ignacio de Morococha S.A.A. has incurred in one (1) infraction of a minor nature, typified in subsection 3.7 of numeral 3 of Annex I of the Sanctions Regulation, approved by SMV Resolution No. 035-2018-SMV/01, for not having updated the information about its Economic Group within the term and form established in the norm, as of the date of imputation of charges.

Article 2.- Sanction Compañía Minera San Ignacio de Morococha S.A.A. with a fine of 5 UIT equivalent to S/. 23,000.00 (Twenty-Three Thousand and 00/100 Soles) for not keeping updated the information about its Economic Group within the term and form established in the norm, as provided in article 1 of the present Resolution.

Article 3.- This Resolution does not exhaust the administrative remedy, and it may be challenged before this Deputy Superintendency of Market Conduct Supervision by filing a motion for reconsideration or appeal, administrative remedies 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 "SMV Institutional Page on the Single Digital Platform of the Peruvian State for Citizen Guidance (www.gob.pe/smv)", in observance of the provisions of numeral 1 of Article 7 of the

[6] Supreme Decree No. D.S. No. 398-2021-EF set the UIT for fiscal year 2022 at S/ 4,600.00.

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"Policy on the dissemination of regulatory projects, general legal norms, early agenda and other administrative acts of the SMV", approved by SMV Resolution No. 014-2014-SMV/01, and by the provisions of the last paragraph of Article 14 of the Sanctions Regulations, approved by SMV Resolution No. 035-2018-SMV/01.

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

Signed by: RIVERO ZEVALLOS Carlos Fabian FAU 2013 Reason:

Carlos Rivero Zevallos
Deputy Superintendent
Deputy Superintendency of Market Conduct Supervision

Signed by: MENESES CAMARGO Carlos Er
Reason: