"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"

Superintendent Resolution No. 057-2024-SMV/02

Lima, 13 May 2024

The Superintendent of the Securities Market

WHEREAS:

File No. 2020016758 containing, among others, the appeal filed by Zest Capital Perú S.A.C. (hereinafter, "Zest"), against Deputy Superintendent Resolution SMV No. 031-2021-SMV/10, Report No. 1329-2023-SMV/06 issued by the Legal Advisory Office (hereinafter, the "OAJ Report"), as well as Zest's briefs; and having heard the oral reports by Zest's representatives;

CONSIDERING:

That, by Deputy Superintendent Resolution SMV No. 031-2021-SMV/10 (hereinafter, "THE RESOLUTION"), the Deputy Superintendency of Prudential Supervision (hereinafter, "SASP") sanctioned Zest with a fine of 240 UIT equivalent to S/ 1 008 000.00 (One million eight thousand and 00/100 Soles), for having incurred in: two very serious infractions, typified in Annex III, literal A), numeral 1, subparagraph 1.1. of the Sanctions Regulation, approved by SMV Resolution No. 035-2018-SMV/01 (hereinafter, the "Sanctions Regulation"), for failing to comply with the provisions of article 4 of the Securities Market Law, approved by Legislative Decree No. 861 and its amendments (hereinafter, "LMV") and article 6 of the Primary Public Offering and Sale of Securities Regulation, approved by CONASEV Resolution No. 141-98-EF/94.10 and its amendments (hereinafter, the "Public Offering Regulation"), for having made two public offerings without having previously registered the participation certificates of the private offering investment funds called Fondo Zest Income Liquid (hereinafter, "Fondo ZIL") and Zest Bond Liquid (hereinafter, "Fondo ZBL") in the Public Registry of the Securities Market (hereinafter, "RPMV");

That, THE RESOLUTION ordered as a corrective measure the registration of Fondo ZBL and Fondo ZIL (together, Funds ZBL and ZIL) in the RPMV. For this purpose, it was stated that, within the term of 30 business days from notification of THE RESOLUTION, Zest must adopt the necessary actions to transfer the management of Funds ZBL and ZIL to a Mutual Fund Management Company duly authorized by the Securities Market Superintendency (hereinafter, "SMV");

That, by brief presented on 27 July 2021, Zest filed an appeal (hereinafter, "Appeal") against THE RESOLUTION and requested that it be declared null and void, that the sanctions and corrective measures imposed be revoked, and that the administrative proceeding be definitively archived. Additionally, it requested the suspension of the effects of THE RESOLUTION;

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

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

That, by briefs presented: i) on 13 October 2021, ii) on 9 August 2022, iii) on 19 August 2022, and iv) on 21 November 2022, Zest supplemented its appeal (hereinafter, "Supplementary Briefs");

That, by brief presented on 3 February 2023, Zest communicated, among others, the appointment of its new General Manager and by brief presented on 3 April 2023, Zest communicated, among others, the appointments of its new investment, commercial, and technology and operations managers;

That, in parallel, on 13 May, 21 July, 13 September and 11 November 2022; and, 7 February and 18 August 2023; Zest held meetings in which it stated its position on some aspects of its appeal before the Legal Advisory Office (hereinafter, "OAJ");

That, by briefs presented on 12 and 27 October 2023 and 9 April 2024, Zest submitted arguments (hereinafter, "Final Arguments"). Likewise, on 19 October 2023 and 3 April 2024, Zest made two Oral Reports;

I. On the requirements of the Appeal and the Competent Body

That, in accordance with subsection 26 of article 12 of the SMV Organization and Functions Regulation, approved by Supreme Decree No. 216-2011-EF (hereinafter, SMV ROF)¹, it corresponds to the Superintendent of the Securities Market to resolve in the last administrative instance the appeals filed against administrative acts of the SMV bodies;

That, from the evaluation carried out, it has been verified that the appeal filed by Zest complies with the requirements established in articles 124² and 221³ of Supreme Decree No. 004-2019-JUS, which approved the Single Ordered Text of the General Administrative Procedure Law – Law No. 27444 (hereinafter, TUO of the LPAG);

[1] Article 12.- The attributions or powers of the Superintendent are, without prejudice to those corresponding to him as the highest executive authority of the SMV, for the proper exercise of the institutional functions described in article 3 of this Regulation, the following: (…)
26. To resolve in the last administrative instance, the appeals filed against administrative acts of the SMV bodies, including those issued by the committee for the selection of Appraisers for the purposes of the public offering of acquisition and public offering of purchase.

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

[3] Article 221.- Requirements of the appeal
The written appeal must state the act being appealed and must comply with the other requirements provided in article 124.

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

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

That, likewise, in the case analyzed it is verified that the filing of the appeal by Zest was made within the legal term, in observance of the provisions of article 2184 of the TUO of the LPAG.

II. Of the Appeal, the Supplementary Briefs, Final Arguments and Oral Report

Zest states the following:

II.1 Issues related to the Regulation of the Securities Market

On the Invitations

a) The invitations made constitute what in Civil Law is known as an "offer", so that if accepted by the persons to whom they were addressed, it gives rise to the formation of the agreement of wills or contract, in accordance with articles 1373 et seq. of the Civil Code. The appellant states that the stages corresponding to a contractual iter were complied with, since offers were issued to institutional investors, there was acceptance by them and the contracts were entered into with them, and it was they who extended the sworn statements, recording their status as institutional investors. Zest states that this allows the conclusion that the invitations or offers were addressed exclusively to institutional investors and if an "acceptance" had come from a non-institutional investor, this would be equivalent to a "counteroffer", as defined in article 1376 of the Civil Code, in which case it does not give rise to the perfection of a contract.

b) The emails sent by Zest clearly indicated that the offers were addressed exclusively to Institutional Investors, which appears in the voluminous evidentiary material provided by Zest and with the evidence provided it is proven that it falls within the assumption established in article 5, literal a) of the LMV. It adds that the foregoing is confirmed in its brief sent to the SMV on 29 January 2021, which contains 6,377 folios.

To validate that the offers were addressed exclusively to Institutional Investors, Zest presented the emails containing said invitations and the factsheets attached to said emails. Thus, it comments on a series of images related to its emails dated 06 May 2019 and 27 May 2019; and the Factsheets of the products Zest Bond Liquid – A4 and Zest Income Liquid – G1. In Zest's opinion, said images make it possible to verify that the invitations were intended exclusively for institutional investors, the same ones who signed the respective sworn statements.

[4] Article 218. Administrative appeals
218.1 Administrative appeals are:
a) Appeal for reconsideration b) Appeal
Only where expressly established by law or legislative decree may the administrative appeal for review be filed. 218.2 The term for filing appeals is fifteen (15) peremptory days, and they must be resolved within thirty (30) days.

"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"

Regarding the emails, Zest states that the Factsheets made available to clients (Zest Bond Liquid – Series A4, Zest Income Liquid - Series D9 and Zest Income Liquid – Series D12), corresponding to the email dated 06 May 2019 and the factsheets (Fact sheet Series A4, Fact sheet Series G1, Fact Sheet Series D12, Fact Sheet Series D10 and Fact Sheet Series D11), corresponding to the email of 27 May 2019, in both cases when clicking on the hyperlinks contained in the aforementioned emails, the information on the proposed investments will be found. It attaches the following images:

Image 1 - Email of 06 May 2019

Image 1 - Email of 06 May 2019

Image 2 - Email of 27 May 2019

Image 2 - Email of 27 May 2019

PERU Ministry of Economy and Finance
SMV Superintendency of the Securities Market

"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"

Additionally, it states that in the disclaimers of said emails, it is indicated that it is addressed to Zest's clients, “... This email is conceived and designed for the clients of ZEST CAPITAL PERÚ S.A.C...". It attaches the following images:

Image 3 – Disclaimer of the email of 06 May 2019

Image 3 – Disclaimer of the email of 06 May 2019

Image 4 – Disclaimer of the email of 27 May 2019

Image 4 – Disclaimer of the email of 27 May 2019

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

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

Zest mentions that in the email of 06 May 2019 and in the email of 27 May 2019 there is the Factsheet of the Zest Bond Liquid-A4 product and the Factsheet of the Zest Income Liquid-G1 product, respectively. It indicates that these factsheets contain some disclaimers that state that "...investors must review the Participation Regulation of the Private Fund before any acquisition of units", therefore investors, prior to any investment, must review the Participation Regulation of the fund. Likewise, it indicates that these disclaimers are found in all the factsheets made available to clients. It attaches the following images:

Image 5 - Factsheet of the Zest Bond Liquid-A4 product

Disclaimer
ZEST CAPITAL PERÚ S.A.C. manages a Private Investment Fund, which is an autonomous patrimony made up of contributions from natural and/or legal persons, which, under the provisions of subsection a) of article 27° of the Law of Investment Funds and their management companies, may make investments in securities, for the account and risk of the fund's participants. These investments have as their purpose investment in securities. This report is conceived and designed for the clients of ZEST CAPITAL PERÚ S.A.C., for which reason it is not advertising nor is it available to the general public. The information shown on this page is private and may not be up to date or may contain errors. This information must in no way be interpreted as an investment recommendation; the investor must seek external advice before any acquisition of units. Past results are not indicators of results that may be obtained in the future. Investment in structured notes entails credit risk of the issuing financial entity and of the underlying assets. As of the closing date of the structured note, the number of underlying assets may be modified according to the amount of investment raised in the pre-operational period. The information shown on this page has been taken from the official web pages of the companies in question and ZEST CAPITAL PERÚ S.A.C. is not responsible for their accuracy. The rules described are not intended to be exhaustive; investors must review the Participation Regulation of the Private Investment Fund before any acquisition of units. The custody account may be a current account opened at a financial entity supervised by the Superintendency of Banking and Insurance, in accordance with the provisions of Law No. 26702, General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance.

Image 6 - Factsheet of the Zest Income Liquid-G1 product

Disclaimer
ZEST CAPITAL PERU S.A.C. manages a Private Investment Fund, which is an autonomous patrimony made up of contributions from natural and/or legal persons, which, under the provisions of subsection a) of article 27° of the Law of Investment Funds and their management companies, may make investments in securities, for the account and risk of the fund's participants. These investments have as their purpose investment in securities. This report is conceived and designed for the clients of ZEST CAPITAL PERÚ S.A.C., for which reason it is not advertising nor is it available to the general public. The information shown on this page is private and may not be up to date or may contain errors. This information must in no way be interpreted as an investment recommendation; the investor must seek external advice before any acquisition of units. Past results are not indicators of results that may be obtained in the future. Investment in structured notes entails credit risk of the issuing financial entity and of the underlying assets. As of the closing date of the structured note, the number of underlying assets may be modified according to the amount of investment raised in the pre-operational period. The information shown on this page has been taken from the official web pages of the companies in question and ZEST CAPITAL PERU S.A.C. is not responsible for their accuracy. The rules described are not intended to be exhaustive; investors must review the Participation Regulation of the Private Investment Fund before any acquisition of units. The custody account may be a current account opened at a financial entity supervised by the Superintendency of Banking and Insurance, in accordance with the provisions of Law No. 26702, General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance.

On the other hand, Zest indicates that in the Participation Regulations of the ZBL and ZIL Funds, numerals 28.4 and 117.2 literal c, state the existence of the sworn declaration that must be signed by the participant, the risks assumed by the participant, and that the latter has the experience and resources necessary to make its investment.

Thus, the aforementioned numerals 28.4 expressly state that: "the participants must sign a sworn declaration, in which they record their knowledge both of the nature of the private offering fund and that they assume the risks derived from their investment in this type of fund". While the aforementioned

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

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

items 117.2 literals c, indicate that "In addition, a declaration shall be attached which must be signed by each participant… Through said declaration the participant shall record that they know that the fund is a private fund not regulated or supervised in which the SMV has no intervention. That they are aware of the risks implicit therein and that they have the experience and resources necessary to assume such risks on their own account." Attached are the following images:

Image 7 – Item 28.4 of the Participation Regulation of Fund ZBL

MANNER PERMITS THE CONVENTIONAL TRANSFER OF UNITS TO THIRD PARTIES.------------------------------------------------------------------------------------------------------
28.4 IN THE CASE OF THIS FUND, DUE TO ITS PRIVATE
CHARACTERISTIC, PRIOR TO THE SUBSCRIPTION OF UNITS, THE PARTICIPANTS MUST SIGN A SWORN DECLARATION, IN WHICH THEY RECORD THEIR KNOWLEDGE BOTH ABOUT THE NATU- RE OF THE PRIVATE OFFERING FUND AND THAT THEY ASSUME THE RISKS DERIVED FROM THEIR INVESTMENT IN THIS TYPE OF FUND, AS WELL AS THAT THE SMV, EXCEPT AS PROVIDED IN ARTICLE 18 OF THE LAW OF INVESTMENT FUNDS, DOES NOT EXERCISE SUPERVISION OVER THIS FUND AND, THEREFORE, ITS MANAGEMENT, THE INFORMATION IT PROVIDES TO ITS INVESTORS AND THE OTHER SERVICES IT PROVIDES TO THEM ARE THE EXCLUSIVE RESPONSIBILITY OF THE MANAGEMENT COMPANY. THIS DECLARATION MUST APPEAR IN A DOCUMENT INDEPENDENT FROM THE PARTICIPATION REGULATION OR ANY DOCUMENT THAT THE PARTICIPANT SIGNS.----------------------------------------------------------------------------------------
ARTICLE TWENTY-NINTH. UNITS. ------------------------------------------------------

Image 8 – Item 28.4 of the Participation Regulation of Fund ZIL

CONVENTIONAL TRANSFER OF UNITS TO THIRD PARTIES.--------------------------------
28.4 IN THE CASE OF THIS FUND, DUE TO ITS PRIVATE
CHARACTERISTIC, PRIOR TO THE SUBSCRIPTION OF UNITS, THE PARTICIPANTS MUST SIGN A SWORN DECLARATION, IN WHICH THEY RECORD THEIR KNOWLEDGE BOTH ABOUT THE NATURE OF THE PRIVATE OFFERING FUND AND THAT THEY ASSUME THE RISKS DERIVED FROM THEIR INVESTMENT IN THIS TYPE OF FUND, AS WELL AS THAT THE SMV, EXCEPT AS PROVIDED IN ARTICLE 18 OF THE LAW OF INVESTMENT FUNDS, DOES NOT EXERCISE SUPERVISION OVER THIS FUND AND, THEREFORE, ITS MANAGEMENT, THE INFORMATION IT PROVIDES TO ITS INVESTORS AND THE OTHER SERVICES IT PROVIDES TO THEM ARE OF EXCLUSIVE RESPONSIBILITY OF THE MANAGEMENT COMPANY. THIS DECLARATION MUST APPEAR IN A DOCUMENT INDEPENDENT FROM THE PARTICIPATION REGULATION OR ANY DOCUMENT THAT THE PARTICIPANT SIGNS.------------------------------------------------------------------------------------------------------
ARTICLE TWENTY-NINTH. UNITS. ------------------------------------------------------

"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"

Image 9 – Item 117.2 literal (c) of the Participation Regulation of Fund ZBL

THE FUND.-
117.2 FOR THE PLACEMENT OF THE UNITS THE FOL-
LOWING PROCEDURE SHALL BE FOLLOWED:
(A) THE MANAGER SHALL MAKE A PRIVATE OFFERING OF THE UNITS TO THROUGH ITS AGENTS WHO HAVE THE PROPER CHARAC- TERIZATION; (B) IN SUCH OFFERING IT SHALL INFORM ABOUT THE MAIN CHARAC- TERISTICS OF THE UNITS AND THE PLACEMENT PROCEDURE, INCLUDING THE PLACEMENT SCHEDULE; (C) LIKEWISE, THE MANAGER SHALL MAKE AVAILABLE TO ALL INTERESTED PARTIES, THE PARTICIPATION REGULATION AND THE SUBSCRIPTION CONTRACT. IN ADDITION, A DECLARATION SHALL BE ATTACHED WHICH MUST BE SIGNED BY EACH PARTICIPANT. THROUGH SAID DECLARATION THE PARTICIPANT SHALL RECORD THAT THEY KNOW THAT THE FUND IS A PRIVATE FUND NOT REGULATED NOR SUPERVISED IN WHICH THE SMV HAS NO INTERVENTION, THAT IT IS CONSISTENT WITH THE RISKS IMPLICIT THEREFOR AND THAT THEY HAVE THE EXPERIENCE AND RESOURCES NECESSARY TO ASSUME SUCH RISKS ON THEIR OWN ACCOUNT; LIKEWISE, THEY SHALL RECORD HAVING RECEIVED THIS PARTICIPATION REGULA- PACIÓN.
117.3 THE MINIMUM AMOUNT TO BE PLACED SHALL BE US$ 100,000.00 (ONE HUNDRED

Image 10 – Numeral 117.2 literal (c) of the Participation Regulation of the ZIL Fund

THE UNITS REPRESENT A RIGHT OF PARTICIPATION IN THE FUND.
117.2 FOR THE PLACEMENT OF THE UNITS, THE FOLLOWING
PROCEDURE SHALL BE FOLLOWED:
(A) THE MANAGER SHALL MAKE A PRIVATE OFFERING OF THE UNITS THROUGH ITS AGENTS THAT HAVE THE PROPER CHARACTERIZATION; (B) IN SUCH OFFERING, IT SHALL INFORM ABOUT THE MAIN CHARACTERISTICS OF THE UNITS AND THE PLACEMENT PROCEDURE, INCLUDING THE PLACEMENT SCHEDULE; (C) LIKEWISE, THE MANAGER SHALL MAKE AVAILABLE TO ALL INTERESTED PARTIES, THE PARTICIPATION REGULATION AND THE SUBSCRIPTION AGREEMENT. IN ADDITION, A DECLARATION SHALL BE ATTACHED THAT MUST BE SIGNED BY EACH PARTICIPANT. THROUGH SAID DECLARATION, THE PARTICIPANT SHALL RECORD THAT THEY KNOW THAT THE FUND IS A PRIVATE FUND NOT REGULATED OR SUPERVISED IN WHICH THE SMV HAS NO INTERVENTION, THAT IT IS CONSISTENT WITH THE RISKS IMPLIED THEREBY AND THAT THEY HAVE THE EXPERIENCE AND RESOURCES NECESSARY TO ASSUME FOR THEIR OWN ACCOUNT SUCH RISKS; LIKEWISE, THEY SHALL RECORD HAVING RECEIVED THIS PARTICIPATION REGULATION.
117.3 THE MINIMUM AMOUNT TO BE PLACED SHALL BE US$ 100,000.00 (ONE HUNDRED

PERU
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"

Subsequently, it attaches an image of the Participation Regulation of the ZIL Fund where it is stipulated that whoever wishes to acquire the units accepts the terms and conditions of the Subscription Agreement, of the Participation Regulation and a declaration where they understand that it is a private fund not regulated by the SMV. It attaches the following image:

Image 11 – Participation Regulation of the ZIL Fund

ZEST INCOME LIQUID IS A PRIVATE FUND OF INSTRUMENTS THAT GENERATE INCOME, WHOSE MAIN OBJECTIVE IS THE APPRECIATION OF INVESTED CAPITAL, AS WELL AS THE DIVERSIFICATION OF THE PORTFOLIO THROUGH INVESTMENTS IN INSTRUMENTS DERIVED FROM FIXED INCOME.
WHOEVER WISHES TO ACQUIRE THE UNITS OF THIS PRIVATE INVESTMENT FUND (HEREINAFTER, "UNITS") MUST BASE THEMSELVES ON THEIR OWN EVALUATION OF THE INVESTMENT AND THE RISK IT REPRESENTS. THE ACQUISITION OF UNITS PRESUPPOSES THE ACCEPTANCE BY THE PARTICIPANT OF ALL THE TERMS AND CONDITIONS OF THE SUBSCRIPTION AGREEMENT, AS WELL AS THOSE OF THE PARTICIPATION REGULATION, IN PARTICULAR, A DECLARATION OF THEIR UNDERSTANDING THAT THE PRESENT IS A PRIVATE FUND, MANAGED BY A PRIVATE LEGAL ENTITY THAT IS NOT WITHIN THE SCOPE OF THE REGULATIONS AND SUPERVISIONS OF THE SUPERINTENDENCY OF THE SECURITIES MARKET OF PERU.

Finally, Zest shows the tenth page of the Subscription Agreement, which corresponds to the annex "Sworn Declaration Participant (Natural Person)", where according to Zest the participant declared to qualify as an institutional investor in addition to other aspects. It attaches the following image:

Image 12 – Sworn Declaration of Natural Person

Sworn Declaration Participant (Natural Person) Through this sworn declaration, ______________________________, identified with DNI ____________________ with address at ______________________________________ I declare the following:

1. To qualify as Institutional Investor/Qualified Investor
2. To have full knowledge of the characteristics and applicable regulation of private
   investment funds, the risks involved in investing in securities of all types both in centralized trading mechanisms and outside them, which may refer to credit, market, liquidity, foreign exchange, settlement risks, country risk, sector risk, company risk, among others inherent to said activity.
3. To have full knowledge of the conditions for the transfer of quotas referred to in
   the Participation Regulation.
4. To acknowledge and accept that the Management Company may request further information regarding the
   declarations made in point 1 above and, therefore, I undertake to deliver, within a reasonable period, all information requested in order to prove the requirements established by the Regulation to be considered an Institutional Investor.
   In that sense, I release the Management Company from all liability for investments and transactions related to securities that it carries out from this date forward and I undertake to keep it informed of any situation that implies the cessation of my qualification as Institutional Investor.
   Lima 21 March 2018

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

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

c) Zest alleges that in THE RESOLUTION it is indicated that the basis for the imposition of the sanctions is based on the information that Zest provided to determine the number of persons to whom the offers of participation quotas were directed. In that line, in recitals 40 to 49 of THE RESOLUTION, it is asserted that in the ZBL and ZIL Funds, invitations were sent by emails to potential investors between May and August 2019, in addition to said invitees are added new participants of the aforementioned funds, as shown in tables 1 and 2 of THE RESOLUTION. Likewise, Zest points out that it wants to denote that there were more offers than those calculated by THE RESOLUTION.

Given this, Zest indicates that the above is a calculation that is hypothetical, limited, in addition to being an aggregate and approximate sum, which results from comparing the dates of 08/07/2019, 09/07/2019, 22/07/2019, 30/07/2019 and 06/08/2019. It argues that the statistical behavior of the indicated dates is not necessarily reflected in the emails of the month of May, therefore, attributing that they sent 144 emails on all occasions only because it is repeated in five events, is not a logical or valid conclusion. It attaches a graph based on the maximum number of persons per date sent.

The appellant argues that the information used to calculate the invitations made was not concrete, complete and reliable, in addition to being accused of not having provided sufficient evidence to disprove said calculation; requiring Zest to explain why the number of offers directed to the market constitutes a hypothetical calculation.

It adds that by sharing the volume of emails sent on certain dates on January 27, 2019, its objective was to specify what type of emails go to what type of interest groups, as opposed to the SASP qualifies the information provided by Zest as "unequivocal" despite the fact that in Recital 151 of THE RESOLUTION it questions and observes its verisimilitude, which would evidence a contradiction; furthermore, said information has been corrected, increased and complemented during the last two years in the vast requirements made via official letter and unofficially by the SASP.

Finally, it comments that in recitals 113, 114, 125 and 223 of THE RESOLUTION a theory lacking logic has been outlined, built on assumptions that consist of factoring its years of operation by the number of routine meetings held, by the number of its workers, by the number of its external sales advisors and by the number of electronic messages that appear on its LinkedIn page to reach the conviction that they have sent nearly 25,000 investment invitations. Despite this, in recitals 218, 219, 224 and 225 of THE RESOLUTION only 103 (one hundred three) invitations to "potential clients" are considered between the months of May and August for the ZBL Fund and 160 for the ZIL Fund.

On the segment of the public

a) In various situations Zest maintains that its investors have signed the sworn declaration of qualifying as institutional investors, said sworn declaration is within the subscription contracts signed by the participants of the funds managed by Zest. In this way, the appellant points out

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.firmadigital.gob.pe/verifica/validador.html

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

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

that it would have accredited that all its participants and investors have signed their respective sworn declaration where they state they know the scope and have the status of institutional investors in accordance with what is required in the Regulation of Institutional Investors, not requiring State protection.

It adds that the "series" of its investment funds are created and liquidated constantly, being divisible securities and that for said reason its investors enter into and sign various contracts and declarations. It states that therefore, throughout this procedure, it has been adding sworn statements from persons who were classified as “potential clients” due to a lag in updating its database and who were actually “participants” or “former participants”.

b) The appellant states that it would have been sanctioned relying on the legal presumption of “public segment” of subsection d) of article 6 of the Public Offering Regulation. However, if the sworn statements of the investors who qualify as institutional investors are subtracted or discounted from the hypothetical arithmetic and statistical calculations outlined by the SASP, then such legal presumption would not be met, since the invitations would be fewer than 100 recipients in each case. It adds that institutional investors must be excluded from the counting of the number of recipients, given that it makes no sense to include them because they do not require protection.

Taking this into account, the duly disseminated invitation was not directed to a “segment of the public” according to the presumption established in subsection d) of article 6 of the Public Offering Regulation, that is, to a group of persons who require the protection referred to in article 2 of said Regulation, given that their number does not involve the public interest.

c) In the event that it is held, as is done in recitals 203 and 204 of THE RESOLUTION, that the numerical legal presumption of “public segment” established in subsection d) of article 6 of the Public Offering Regulation is relative, since it may be fewer than 100 (one hundred), for example, that there be five (5) recipients of the offer and they merit public interest, Zest would disagree with that position. It argues that subsection d) of article 6 of the Public Offering Regulation states that a “public segment” is configured when there exists: i) a significant number of persons, that is, there exists “public interest”; and, that ii) such persons require protection by the State, that is, there exists an “information asymmetry”.

Along these lines, Zest states that, if such an interpretation were accepted, the State through the SMV (extensively interpreting its powers, which is prohibited) could intervene in each and every private relationship, this being unconstitutional. Finally, it points out that, for Zest, the concept of “massiveness” of securities is not in dispute as to what the characteristics of the securities are, but rather that a public offering has not been configured because it lacks the element of segment of the public in accordance with the LMV and the Public Offering Regulation. Such arguments being contrary to the principle of predictability and legality, since the administrative authority must submit to the legal order

Electronic document digitally signed within the scope of Law No. 27269, Law on 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.firmadigital.gob.pe/verifica/#/firma/4b9d-4b9d-4b9d-4b9d

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

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

legal order in force and cannot act arbitrarily, unreasonably and without motivation varying the interpretation of the applicable norms.⁵

d) It states that Fund ZBL has 24 investors while Fund ZIL has 16 investors, so no public interest is identified in these funds. It adds that the SMV is erroneously analyzing the number of invitees (without paying attention to their status as institutional investors) and not the final number of investors, and furthermore these persons have no need for protection.

Taking into account its arguments, the universe of persons in the offering would be fewer than 100, a circumstance that constitutes an indication regarding the private nature of the offering; likewise, it states that it has not been evidenced that, being the number fewer than 100, it is a case in which the public interest is involved.

e) Taking into account subsection a) of article 5 of the LMV, Zest states that it regulates on the basis of identifying the institutional investor as one who does not require protection, therefore, in its view it cannot be maintained that the qualification of the recipient investor in the invitation does not matter.

On Public and Private Offering

a) Zest states that non-compliance with the regulations applicable to public offerings has not been proven on the basis of reliable, concrete and coherent evidence, but on the contrary the infringement is presumed or forecast. It alleges that the principle of presumption of lawfulness has been affected, since it has been sanctioned with an infringement classified as very serious that in its view is non-existent, because there is a break in the causal link in the present case (as no public offerings were made), it cites subsection 9 of article 248 of the TUO of the LPAG and a comment by Morón Urbina regarding the principle of lawfulness.⁶ Finally, Zest states that given the rupture of the causal link the consequence is the exemption from the sanction.

b) According to article 5 of the LMV, the offering of securities not considered a public offering is private, regardless of whether the offering qualifies within the cases established in subsections a) and b) of the aforementioned article. Therefore, it cannot be argued in a biased manner in recitals 222 and 231 of THE RESOLUTION that only that which fits within case a) is indisputably private. Therefore, as it lacks the element “segment of the public” and is not configured as a public offering in accordance with the LMV and the Public Offering Regulation, the administrative sanctioning procedure has violated the “principle of causality” and broken the “causal link”.

[5] Christian Guzmán Napurí. The Administrative Sanctioning Procedure. Lima: Instituto Pacífico, 2020. Page 73. “the aforementioned principle establishes – as a result of the reform of Legislative Decree No. 1272 – that the administrative authority submits to the current legal system and cannot act arbitrarily, which is rather a consequence of the principle of legality. As a result, the norm prescribes that the administrative authority cannot unreasonably and without motivation vary the interpretation of the applicable norms (…)”.

[6] Morón Urbina, Juan Carlos. Comments to the Law of the General Administrative Procedure. Editorial Gaceta Jurídica: 2004, p. 635. “If the course of the administrative sanctioning procedure does not reach conviction of the unlawfulness of the act and the culpability of the administered, the implicit mandate of acquittal that this presumption entails is imposed (in dubio pro reo). In all cases of absence of necessary evidence to destroy the presumption of innocence, including reasonable doubt, it obliges the acquittal of the administered” (emphasis is Zest's). Regarding contrary evidence, Zest concludes: “The presumption will only yield if the entity can gather sufficient evidence about the facts and their authorship, be certain that all the constituent elements of the foreseen type have occurred, and a sufficient logical reasoning that articulates all these elements forming conviction” (emphasis is Zest's).

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It argues that it has been verified that all participants have the sworn declaration where they declare to be institutional investors, in accordance with the regulations. The foregoing, indicates that it is verified with the reading of article 3 of THE RESOLUTION, where the charges imputed referred to in Office No. 1618-2020-SMV/10.3 (hereinafter, Office of Charges) are archived, in the extreme referred to the public offering of negotiable securities without previously registering these in the RPMV, with respect to the participation certificates of the other funds administered by Zest as of September 30, 2019.

It adds that, in sanctioning law in general, responsibility must fall on whoever carries out the omissive or active conduct constituting the sanctionable infraction. It goes on to cite the Constitutional Court7, pointing out regarding the principle of causality or culpability, that it is not constitutionally acceptable that a person be sanctioned for an act or an omission of a legal duty that is not imputable to them. It indicates that a person cannot be sanctioned for an infraction they have not committed, and according to the foregoing, in its criteria Zest has not made a public offering because one of its elements has not concurred, which is being directed to a "segment of the public".

c) Based on subsection b) of article 5 of the LMV, private offers are considered, among others, when the offer has a nominal value or unit placement value lower than or equal to or higher than S/ 499, 908.00 (for the year 2019). In that line, the SASP would have supported its hypothesis in that the nominal value of the participation quotas of these investment funds is USD 100.00 and the minimum investment amount of USD 10,000.00. However, it argues that the SASP is aware that the investment of Zest's participants equals or exceeds the amount of S/499,908.00 according to the information provided.

d) That, based on subsection a) of article 5 of the LMV, although an offer has all the characteristics of a public offer, if it is only directed to institutional investors, it is considered a private offer. Zest indicates that the foregoing is conditioned on the negotiable securities acquired by these investors not being transferred to third parties, unless they do so to other institutional investors or the security is previously registered in the RPMV, which in the present case is not the object of discussion.

It points out that the ratio legis of the norm and the true intention of the legal system that regulates the Securities Market is to ensure that the offered securities remain within the sphere of institutional investors that have sufficient capacity to, based on the information provided to them, make adequate investment decisions, or because all adequate information is provided to them. It adds that for this reason, in all securities market systems, it is usually recognized as one of the "safe harbors" in which an offer will be considered, always as "private", that directed exclusively to institutional investors.

[7] STC No. 2868-2004-AA-TC of November 24, 2004. Consideration No. 21 "a limit to the sanctioning power of the State is represented by the principle of culpability. From this point of view, the sanction, penal or disciplinary, can only be based on the verification of subjective responsibility of the agent infringing a legal good. In that sense, it is not constitutionally acceptable that a person be sanctioned for an act or an omission of a legal duty that is not imputable to them." (emphasis is Zest's).

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Likewise, it points out that in the denied assumption that it could be verified that an offer was initially directed, among others, to recipients who could not comply with the legal requirements to be considered institutional investors, if such offers only materialize in Investment Contracts signed only by institutional investors, if it would be complying with the objective and sense of the norm, and the same would not be violated.

In this way, the administration should have taken into account that it has not entered into transactions with buyers subject to protection, but rather all its contracts have been entered into with institutional buyers. It states that Zest's and its products' dissemination emails are not properly "offers", nor have they produced any negative effect on the market.

Lastly, it states that even if the SMV were to consider the emails addressed to potential interested parties as "offers", no transaction or purchase was materialized with a buyer other than an institutional investor, with the ratio legis of article 5 of the LMV prevailing, that securities are not transferred to non-institutional buyers, which has not occurred since all buyers are institutional.

e) Zest states that it is being sanctioned for making public offers when it has made private offers. It adds that the application of sanctions must be based on proven facts and not on presumptions or alleged failures of procedural collaboration by the administered party (which, had they occurred, could trigger the legal consequences provided by law), which in no way justifies reversing the burden of proof in a sanctioning procedure that falls on the Administration, much less presuming the commission of the infringement under investigation based on an alleged fact not configured in reality (making a public offer).

The appellant states that it has carried out its operations under the denomination, requirements, procedures and formalities typical of private offers, finalizing them through contracts typical of private offers with the respective sworn statements required by law. However, it is charged with an infringement that corresponds to an absolutely different factual assumption because they are requirements typical of operators making public offers.

Along these lines, it maintains that Zest's real behavior and will to be evaluated must be that which has been strictly, manifestly and objectively deployed by it, that is, that of a private offer. This would have been corroborated by the actions prior to the conclusion of its operations, and by the manner of their completion (concluding purchase operations exclusively with institutional investors and collecting the respective sworn statements from institutional buyers required by law).

Taking all of the foregoing into account, it states that it has not complied with the rules regulating "Public Offer", because it did not propose to make nor did it at any time make a "Public Offer", but rather a private offer. This cannot be ignored or distorted without violating the imperative principle of material truth and the qualification contained in article 5 of the LMV.

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

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

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

In this way, it points out that it is not lawful for the Administration to apply the aforementioned infringement by distorting the facts. It adds that, in any case, what should have been judged is whether, in the case of a private offer, the administered party has violated any rule corresponding to private offers, in which case, with respect to that specific conduct, the respective state actions must be carried out (imputation of charges, invitation to submit defenses, etc.).

Thus, starting from the concept of sanction and its function⁸, the set of rules whose compliance or non-compliance must be evaluated is that of the private offer, and the degree of compliance with article 5 of the LMV must be verified. It states that the Administration should have evaluated whether the Administered Party violated article 5 of the LMV and, in turn, whether such violation is classified as a punishable infringement or whether it is the subject of an administrative warning or corrective action under the principle of "responsiveness", according to which prior preventive actions such as warning, corrective measures and, as a last resort, sanctions applied gradually from least to most (numeral 239.1 of art. 239, subsection 2 of numeral 245.1 and 245.2 of the TUO of the LPAG), or rules that indicate that supervision or inspection must be carried out under a compliance approach based on prevention rather than sanction.

In this way, in the case of an erroneous or irregular action by the Administered Party with little impact because the ratio legis of the unobserved rule has not been affected (if it is irregular to send emails to potential clients who turned out not to be institutional but with whom no transaction was concluded) or if the Administration notices some "gray area" that does not allow it to clearly determine the intentional or negligent harm to the public interest protected by the administered party (infringement) or in the face of a defect, obscurity or regulatory gap in the rule, in all those situations, the Administration must refrain from applying any sanction, preferring to apply the principle of responsiveness.

f) It has not committed any infringement, but rather the complainant has distorted the facts attributed to the conduct of the administered party, imputing to it the formulation of a "covert public offer", that is, attributing to Zest an intentional conduct aimed at illegally capturing non-institutional clients. It adds that the complaint is manifestly malicious and false, because if it were true, it would have resulted in the corresponding transactions with non-institutional clients, which did not happen. Additionally, Zest indicates that said complaint has misled the Administration, which has evaluated Zest's conduct under the prism of the set of regulations corresponding to a "public offering", erroneously applying the sanction of THE RESOLUTION.

g) It points out that if Zest had erred in behavior by not directing its emails "exclusively" to potential institutional clients, despite the fact that it did exclusively carry out transactions with institutional clients, it asks whether, for that

[8] Zest indicates: "This is so because, as JOSÉ ROBERTO DROMI points out, the sanction is one of the indirect means available to the Administration to maintain observance of the rules, restore the violated legal order and prevent acts contrary to law from prevailing, so that the positive legal system concludes with the sanction as an irreducible element in the logical scheme of the rules. In this sense, the sanction represents the last phase of the legal production process: the existential element that updates the validity of law. By its very nature, it is the last ratio, the last resort to which the Administration turns and must turn to make the legal order prevail." According to Zest, the basis of said argument is found in: Dromi, José Roberto. Manual of Administrative Law. Astrea Publishing House, Buenos Aires, 1987. P. 187.

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

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

error, has it incurred a sanctionable infraction? and it is answered that it does not consider so, because said error has not affected the ratio legis of article 5 of the LMV (that the securities are not destined for non-institutional third parties, the purpose of the norm that has been fulfilled). Citing García de Enterría and Tomás Ramón Fernández, it points out that there are legal infractions that do not harm any legal good or present social danger, where the legal system reacts outside the system of personal sanctions and allows for correction.⁹

On the Sworn Statements

a) Based on article 3° of the Regulation of Institutional Investors, on numeral 6 and on the last paragraph of its Annex 1, it maintains that the verifications carried out must be documented at least with the sworn statement signed by said investors, in which it is stated: i) knowledge of the scope of said qualification and ii) having such condition. Therefore, Zest points out that it acted diligently in seeking to obtain the sworn statements of the natural persons to whom it directed its private offering and which were delivered to the regulator.

b) In the OAJ Report it is indicated that in a group of sworn statements it was stated that they were a "qualified" and, at the same time, "institutional" investor, which would not generate clarity. Along these lines, Zest argues that the category of "qualified" investor is not recognized in Peruvian legislation, but that it is evident that said term refers to investors who had the condition of "institutional" and who declare themselves to be so; consequently, it states that only their affirmation of being institutional investors should be taken into account, and such sworn statements should not be discarded.

c) In the denied assumption that the investors who declared themselves to be "qualified" could not be considered as "institutional", the fact that they have signed the sworn statements accepting knowledge of the risks of their investments evidences that they had no need for protection by the SMV.

d) On the other hand, Zest points out that the credibility of the sworn statements cannot be denied for formal issues, without taking into account that the Regulation of Institutional Investors does not establish formalities for the preparation and/or issuance of said statements, which only provides that a sworn statement be signed indicating that one knows and has the status of institutional investor.

e) Likewise, Zest argues that in the OAJ Report it is indicated that it "draws attention" that institutional investors have not been diligent in filling out documents, to which Zest comments that this is not a situation that can qualify or disqualify an investor as "institutional", especially if, to reach such a conclusion, there would have to be a legal provision that allows attributing a legal consequence (disregard of an investor's institutional status) for the fact that a sworn statement lacks some formality that has also not been established in the current regulations.

[9] "(...) there are legal infractions that do not harm any legal good nor present any social danger, with respect to which the legal system reacts outside the system of personal sanctions, and even frequently allows for correction (...)". García de Enterría and Fernández, Tomás Ramón. Course on Administrative Law. Twelfth Edition, Latin American Version, Ed. Palestra Temis, Lima – Bogotá, 2006, Volume II, Pág. 1079.

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"Year of the Bicentennial, of the consolidation of our independence, and of the commemoration of the heroic battles of Junín and Ayacucho"

f) The SMV alleges that there are no sworn statements that evidence that those recipients of the invitations who did not subscribe the securities offered by Zest had the status of institutional investors. According to Zest, this reasoning is based on an incorrect interpretation of the scope of the Regulation of Institutional Investors, specifically of its Annex 1.

It begins by stating that according to numeral 6 of Annex 1 of the Regulation of Institutional Investors, institutional investors are, among others:

6. Natural persons with assets exceeding two million New Soles (S/. 2,000, 000.00), and an investment portfolio in securities equal to or greater than one million New Soles (S/. 1,000, 000.00).

The last two paragraphs of the aforementioned Annex 1 provide the following:

"With respect to the institutional investors detailed in numerals 4, 5 and 6 of this Annex, the verification carried out must be documented at least with the sworn statement signed by said investors, in which they state: (i) knowledge of the scope of said qualification; and (ii) having such status.

Brokerage agents acting as placement agents must diligently implement and apply procedures so that the investors participating in this market are exclusively institutional investors. In the event that issuers carry out the placement of securities, they must ensure they have the sworn statements referred to in the preceding paragraph. For this purpose, as applicable, they must keep an internal record of the institutional investors participating in the placement of said securities." (Underlining is by Zest).

Zest points out that, from reading these two rules, both establish a single evidentiary standard for conducting due diligence to identify institutional investors: obtaining sworn statements, signed by those who state their knowledge of the scope of that qualification, and that they have such status. Zest argues that the last of these rules provides that in the event the placement is carried out by the issuer, the sworn statements must only be obtained from the institutional investors who participated in the placement of the securities, that is, only from those who acquired the securities subject to the placement.

Based on the foregoing, if the last of these two rules only requires obtaining sworn statements from those institutional investors who participated in the placement of the securities subject to the invitation, it is because, in essence, this admits a different standard for verifying the possession of institutional investor status during the invitation stage, consisting of having conducted a verification of financial solvency and knowledge, but not documenting it by obtaining sworn statements. Otherwise, it could not be understood why the last of the two cited rules provides that, in that case, only a record of "the institutional investors

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"

who participate in the placement of said securities", that is, those who acquired them. Consequently, Zest alleges that only with respect to the institutional investors who acquire the securities placed by the issuer is it obligated to obtain and keep the sworn statements, a requirement that has been met in this case, since it is not disputed that Zest obtained the sworn statements from all institutional investors who subscribed to the units of the ZBL and ZIL Funds. It concludes that Zest acted diligently in seeking to obtain the sworn statements from the natural persons to whom it directed its private offering and which were delivered to the regulator.

Regarding the Information

a) In different documents, the SMV has characterized the invitations sent by Zest to certain institutional investors as "public offerings". To this end, Zest states that the SMV has made various arguments,10 but beyond relying on references regarding the number of persons to whom the invitations were directed, the SMV has not verified, at any time, whether the information made available to said persons met the requirements of being true, sufficient, timely and clear, and whether it was relevant for understanding the positive and negative implications of the proposed transactions, and whether it allowed them to make free and informed decisions. Zest states that it has delivered the emails showing the information made available to the recipients, which has not been analyzed at any time in this proceeding.

b) According to article 2 of the Public Offering Regulation, said norm has the purpose of protecting investors so that they understand the positive and negative implications of the transactions proposed to them. However, in the present case there is no investor who has stated that they did not receive sufficient information to freely make their investment decision, and even less so that they have been harmed, or have filed a claim, for which reason it alleges that it is not feasible to apply subsection 1, numeral 1.1, literal A) of Annex III of the Sanctions Regulation, which establishes as an infraction: "Carrying out a public offering without having previously registered the securities in the Registry or having registered the corresponding prospectus, except in the cases of exception established in the regulations", since this sanctionable assumption does not cover the protected legal interest (investor protection).

c) The characterization of a securities offering as "public" and its need for regulation and intervention depends on the existence or not, in a given invitation to invest, of conditions for investors to make free and informed decisions regarding the acquisition of securities subject to possible investment, which has been reflected in article 2 of the Public Offering Regulation. It points out that said article has established two rules: 1) First Rule.- The purpose of this regulation is the protection of investors in the public market for securities, and that said protection has as its objective "the disclosure, in a truthful, sufficient, timely and clear manner, of all information that is relevant in order to understand the positive and negative implications of the transactions proposed to them, so that they are in a position to

[10] Examples of these arguments Zest points out are that the invitation would have been directed to a "segment of the public", that is, persons who require protection, or that the investors to whom they were directed did not qualify as institutional, etc.

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

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

adopt free and informed decisions regarding them, and that said disclosure be made in the most efficient manner."; and b) Second Rule.- the interpretation of the provisions of that Regulation, for purposes of its application, must be made in accordance with the purpose mentioned in the first rule. Taking into account the foregoing, it concludes that according to what it calls "First Rule", there will only be a need for protection by the State (and the provisions of the Public Offering Regulation will apply or an offer of securities will be characterized as public) when the objective of that regulation has not been met, that is, when all the information that is relevant to understand the positive and negative implications of the transactions has not been disclosed to potential investors, in a truthful, sufficient, timely and clear manner, so that they are in a position to adopt free and informed decisions regarding them.

d) At the time of interpreting all the provisions of the Public Offering Regulation, the need or not to exercise protection in the particular case must be taken as an interpretation guideline. This manifestation is none other than the reception, in our legislation, of the "ability to fend for themselves" test or the offerees' ability to fend for themselves recognized in cases such as the decision adopted by the Supreme Court of the United States in the Ralston Purina judgment (346 U.S. 119 [1953]). The appellant indicates that the SMV did not take into account that this same requirement is in the definition of "segment of the public" contained in article 6 of the Public Offering Regulation.11 Zest points out that the SMV seems to confuse what is the involvement of public interest with the existence of a need for protection, based on the way that definition is drafted. It adds that although an isolated reading of that definition could lead to the erroneous conclusion that it would be enough for an invitation to involve the number of persons previously qualified by that same norm as "sufficient to involve public interest" for us to be before an invitation directed to a segment of the public, the truth is that it itself and what Zest calls "First Rule" (which must be interpreted based on that definition), provide that the need for protection in a given case exists when "in order to the possibility of access to relevant information for said persons and/or for it to be processed by them, they find difficulties in adopting a free and informed decision regarding the invitation made." In other words, Zest indicates, it is enough that all the relevant information has been provided to the recipients of an invitation so that they can process it and adopt a free and informed decision regarding the invitation made for that invitation to qualify as a private offer. Zest points out that said requirement has been satisfied in the present case.

e) The reasoning set forth above does not exceed or disrupt what is regulated in the LMV, since article 5 of this defines "private offer" as "not included in the previous article" and its article 4 defines public offer as "invitation, adequately disseminated, that one or more natural or legal persons direct to the general public, or to certain segments thereof, to carry out any legal act related to the placement, acquisition or disposal of securities." It argues that this last definition cannot be analyzed in

[11] "A segment of the public is considered to be the set of determined or undetermined persons who, according to the circumstances, require the protection referred to in Article 2, when their number is such that it involves the public interest. It is considered that said protection is required when, in order to the possibility of access to relevant information by said persons and/or for it to be processed by them, they find difficulties in adopting a free and informed decision regarding the invitation made." (The underlining is Zest's).

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isolated manner, but based on the rules and principles that inform the existence of state regulation for public offers, among which the rule of need for protection referred to in the previous letters stands out.

f) The SMV has interpreted the scope of the rule contained in the second paragraph of subsection d) of article 6 of the Public Offering Regulation without taking into account the provisions of article 2 of that same regulation, especially what Zest calls the "First Rule".

g) It cites the second paragraph of subsection d) of article 6 of the Public Offering Regulation,12 and points out that said Regulation seeks to safeguard the provision of sufficient information to the recipients of the offer, which allows them to understand the positive and negative implications of the transactions proposed to them, and that they are in a position to make free and informed decisions regarding them, and that the number of one hundred (100) persons to which it refers is composed of persons who do not have the status of institutional investors, on the understanding that the latter, due to their knowledge and financial solvency, do not require public protection. Additionally, it points out that it would not make sense, in that context, to interpret that in order to determine a possible need for public protection, persons who do not require it are counted as members of the possible segment. Under the foregoing argument, Zest concludes that it has complied with the requirement not to direct an invitation to a segment of the public, since excluding the number of persons who signed the sworn statements, the number of those to whom the invitation was directed does not exceed the threshold of one hundred (100), in the case of each fund.

II.2 Issues related to Administrative Law

On the principle of typicity

a) Zest points out that the Sanctions Regulation does not define as an infraction the sending of informational emails to potential non-institutional buyers with whom, after verifying their non-institutional status, no transaction has been entered into. It adds that subsection 2.12 of numeral 2 of Annex V of the Sanctions Regulation13 is a type of infraction related to article 5 of the LMV, which confirms that the ratio legis of the latter article is that non-institutional buyers do not participate in the private offering. Therefore, the error consisting of sending communications to potential non-institutional clients is not defined as a punishable infraction, and a corrective administrative action is possible.

b) That the mere non-observance of a rule does not constitute a punishable infraction, unless it is specifically and exhaustively defined as such, is

[12] "Without prejudice to the provisions of the preceding paragraph, for purposes of its qualification as a segment of the public, a group of recipients consisting of a number equal to or greater than one hundred (100) persons is considered to involve the public interest, and it is presumed, unless proven otherwise, that such persons require the aforementioned protection."

[13] "ANNEX V - On infractions in asset securitization processes and in guarantee trusts The following are infractions of the securitization company, of others authorized to act as trustee companies in securitization processes, of the members of the technical committee and of the natural or legal persons that provide any service linked to the securitization process, as applicable: (…) 2.- Serious (…) 2.12 Participate in securitization trusts that back the issuance of securities of private offering directed to investors other than those set forth in subsection a) of article 5 of the LMV."

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"

that is, as an infraction of mere non-observance of the rule, for example, the omission to file an income tax sworn statement, which is not the case of subsection a) of article 5 of the LMV. Consequently, it points out that this type of definition of an infraction of mere observance is exceptional and does not obey a good principle of administration, since, citing Víctor Baca, it indicates that the administered party could be liable even if the conduct produced less harm or risk than the prescribed one; and even the most diligent could become an infringer, among others.14

It adds that the sanctioning type provided in numeral 2.12 of numeral 2 of Annex V of the Sanctions Regulation could not be applied by extension or analogy either, since it would contravene subsection 9 of article 139 of the Constitution and subsection 4 of article 248 of the TUO of the LPAG.

c) That the administrative procedure is governed by the "pro homine" principle, which implies carrying out the interpretation and application of the legal system most favorable to the administered party, together with the presumption of lawfulness, under which only when it is proven without reasonable doubt regarding the facts or the interpretation of the law that the administered party has infringed (by intent or negligence) the mandatory rule by committing a specific infraction defined in the law (which harms the public interest), will the application of a sanction proceed, since the general rule of law is freedom and its exception is the restriction of freedom (subsections "a", "d" and "e" of numeral 24 of article 2 of the Constitution).

On due process

a) That there is a divergence between the charges formulated, the fact/infraction, and the sanctionable assumption. Thus, it points out that it has been sanctioned for: i) Having carried out a primary public offering of participation certificates without having registered the securities of the investment funds managed by Zesi in the RPMV; as well as for ii) having carried out a primary public offering without being duly authorized as a SAFI; iii) having directed it to at least 103 persons in one case and 160 in another; iv) not complying with the provisions of article 4 of the LMV; and v) not complying with the provisions of article 6 of the Public Offering Regulation. In this way, it alleges that the inclusion of 4 additional infractions (to be sanctioned) to the one communicated in the Statement of Charges contravenes due procedure (paragraph 2 of article 248; paragraph 3 of article 254; paragraphs 3 and 4 of article 255 of the TUO of the LPAG) and the right to defense (which is part of due process), since the four additional infractions included in LA were not made known

[14] "(...) by typifying mere non-compliance, administrative discretion is limited to determine whether an injury or concrete risk occurred, but it is done to the detriment of the innocent, who responds even if his conduct produces less harm or risk than the prescribed (e.g., using a more effective sterilizer than the regulatory one). Furthermore, "making the infraction depend on a mere breach of a norm [...] and connecting it to the protection of a legal good declared as such by the legislator" has a notable drawback, since "the legislator inevitably tends to select numerous and, above all, overly generic legal goods harmed, with the conclusion that the citizen is overwhelmed with orders and, consequently, with the threat of sanctions"; thus turning the most careful citizen into an offender. On the other hand, the negative effects of this way of typifying end up harming the Administration itself, since the norm that imposes requirements on the administered also imposes on it the duty to demand compliance, so there would be patrimonial liability of the Administration if a citizen causes harm by not complying with them." Baca Oneto, Víctor Sebastián. "Subjective or objective liability in sanctioning matters? A proposal for a response based on the Peruvian legal system". paper presented at the IV International Congress of Administrative Law held in Mendoza, Argentina, on 15, 16 and 17 September 2010. In: https://www.mpfn.gob.pe/escuela/contenido/actividades/docs/2271_responsabilidad_subjetiva_u_objetivaen_materia_sancionadora.pdf

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RESOLUTION, preventing argument on them. This would reveal that, in the SMV's criteria, Paragraph 1, numeral 1.1, literal A) of Annex III of the Sanctions Regulation is not fully applicable for the purpose of sanctioning it.

b) That due procedure has been disregarded by failing to comply with the provisions of paragraph 5 of article 255 of the TUO of the LPAG, since it was not made known that after the final report of the instructing authority, the sanctioning body had ordered the carrying out of complementary actions aimed at determining the additional infractions mentioned.

On the principle of legality

a) Based on the principle of legality (established in paragraph 1.1. of article IV of the TUO of the LPAG), the principles of due procedure and typicity (established in paragraphs 2 and 4 of article 248 of the TUO of the LPAG) and the grounds for nullity of article 10 of the TUO of the LPAG, Zest points out that THE RESOLUTION contemplates in its analysis and conclusions the existence of possible infractions that were not duly included in the notification of initiation of the sanctioning procedure, and therefore, duly imputed to Zest, which violates its right to defense.

Zest argues that the principle of typicity has been infringed, because the final mention of 4 additional infractions has caused them to be subsumed into the sanctionable assumption applied, thus incurring an extensive interpretation of it. It adds that in no sanctioning procedure can it be "presumed" to have been initiated for infractions that have not been specifically detailed and expressly imputed as infracting facts that motivate the opening of said procedure. It indicates that in the present case Zest could only be investigated and sanctioned for the infraction directly recorded in the Statement of Charges.15

Zest argues that the requested nullity is insurmountable, since there is a violation of the right to defense (a fundamental right of the person), and the principle of conservation of the administrative act is not applicable. Even if it is presumed that the authority would have resolved in the same way anyway even if the procedural defect had not occurred, this would in turn imply an ignorance and an unacceptable lack of weighing of the constitutional nature of the right to defense by assuming such right as useless or dispensable, in such a way that the administered did not have the possibility to present defenses to the supposed imputations made and that were not duly notified as part of this procedure.

b) The appellant indicates that both for doctrine and for the Constitutional Court, the principle of legality has a double aspect: i) the principle of legal reserve, under which infractions and sanctions must be provided for in a norm with the rank of law, allowing its development via regulation without creating new types

[15] "INFRACTION THAT ZEST WOULD HAVE COMMITTED" According to what is indicated, ZEST would have incurred the infraction classified as very serious typified in paragraph 1.1, numeral 1, literal A) of Annex III of the SANCTIONS REGULATION, in force at the time the events occurred, which establishes as an infraction of a very serious nature of the participants in an OPP: "Carrying out a public offering without having previously registered the securities in the Registry or having registered the corresponding prospectus, except in the cases of exception established in the regulations".

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"

of punishable infractions; and ii) the mandate of typification, under which the texts in which the sanctioning norms are expressed describe with sufficient precision the conducts that are threatened with a sanction, as well as the sanctions themselves.16

Likewise, Zest argues that numeral 4 of article 248 of the TUO of the LPAG recognizes the principle of typification, under which the infractions expressly provided for in norms with the rank of law are punishable conducts through their typification as such, not allowing extensive or analogical interpretation. Therefore, the configuration of the punishable conduct must be exact, exhaustive, and must be an exhaustive typification, having a sufficient level of precision in accordance with the Constitutional Court.17 Zest concludes that, in the present case, there is no typification that describes the conduct of the administered as a punishable infraction, that is, having made, involuntarily, an erroneous invitation of a private offer, there being no punishable infraction.

On the principle of presumption of veracity and presumption of lawfulness

Zest points out that, in application of the principles of presumption of veracity and presumption of lawfulness based on subsection 1.7 of article IV18 and subsection 9 of article 24819 of the TUO of the LPAG, within an administrative procedure, the administration must start by presuming that the administered has acted in accordance with the legal system, unless there is evidence that reliably proves otherwise, which breaks said presumption. In that line, it indicates that the SMV must presume that Zest complied with the requirement of having directed the offer made solely to institutional investors, as evidenced by the sworn statements submitted. It adds that only if the administration has sufficient evidence of the infraction and reliably proves that the presumption of veracity has been broken and that Zest has acted contrary to the legal system, can the legally established presumptions be rebutted and, therefore, conclude that said requirement to qualify the invitation as one of a public offer would have been breached, since, according to said normative text, it is not possible to shift the burden of proof to the administered when the current norm already assigns to it presumptions such as those established by the norm; making said shift of the burden of proof would mean disregarding the principle of legality that governs all administrative procedure and entails its nullity.

On the criteria for the graduation of the sanction

[16] It points out, citing Nieto Alejandro, that the mandate of typification has to do with "(...) the old requirement of lex certa and with what is usually called 'principle of (precise) determination' and, more recently still, 'principle of taxativity', whose confessed objectives lie in protecting legal (certainty) security and the reduction of discretion or arbitrariness in the application of the Law". It adds that this "mandate of typification" consists in the requirement "(...) that the texts in which the sanctioning norms are expressed describe with sufficient precision – or if you will, with the greatest possible precision – the conducts that are threatened with a sanction as well as these same sanctions". Nieto, Alejandro. Derecho Administrativo Sancionador, Ed. Tecnos, 4th Edition. Madrid, 2005, p. 297.

[17] It cites Consideration 5 of the STC of Exp. No. 2192-2004-AA/TC. "The subprinciple of typification or taxativity constitutes one of the manifestations or concretions of the principle of legality with respect to the limits imposed on the penal or administrative legislator, so that the prohibitions that define sanctions, whether penal or administrative, are drafted with a sufficient level of precision that allows any citizen with basic education to understand without difficulty what is being proscribed under threat of sanction in a given legal provision".

[18] "1.7 Principle of presumption of veracity.- In the processing of the administrative procedure, it is presumed that the documents and declarations made by the administered in the form prescribed by this Law respond to the truth of the facts they affirm. This presumption admits proof to the contrary".

[19] "9. Presumption of lawfulness.- The entities must presume that the administered have acted in accordance with their duties as long as they do not have evidence to the contrary."

PERU
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"

Zest points out the following:

a) Background of the Infringer

In reference to the background of the Infringer, the appellant highlights that it has been verified that Zest has no record of sanctions in the last 4 years, in accordance with consideration 259 of THE RESOLUTION, a point with which it agrees. It adds that Zest has never had sanctions either by the SMV or by any other entity of the Peruvian state nor claims from its institutional investors in private-direct or administrative proceedings before Indecopi.

b) The seriousness of the damage to the public interest and/or protected legal good

Regarding the seriousness of the damage to the public interest and/or protected legal good, the appellant cites considerations 260, 261 and 263 of THE RESOLUTION, pointing out that it has been possible to verify and confirm that Zest manages funds whose quotas are offered exclusively to institutional investors, which it indicates is documented in the sworn statements signed by its participants and potential investors submitted to the SMV. In that line, it does not agree with the SASP's statements regarding the existence of harm to the public interest and/or legally protected interest, since the private investment funds managed do not require registration with the RPMV and their investors do not require state protection due to their capacities to understand and analyze the risks inherent in their investment decisions. Based on article 2 of the Public Offering Regulation, it points out that the legally protected interest has not been affected, since the offers made are private and its investors are institutional, being persons who are able to decide freely and in an informed manner about their investment decisions, not requiring State protection.

Likewise, Zest cites what is stated on pages 71 and 72 of the OAJ Report: "making a public offering of securities without previously registering them with the RPMV affects the legally protected interests related to investor protection and transparency, by not providing all investors with all the necessary information to make a proper investment decision, and to the market by not having truthful, sufficient and timely information that allows other investors to know such securities and the issuer that backs them. The foregoing undermines the proper development and integrity of the market, creating distrust among its participants." and asks: how is such a conclusion reached if the invitation was addressed exclusively to institutional investors and contracts were only entered into with institutional investors, who do not require protection? How was market transparency affected if the offer was private? How has distrust been created among market participants?

c) The harm caused and the impact on the market

Regarding the economic harm, the appellant points out that the SASP has verified that Zest has not generated economic harm to the participants or to the market in recital 264 of THE RESOLUTION, for which it agrees with said

"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"

statement, but it does not agree with the statements in recitals 265 and 266, which it considers speculative and which have no causal link with the grading element analyzed. It cites the aforementioned recital 266, commenting that the SASP asserts that an alleged infringement described in subsection 1.1 of numeral 1 of letter a of Annex III of the Sanctions Regulation motivated the Mutual Funds Association to file a complaint with the SMV (it highlights that it was one and not several complaints, unless there are others not brought to Zest's knowledge), which it states does not have adequate evidentiary means since the emails presented deviate from the standard format, and also that said association did not respond to further requests for information by the SMV and that said complaint was filed after the presentation of its application for organization of a SAFI published in newspapers. For all these reasons, it argues that it is evident that the aforementioned association sought to delay Zest's formalization process and prevent competition in the industry.

Likewise, Zest refers to the fact that in the OAJ Report,20 it is indicated that Zest's behavior had an impact on the market to the point that the Association filed a complaint, and although it was not a minor behavior, it was taken as a clear indication for the initiation of preliminary inquiries. In light of this, Zest comments that the SMV does not specify what the magnitude of said impact was, the significance of the evidentiary means presented in the complaint, and it seems to leave aside the possible intention of the complainant, who is the direct beneficiary of there being one less competitor in the market. Zest adds that it is not analyzed how the aforementioned complaint favors the formation of an oligopoly in the market.

d) Recidivism

Regarding recidivism, Zest points out that it agrees with THE RESOLUTION on that point, since it has been verified and specified that Zest does not present recidivism in final sanctions of this nature.

e) The circumstances of the commission of the infringement

In reference to the circumstances of the commission of the infringement, the appellant points out that the SASP states that the administrative sanctioning procedure was initiated as a result of a complaint by the Mutual Funds Association, in which the informants reserved the right to identify themselves. It indicates that it has no further comments on this point, since administrative sanctioning procedures are ex officio and complaints are merely informative, again highlighting its arguments referring to the fact that the mutual funds association's complaint does not have adequate evidentiary means since the emails presented deviate from the standard format, among others (presented in the argument on the grading criterion of economic harm).

f) The illicit benefit resulting from the commission of the infringement

[20] Specifically on page 70.

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

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

Regarding the illicit benefit resulting from the commission of the infringement, the appellant cites recital 272 of THE RESOLUTION, and indicates that it is known to the SASP that Zest submitted its application for organization of a SAFI, so the argument of saving the costs of complying with the SMV's prudential regulation is not logical or consistent with what was expressed to the SMV for two years. In light of this, the appellant asks: would Zest have done so to save those costs? What are the benefits of this action when Zest has only contracted with participants that are institutional investors and do not require protection?

g) The existence or not of intent in the conduct of the infringer

Regarding the intent of the infringer's conduct, the appellant states that it agrees with the SASP when it indicates that Zest did not have intent in the alleged commission of the infringement.

Zest indicates the non-existence of intent in the commission of the alleged infringing conduct imputed by the SMV, which has been recognized in recital 273 of THE RESOLUTION, and that this has been overlooked in the OAJ Report.21 It adds that the referred report would be concluding that although no intent has been evidenced, this does not mean that Zest did not act intentionally at the time of committing the alleged infringement. It points out that such a conclusion, besides being based on a fallacy from legal logic, hides an express recognition of the non-existence of intent on the part of Zest.

Zest indicates that it is relevant that the SMV recognizes that it has not managed to evidence the existence of intent, since the burden of proving the occurrence of the circumstances that allow the application of a sanction within a sanctioning procedure lies with the Administration, not with the administered. This is seen in numeral 4 of article 255 of the LPAG.22

The appellant indicates that numeral 10 of article 248 of the LPAG provides that "administrative responsibility is subjective, except in cases where by law or legislative decree objective administrative responsibility is provided" and that in the present case there is no provision with the rank of law that has provided for objective administrative responsibility. It indicates that if the existence of intent on the part of Zest has not been evidenced or proven, then how or under what legal framework could the sanctions that are the object of challenge in the present procedure be applied? It argues that the application of the sanctions object of challenge is notoriously illegal, since in application of numeral 10 of article 248 of the LPAG, for the sanctions provided in the Sanctions Regulation to proceed, the SMV must accredit the intentional action on the part of the administered. As said situation is not accredited, the

[21] Cites page 68 of the OAJ Report: "Likewise, regarding the intent of the infringer's conduct, it must be specified that Zest indicates that 'the Deputy Superintendence states that Zest Capital did not have intent in the alleged commission of the infringement. We agree with said conclusion.', when recital 273 of THE RESOLUTION actually states that no intent of Zest in the commission of the infringement has been evidenced."

[22] "Article 255.- Sanctioning procedure
The entities in the exercise of their sanctioning power adhere to the following provisions:
(...) 4. Once said term has expired and with the respective defense or without it, the authority instructing the procedure shall ex officio carry out all necessary actions for the examination of the facts, gathering the data and information that are relevant to determine, where appropriate, the existence of responsibility susceptible to sanction."

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"

application of the challenged sanctions is null, based on numeral 1 of article 10 of the LPAG.

It adds that Zest's intention was always to obtain a SAFI license (and then the possibility of managing mutual funds) and to submit to the supervision of the SMV; however, on the recommendation of the General Superintendence of Supervision of Entities (hereinafter, "IGSE") and Mr. García, Zest withdrew from the procedure until the present administrative sanctioning procedure is concluded, since this would benefit the licensing process. All of this hoping that the SMV gives it the opportunity to clarify the present imputations and submit to its regulation and supervision.

h) The probability of detection of the infringement

In reference to the probability of detection of the infringement, the appellant cites recitals 276 and 277 of THE RESOLUTION, comments that the statements of the SASP are contradictory, since they indicate the probability of detection is low because the information has not been contained in periodic publications or web pages, but, on the other hand, it indicates that detection was possible due to the complaint of the Association of Mutual Funds. It highlights that the evidentiary means of the association in its complaint was the information contained in web pages, journalistic media and social networks of Zest; therefore it is more appropriate for the SASP to affirm that the probability of detection is high instead of low, since the information in the complaint comes from public media.

i) The voluntary declaration of the commission of the infringement and the contribution of the infringer for its clarification

Regarding the voluntary declaration of the commission of the infringement and the contribution for its clarification, the appellant indicates it acted considering compliance with the regulations and the regulation applicable to it, so it does not agree with the SASP regarding that it has carried out a covert public offering, since the placement of the investment fund was directed to institutional investors.

Regarding the contribution of the infringer for its clarification, Zest indicates based on the principle of procedural good faith, it must be considered that the appellant has made its best efforts to provide all the information and clarify all the doubts that both the IGCP and the SASP have required. However, the deployment of said effort was limited by the imposition of States of Emergency regarding the emergence of Covid-19 in Peru, with the sending of information requested by the SMV within peremptory deadlines of 5 business days in 2020 and 2021 being a titanic and risky task (citing recital 279 of THE RESOLUTION). It points out that from December 2019 to January 2020 the coordination between the SMV and Zest was fluid; and only in May 2020, when the imputation of charges was notified (after mandatory lockdowns were decreed), where despite complying with the requested information, the health and integrity of its collaborators was being put at risk, it adds that the IGSP did not consider its request for humanitarian reconsideration regarding the deadlines and amount of information requested, despite which it made its best efforts to present the requested information. It argues that, regarding the facts not clarified, that, in various informal conversations with the IGSP, only emphasis was made

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"Year of the Bicentennial, of the consolidation of our Independence, and of the commemoration of the heroic battles of Junín and Ayacucho"

emphasis on the fact that they needed the sworn statements of the participants in which they declared that they are institutional investors.23 It reiterates that throughout the entire procedure it has shown its good faith and willingness to provide all the required information, as well as the corresponding elements of fact and law.

On the principle of reasonableness and proportionality

a) Zest points out that the sanctioning power must be governed by the principle of reasonableness, regulated in numeral 3 of article 248 of the TUO of the LPAG.24 It adds that article 25 of the Sanctions Regulation,25 in accordance with article 348 of the LMV and subsection 10 of article 248 of the TUO of the LPAG, provides the "Sanction Criteria" that must be applied in the sanctioning procedures followed in the SMV for the purposes of determining the applicable sanction. Furthermore, it cites a paragraph from a TC ruling26 and a

[23] Zest points out: "To cite an example, on one occasion, on January 12, 2021 at 10:00 a.m., via a WhatsApp call, Mr. Jorge Orbegoso Izquierdo, an official of the General Intendancy of Prudential Compliance, was asked, in the telephone call organized by the SMV, if he required more information about the emails and he said no, that it was enough for him. We made ourselves available for whatever he required. Likewise, in the frequent conversations with the official Giovanni Cibej Coronado of the General Intendancy of Prudential Supervision, instructing body of this administrative sanctioning procedure."

[24] "Article 248.- Principles of administrative sanctioning power The sanctioning power of all entities is additionally governed by the following special principles: (...)
3. Reasonableness.- The authorities must foresee that the commission of the sanctionable conduct is not more advantageous for the offender than complying with the infringed norms or assuming the sanction. However, the sanctions to be applied must be proportional to the non-compliance qualified as an infraction, observing the following criteria that are indicated for the purposes of their gradation:
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) 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."

[25] "Article 25.- Sanction Criteria
The sanctions imposed must take into account the following criteria:
a) Antecedents, for final sanctions imposed by the SMV within the term of four (4) years prior to the commission of the infraction to be sanctioned. The commission of the same infraction in the year prior to the infraction to be sanctioned is not considered an antecedent. b) Recidivism, for the commission of the same infraction, takes into account that final sanction imposed by the SMV within the term of one (1) year prior to the commission of the infraction to be sanctioned. c) Circumstances of the commission of the infraction. d) Economic harm caused and its repercussion in the market. e) Illicit benefit resulting from the commission of the infraction. f) Probability of detection of the infraction. g) Severity of the damage to the public interest and/or protected legal right. h) Existence or not of intentionality in the conduct of the offender. When, from the evaluation of the aforementioned criteria, it is observed that there is no proportionality between the sanction to be imposed and the imputed facts, by exception and through a reasoned resolution, a sanction corresponding to a lower classification than the one provided for may be imposed."

[26] "15. The principle of reasonableness or proportionality is inherent to the Social and Democratic State of Law, and is configured in the Constitution in its articles 3 and 43, and expressly set forth in its article 200, last paragraph. Although doctrine usually distinguishes between the principle of proportionality and the principle of reasonableness, as strategies for resolving conflicts of constitutional principles and guiding the judge toward a decision that is not arbitrary but just; prima facie, a similarity can be established between both principles, to the extent that a decision adopted within the framework of convergence of two constitutional principles, when it does not respect the principle of proportionality, will not be reasonable. In this sense, the principle of reasonableness seems to suggest an assessment regarding the result of the judge's reasoning expressed in their decision, while the procedure to reach this result would be the application of the principle of proportionality with its three sub-principles: adequacy, necessity, and proportionality in the strict sense or balancing.” (The underlining and highlighting are by Zest).

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"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"

Supreme Court resolution27, both referring to the principle of reasonableness. Zest mentions that although the opinion of the IGCP is not binding and that in its formulation only one public offering was contemplated (being, according to the SMV, two), the clear support for the graduation of the fine imposed or, failing that, the reasonableness of the increase or difference with respect to the fine proposed by the IGCP has not been evidenced in THE RESOLUTION. The appellant indicates that this would be even more serious because from the evaluation of the criteria for applying the sanction contained in THE RESOLUTION it is proven that Zest has no record of infractions, has not incurred recidivism, the existence of intentionality or harm to the market was not proven, as well as the probability of detection is high.

b) That it was sanctioned with 240 UIT, despite the fact that the IGCP in its Report No. 329-2021-SMV/10.2 recommended a fine of 26 UIT (below the minimum classification provided of 50 UIT established in article 33 of the Sanctions Regulation). It points out that, to justify the increase in the sanction, article 348 of the LMV was used, as well as subsection 3 of article 248 and article 257 of the TUO of the LPAG were cited to indicate that the sanction imposed must take into account the graduation criteria of the LMV, the Sanctions Regulation and the TUO of the LPAG.

Based on subsection 1.4 of article IV of the TUO of the LPAG and considering the range stipulated in the regulations (from 50 UIT to 700 UIT), the appellant points out that it is not reasonable that a sanction of 240 UIT has been applied, especially considering the Final Report of the Instruction Body, which, although not binding, sets the guideline for the SMV's analysis criteria as a single administration vis-à-vis the administered. Thus, Zest considers that going from a suggestion of 26 UIT (which is a sanction below the corresponding lower classification for this type of infractions) to 240 UIT in the same case, same facts and evidence, evidences a violation of the principle of reasonableness and predictability. It requests that the graduation of the sanction made in THE RESOLUTION be reconsidered.

Zest indicates that applying 240 UIT, even more so considering that the Instruction Report suggested a much lower sanction, would be contrary to law because it would demonstrate that the administration is not objective when analyzing the different cases presented to it. Additionally, it cites the Constitutional Court, pointing out that the principle of reasonableness suggests an assessment regarding the result of the judge's reasoning expressed in their decision, while the procedure to reach that result would be the application of the principle of proportionality (in its three sub-principles: adequacy, necessity, and proportionality in the strict sense or balancing).28

[27] CAS. No. 9847-2014-LIMA dated 31 May 2016.

[28] "(...) it has been recognized by specialized doctrine as a consequence of the need for the Administration's decisions not to respond solely to a mechanical and unreasonable application of the formal norm, but rather to the justice and adequacy of what is resolved; and to this extent it is identified as a manifestation of the ideals of justice and reasonableness that should guide the Administration's action. (...)". Furthermore, it has indicated that "the principle of reasonableness constitutes an essential means of interpretation and normative application for the acts of the Administration, not with the purpose of invalidating the norms that regulate the actions of its different organs, but rather in order to give them the meaning and scope that the imperative of material justice and reasonableness require, in harmony with the purpose of each of the norms that must be applied in the specific case. (...)"

[29] STC No. 2192-2004-AA/TC-Tumbes. "(...) The principle of reasonableness or proportionality is inherent to the Social and Democratic State of Law, and is configured in the Constitution in its articles 3 and 43, and embodied

PERÚ
Ministerio de Economia 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"

c) Zest states that the SMV must take into account that the simultaneous application of the fine (imposed amount) and the corrective measure of registration of the ZBL and ZIL funds in the RPMV is equivalent, in fact, to the application of a closing sanction on Zest, a sanction not provided for in our legislation and which is disproportionate to the alleged harm to the interest sought to be protected. Zest points out that the main asset a private fund manager has is its reputation, thus it states that requiring a manager to cause the investors of the funds it manages to make the decision to change manager and to register the securities they own in the RPMV due to the alleged infringement of the public offering rules would entail reputational damage to Zest, which could bring with it that the participants of the other investment funds it manages make a similar decision to change manager and that, therefore, it is left with no funds to manage.

d) Zest points out that the fine is notoriously high and disproportionate in relation to the alleged harm sought to be sanctioned, even more so taking into account the maturity of the two funds (December 2023 for the ZBL Fund and May 2024 for the ZIL Fund), there has not been a single complaint from the investors of these, which shows that the alleged harm sought to be protected (failure to deliver sufficient information to carry out the investment) did not occur, since the investors feel satisfied with the investment they made.

e) Zest states that the sanctioning measure does not seek to remedy a concrete harm to the investors, but an alleged danger translated into the non-compliance with the provisions of the Public Offering Regulation invoked by the SMV that has not caused harm to the public, and that has not required protective intervention.

f) Zest cites Superintendente Resolution No. 071-2023-SMV/02 of 11 September 2023, indicating that in that case (where the infractions committed were very serious and where in first instance the maximum sanction permitted by the Regulation had been imposed), the SMV, judiciously using the criteria mandated by the legal system, decided that it was reasonable to modify the maximum sanction imposed and, not only lift the disqualification, but impose a sanction of 49 UIT, within the range of 40 to 700 UIT that the Regulation allowed.

It adds that according to the TUO of the LPAG and the principle of predictability that it embodies, the administration's action in all its manifestations, and even more so as to the analysis it carries out to determine the correct sanction to be imposed in cases of verification of infractions, generates an expectation in the administered in general and, evidently, the same entity cannot use a different criterion to determine what the correct sanction is in the present case.

[*] expressly in its article 200, last paragraph. Although doctrine usually makes distinctions between the principle of proportionality and the principle of reasonableness, as strategies to resolve conflicts of constitutional principles and guide the judge towards a decision that is not arbitrary but just; a similarity between both principles can be established, prima facie, to the extent that a decision adopted within the framework of convergence of two constitutional principles, when it does not respect the principle of proportionality, will not be reasonable. In this sense, the principle of reasonableness seems to suggest an assessment regarding the result of the judge's reasoning expressed in their decision, while the procedure to reach this result would be the application of the principle of proportionality with its three sub-principles: adequacy, necessity and proportionality in the strict sense or weighing. (...)". (emphasis is Zest's).

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On the motivation

a) THE RESOLUTION contains an arbitrary administrative act lacking sufficient motivation, which allows proving why the same entity with the same facts and law concludes to depart from the content of the Final Instruction Report, which is not even mentioned in the background of the case and sets a guideline for the Entity's criterion. It adds that a clear and detailed explanation of a reasonable connection between the allegedly infringing fact and the amount of the sanction must be made.

It argues that, if the decision-making authority decides to depart from it, it must carry out a detailed evaluation of it, an analysis of the defenses and evidence provided by the administered, a detailed analysis of the objective reasons that lead it not to adopt the decision suggested by the instructing body and to impose a sanction exorbitantly higher than the suggested one that excessively exceeds the minimum applicable sanction of 50 UIT. And not limit itself to making a statement of responsibility for the imposition of the sanction without carrying out the respective analysis.

It indicates that THE RESOLUTION does not present sufficient legal and logical support for the sanction adopted nor for having considered departing from what was proposed by the Final Report, which violates the duty of motivation (numeral 4 of article 3 of the TUO of the LPAG). Next, it points out that the Constitutional Court states that nullity of the act is incurred, in case of absence of motivation or when it is generic, apparent or insufficient, by constituting an arbitrariness rejected by law. Zest transcribes Considerations 4 to 8 of the Constitutional Court's judgment in File No. 01097-2012-PA/TC,²⁹ regarding motivation, indicating that there must be reasoning

[29] File No. 01097-2012-PA/TC Huaura - Paulino Roberto Gonzales Montesinos

"(...) This Court has had the opportunity to express its position regarding the motivation of administrative acts, considering that:

"[...] [T]he right to the motivation of administrative resolutions is of special relevance. It consists of the right to certainty, which entails the guarantee for every administered party that judgments are motivated, that is, that there is an explicit legal reasoning between the facts and the laws that are applied. [...]

The motivation of administrative action, that is, the foundation with the reasoning on which it is based, is an unavoidable requirement for all types of administrative acts, with the same reasons being imposed to require it both with respect to acts emanating from a regulated power and a discretionary one.

The issue of the motivation of the administrative act is a key question in the legal-administrative system, and is the central object of comprehensive control by the constitutional judge of administrative activity and the consequent suppression of areas of jurisdictional immunity.

It constitutes a requirement or condition imposed for the effective validity of the principle of legality, an unavoidable presupposition of every rule of law. To this, one must add the close link that exists between administrative activity and the rights of persons. It is indisputable that the requirement of sufficient motivation of its acts is a guarantee of reasonableness and non-arbitrariness of the administrative decision.

To that extent, this Court must emphasize that the lack of motivation or its insufficiency constitutes arbitrariness and illegality, insofar as it is a condition imposed by Law No. 27444. Thus, the lack of sufficient rational foundation of an administrative action is by itself contrary to the guarantees of due administrative procedure." (STC 00091-2005-PA, ground 9, paragraphs 3, 5 to 8, criterion reiterated in STC 294-2005-PA, STC 5514-2005-PA, among others.)

Additionally, it has been determined in STC 8495-2006-PA/TC that: "an administrative act issued under a legally established discretionary power is arbitrary when it only expresses the individual assessment of the person exercising the administrative competence, or when the administrative body, when adopting the decision, does not state

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"

explicit legal reasoning between the facts and the laws that are applied; that, it is necessary to express the reasons that have led to adopting a certain decision, to set out the reasons of fact and the legal support that justifies the decision, among others.

It concludes that it is faced with an administrative act that, by contravening the aforementioned legal principles, becomes null and void by operation of law as provided in article 10° of the TUO of the LPAG.

b) It indicates that the sufficiency of the disclaimer derived from the invitation email and all its attached links has not been evaluated, through which it sent the data related to the offer that was being made to the recipients.

c) According to Zest, the duty of sufficient motivation set forth in numeral 4 of article 3 and article 6 of the LPAG is breached. Next, Zest cites a resolution of the TC30 linked to the importance of the element of motivation, even when it is issued in the exercise of discretionary power, denoting that the act incurs nullity in the case of absence of motivation or when the motivation is generic, apparent or insufficient because all of that constitutes arbitrariness rejected by law. Based on the foregoing, Zest states that the motivation of administrative acts constitutes a constitutional guarantee of the administered party to avoid the arbitrariness of the Administration when issuing administrative acts.

or expresses the reasons that have led it to adopt such a decision. Therefore, motivating a decision does not only mean expressing solely under which legal norm the administrative act is issued, but, fundamentally, setting out succinctly –but sufficiently– the reasons of fact and the legal support that justify the decision taken".

5. Therefore, the motivation of administrative acts constitutes a constitutional guarantee of the administered party that seeks to avoid the arbitrariness of the Administration when issuing administrative acts. In that sense, Law 27444, Law of General Administrative Procedure, in article IV of the Preliminary Title establishes that due procedure is one of the Principles of administrative procedure. In attention to this, it is recognized that "Administered parties enjoy all the rights and guarantees inherent to due administrative procedure, which includes the right to present their arguments, to offer and produce evidence and to obtain a decision motivated and founded in law (...)".

6. In turn, articles 3.4, 6.1, 6.2 and 6.3 state respectively that, for its validity "The administrative act must be duly motivated in proportion to the content and in accordance with the legal system. The motivation must be express, through a concrete and direct relation of the relevant proven facts of the specific case, and the exposition of the legal and normative reasons that with direct reference to the foregoing justify the adopted act. It may be motivated through the declaration of conformity with the foundations and conclusions of previous opinions, decisions or reports in the file, provided that they are identified accurately, and that due to this situation they constitute an integral part of the respective act. The exposition of general formulas or formulas empty of substantiation for the specific case, or those formulas that due to their obscurity, vagueness, contradiction or insufficiency are not specifically enlightening for the motivation of the act, are not admissible as motivation" (emphasis added).

7. Elaborating on the obligation to provide motivation, even when a motivation by reference has been made, article 24.1.1 requires the Administration that the notification contain "The full text of the administrative act, including its motivation".

8. Finally, it should be recalled that in article 239.4, developed in Chapter II of Title IV on "Responsibility of authorities and personnel in the service of the public administration", it is stated that those liable to sanction are "The authorities and personnel in the service of the entities, regardless of their labor or contractual regime [who] incur an administrative fault in the processing of the administrative procedures under their charge and, therefore, are susceptible to being administratively sanctioned with a warning, suspension, cessation or dismissal according to the seriousness of the fault, recidivism, the damage caused and the intentionality with which they have acted, in case of: (...) Resolving without motivation any matter submitted to their competence".

[30] Ibidem.

"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"

Zest cites article IV of the Preliminary Title of the LPAG,³¹ indicating that it establishes that due procedure is one of the principles of the administrative procedure. Next, the appellant cites articles 3.4, 6.1, 6.2 and 6.3 of the TUO of the LPAG³² referring to the validity of the administrative act with respect to motivation. It adds that elaborating on the obligation to provide motivation, even when a motivation by reference has been made, as indicated in article 24.1.1 of the LAPG, which requires the administration that the notification contain "The integrated text of the administrative act, including its motivation".

d) Without prejudice to its arguments presented, which would prove that the administration has not proven to have sufficient evidentiary elements to conclude that Zest has committed an infraction, but that, even if it had, the OAJ Report does not comply with the requirements of legality and sufficiency necessary to avoid its nullity, it indicates that the duty of sufficient motivation is not complied with by detailing in an extremely brief manner the reasons that lead it to conclude that "it is a proportional and reasonable sanction for Zest's infringing conduct", and that therefore, it does not consider reducing the sanction. Likewise, it fails to analyze all the arguments presented by the administered party in its defense within the procedure, regarding the reasons why said sanction is not reasonable, so the OAJ Report suffers from elements of nullity.

e) Zest points out that it is a legal obligation of the decision-making authority to carry out a detailed evaluation of all the arguments put forward in the appeal, specifying the clear and specific reasons that lead it not to discuss the imposed sanction, which in its opinion, does not have sufficient support for its determination. Likewise, Zest cites article 239.4 of the LPAG³³ recalling that the authorities and personnel of the public administration are liable to sanction for resolving without any motivation a matter submitted to their competence.

II.3 On the corrective measure imposed

a) Zest cites article 5 of THE RESOLUTION that imposes the corrective measure, and indicates that the Sanctions Regulation (being a special sanctioning procedure) must be subject in a supplementary manner to the TUO of the LPAG in accordance with article

[31] "The administered parties enjoy the rights and guarantees implicit in due administrative procedure. Such rights and guarantees comprise, in an enunciative but not limitative manner, the rights to be notified; to access the file; to refute the charges imputed; to present arguments and to submit complementary allegations; to offer and produce evidence; to request the use of the word, when appropriate; to obtain a motivated decision, founded in law (...)"

[32] This is how Zest cites all the articles as a whole: "The administrative act must be duly motivated in proportion to the content and in accordance with the legal system; the motivation must be express, through a concrete and direct relation of the relevant proven facts of the specific case, and the exposition of the legal and normative reasons that with direct reference to the former justify the adopted act. It may be motivated through the declaration of conformity with the foundations and conclusions of previous opinions, decisions or reports present in the file, provided that they are identified accurately, and that due to this situation they constitute an integral part of the respective act. The reports, opinions or similar that serve as the foundation for the decision must be notified to the administered party together with the act. The exposition of general formulas or formulas empty of substantiation for the specific case, or those formulas that due to their obscurity, vagueness, contradiction or insufficiency are not specifically enlightening for the motivation of the act, are not admissible as motivation. [The highlighting is Zest's]"

[33] This is how Zest cites "The authorities and personnel in the service of the entities, regardless of their labor or contractual regime, [who] incur an administrative fault in the processing of the administrative procedures under their charge and, therefore, are susceptible to being administratively sanctioned suspension, cessation or dismissal according to the seriousness of the fault, recidivism, the damage caused and the intentionality with which they have acted, in case of: (...) Resolve without motivation any matter submitted to its competence. (...)"

PERÚ
Ministerio de Economia 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"

247 de esta última norma. In that line, it points out that the Sanctions Regulation must observe the principles of sanctioning power (article 248 of the TUO of the LPAG) and the structure of guarantees provided for the administrative sanctioning procedure, and may not establish conditions less favorable to the administered party than those provided in the TUO of the LPAG.

b) It points out that the corrective measure violates the principle of typicity; for this purpose, it indicates that article 21 of the Sanctions Regulation authorizes the application of corrective measures, which are listed in Annex XX of said regulation. Next, it proceeds to cite numeral 27 of Annex XX – "27) Other measures directly related to compliance with the infringed rules." and points out that the principle of typicity requires that punishable conducts (in this case, directly obliging Zest to register participation quotas of the investment funds in the RPMV; and directly obliging Zest to take necessary measures to transfer the administration of the investment funds to a SAFI regulated and supervised by the SMV) be specifically and exhaustively provided for in a rule with the rank of law with all the elements of the configuration of the punishable conduct, rejecting the vagueness of the statement, so that the administered party and the administration foresee with a sufficient degree of certainty what constitutes a punishable offense.

In that line, it argues that a supposed infraction cannot be imputed based on a statement of a general nature that allows subjective interpretation of its scope (violating due process). This has been expressly recognized by the Constitutional Court and it proceeds to cite Consideration 5 of File No. 2192-2004-AA/TC regarding the subprinciple of typicity or exhaustiveness.34 It argues that the application of a corrective measure based on an open, non-exhaustive and specific statement, of a vague and generic nature, with a broad subjective spectrum at the discretion of the "judge", because it does not contain an exhaustive detail of the punishable conducts and their application, contravenes the most elementary guarantees and principles of sanctioning law, being unconstitutional and null. It points out that the measure applied, being in its opinion a "catch-all", a generic clause, gives rise to establishing, at the free will of the SMV, any type of measure for the supposed correction of the damage potentially caused by the infraction of a rule, and to satisfy (in the SMV's understanding) the requirement of typification of the corrective measure. Zest comments that such reasoning is not correct, and that it is indispensable that corrective measures be previously and expressly typified.

Additionally, the appellant argues that the corrective measure imposed is not typified in the Sanctions Regulation, even though article 251 of the TUO of the LPAG35 states that it must be previously typified. Thus, it states that the Sanctions Regulation has not taxatively defined a corrective measure such as the one imposed, that the SMV has not issued or published a general rule establishing said measure, and it is not directly related to the alleged infringement of the rules of the Public Offering Regulation. It points out that the RESOLUTION only indicates item 27) of Annex XX of the

[34] Ver pie de página 17.

[35] "Corrective measures must be previously defined, be reasonable, and adjust to the intensity, proportionality, and needs of the protected legal interests intended to be guaranteed in each specific case."

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"

Reglamento de Sanciones. Zest cites Consideration 14 of STC No. 8957-2006-PA/TC of the Constitutional Court regarding the principle of legality.36 It states that the corrective measure is unrelated to the breach of primary public offering regulations, nor to the definition of corrective measure and its purposes. Finally, it states that article 9 of the Public Offering Regulation empowers the SMV to suspend the conduct of the offering until the registration in the RPMV has been made, which has a greater logical connotation.

For all the aforementioned, Zest requests to declare the nullity of the imposed corrective measure, as it is not previously and expressly defined in a norm of legal rank at the time of the commission of the alleged infringing conduct, which has been determined at the free discretion of the entity, violating the established legal procedure and incurring the ground for nullity of numeral 1 of article 10 of the LPAG.

c) It states that according to article 1 of the Investment Funds Law, these funds are autonomous patrimonies, therefore the decision to transfer the administration of the fund does not belong to the management company but to the fund's participants (through the participants' assembly). It adds that according to article 4 of the same law, the ZBL and ZIL Funds, whose certificates are placed by private offering, are governed by the Investment Funds Law, their participation regulations, and subscription contracts.

On this basis, it points out that subsection r) of article 9 of the Investment Funds Law indicates that the participation regulations must contain the procedure for transferring the administration of the investment fund, and comments that the participation regulations of Funds ZBL and ZIL (and their subscription agreements) do not contemplate as a cause for transfer of the funds (nor an ad hoc procedure) compliance with the imposed corrective measure. It points out that even if it is considered that complying with the corrective measure implies that the management company must resign from the administration of the funds or dissolve and liquidate, this would not imply that Zest complies with the imposed measure, since the transfer decision always rests with the participants and not with the management company.

Zest indicates that a basic guideline in any administrative sanctioning procedure is that both the sanctions and the corrective measures imposed by the Administration can only be imposed on the administered party that is part of the sanctioning procedure and not on third parties. It argues that the possibility of complying with the sanction and/or corrective measure must be under

[36] STC No. 8957-2006-PA/TC
14. The principle of legality in sanctioning matters prevents attributing the commission of an infraction if it is not previously determined in the law, and also prohibits applying a sanction if it is not also determined by law. As this Court has expressed (Anti-Terrorism Legislation Case, Exp. No. 010-2002-AI/TC), the principle imposes three requirements: the existence of a law (lex scripta), that the law be prior to the sanctioned act (lex praevia), and that the law describe a strictly determined factual assumption (lex certa). As has been pointed out, "This principle comprises a double guarantee; the first, of a material nature and absolute scope, referring both to the strictly criminal sphere and to that of administrative sanctions, reflects the special importance of the principle of legal certainty in those limiting fields and presupposes the imperative need for normative predetermination of the infracting conducts and of the corresponding sanctions, that is, the existence of legal precepts (lex praevia) that allow predicting with a sufficient degree of certainty (lex certa) those conducts and knowing what to expect regarding the attached responsibility and the eventual sanction; the second, of a formal nature, relating to the requirement and existence of a norm of adequate rank and which this Court has identified as law or norm with the rank of law. (Cf. Judgment of the Spanish Constitutional Court 61/1990)." (emphasis by Zest).

"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"

control of the administered party, otherwise, the latter is exposed to the application of sanctions for non-compliance with said legal consequences. Zest points out that the aforementioned guideline has been reflected in the wording of numeral 251.1 of article 251 of the LPAG,37 indicating that if what is sought is the restoration or reparation of the legal situation altered by the administered party subject to sanction, the corrective measure must be one that can be complied with by the latter.

Additionally, it points out that the corrective measure is illegal because it contravenes the principles of the sanctioning power of article 248 of the TUO of the LPAG and article 19 of the Sanctions Regulation, since the transfer of the investment fund depends solely on the participants and not on the management company. Therefore, it indicates that the imposed corrective measure contains an imprecise task and generates doubts; likewise, the final obligated party, which are the participants, was not correctly identified for the purpose of complying with the imposed corrective measure.

Zest states that it is not understood that the OAJ Report states that "it is evident that the transfer of the funds is not fully within Zest's sphere of control, since it will ultimately depend on the decision of the participants"38 where it is also recognized that Zest must "carry out all necessary actions to transfer the management of the funds"39 and bases this on the fact that "investors must adopt decisions within the scope of the regulations…." 40 Regarding said argument, Zest indicates that it is at the very least an apparent motivation, and asks: What logical causal relationship exists between maintaining that the investor participants, who are those who can adopt the decision to transfer the management of the funds, are obliged to adopt decisions within the framework of the law, and attributing to Zest the obligation to assume the consequences if the investors do not adopt that decision? Or it adds: can the SMV impose a corrective measure consisting of third parties who have not been part of the sanctioning procedure adopting a certain position? Zest points out that the SMV's arguments lack all logic in maintaining the corrective measure, which is not only illegal but also presupposes the performance of acts by third parties (i) who are not part of this administrative sanctioning procedure and ii) are not under Zest's control, and it is not possible to ensure that they will comply with what the SMV has ordered, no matter how much it is maintained that this is what would correspond according to the applicable regulations.

d) Zest considers that the corrective measure is unconstitutional, since it affects the contracting right of the participants of Funds ZBL and ZIL, who are not obliged to transfer their property due to a sanction for which they are not responsible. In that line, it points out that based on their constitutional right to contract, the participants gathered in assembly might not approve the transfer and/or liquidation of the funds, in which case complying with the corrective measure would be legally impossible. Likewise, under the same right, the participants could transfer their investment funds to another management company not

[37] “Administrative sanctions imposed on the administered party are compatible with the issuance of corrective measures aimed at ordering the restoration or reparation of the situation altered by the infraction to its previous state, including that of the affected assets, as well as with compensation for the damages and losses caused (…)” The underlining is by Zest.

[38] This citation is actually found on page 76 of the OAJ Report.

[39] This citation is actually found on page 76 of the OAJ Report.

[40] This citation is actually found on page 76 of the OAJ Report.

"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"

supervised by the SMV domiciled in Peru or abroad, and not only towards a SAFI regulated and supervised by the SMV.

It comments that the corrective measure is contrary to the constitutional right to contract of the investors, since the SMV's decision would not necessarily influence the decision-making capacity of the participants of the ZBL and ZIL Funds. In Zest's opinion, even if it accredited the adoption of the necessary actions to transfer the Funds (corrective measure), it could happen that the participants do not approve them, and this latter fact would determine that Zest be sanctioned for non-compliance with the corrective measure.

e) It indicates that the corrective measure is disproportionate and unreasonable, infringing articles 3, 5, 8 and 251 of the TUO of the LPAG, and article 19 of the Sanctions Regulation because it is an administrative act that does not adhere to the legal system, being unlawful, imprecise, physically and legally impossible and does not include the issues arising from the motivation, all justified in the reasons expressed in previous paragraphs. It again cites Consideration 15 of STC No. 2195-2004-AA/TC41 regarding the principle of proportionality, and points out that it is evident that the administrative act whose object is physically and legally impossible suffers from a validity requirement, and is therefore null and void because the sanction imposed does not fall on Zest but on the owners of the investment funds (third parties), infringing subsection 2) of article 3; and subsections 5.2 and 5.3 of article 5 of the TUO of the LPAG; as well as the provisions of subsection a) of article 32 of the Regulation of Investment Funds and their Management Companies, approved by SMV Resolution No. 029-2014-SMV/01 (hereinafter, "Investment Funds Regulation"), regarding the requirement of the agreement of the participants.

It adds that article 19 of the Sanctions Regulation specifies that the corrective measure must be motivated and observing the principles of proportionality and reasonableness. Thus, it points out that the corrective measure imposed lacks motivation in proportion to the sanction imposed and the norms presumably infringed regarding public offering, since its compliance affects the rights of third parties (the participants of the funds), infringing subsection 4) of article 3 and article 6 of the TUO of the LPAG, as well as article 19 of the Sanctions Regulation.

Zest argues that the corrective measure imposed is unreasonable and disproportionate, since it has no reasonableness with the purpose pursued, in accordance with article 251 of the TUO of the LPAG and article 19 of the Sanctions Regulation, which state that a corrective measure has the purpose of restoring, reversing, repairing, or restituting the situation altered by the non-compliance with the securities market regulations. However, it indicates that said measure suffers from a physically and legally possible object, among other validity requirements, since ordering Zest to transfer the ZBL and ZIL Funds to a supervised SAFI is not related to restoring, reversing, repairing or restituting, because the infraction to the SMV regulations is already consummated. Finally, it states that it would be different if Zest were required to organize itself as a SAFI licensed and supervised by the SMV, as it has sought, a measure that would indeed be related to the intensity, proportionality and needs of the protected legal assets.

[41] Zest cites STC No. 2195-2004-AA/TC, however, we understand that it refers to STC No. 2192-2004-AA/TC-Tumbes. See footnote. 17.

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

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

f) Zest maintains that the corrective measure does not seek to correct a harm to the protected legal assets (in accordance with article 251 of the LPAG), which is the delivery of information to the public so that it adopts a free and fully informed investment decision, since what it proposes is a change of manager or liquidation of the funds and with it the redemption of the investment. It adds that a corrective measure in the course of a procedure where the infraction to the rules of the public offering is discussed should have consisted of one that guarantees the delivery of information to the investors, but only if they had not yet executed their investment decision. In practice, the closure of the ZBL and ZIL Funds is pursued.

g) Zest indicates that in accordance with article 226 of the TUO of the LPAG, the filing of any appeal does not suspend the execution of the challenged act (unless a norm provides otherwise). In that line, it alleges that pursuant to article 18 of the Sanctions Regulation, it is up to the SMV Superintendent to resolve the appeal for suspension of the execution of the challenged act. Therefore, it requests the suspension of the execution and effects of THE RESOLUTION given that the circumstances established in subsections a) and b) of numeral 226.2 of article 226 of the TUO of the LPAG are met.

It adds that the execution of THE RESOLUTION generates damages that are impossible or difficult to repair since: i) the payment of the fine of 240 UIT is equivalent to 1 year of Zest's net profits; ii) the market repercussion towards Zest and its investors can significantly affect its business, generating possible capital flight of its investors and even leading it to bankruptcy; and iii) irreversible damage would be done to Zest's image in the market, leading the SMV to remove it from the market under responsibility and in breach of current regulations and because it would generate financial panic among its investors.

Likewise, it indicates that the challenged act has transcendent nullity defects because, on the one hand, the sanctions and fines imposed infringe subsection 1) of article 10 of the TUO of the LPAG, since it contravenes the Constitution, the laws or the regulatory regulation, and on the other hand, the measure infringes subsection 2) of article 10 of the TUO of the LPAG referring to the defect or omission of the validity requirements of the administrative act, as it lacks a physically and legally possible object.

h) Zest points out that even when the SMV proposes to vary the corrective measure and only require Zest to prove the adoption of the "necessary" measures for the transfer of the funds and, if this does not occur, to proceed with their liquidation, this action (liquidating the funds) is also not within the scope of what Zest can execute, since said decision corresponds to the Assembly of participants and not to the Fund's administrator.

The appellant indicates that it must be taken into account that the adoption of the decision to liquidate the funds before their maturity date could mean that investors incur losses due to the early redemption of the underlying securities, which would be equivalent to a confiscation.

i) In its last written argument Zest states that the funds referred to in this administrative sanctioning procedure had, as maximum terms of

Electronically signed document digitally in 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.firmadigital.gob.pe/verifica/validacion.aspx

PERU
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"

validity, December 2023 (Zest Bond Liquid) and May 2024 (Zest Income Liquid).

Finally, Zest points out that, in the event that its arguments on the inadmissibility of the application of the corrective measure are not accepted, what has been stated must be taken into account when modulating its effects.

II.4 Other aspects

Final Request

The appellant states that this procedure has a legal relevance that requires distinguishing between the aspects of: regulation of the securities market that are discussed in it and of administrative sanctioning law that require a resolution in accordance with the rules that currently regulate the application of administrative sanctions. It points out that, between the SMV and Zest there is a legal discrepancy regarding the interpretation of the scope of the rules of the Public Offering Regulation, the Institutional Investors Regulation and the Sanctions Regulation. Likewise, it indicates that it has been a practice of the SMV to clarify through the resolutions that end various administrative procedures, those aspects of the various rules that regulate the securities market that were confusing or obscure.

Zest requests that the issuance of new regulations be considered, the clarification of those confusing or obscure aspects of the rules involved in this procedure, and particular attention be paid to the sanctioning nature of this procedure and the necessary and mandatory application of the principles and rules that govern administrative sanctioning procedures, so that in accordance with Zest's arguments THE RESOLUTION is revoked, lifting the sanction and the corrective measure imposed.

Changes in Zest's management team

By means of writings presented on 3 February and 3 April 2023, Zest communicated, among others, the appointment of its new General Manager and the appointments of its new investment, commercial and technology and operations managers; respectively. It requests that said facts be taken into account in the present case.

Request for Organization Authorization

a) Zest reported that it has submitted an authorization request to organize a investment fund management company to be named "Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C.".

b) The appellant points out that Zest was created in February 2016 and has operated without any complaint from its clients, having a client portfolio as of 17 October 2023 of 2914, and that Zest has already shown a desire to be regulated by the SMV in order to continue growing, since it initiated a procedure to obtain its authorization which it later withdrew upon the suggestion of the SMV because it was pending

PERU
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"

resolution of the present sanctioning procedure. It adds that the aforementioned attitude is corroborated because within its economic group is the company Zest Capital LLC, headquartered in the United States of America under RIA regulation, with code ZEST (CRD # 316889/SEC#:801-122725) and attaches an access link.42

III. Prior Analysis of Legal Issues

Before proceeding with the analysis of the specific case, we consider it necessary to develop some concepts that will allow understanding the applicable framework.

III.1 Public Offering

Offers of securities that have the nature of a public offering must comply with the requirements established in the LMV and its regulatory norms. Among such provisions, those related to the registration of securities in the RPMV and the disclosure of information so that potential investors can form a well-founded judgment about the investment proposed to them stand out.43

In this line, doctrine states that “The qualification of a securities offering within the category of public offering must be understood above all as a mechanism of transparency and protection of investors' rights, which explains why the consequences derived from it translate into the sphere of protection of investors' rights.”44

That is, the regulation of public offerings has as its raison d'être transparency and investor protection.

Now, regarding the concept of public offering of securities, the LMV in its article 4 establishes the following definition:

“Article 4.- PUBLIC OFFERING
A public offering of securities is the invitation, adequately disseminated, that one or more natural or legal persons direct to the general public, or to certain segments thereof, to carry out any legal act related to the placement, acquisition or disposal of securities.”

From the text of the previous article, it follows that the public offering of securities contains the following elements:

i) It is an Invitation.

ii) Adequately disseminated.

iii) Directed to the general public or to a segment thereof.

iv) It concerns a legal act related to the placement or disposal of securities.

[42] https://adviserinfo.sec.gov/firm/summary/316889

[43] Resolution No. 124- 2003-EF/94.12 of the Administrative Tribunal of CONASEV.

[44] Beatriz Belando Garín, cited by Néstor Raúl Fagua Guauque. The Public Offering as an activity of the Securities Market. In: Securities market regime. Volume II - Issuance and offering of securities. Coordinators: Juan Carlos Varón Palomino and Germán Darío Abella Abondano. University of the Andes. Temis, 2017. Page 100.

PERU
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"

For the purposes of a correct application of the cited norm and in order to identify each of its elements⁴⁵ the regulations undertake to develop the scope of the terms "invitation", "adequately disseminated", "general public", among others.

Taking this into account, article 6 of the Public Offering Regulation complements the definition of public offering of securities, giving greater content to the aforementioned concepts and establishing important rules for determining a securities offering as public, as seen below:

Article 6.- SCOPE OF THE TERM "PUBLIC OFFERING"

For the purposes of the application of the general rule contained in article 4, the text of article 4 of the Law, referring to the public offering of securities, has the scope indicated below:

a) Invitation.- Any manifestation of will made directly or through third parties is considered an invitation, whether it has the character of an invitation to offer, simple offer, unilateral promise or another whose purpose is to make or receive proposals linked to what is indicated in subsection e);

b) Adequately disseminated.- The invitation is adequately disseminated when it is directed to its recipients, individually or jointly, simultaneously or successively, through any means, such as newspapers, magazines, radio, television, mail, meetings, computer systems or other means permitted by technology, that is suitable to make known its content to its recipient.

The use of the services of stock exchanges or of the entities responsible for conducting centralized negotiation mechanisms is also included;

c) General public.- The general public is made up of the set of undetermined persons, national or foreign, who are potential investors in the national territory;

d) Segment of the public.- A segment of the public is considered to be the set of determined or undetermined persons who, according to the circumstances, require the protection referred to in Article 2, when their number is such that it involves the public interest. It is considered that such protection is required when, in order to the possibility of access to relevant information by such persons and/or for it to be processed by them, they encounter difficulties in adopting a free and informed decision regarding the invitation made.

Without prejudice to the provisions of the preceding paragraph, for purposes of its qualification as a segment of the public, a set of recipients made up of a number equal to or greater than one hundred (100) persons is considered to involve the public interest, and it is presumed, unless proven otherwise, that such persons require the aforementioned protection.

[45] Which, among others, will help to distinguish whether, despite being called private, it is a public offering.

PERU
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"

Shareholders or other holders of participation rights in a legal entity are susceptible to being considered a segment of the public under the terms of this subsection with respect to invitations made by said legal entity; and,

e) Legal act referring to the placement or disposal of securities.— It comprises that relating to the creation or transfer of economic rights referring to said securities, including the right or option of subscription or acquisition.

Said legal act, whatever its characteristics, must have the nature of an investment act for its subscriber or acquirer.

When the rights referred to in subsection e) have the status of securities, the public offering thereof is also considered a public offering of the securities to which its rights pertain, and the provisions of this Regulation must be complied with regarding both securities. In such case, a common informative prospectus must be registered and used.

For the purposes of this case, we will focus on the concepts of "invitation" and "segment of the public", since they are the central points of the analysis to be carried out.

a) Invitation

According to the foregoing, article 4 of the LMV defines the public offering of securities as an invitation. In that line, subsection a) of article 6 of the Public Offering Regulation develops the scope of the term "invitation". Thus, said provision considers an invitation to be any manifestation of will made directly or through third parties, in the nature of an invitation to offer, simple offer, unilateral promise or another whose purpose is to make or receive proposals linked to legal acts referring to the placement or disposal of securities.

In this way, it should be emphasized that the invitation is "the declaration that the offeror makes of its proposal",⁴⁶ it being through said declaration that the offeror manifests or expresses its will to: i) the public in general, or ii) a segment thereof; to make or receive proposals linked to the placement or disposal of securities.⁴⁷

Taking into account the foregoing, it should be emphasized that the concept of public offering of securities comprises and begins with an invitation to place or dispose of securities and not from the moment in which said securities are acquired or subscribed.

Accordingly, the Peruvian legislator has determined that the protection to which we have referred above operates from the moment in which the recipients are invited to acquire or subscribe securities.

Therefore, regardless of whether the investor recipient of the invitation accepts, rejects or does not respond to a proposal linked to legal acts referring to the placement or disposal of securities; they

[46] Statement of Motives of the Public Offering Regulation.

[47] SMV Informative Document - Constitutive Elements of the Public Offering of Securities. P. 4. Available at: https://www.smv.gob.pe/Uploads/Documento%20Informativo.pdf

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"Year of the Bicentennial, of the consolidation of our Independence, and of the commemoration of the heroic battles of Junín and Ayacucho"

will be protected by the regulations on public offerings of securities, by the fact of being a recipient of the aforementioned invitation.

b) Segment of the public

The recipient of the offering (invitation) of securities is a central element to determine whether the offering is public or private in nature, since it allows knowing whether or not there is a need for protection requiring the intervention of the SMV and the regulation of the securities market.48

According to the regulations, the offering (invitation) of securities may be directed to the public in general or to a segment thereof (that is, to a "segment of the public"). In this section, basic concepts of the second case will be developed. In that line, the scope of the concept of segment of the public is established in subsection d) of article 6 of the Public Offering Regulation, which states:

Article 6.- SCOPE OF THE TERM "PUBLIC OFFERING"

For purposes of the application of the general rule contained in article 4, the text of article 4 of the Law, referring to the public offering of securities, has the scope indicated below: (...)

d) Segment of the public.- A segment of the public is considered to be the group of persons determined or not who, according to the circumstances, require the protection referred to in Article 2, when their number is such that it involves the public interest. It is considered that said protection is required when, in order to have the possibility of access to relevant information by said persons and/or for it to be processed by them, they encounter difficulties in adopting a free and informed decision regarding the invitation made.

Without prejudice to the provisions of the preceding paragraph, for purposes of their qualification as a segment of the public, a group of recipients consisting of a number equal to or greater than one hundred (100) persons is considered to involve the public interest, and it is presumed, unless proven otherwise, that said persons require the aforementioned protection. (...)"

In that sense, in order to define when a segment of the public is configured, the regulation has established two criteria:

First criterion

In accordance with the first paragraph of subsection d) of Article 6 of the Public Offering Regulation, the following is considered a segment of the public: the group of persons [determined or not] who, according to the circumstances: i) require protection (to which Article 2 of the Public Offering Regulation refers)49 and ii) their number involves the public interest.

[48] Ibidem Page 5.

[49] "Article 2 Purpose and Interpretive Principles The purpose of this Regulation is the protection of investors in the public securities market through the disclosure, in a truthful, sufficient, timely and clear manner, of all information that is relevant in order to understand the positive and negative implications of the transactions proposed to them, so that they are in a position to make free and informed decisions regarding the same, and that such disclosure is

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

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

Regarding the need for protection, subsection b) of Article 6 and Article 2 of the Public Offering Regulation state that the purpose of the regulations is for persons to be in a position to make free and informed decisions regarding the invitation made. To achieve the foregoing, such persons, at the time of receiving the invitation, must have: 1) the possibility of access to relevant information; and/or 2) the possibility of processing such information. On the other hand, regarding the public interest, this refers to the number of persons to whom the invitation was made.

Second criterion

Without prejudice to the foregoing, the second paragraph of subsection b) of Article 6 of the Public Offering Regulation has established a quantitative criterion; thus, a group of recipients consisting of a number equal to or greater than one hundred (100) persons is considered a segment of the public, since such a quantity involves the public interest, and it is presumed, unless proven otherwise, that such persons require the aforementioned protection.

It is important to note that the aforementioned number of recipients refers to the persons who receive the invitation, without considering the status they may have, for example, that of being an institutional investor.

Now, as indicated in the SMV informative document when referring to the presumption contained in the second paragraph of subsection b) of Article 6 of the Public Offering Regulation, "the aforementioned presumption is relative in nature, if it has direct consequences in relation to the burden of proof to determine whether the offer is directed to a segment of the public in need of protection or not".50

Thus:

• If the recipients of the invitation are 100 persons or more, then according to the cited rule, the offer involves the public interest and it is presumed that such persons require protection, with the burden of proof to the contrary falling in this case on whoever alleges the opposite.51

• Now, if the recipients of the invitation are fewer than 100 persons, it is assumed that in principle there is no public interest to protect; however, it should be analyzed whether, despite being a universe of recipients fewer than 100, there are reasonable grounds that make necessary the protection to which Article 2 of the Public Offering Regulation refers.52

[50] SMV Informative Document – Constitutive Elements of the Public Offering of Securities. Pag. 6. Available at: https://www.smv.gob.pe/Uploads/Documento%20Informativo.pdf

[51] Ibidem.

[52] Ibidem.

"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"

The foregoing has been ratified by the Second Transitional Contentious Administrative Chamber of the Supreme Court of Justice of Lima, which stated in its recital 7.2 of Resolution No. 5 of 28 May 2013, the following:

"Regarding the public interest, which is the second requirement necessary to define an offer as public, it should be noted that although it is true that subsection d) of Article 6 of CONASEV Resolution No. 141-98-EF-94.10 grants protection only to a number equal to or greater than 100 recipients of the offer, it is also true that this number is merely referential, since protection cannot be limited only to a number of persons greater than a certain quantity, especially when it has already been established that the necessary information to carry out the investment for the acquisition of bonds in trusts was not provided and that, both in the administrative and judicial proceedings, the exact number of persons to whom the offer was directed has not been determined." (The underlining is ours).

Taking into account the foregoing, it is clearly established that although subsection d) of Article 6 of the Public Offering Regulation grants protection only to a number equal to or greater than 100 recipients of the offer, said number is referential, since protection cannot be limited to a number of persons greater than a certain quantity. Thus, a number fewer than 100 recipients of an offer of securities may be considered to involve the public interest and that such recipients require protection, although in such case, the need for protection under Article 2 of the Public Offering Regulation must be justified.

In this way, the regulations provide security to the market by stating that, if the invitation is directed to 100 or more persons, it will be considered as directed to a segment of the public, since such a quantity involves the public interest, and it is presumed, unless proven otherwise, that such persons require the aforementioned protection. Therefore, whoever makes such an invitation must have the respective evidence to indicate that it falls within a private offering, which will be explained below.

III.2 Private Offering

Article 5 of the LMV defines private offering of securities as follows:

Article 5.- Private Offering

A private offering is an offering of securities not included in the previous article [Article 4 of the LMV – Public Offering]. Notwithstanding the foregoing, the following are considered private offerings:

a) The offering directed exclusively to institutional investors. The securities acquired by these investors cannot be transferred to third parties, unless they are transferred to another institutional investor or the security is previously registered in the Public Registry of the Securities Market.

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

PERU
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"

b) The offering of securities whose nominal value or lowest unit placement value is equal to or greater than two hundred fifty thousand new soles (S/ 250 000,00). In this case, the securities cannot be transferred by the original acquirer to third parties with lower nominal values or placement prices.

c) Those established by Conasev,

As can be seen, the first line of article 5 of the LMV defines private offering of securities as that "not included" in the definition of public offering of securities (article 4 of the LMV). Thus, our regulations define private offering of securities having as sole reference its antagonistic institution, the public offering of securities.53 Consequently, everything that is not part of the scope of public offering of securities will be a private offering of securities.54

a) Safe harbors

Without prejudice to the definition of private offering indicated in article 5 of the LMV, the same article establishes assumptions under which an offering of securities will be considered beyond any doubt as a private offering of securities, which is known as "safe harbors". Thus, the cited norm establishes that the following are considered private offerings:

• Offerings (invitations) of securities directed exclusively to institutional investors.

• Offerings (invitations) of securities whose nominal value or lowest unit placement value is equal to or greater than S/ 250 000,00. (figure that is updated annually at the close of each fiscal year in accordance with the First Final Provision of the LMV).55

• Others established by the SMV. To date, the SMV has not established, through a general provision, other assumptions of securities offerings that are considered private.

In this way, the safe harbors established in article 5 of the LMV must be met by all invitees or recipients of the offering and not only by its buyers.

b) Institutional Investors

[53] Carlos Andrés Aldana Gantiva. The Private Offering of Securities. In: Securities Market Regime. Volume II - Issuance and offering of securities. Coordinators: Juan Carlos Varón Palomino and Germán Darío Abella Abondano. University of the Andes. Temis, 2017. P. 106. "The private offering of securities has in most legislations as sole reference its antagonistic institution, that is, the commonly studied public offering of securities.".

[54] Néstor Raúl Fagua Guauque. The Public Offering as an activity of the Securities Market. In: Securities Market Regime. Volume II - Issuance and offering of securities. Coordinators: Juan Carlos Varón Palomino and Germán Darío Abella Abondano. University of the Andes. Temis, 2017. P. 18. The norms of the securities market do not deal with the private offering and in this sense everything that is not part of the scope of the public offering will be private offering."

[55] "First.- The sums referred to in this law are of constant value and are updated annually, at the close of each fiscal year, based on the Wholesale Price Index for Metropolitan Lima periodically published by the National Institute of Statistics and Informatics. The base of the referred index is considered to be the number for the month of January 1996."

PERU
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"

As observed in the previous point, one of the safe harbors to be considered a private offering is that the offering (invitation) is directed exclusively to institutional investors.

In the securities markets there are certain subjects or entities considered sophisticated or specialized investors. These investors receive various denominations depending on the legal framework in which they are found, such as professional, institutional investors, among others. In the Peruvian case, we currently identify these sophisticated investors under the denomination of "Institutional Investors".

In this line, Institutional Investors are those characterized by having a high degree of sophistication, which is why they do not require the same degree of protection as non-institutional or retail investors, that is, the general public.56

Now, with regard to the Peruvian legal framework, Article 3 and Annex 1 of the Regulation of the Institutional Investors Market, approved by SMV Resolution No. 021-2013-SMV/01 (hereinafter, Institutional Investors Regulation), state the following:

Article 3.- Institutional Investors

Institutional investors are persons who, by their nature, characteristics or knowledge, adequately understand, manage and evaluate the risks associated with their investment decisions.

Institutional investors are the natural and legal persons indicated in Annex 1 INSTITUTIONAL INVESTORS.

For its part, Annex 1 of the Institutional Investors Regulation establishes a list, which states the following:

ANNEX 1

INSTITUTIONAL INVESTORS

For all purposes of this Regulation, the following persons are institutional investors:

1. Banks, finance companies and insurance companies and other companies indicated by Article 16 of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amending norms; brokerage agents; private pension fund administrators; investment fund management companies; mutual fund management companies and securitization companies.

2. Foreign entities that carry out activities similar to those indicated in numeral 1 and/or the Qualified Institutional Buyers referred to in Rule 144A of the U. S. Securities Act of 1933.

[56] José Antonio Payet. The securities market and investor protection. In: Ius et veritas No. 12. P. 79. Stating: "The high degree of sophistication that characterizes these investors is a reason why they do not require the same degree of legal protection as small individual investors. In fact, investor protection rules are fundamentally provisions for individual investors and not for institutional investors."

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

"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"

3. The Health Care Provider Entities referred to in the Law on Modernization of Social Security in Health, Law No. 26790, the Pension Normalization Office – ONP and the Social Health Insurance – Essalud.

4. Legal persons under private law or public law that have as one of their activities, in accordance with the legal or contractual provisions governing them, investment in securities. In the case of non-state legal persons, it shall be required that they have an investment portfolio in securities equal to or greater than one million Nuevos Soles (S/. 1,000, 000.00).

5. The funds and autonomous patrimonies managed by the persons indicated in the preceding numerals, provided that the investment decision is their responsibility and that the individual net patrimony of the fund or patrimony is equal to or greater than four hundred thousand Nuevos Soles (S/. 400 000.00).

6. Natural persons who have a patrimony greater than two million Nuevos Soles (S/. 2,000, 000.00), and an investment portfolio in securities equal to or greater than one million Nuevos Soles (S/. 1,000, 000.00).

With respect to the institutional investors detailed in numerals 4, 5 and 6 of this Annex, the verification carried out must be documented at least with the sworn statement signed by said investors, in which they state: (i) knowledge of the scope of said qualification; and (ii) having such condition.

Brokerage agents acting as placement agents must diligently implement and apply procedures, so that the investors participating in this market are exclusively institutional investors. In the event that issuers carry out the placement of securities, they must ensure they have the sworn statements referred to in the preceding paragraph. For this purpose, as applicable, they must keep an internal record of the institutional investors participating in the placement of said securities.

Considering the foregoing, it should be noted that the definition of institutional investor in Article 3 and the list of these in Annex 1 must be read together and not in isolation, with those expressly indicated in Annex 1 of the Institutional Investors Regulation being considered Institutional Investors, so the list is exhaustive and not illustrative.

This is done in order to provide legal certainty to the market and to have certainty that transactions are being carried out with Institutional Investors within the Peruvian securities market.

On the other hand, it is important to mention that pursuant to Article 6 of SMV Resolution No. 021-2013-SMV/01,57 for purposes of literal j) of Article 8

[57] "Article 6.- To provide that for purposes of the provisions established in literal j) of Article 8 of the Securities Market Law, Legislative Decree No. 861, as well as for any other regulatory provision approved by the SMV, they shall be

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

"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"

of the LMV,58 as well as for any other regulatory provision approved by the SMV, the subjects included in the scope of Article 3 of the Institutional Investors Regulation (which includes its second paragraph and the reference to the list in its Annex 1) shall be considered Institutional Investors.

Additionally, it is important to highlight the provisions of the Fifth Complementary Final Provision of the Regulation of Institutional Investors:

"Fifth.- The monetary figures referred to in this Regulation and its Annexes are of constant value and are updated annually at the close of each fiscal year, based on the Wholesale Price Index that, with reference to the entire country, is published monthly by the National Institute of Statistics and Informatics [INEI]. For the updates, the index corresponding to the month of January 1996 shall be considered as the base."

Thus, it is clearly established that the monetary figures found in Annex 1 of the Regulation of Institutional Investors must be updated annually at the close of each fiscal year, based on the Wholesale Price Index published monthly by the INEI. This is in order to guarantee compliance with the different monetary parameters to be considered an Institutional Investor.

Finally, it is necessary to make particular mention of the case of Institutional Investors under item 6 of Annex 1 of the Regulation of Institutional Investors, that is, Institutional Investors who are natural persons with assets exceeding two million Nuevos Soles (S/ 2,000,000.00), and an investment portfolio in securities equal to or greater than one million Nuevos Soles (S/ 1,000,000.00).

Regarding the aforementioned Institutional Investors, the penultimate paragraph of Annex 1 of the Regulation of Institutional Investors states that the verification of such investors as institutional is documented at least with the sworn statement signed by them, in which they state: (i) knowledge of the scope of the Institutional Investor qualification; and (ii) having such status. It should be noted that, in accordance with the fifth complementary final provision of the Regulation of Institutional Investors, the amounts of assets and investment portfolio are updated annually, so in the sworn statements, such amounts must not appear outdated; otherwise, the Institutional Investor status of the signatory cannot be verified.

[58] Article 8.- Terms.- The terms indicated have the following scope in this law:
(...) j) Institutional investors.- Banks, financial institutions and insurance companies governed by the General Law of Banking, Financial and Insurance Institutions, brokerage agents, private pension fund administrators, investment fund management companies, mutual fund management companies, as well as foreign entities that carry out similar activities and other persons qualified as such by CONASEV; (...).

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

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

IV. Analysis of the arguments formulated by Zest in its Appeal, Complementary Briefs, Final Arguments and Oral Reports

IV.1 Issues related to the Regulation of the Securities Market

On the Invitations

a) The appellant argues that the invitations made constitute what in Civil Law is known as an "offer", which if accepted by the persons to whom they were addressed gives rise to the formation of the agreement of wills or contract, in accordance with the Civil Code. It indicates that the corresponding stages of a contractual iter were fulfilled (offer, acceptance, conclusion of contracts and extension of sworn statements, all with institutional investors). Finally, it points out that if an "acceptance" had come from a non-institutional investor, it would be equivalent to a "counteroffer", as defined in article 1376 of the Civil Code, in which case it does not give rise to the perfection of a contract.

The application of civil regulations to the case under analysis, although it allows establishing the rules and the moment of contract formation, cannot ignore or deny that the securities market regulations are observed, which are of public order and establish a legal regime for investor protection and efficient functioning of the securities market.59

In this line, the provisions on public offering of securities aim, on the one hand, for the subjects making the offers to act in compliance with the applicable regulations (or the regulatory standard) for this type of invitations; and on the other hand, for the investors to whom they are addressed to be protected. Thus, investor protection is not a concept of free will and determination of the offeror, but a requirement that must be met following the standards provided in the applicable framework.

Now, article 4 of the LMV considers as one of the elements of the public offering of securities, the invitation,60 while item a) of article 6 of the Public Offering Regulation develops the concept of "invitation", which may have the character of an invitation to offer, simple offer, unilateral promise or in general any that has as its object to make or any other that aims to make or receive proposals related to the acquisition or placement of securities.61

In this sense, what is relevant in the invitation element of the public offering in the securities market, regardless of the alleged civil approach, is the proposal to

[59] José Enrique Cachón Blanco. Public Offers for the Sale of Negotiable Securities. Dykinson, S.L, 1997. Pág. 60. This author points out that "General civil regulations specifically address, as regards public offerings, the problem of the meeting of the offer and the contractual acceptance. The securities market regulations, for their part, construct, based on the concept of public offering of negotiable securities, a legal scheme for investor protection, and in general, for the efficient functioning of the securities market."

[60] "Article 4.- Public Offering.- A public offering of securities is the adequately disseminated invitation that one or more natural or legal persons direct to the general public, or to certain segments thereof, to carry out any legal act related to the placement, acquisition or disposal of securities." (The underlining is ours)

[61] "Article 6.- Scope of the Term "Public Offering" (...) a) Invitation.- An invitation is considered to be any manifestation of will made directly or through third parties, whether it has the character of an invitation to offer, a simple offer, a unilateral promise or any other whose purpose is to make or receive proposals related to the provisions of subsection e);"

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

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

acquire or place securities, which may or may not be answered or accepted by the recipient thereof. Thus, Zest's arguments on this point are not admissible.

b) Regarding the fact that the emails clearly indicated that said offers were directed exclusively to Institutional Investors, it should be mentioned that from the review of the same and the reports attached to them, it is not observed, as Zest maintains, that in said emails it is mentioned that the offers made by Zest were directed exclusively to institutional investors.

However, Zest has attached a series of images, which would show, in its opinion, that the invitations of the ZBL and ZIL Funds were made exclusively to institutional investors. Thus, it indicates that the emails sent contained a disclaimer stating: "This email is conceived and designed for the clients of Zest Capital Perú SAC" (See Image 3 and Image 4).

In this regard, in the aforementioned disclaimer, the scope of the term "client" for Zest is not defined, and this term cannot be equated with the concept of Institutional Investor, because as discussed below, according to some Participation Agreements, clients can be what Zest calls: qualified investors and institutional investors (See subsection a) of the section On segment of the public, of point IV.1 and Annex No. 1 of this resolution). In that sense, the referred disclaimers do not allow determining that the invitations were exclusively directed to institutional investors.

On the other hand, it indicates that the emails sent contained a link called "Factsheet", which attached a disclaimer stating "investors must review the Participation Regulation of the Private Fund before any acquisition of shares" (See Image 5 and Image 6). Subsequently, it cites the Regulations of the ZBL and ZIL Funds, where it was stipulated that participants must sign a sworn statement stating that they are private offering funds (not regulated or supervised by the SMV) and that they assume the risks derived from this type of investment, in addition to having the experience and resources necessary for it (See image 7, Image 8, Image 9, Image 10 and Image 11).

In this regard, the Participation Regulations of the ZBL and ZIL Funds state that the funds are private offerings and not regulated by the SMV, but they do not mention that the participants are institutional investors. In that sense, it is different for an investment fund to be private and not regulated by the SMV; and another, that said fund is directed exclusively to institutional investors, as Zest states. On the other hand, the Participation Regulations of the ZBL and ZIL Funds indicate that the participants assume the risks derived from this type of investment, in addition to having the experience and resources necessary to make their investment; the foregoing does not fit within the definition of Institutional Investor, contained in current regulations (See subsection b) of Section III.2 - Private Offering of point III]. For all the foregoing, the aforementioned disclaimers and Participation Regulations of the ZBL and ZIL Funds do not allow determining that the invitation was directed exclusively to institutional investors.

Regarding the sworn statement (image 12), although it belongs to an investor who has not been invited to acquire shares of the ZBL Funds

"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"

and ZIL, according to the information provided by Zest, and therefore its evaluation would not correspond, the format as such is evaluated in subsection a) of the section On segment of the public of point IV.1 and in the Annex of this resolution.

Finally, regarding the document that includes 6,377 folios, and which in Zest's opinion contains voluminous evidentiary material, which shows that the offers were directed exclusively to institutional investors, it should be mentioned, first, that said folios not only contain information of the participants of the ZBL and ZIL Funds but also of other funds managed by Zest that are not the object of this sanctioning procedure. Second, from all the information relevant to the invitations of the ZBL and ZIL Funds, it cannot be established that the invitations were addressed exclusively to institutional investors.

c) Regarding the comments on the calculation of the number of invitations and that the information used to carry it out is not reliable, we must begin by stating that THE RESOLUTION has worked with the information provided by Zest itself and has proceeded as follows to calculate the number of invitees for the participation quotas of the ZBL and ZIL Funds:

According to Annexes 5, 6, 7 and 8 62 of the brief submitted by Zest on 27 January 2020; from the email address info@zestcapital.com.pe on 6 and 27 May 2019, Zest sent emails63 to 79 persons called "potential clients", inviting them to subscribe to participation certificates of the ZBL and ZIL Funds; and, additionally, on 25 June 2019 it sent emails to 144 potential clients (the 79 potential clients mentioned above were also included in this mailing)64, inviting them to subscribe to participation certificates of the ZIL Fund.65

Similarly, according to Annexes 1 and 4 66 of the brief submitted by Zest on 27 January 2020; in the period from May to August 2019, Zest captured 24 new potential clients (different from the 79 potential clients mentioned in the previous paragraph), who became participants of the ZBL Fund and 16 new potential clients, different from the 144 potential clients mentioned, who became participants of the ZIL Fund.67

[62] Annex 5 (Referring to the contents of the emails that Zest sent promoting its products, market reports and others, on the dates requested by the SASP); Annex 6 (Referring to the list of persons to whom these emails were addressed in the month of May 2019); Annex 7 (Referring to the list of persons to whom these emails were addressed in the month of June 2019) and Annex 8 (Number of persons to whom ZEST sent the emails during July and August 2019).

[63] These emails contained the characteristics of series of a class of participation quotas of the same investment fund, the ZBL Fund, such as profitability, term, underlying assets, among others, and also attached the prospectuses corresponding to each of the series.

[64] These 144 potential clients include the 79 persons referred to above.

[65] Likewise, Zest would have sent emails between 04 and 31 July 2019 to 144 persons and on 6 August 2019, to 143 persons, inviting them to subscribe to participation certificates of the ZIL Fund.

[66] Annexes 1 (Referring to the participants in force as of 30 September 2019 of the funds managed by Zest) and 4 (Referring to the operations of the participants of the funds managed by Zest up to 30 September 2019).

[67] According to recital 226 of THE RESOLUTION "It should be noted that, notwithstanding the request made through OFFICIAL LETTER 261, ZEST did not send a list of names of potential clients to whom it addressed the emails on 8, 9, 15, 22 and 30 July and 6 August 2019, containing the offers of subscription certificates, but only indicated, in Annex 6 of the brief sent to the SMV on 27 January 2020, that it addressed 144 recipients on 8, 9, 15, 22 and 30 July 2019 and 143 recipients on 6 August 2019 whose content was a private offer".

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"

In this regard, according to the information provided by the appellant, in the period from May to August 2019, Zest invited 103 persons to subscribe to participation certificates of the ZBL Fund. Of these, 79 were potential clients who did not subscribe to the aforementioned certificates, while the remaining 24 persons became participants of the ZBL Fund. As for the ZIL Fund during said period, Zest invited 160 persons to subscribe to participation certificates. Of these, 144 were potential clients who never subscribed to the aforementioned certificates, while the remaining 16 persons became participants of the ZIL Fund.

Therefore, it is clearly established that with respect to the participation certificates of the ZBL Fund an invitation was made to 103 persons and with respect to the ZIL Fund an invitation was made to 160 persons (See details in the Annex of this Resolution).

Now, regarding the fact that the statistical behavior of the dates indicated by the SMV in its analysis is not necessarily reflected in the emails of the month of May, it is not logical or valid to attribute that 144 emails were sent on all occasions only because it is repeated in five events. As observed in the previous paragraphs, the SMV is not based on a "statistical behavior", but rather the analysis carried out in THE RESOLUTION is based on the information provided by Zest in the preliminary inquiry stage, in Annexes 5, 6 and 7 of the brief sent on 27 January 2020 and there is no other information in the file that would lead us to disprove the conclusions reached based on said information.

In reference to the fact that the SASP alleges in recital 151 of THE RESOLUTION that on the one hand the information provided by Zest is "unequivocal" and on the other, questions its veracity, it is observed that what is considered unequivocal is to whom it sent the offers of securities and when this occurred, while the questioning occurred because Zest states that the emails were sent to another group of persons, without supporting what was stated with the respective evidence. It is important to mention that from the review of the file we have not found reasons to rebut the calculation of the number of guests (103 and 160 respectively) to participate in the ZBL and ZIL Funds.

Regarding the argument that the SASP has outlined a theory lacking logic built on assumptions that consist of factoring its years of operation by: i) the number of routine meetings held, ii) the number of its workers, iii) the number of its external sales advisors and iv) the number of electronic messages that appear on its LinkedIn page, to reach the conviction that they have sent nearly 25,000 investment invitations. The foregoing is a comment to illustrate the operation of Zest, however, it does not merit further pronouncement since it is not the object for which Zest has been sanctioned and as the company rightly points out, in recitals 218, 219, 224 and 225 of THE RESOLUTION only the making of an invitation to 103 persons regarding the participation certificates of the ZBL Fund and the making of an invitation to 160 persons regarding the participation certificates of the ZIL Fund is imputed as an infraction.

For all the foregoing, it is not observed that the calculations of the numbers of guests in the offers of participation quotas of the ZBL and ZIL Funds are hypothetical,

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limited or approximate. Likewise, it is clear that the information and documentation used to make said calculations is that presented by Zest itself, without any alteration or modification, without the appellant having been able to explain why said information would be erroneous or should be rebutted.

On the segment of the public

a) Regarding the element segment of the public, as analyzed in literal c) of the section On the invitations of point IV.1, it is observed that the aforementioned invitations made by Zest were addressed to 103 recipients for the ZBL Fund and 160 recipients for the ZIL Fund (more than 100 persons), therefore, according to the second paragraph of subsection b) of article 6 of the Public Offering Regulation, the number of recipients of the invitations involves the public interest and it is presumed that all these recipients require the protection referred to in article 2 of the aforementioned Regulation, unless proven otherwise. Thus, the burden of proof to the contrary falls on the interested party who alleges the opposite, in this case, Zest.

Now, the appellant has provided throughout this proceeding a series of subscription contracts of the participants of the investment funds it administers, which it states contain the sworn statements of its participants. It adds that these sworn statements indicate that the referred participants are institutional investors.

In that sense, the sworn statements presented by Zest linked to the 103 recipients for the ZBL Fund and 160 recipients for the ZIL Fund have been analyzed. Thus, in the entire file a total of 29 sworn statements linked to the recipients of the ZBL Fund and 25 sworn statements linked to the recipients of the ZIL Fund have been found, therefore Zest has not sent all the statements of all the 103 and 160 recipients. From the review of the 29 and 25 sworn statements presented, the following is observed:

1) In some contracts "institutional investor" is defined (among others) as "Natural persons who have a patrimony greater than S/ 2 000,000 (two million Soles), and an investment portfolio in securities equal to or greater than S/ 1 000,000 (one million Soles)." In that sense, the monetary figures have not been updated, in accordance with the provisions of the fifth final complementary provision of the Institutional Investors Regulation, which does not allow verifying that said investors are Institutional Investors at the date of signing of the document. Institutional investors in 2019 had to have a patrimony greater than S/3 999,303 (Three million nine hundred ninety-nine thousand three hundred three soles) and an investment portfolio in securities equal to or greater than S/1 999,652 (One million nine hundred ninety-nine thousand six hundred fifty-two soles).

2) In some contracts "qualified investor" is defined as "that natural person who, although not qualifying as an Institutional Investor, has experience and knowledge in the securities market, has invested in securities and also has relevant capital in financial entities" (The underlining is ours). In this way, the "qualified investor" for

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for the purposes of the aforementioned contracts is a natural person who is not an institutional investor in accordance with Peruvian regulations.

There are some contracts in which the sworn statement model, which is part of them, the investors declared "1. Qualify as Institutional Investor/Qualified Investor". In that sense, in the sworn declaration it is not clear whether the natural person declares to be an institutional investor or a non-institutional investor, (what Zest calls a qualified investor). Therefore, from the aforementioned sworn declarations, the quality declared by the investors cannot be concluded and thus there are no elements to qualify the signing investor as an institutional investor.

3) Based on the same definitions mentioned in the previous numeral, there are other contracts in which the model of the sworn declaration states the following:

"1. Qualify as (understanding and knowing its scope):

Mark (x)	Mark (x)
X Qualified Investor	X Institutional Investor

It is observed that the investors marked the option of being both "qualified investor" (investor that is not institutional according to the definition of the subscription contracts) and the option of being an institutional investor. Therefore, with these sworn declarations the signing investor cannot be qualified as an institutional investor.

Taking into account what is indicated in numerals 1), 2) and 3) above, in the Annex of this resolution the lists of all the invitees (potential clients and participants) to acquire participation quotas of the ZBL and ZIL Funds during the period May to August 2019 are shown. Next to said list, two columns are established: one where it is indicated who has sworn declarations and another column where it is indicated if said sworn declarations have any of the observations mentioned above in numerals 1), 2) and 3).

The aforementioned analysis is detailed in the Annex of this Resolution, where it has been determined that, according to the formats presented by Zest to substantiate the quality of institutional investor:

• In the case of the ZBL Fund, only 19 sworn declarations comply with the current regulations to accredit the quality of Institutional Investor. Additionally, it must be indicated that of these 19 declarations: 18 do not have signatures, and 19 do not have the complete names; however, they are being considered to comply with the regulations, to the extent that these, according to what is indicated in the Contract, are part of it and this is signed and has the complete name of the signer.

• In the case of the ZIL Fund only 11 sworn declarations comply with the current regulations to accredit the quality of Institutional Investor. Additionally, it must be indicated that of these 11 declarations: 11 do not have signatures and 10 do not have the complete names however they are being considered to comply with the regulations, to the extent that this, according to

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

to what is indicated in the Contract, they are part of it and this is signed and has the complete name of the signer.

b) The appellant maintains that institutional investors should be excluded from the counting of the number of recipients, given that they do not require protection, in accordance with the legal presumption of "public segment" of subsection d) of article 6 of the Public Offering Regulation.

Regarding the possibility of excluding institutional investors from the counting of the number of recipients, it must be noted that subsection d) of article 6 of the Public Offering Regulation, when it mentions that for purposes of qualification as public segment it is considered that "a set of recipients made up of a number equal to or greater than one hundred (100) persons involves the public interest, and it is presumed, unless proven otherwise, that said persons require the protection...".

It is observed that the norm speaks in a general manner of recipients, without making reference to the conditions that these may have (be institutional investors or not), so a distinction cannot be made where the norm does not make it. Consequently, it is not appropriate to make the discount mentioned by Zest, since the total number of recipients of the invitations were 103 and 160 persons for the ZBL Fund and the ZIL Fund respectively. This is without prejudice to the observations to the sworn declarations presented contained in the Annex of this Resolution.

c) Zest points out that if it were accepted that the numerical legal presumption of "public segment" established in subsection d) of article 6 of the Public Offering Regulation is relative, since it can be less than 100 (one hundred); then, the State through the SMV (interpreting extensively its powers, which is prohibited) could intervene in each and every one of the private relationships, this being unconstitutional. Regarding the "massiveness" of the securities, for Zest it is not in discussion what the characteristics of the securities are, but rather that a public offering has not been configured due to lacking the public segment element, being contrary to predictability and legality.

In the first place, as already indicated in literal b) of numeral III.1, the numerical legal presumption of "public segment" is relative. Second, it must be remembered that in the event that the SMV intervenes in an offer directed to fewer than 100 persons, it would not be extensively interpreting its powers, in accordance with the cited rules, law read together with regulation, if there is a public interest to protect despite the recipients of the offer being fewer than 100, the SMV as the entity responsible for the control and supervision of securities market regulations such as the LMV, has the prerogative to intervene, and in that case, of course, that public interest to be protected must be proven, a requirement that would not be enforceable in the case where the universe of recipients is a number equal to or greater than 100. Finally, although "massiveness" is a characteristic of securities, it is also a criterion to indicate when we are facing a public offer of securities.

d) Zest indicates that the ZBL Fund has 24 investors while the ZIL Fund has 16 investors, therefore no public interest is identified in these funds. It adds that the SMV is erroneously analyzing the number of invitees (without

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"

paying attention to their status as institutional investors) and not to the final number of investors, and also indicates that these persons do not need protection. Finally, it has not been evidenced that being the number fewer than 100 persons it is a case involving public interest.

As already detailed in subsection c) of the section On the invitations of point IV.1, the invitations of the ZBL and ZIL Funds were made to more than 100 persons (103 for ZBL and 160 for ZIL), demonstrating that the aforementioned threshold has been reached. Likewise, as already mentioned in subsection b) of point III.1, to count the number of 100 recipients established in article 6 of the Public Offer Regulation, all recipients of the invitation of securities must be considered, regardless of their status as institutional or non-institutional investor.

e) Taking into account subsection a) of article 5 of the LMV, Zest points out that it regulates on the basis of identifying the institutional investor as one who does not require protection, therefore in its view it cannot be held that the qualification of the recipient investor in the invitation does not matter.

In response, it should be noted first that to count the number of 100 or more recipients for the purpose of qualifying under the element "segment of the public" established in the second paragraph of numeral d) of article 6 of the Regulation of the Public Offer Regulation, all recipients of the securities must be considered. The aforementioned rule expressly speaks of recipients, without making a distinction between institutional and non-institutional investors for the case of counting the number of recipients. Likewise, the same rule states that if the recipients are equal to or greater than 100, there is public interest and it is presumed (unless proven otherwise) that such recipients require protection. In that line, if in addition to that, the other elements of the public offer are met, we are facing a public offer of securities, which occurs in the present case.

On the other hand, subsection a) of article 5 of the LMV establishes another normative assumption, which is a safe harbor, under which an offer directed exclusively to institutional investors will be considered a private offer. As observed in subsection c) of the section On the invitations of point IV.1, Zest, in relation to the offers of the ZBL and ZIL Funds, has not proven what it alleges, that is, that the offers were directed exclusively to institutional investors, therefore this point is rejected.

On the Public and Private Offer

a) Regarding that the non-compliance with the regulations applicable to public offers of securities has not been proven, presuming an infraction and violating the principle of presumption of lawfulness.

According to article 4 of the LMV, read together with article 6 of the Public Offer Regulation, the public offer of securities is the adequately disseminated invitation directed to the general public or to a segment thereof to carry out any legal act related to the placement, acquisition or disposal of securities. In that sense, the public offer of

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"

securities consists of four elements to be configured as such, which are observed in the present case and in THE RESOLUTION:

• It is an Invitation

As analyzed in subsection c) of the section On the invitations, of point IV.1, it has been verified that Zest made invitations directed to 103 recipients to subscribe the participation certificates of the ZBL Fund and invitations directed to 160 recipients to subscribe the participation certificates of the ZIL Fund. The invitation element being fulfilled.

• Adequately disseminated

It is observed that the 103 and 160 invitations to subscribe the participation certificates of the ZBL and ZIL Funds, respectively, were made through emails and/or in-person meetings, in accordance with the information provided and declared by Zest.66 Thus, it is determined that the invitations were adequately disseminated because they were directed to their recipients or potential clients, through meetings and/or emails, which are suitable means of communication to make known the content of the offer.

• Directed to the general public or a segment thereof

According to the analysis in subsection (a) of the section On public segment, of point IV.1 and the Annex of this Resolution, as the aforementioned invitations exceed 100 recipients, in accordance with the second paragraph of subsection (b) of article 6 of the Public Offering Regulation, the number of recipients of the invitations involves the public interest and it is presumed that all these recipients require the protection referred to in article 2 of the aforementioned Regulation, unless proven otherwise (which has not been presented). Thus, the element of the public segment is met.

• It concerns a legal act related to the placement or disposal of securities.

The invitation concerned the legal act related to the placement or disposal of securities, since the invitation was to subscribe participation certificates of the ZBL and ZIL Funds.

In accordance with the foregoing, it is observed that THE RESOLUTION took into account these elements to determine that two public offerings of securities were configured with respect to the invitations of the ZBL and ZIL Funds, which were not registered in the RPMV as required by the regulations. In this sense, the breach of the regulations applicable to public offerings has been proven based on reliable evidence provided by Zest, so the infringement is not presumed nor is the principle of presumption of lawfulness violated, nor would there be a break in the causal link.

[66] Taking into account that Zest indicated that "the process of placing the participation quotas of our investment funds (...) is carried out, mainly, through in-person meetings with each of the potential investors, individually (...)".

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"

b) The appellant states that according to article 5 of the LMV, the offering of securities not considered a public offering is private, so it cannot be argued that only an offering that falls within the assumption of subsection (a) of said article is indisputably private. Likewise, it states that since the element "public segment" is lacking (as all its participants are institutional investors), the PAS has violated the "principle of causality" and broken the "causal link". It adds that liability must fall on whoever carries out the omissive or active conduct constituting the sanctionable infringement, in accordance with the principle of causality.

As already analyzed in the previous subsection, Zest made two public offerings of securities with respect to the participation quotas of the ZBL and ZIL Funds, by complying with all the elements required by the regulations to be considered public offerings, among them, being directed to a segment of the public (which has also been corroborated in the section On public segment of point IV.1).

On the other hand, Zest is the one that has argued that it made a private offering directed exclusively to institutional investors in accordance with the provisions of subsection (a) of article 5 of the LMV, without the respective evidence. Additionally, no evidence is observed in this case that would allow establishing that the offerings were directed exclusively to institutional investors, even more so when it has been determined that Zest entered into contracts with investors that have not accredited their status as institutional. [See details in subsection (a) of the section On public segment of point IV.1 and Annex No. 1 of this resolution].

Now, regarding the archiving of the charges imputed in the other funds managed by Zest (different from the ZBL and ZIL Funds), it is evident that this archiving was due to the fact that in the imputation of charges reference was made only to the invitations to those who became participants and not, as in the case of the ZBL and ZIL Funds, to the invitations to all recipients, (including the potential clients to whom the emails sent between May and August 2019 were directed), so the charges were archived.⁶⁹

For the foregoing, the principle of causality has not been violated nor has the causal link indicated by Zest been broken, as the element of the public segment is present. Furthermore, the conduct constituting the sanctionable infringement falls on Zest's behavior.

c) Based on subsection (b) of article 5 of the LMV and THE RESOLUTION, Zest states that the commission of the public offering would be due to the fact that the nominal or placement value was not greater than the amount of S/ 250,000 (updated to 2019 is S/ 499,908), with its participants having lower amounts. It argues that the SASP is aware that the

[69] Considerando 255 of LA RESOLUCIÓN: "On this matter, whereas the imputation of charges referred solely to the participants who actually acquired the participation certificates of the other funds managed by ZEST and not to all the recipients of the offers of said certificates, regardless of whether such offer recipients actually acquired or not the offered securities, ZEST has proven that all the participants referred to in the charge document have submitted a sworn statement indicating that they qualify as institutional investors. As previously stated, for an offer of securities to qualify as a private offer, it must be proven that all recipients of the offer qualify as institutional investors, regardless of whether they ultimately acquired or not the securities subject to the offer; however, since the charge document has limited the imputation solely to the participants who actually acquired the offered securities, it is not possible to declare in this administrative sanctioning proceeding the commission of an infraction for the offer of securities of the other funds managed by ZEST".

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investment of the participants of Zest equals or exceeds the amount of S/499,908.00 according to the information provided.

In this regard, it should be noted that LA RESOLUCIÓN considers that the offers of the ZBL and ZIL Funds are public offers because they comply with all the elements required by the regulations to be considered as such and not due to the nominal value of the participation quotas of these investment funds (USD 100.00) nor to the minimum investment amount of USD 10,000.00.

On the other hand, subsection a) of article 5 of the LMV provides that it will be a private offer (safe harbor) if the nominal value or the lowest unit placement value thereof is equal to or greater than S/. 250 000,00 (amount updated to 2019 is S/ 499,908.00). Thus, the cited norm refers to the nominal value or unit placement value and not to the total invested. In that sense, regardless of whether the total investment amount of the participants in operations carried out through Zest is equal to or greater than S/ 499,908.00, what is relevant for applying the safe harbor is that the nominal value or unit placement value is equal to or greater than S/. 250 000,00 (amount updated to 2019 is S/ 499,908.00).

d) Zest argues that subsection a) of article 5 of the LMV establishes that even if an offer has all the characteristics of a public offer, if it is directed only to institutional investors, it will be considered a private offer. Along these lines, it adds that the ratio legis of this norm is that the offered securities remain within the sphere of institutional investors. It concludes by arguing that if an offer is initially directed to recipients who are not institutional investors, but such offers only materialize in Investment Contracts subscribed solely by institutional investors, the objective and purpose of the rule would be fulfilled.

In this regard, when analyzing whether an offer is public or private, it must first be determined whether Article 4 of the LMV and its implementing regulations apply; if it does not have all the elements of a public offer, it is considered a private offer, as set forth in the first paragraph of Article 5 of the LMV, which is not the case here.

Additionally, Article 5 of the LMV establishes safe harbors, which are an exception to public market rules, under which there is unquestionably a private offer. Thus, subsection a) of Article 5 of the LMV establishes a safe harbor, under which it is unquestionably private: "The offer directed exclusively to institutional investors."

In this way, it is understood that the logic of subsection a) of Article 5 is that from the moment the invitation is made, no investor requiring the protection of securities market regulations is involved, in order to foster the proper development and integrity of the market, creating confidence among its participants and not affecting their expectations, and in general, seeking to prevent investors requiring protection from participating. Along the same lines, the rule establishes that such securities may only be transferred to institutional investors. For all the foregoing, the interpretation that Zest gives on this aspect cannot be admitted.

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However, even if Zest's position were assumed, it must be recalled that, as set forth in subsection a) of the section On segment of the public of point IV.1 and the Annex to this Resolution, not all acquirers of the quotas of Fondos ZBL and ZIL are institutional investors. On this matter, not all transactions or purchases were materialized with investors that prove to be institutional investors.

e) Zest states that it is sanctioned for carrying out public offers when it has carried out private offers, without proven facts and based on presumptions. It adds that it has carried out its operations under the denomination, requirements, procedures and formalities typical of a private offering; nevertheless, it is charged with an infraction that corresponds to public offerings, distorting its conduct and will, the application of the infraction being unlawful. It states that its actions and the contracts perfected exclusively with institutional investors are evidence of a private offering. Finally, it argues that what should be judged is whether, in the case of a private offering, the administered party has violated any rule corresponding to private offerings, in which case the principle of responsiveness should be taken into account.

As observed in letter a) of this section, the offerings of the ZBL and ZIL Funds comply with all the elements of public offerings of securities in accordance with the regulations, so those offerings are public, and furthermore they were not registered in the RPMV, this being a punishable fact. In that sense, the SMV has determined that Zest has carried out two public offerings of securities based on proven facts, so the burden of proof is not reversed. Now, once the existence of two public offerings of securities has been determined, it will be up to the administered party to show why the SMV's analysis could be wrong.

It is important to specify that the facts are not being distorted or a different fact being charged as stated, but rather only the set of acts carried out by Zest is being classified in accordance with the securities market regulations, where it is observed that all the elements that constitute a public offering of securities were met.

Despite the foregoing, Zest alleges that it is in a private offering, specifically, in a safe harbor regarding the fact that the offering was directed exclusively to institutional investors. However, it has not proven its allegations, that is, that the recipients of its offerings are exclusively institutional investors as seen in letter a) of the section On segment of the public of point IV.1 and detailed in the Annex of this resolution, even more so when it has been proven that some participants of the ZBL and ZIL Funds do not qualify as institutional investors.

On the other hand, the administered party's statement that its will was to make a private offering is irrelevant for purposes of determining whether we are before a public offering, since the character of a public offering is determined based on the regulations and the nature of the financial operation under analysis, rather than on the will of the administered party.

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For all the foregoing, it is not appropriate to judge whether it is a private offering and whether any regulation corresponding to private offerings was violated. Taking this into account, it is clear that there is infringing behavior on the part of Zest, since it carried out public offerings of securities without having previously registered the participation certificates of the ZBL and ZIL Funds in the RPMV, a case that is typified in Annex III, letter A), numeral 1, subparagraph 1.1 of the Sanctions Regulation as an infraction of a very serious nature of the participants in a primary public offering.70

Finally, regarding the application of the principle of responsiveness, in Peruvian legislation there is no express reference to that concept. According to doctrine, responsive regulation is that approach under which persuasive or non-punitive measures are initially applied until reaching sanctioning measures,71 a scheme that is not contemplated in the current regulations applicable to this case, given the nature of the breach and the protected legal interest. However, an aspect of responsive regulation can be recognized through certain principles that are part of the responsive approach, as is the case of the principles of reasonableness and proportionality,72 whose compliance is analyzed in the section On the principle of reasonableness and proportionality of point IV.2.

f) Zest states that it has not committed any infraction, but rather the complainant has distorted the facts attributed to the administered party's conduct, charging it with the formulation of a "covert public offering". It adds that the complaint is manifestly malicious and false, because if it were true, it would have resulted in the corresponding transactions with non-institutional clients, which did not happen. Nevertheless, it states that the Administration has been led into error by said complaint, classifying Zest's conduct as a "public offering", erroneously applying a sanction to it.

Regarding a distortion of the facts, the complaint only gave indications for preliminary inquiries to be initiated, and rather it is with the documentation provided by Zest that it is determined that the offerings of the ZBL and ZIL Funds qualify as public offerings. Additionally, we must reiterate that, as has been

[70] Sanctions Regulation
"Annex III - Of the Infractions related to the OPP, OPV and OPI in which the Participants may incur A) They are infractions of the Participants in an OPP, OPV or OPI, as applicable:
1.- Very Serious
1.1 Carrying out a public offering without having previously registered the securities in the Registry or having registered the corresponding prospectus, except in the cases of exception established in the regulations"

[71] Ochoa, Francisco (2018) Alternatives to traditional regulation: beyond command and control (Chapter IV), in: Sumar, O. (Ed.) Beyond the Economic Analysis of Regulation – Regulatory Improvement and Multidisciplinary Approaches (pp. 99-136). Lima: Themis. Page 116.

[72] Ochoa, Francisco (2021). Responsive approach in administrative oversight: Theory, legal framework and practice. In: Espinoza Saldaña, E. (Ed.), Studies on Administrative Law, Vol. 1, 20 years of the General Administrative Procedure Act (Tera Ed., pp. 535-555). Civil Association Law and Society. Pages 541 to 543. "Although our legislation does not expressly refer to the concept of RR, there are provisions and principles that recognize the same values that are part of the responsive approach and, therefore, make its application possible (and mandatory)." In the case of proportionality, the author states: "One of these principles is the principle of proportionality, recognized in article 200 of the Political Constitution of the State and developed by various rulings of the Constitutional Court". In the case of reasonableness, the author points out: "The principle of proportionality is also recognized in the LPAG, specifically, in the Preliminary Title, under the name of the principle of reasonableness. According to this principle, when administrative authorities adopt decisions that involve the limitation of rights of the administered (creation of obligations through corrective measures, qualification of infringing conduct, imposition of fines, among others), they must ensure proportionality between the means and ends used, as well as choose the strictly necessary measure for the end. In this sense, reasonableness in administrative matters is not limited to a simple gradation of the amount of the fine —as is often thought—, but to any context in which the authority has the possibility of adopting a decision that may limit or restrict rights."

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determined in the present case, [See literal a) of the section On the target segment, of point IV.1 and Annex of the present resolution] some participants of the ZBL and ZIL Funds do not qualify as institutional investors. For all the foregoing, Zest's arguments on this point are rejected.

g) Zest carries out a hypothetical exercise arguing that, if it had erred in its conduct by not directing its emails "exclusively" to potential institutional clients, despite the fact that it did carry out, exclusively, transactions with institutional clients, then, has it committed a sanctionable infringement due to that error? It responds that it does not consider it so, because said error has not affected the ratio legis of article 5 of the LMV, which is that the securities are not destined for non-institutional third parties, a purpose of the rule that has been fulfilled.

In this regard, it should be mentioned that the hypothetical exercise may have different variants, but we can point out that if someone carries out a public offering of securities without registration in the RPMV, such conduct is sanctionable regardless of whether it made an error by not directing its emails "exclusively" to potential institutional clients. As has been answered in literal d) of this section, the logic of subsection a) of article 5 is that from the moment the invitation is made, no investor requiring the protection of the securities market regulations is involved. Finally, as already determined, some participants of the ZBL and ZIL Funds do not qualify as institutional investors.

On the Sworn Declarations

a) Based on the regulations, Zest maintains that the verifications carried out must be documented at least with the sworn declaration signed by the institutional investors, in which they state: i) knowledge of the scope of said qualification and ii) that they have such condition. Therefore, it acted diligently in seeking to obtain the sworn declarations of the natural persons to whom it directed its private offering.

In this regard, Zest has not accredited the sworn declarations of all the recipients of the public offerings made for the ZBL Fund and ZIL Fund, so it cannot be determined whether all of them were institutional investors. Likewise, it cannot be pointed out either that Zest has acted diligently, since even, as analyzed in literal a) of the section On the target segment, of point IV.1 and in the Annex of the present Resolution, some sworn declarations were not filled in correctly under the supervision of Zest. For all the foregoing, the appellant's arguments on this point must be rejected.

b) Zest maintains that the category of "qualified" investor is not recognized in Peruvian legislation, but that it is evident that said term refers to investors who had the condition of "institutional" and who declare to be so, consequently, only their assertion of being institutional investors should be taken into account, and such sworn declarations should not be discarded.

In this regard, the argument put forward by Zest is striking, to the extent that it recognizes that the category of "qualified" investor is not recognized in Peruvian legislation; however, as detailed in literal a) of the section

PERU
Ministry of Economy and Finance
SMV
Superintendency of the
Securities Market

"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"

Regarding the public segment, from point IV. 1 and in the Annex of this Resolution, Zest has defined the concept of “qualified investor” in the contracts where the observed sworn statements are found. Thus, Zest itself defined “qualified investor” as "that natural person who, although not qualifying as an Institutional Investor, has experience and knowledge of the securities market, has invested in securities and also has significant capital in financial institutions" (The underline is ours). In this way, the “qualified investor” for the purposes of the aforementioned contracts and sworn statements is a natural person who does not qualify as an institutional investor under Peruvian regulations.

Likewise, Zest's argument that it is evident that it refers to investors who had institutional status must be flatly dismissed, because Annex 1 of the Institutional Investors Regulations, read together with its Fifth Supplementary Final Provision, required that the natural person for the 2019 fiscal year have assets in excess of S/3’999,303 (Three million nine hundred ninety-nine thousand three hundred three soles) and also an investment portfolio equal to or greater than S/1’999,652 (One million nine hundred ninety-nine thousand six hundred fifty-two soles). However, in the contracts related to these statements and in the statements themselves, these amounts are not currently listed.

Similarly, in some of the sworn statements, the investors declared:

“1. Qualify as Institutional Investor/Qualified Investor”

While in others they declared:

“1. Qualify as (understanding and knowing their scope):

Mark (x)	Mark (x)
[X] Qualified Investor	[X] Institutional Investor

It is observed that in both options the investors declared to be both qualified investors (investor who is not institutional according to the definition of the subscription contracts) and institutional investors. Therefore, Zest's argument regarding the evident fact that the term “qualified investor” refers to investors who had “institutional” status and declared as such must be rejected, all the more so since it is Zest itself that has defined the term “qualified investor” in some of its contracts as one who is not an institutional investor. In this way, these sworn statements do not allow demonstrating that those investors had the status of institutional investor under the regulations.

c) Zest argues that the fact that the parties signed the sworn statements accepting that they know the risks of their investments evidences that they did not need protection from the SMV.

PERU
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"

In this regard, the aforementioned statement made by Zest cannot be shared; in any case, the fact that a person has signed a sworn statement indicating that they are both a qualified investor (an investor who is not institutional, according to the definition in Zest's subscription contract) and an institutional investor (that is, a highly specialized investor) is a clear indication that they do not have knowledge of the scope of the institutional investor qualification and evidences that they do not have such status, and consequently, requires protection.

d) Zest states that the credibility of the sworn statements cannot be denied for formal issues, without taking into account that the Regulation of Institutional Investors does not establish formalities for the preparation and/or issuance of said statements, which only provides that a sworn statement be signed indicating that one knows and has the status of institutional investor.

As seen in subsection (a) of the section On the public segment of point IV.1 and in the Annex of this resolution, it has been determined that a group of sworn statements do not prove that the investor is institutional by having declared to be both an institutional and qualified investor (which is defined by Zest in its subscription contracts as that investor who is not institutional), as well as by defining the institutional investor, in the case of natural persons, as one who has assets exceeding S/ 2'000,000 and an investment portfolio equal to or greater than S/ 1'000,000; when the updated amounts should have been updated, which for the year 2019 were S/3'999,303 and S/1'999,652, respectively. This is not a matter of form but of substance, as there are two opposing statements, and/or that do not respond to the amounts required in 2019 to be considered an institutional investor. Furthermore, the fact that they have checked both boxes (being institutional and being qualified) is a clear indication that the investor does not know the definition of institutional investor in Peruvian regulations and evidences that they do not have such status.

e) The appellant indicates that the lack of diligence on the part of the investors in filling out documents is not a situation that can qualify or disqualify an investor as "institutional", as there is no legal provision that attributes a legal consequence (disregard of an investor's institutional status) for the fact that a sworn statement lacks any formality that has also not been established in the current regulations.

In this regard, the investors are highly specialized, and as correctly pointed out in the first paragraph of Article 3 of the Institutional Investors Regulation, they stand out for adequately understanding, managing and evaluating the risks associated with their investment decisions, among them, obviously, the risks linked to signing a subscription agreement for shares of investment funds or a sworn statement indicating that they are institutional investors.73 Therefore, the fact of not having exercised the minimum diligence and care due when filling out the sworn statements is not consistent with the status of an institutional investor. In particular, it should be noted that some contracts define the

[73] Article 3.- Institutional Investors
Institutional investors are persons who, by their nature, characteristics or knowledge, adequately understand, manage and evaluate the risks associated with their investment decisions. Institutional investors are the natural and legal persons indicated in Annex 1 INSTITUTIONAL INVESTORS.

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

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

qualified investor and institutional investor, in accordance with what is seen in the Annex to this resolution; and those definitions are the ones that apply in the sworn statements that are part of said contracts. In that sense, as Zest has rightly acknowledged, the definition it includes of qualified investor is not applicable in our legislation; therefore, based on good faith, this fact would denote, as of the date of preparation of the contracts, at least a lack of diligence on the part of Zest in incorporating said definition into the contract. On the other hand, a statement in which the investor chooses both conditions shows that the person is not an institutional investor, since, given the qualities that an institutional investor holds, they would know that the figure of qualified investor does not exist in Peruvian legislation; without prejudice to the fact that, under the definitions given by Zest, they could not have both qualities. Furthermore, they are also unaware of the amounts updated to 2019 to qualify as an institutional investor.

f) Zest points out that the SMV incorrectly interprets Annex 1 of the Institutional Investors Regulation, since it does not require the sworn statements of all invitees, but only of the acquirers. Based on the last two paragraphs of said Annex74, it states that a single standard of proof has been established for carrying out due diligence for the identification of institutional investors through obtaining sworn statements, which, in the case where the placement is carried out by the issuer, must be obtained from the institutional investors that have participated in the placement of the securities, that is, only from those that acquired the securities subject to the placement, admitting a different standard for verifying the holding of the status of institutional investor during the invitation stage, consisting of having carried out a verification of financial solvency and knowledge, but not documenting it through obtaining sworn statements. Finally, it states that it is not in dispute that Zest obtained the sworn statements of all the institutional investors that subscribed to the shares of the ZBL and ZIL Funds.

On this aspect, it should be noted first that the purpose of the Institutional Investors Regulation is to regulate the exceptional regime of primary public offerings directed exclusively to institutional investors, as stated in its Article 1.75. Taking this into account, on the one hand, this regulation indicates when one is dealing with an institutional investor and the verification of such status; and on the other hand, it indicates the rules that must be followed when carrying out a primary public offering directed exclusively to institutional investors.

[74] "(...) With respect to the institutional investors detailed in numerals 4, 5 and 6 of this Annex, the verification carried out must be documented at least with the sworn statement signed by said investors, in which they state: (i) knowledge of the scope of said qualification; and (ii) that they have such status. The intermediation agents acting as placement agents must diligently implement and apply procedures so that the investors participating in this market are exclusively institutional investors. In the event that the issuers carry out the placement of securities, they must ensure that they have the sworn statements referred to in the preceding paragraph. For this purpose, as applicable, they must keep an internal record of the institutional investors participating in the placement of said securities." (The underlining is Zest's).

[75] Article 1.- PURPOSE
This Regulation establishes the general provisions that define and apply to the exceptional regime of primary public offerings directed exclusively to institutional investors, in accordance with the provisions of the Securities Market Law, Legislative Decree No. 861 and Article 1 of the Securities Market Promotion Law, Law No. 30050, hereinafter the Institutional Investors Market."

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

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

Second, it is observed that the last paragraph of Annex 1 of the Institutional Investors Regulation does not define what is understood as an institutional investor, but rather sets forth rules that apply when a primary public offering is made exclusively to institutional investors. Thus, when the aforementioned last paragraph states:

"Brokerage agents acting as placement agents must diligently implement and apply procedures so that the investors participating in this market are exclusively institutional investors. In the event that issuers carry out the placement of securities, they must ensure they have the sworn statements referred to in the preceding paragraph." (Underlining is ours)

It must be understood that the reference to "this market" refers to the market regulated in the Institutional Investors Regulation, that is, the market for primary public offerings aimed exclusively at institutional investors. Thus, when the rule states "In the event that issuers carry out the placement of securities, (...)," this assumption refers to whether an issuer in the primary public offering market aimed exclusively at institutional investors carries out a placement in this market and must ensure it has the respective sworn statements.

Now, an issuer in the primary public offering market aimed exclusively at institutional investors is understood as the one defined in accordance with Article 4 of the Institutional Investors Regulation⁷⁶, that is, the issuer that makes a public offering of securities to such investors and whose offering securities are also registered in the RPMV or in one of the foreign registries indicated by the Institutional Investors Regulation.⁷⁷

[76] "Article 4.- Issuers [In force at the date the facts were committed]
4.1. For the purposes of this Regulation, issuers are considered to be legal entities, national or foreign, that make public offerings of securities. Foreign issuers wishing to make a public offering in the national territory must observe the provisions of numerals 4.2. and 4.3. below. 4.2. The securities issued by the following foreign issuers shall be registered in the Public Registry of the Securities Market:
4.2.1. Governments, central banks or equivalent organisms. 4.2.2. Legal entities, including those of public law of a financial nature, or multilateral organisms, whose existence emanates from international agreements in which Peru participates. (...)"
(*) Article modified by Article 1 of Superintendency Resolution No. 128-2020-SMV-02, published on 26 December 2020, the text of which is as follows:
"Article 4.- Issuers [Current rule]
4.1 For the purposes of this Regulation, national securities issuers are considered to be legal entities, national or foreign, that make public offerings of securities included in numeral 2.1.
4.2 For the purposes of this Regulation, foreign securities issuers are considered to be those that make public offerings of securities included in numeral 2.2, provided they are:
4.2.1 Governments, central banks or equivalent organisms. 4.2.2. Legal entities, including those of public law of a financial nature, or multilateral organisms or their financial entities, whose existence emanates from international agreements in which Peru participates. 4.2.3 Autonomous patrimonies. (...)"

[77] "Article 2.- Scope [In force at the date the facts were committed]

"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"

Taking into account the foregoing, in the present case the last paragraph of the aforementioned Annex 1, which refers to primary public offerings aimed exclusively at investors, is not applicable, since: i) as analyzed, the offerings made by Zest were not aimed exclusively at institutional investors; ii) it is not observed that the securities of its offerings are registered in the RPMV or are registered in one of the foreign registries indicated by the Institutional Investors Regulation; and iii) they have not been made by an issuer as defined in Article 4 of the Institutional Investors Regulation.

Finally, it must be indicated that Zest has not submitted the sworn statements of all those invited to acquire the securities, the shares of the ZBL and ZIL Funds, as detailed in letter a) of the section On segment of the public of point IV.1 and in the Annex of this resolution. For all the foregoing, it is clearly established that Zest did not act diligently in seeking to obtain the sworn statements of the natural persons to whom it directed its private offering.

On the Information

a) Zest indicates that the SMV has not verified whether the information made available to the invited persons complied with the requirements of being truthful, sufficient, timely and clear, which in its opinion was relevant in order to understand the positive and negative implications of the proposed transactions, and whether it allowed them to make free and informed decisions. It adds that it has delivered the emails where the information made available to the recipients can be seen, which has not been analyzed at any time in this proceeding.

Regarding what Zest alleges, it must be noted that all the documentation in the file has been reviewed and analyzed; among these: i) the email templates sent by Zest to the investors; i) the Reports attached to said emails; iii)

The public offerings of securities made in national territory and aimed exclusively at institutional investors, which are within the scope of this Regulation, are the following:

2.1. Those registered with the SMV.

2.2. Those registered with the U.S. Securities and Exchange Commission - SEC and the SMV, as well as those registered with the SMV and made under Rule 144A and/or Regulation S of the U.S. Securities and Exchange Commission - SEC, issued under the U.S. Securities Act of 1933.

2.3. Those registered or recognized by the Superintendencia Financiera de Colombia, the Superintendencia de Valores y Seguros de Chile and any other authority with which the SMV signs a memorandum of understanding within the framework of the Mercado Integrado Latinoamericano (MILA). (...)

(*) Article amended by Article 1 of Superintendente Resolution No. 128-2020-SMV-02, published on 28 December 2020, the text of which is as follows:

"2.- SCOPE [Current Standard]
The primary public offerings of securities made in national territory and aimed exclusively at institutional investors, which are within the scope of this Regulation, are the following:

2.1 Offers of national securities registered in the Public Registry of the Securities Market.

2.2 Offers of foreign securities that are recognized in accordance with this Regulation, as they are registered with the U.S. Securities and Exchange Commission - SEC, as well as those made under Rule 144A and/or Regulation S of the U.S. Securities and Exchange Commission - SEC, issued under the U.S. Securities Act of 1933. The securities subject to the offers that have been recognized in accordance with this numeral shall be automatically registered in the section of the Public Registry of the Securities Market called "Institutional Investors Market", with the provisions of article 21 of the Regulation being applicable. (...)" (The underline is ours).

"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"

the subscription contracts; iv) the sworn statements (annex of the aforementioned contracts); and v) the participation regulations of the ZBL and ZIL Funds.

Now, in the event that someone makes a public offering of securities without registering it in the RPMV but sends the same information required by the regulations to investors, is that action illegal? We consider that it is, because otherwise, the regulation of the securities market would be irrelevant; it would be enough to invoke that the same relevant information has been sent in order not to go through the regulatory control of the SMV; and this control would have to be carried out by the SMV subsequently, with possible affected parties. In that sense, since one of the purposes of the SMV is the protection of investors, it carries out said control beforehand and after this, the registration of the Fund in the RPMV is arranged and the information supporting it is disseminated.

Likewise, it must be taken into account that the registration of a security in the RPMV implies a series of obligations on the part of the issuer, both of continuous delivery of information and of assuming a series of prudential obligations that are found in the securities market regulations (LMV, Investment Fund Law, Investment Fund Regulation, among others).

b) Zest indicates that there is no investor who has stated that they have not received sufficient information to freely adopt their investment decision and, even less, that they have been harmed or that they have filed any claim, the imposed infraction not being applicable.

The aforementioned argument cannot be admitted because, regardless of whether any investor has stated that they have received sufficient information to freely adopt their investment decision and/or that they have stated that they have not been harmed (which does not imply that this has not happened), what has been analyzed is whether public offerings of securities have been made without the necessary registration in the RPMV. The foregoing implies that all the securities market regulations that protect the investor were not applied (LMV, Investment Fund Law, Investment Fund Regulation, among others).

c) Based on the purpose⁷⁸ established in article 2 of the Public Offering Regulation, the appellant argues that an offer will be public and will need regulation, depending on whether in the invitation to invest, there are conditions for investors to be able to adopt free and informed decisions regarding the acquisition of securities subject to possible investment. Thus, it states that there will only be a need for protection when the purpose of that regulation has not been fulfilled.

In this regard, it should be noted at the outset that the purpose established in article 2 of the Public Offering Regulation is enshrined in the first paragraph

[78] "Article 2.- Purpose and interpretive principles The purpose of this Regulation is the protection of investors in the public securities market through the disclosure, in a truthful, sufficient, timely and clear manner, of all information that is relevant in order to understand the positive and negative implications of the transactions proposed to them, so that they are in a position to adopt free and informed decisions regarding them, and that such disclosure is made in the most efficient manner. Public market is understood as that in which transactions with securities are carried out based on their public offering. (...)"

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"

of numeral d) of article 6 of the aforementioned regulation.79 Next, the same numeral d) in its second paragraph has established that "Without prejudice to the provisions of the preceding paragraph, for purposes of qualification as a segment of the public, a group of recipients consisting of a number equal to or greater than one hundred (100) persons is considered to involve the public interest, and it is presumed, unless proven otherwise, that said persons require the aforementioned protection."

In that sense, it is clearly established that numeral d) of article 6 of the Public Offering Regulation takes into account the purpose of article 2 of said regulation, and that for purposes of qualifying a "segment of the public" in a number equal to or greater than 100 recipients, the need for protection of all of them is presumed. Consequently, in said scenario the protection of the recipients is presumed, and it corresponds to the person making the invitations to invest to prove otherwise.

Finally, the foregoing refers only to the effects of the qualification of the element "segment of the public", which does not imply that the securities market regulation applies; for the latter to occur, it is necessary that all the other elements of the public offering are met, such as: invitation, adequately disseminated and relating to securities, only in said scenario, the securities market regulations shall apply.

d) Zest points out that a guideline for interpretation of all the provisions of the Public Offering Regulation is the need or not to exercise protection in a particular case, which is a reception in our regulations of the "defense for themselves" test or the offerees' ability to fend for themselves from the Ralston Purina judgment (346 U.S. 119 [1953]). It adds that the SMV did not take into account that this same requirement is contained in the definition of "segment of the public" of article 6 of the Public Offering Regulation, appearing to confuse the involvement of the public interest with the existence of a need for protection. The appellant indicates that this is an erroneous conclusion, because it would suffice that an invitation involves the number of persons previously qualified by that same norm as "sufficient to involve public interest" for us to be before an invitation directed to a segment of the public. It indicates that it is enough to provide the recipients of an invitation with all the relevant information so that they adopt a free and informed decision for said invitation to qualify as a private offering.

As indicated by literal d) of article 6 of the Public Offering Regulation, it is considered a "segment of the public" when the group of determined persons: i) require protection; and ii) their number involves public interest. The same norm

[79] Article 6.- Scope of the term "public offering" For purposes of the application of the general rule contained in Article 4, the text of Article 4 of the Law, referring to the public offering of securities, has the scope indicated below:
(…) d) Segment of the public.- A segment of the public is considered to be the group of determined or undetermined persons who, according to the circumstances, require the protection referred to in Article 2, when their number is such that it involves the public interest. It is considered that said protection is required when, in order to have the possibility of access to relevant information by said persons and/or for it to be processed by them, they encounter difficulties in adopting a free and informed decision regarding the invitation made. Without prejudice to the provisions of the preceding paragraph, for purposes of its qualification as a segment of the public, a group of recipients consisting of a number equal to or greater than one hundred (100) persons is considered to involve the public interest, and it is presumed, unless proven otherwise, that said persons require the aforementioned protection. (…)

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"

provides that when the recipients of the invitation are equal to or greater than 100, there is public interest and it is presumed that they require protection. In that sense, the aforementioned norm is, on the one hand, confirming that 100 recipients is a number that involves public interest and on the other, that it is presumed that they require protection, shifting the burden of proof regarding the non-necessity of protection of the invitees to the entity making the invitation to acquire securities. For that reason, Zest's argument on this point is rejected; finally, regarding the comments that it would suffice to send relevant information for a private offering to be configured, it should be indicated that an offering is private as long as it does not comply with all the elements of the public offering, which has not occurred in the present case.

e) Zest indicates that the above reasoning does not exceed or disrupt what is regulated in the LMV, since article 5 of the latter defines "private offering" as "not included in the previous article" and its article 4 defines public offering. It argues that the latter definition cannot be analyzed in isolation, but rather based on the rules and principles that inform the existence of state regulation for public offerings, among which the aforementioned rule of the need for protection stands out.

In response, as already noted in literal a) of the section On the Public and Private Offer of point IV.1, the invitations made by the ZBL and ZIL Funds qualify as public offers by complying with all their elements, being included in article 4 of the LMV, and the application of the aforementioned article 5 of the LMV does not proceed.

f) The appellant indicates that the SMV has interpreted the scope of the rule contained in the second paragraph of subsection d) of article 6 of the Public Offer Regulation without taking into account the provisions of article 2 of that same regulation, especially regarding the purpose of said norm.

As already mentioned above, the purpose established in article 2 of the Public Offer Regulation is enshrined in the first paragraph of literal d) of article 6 of said regulation, while its second paragraph states that without prejudice to the provisions of the first paragraph, for the purposes of qualifying a "segment of the public", a number equal to or greater than 100 persons is presumed to require the protection of all of them. Therefore, the aforementioned article 6 takes into account the provisions of article 2 of the Public Offer Regulation.

g) Zest reiterates that the second paragraph of subsection d) of article 6 of the Public Offer Regulation seeks to ensure that sufficient information is provided to the recipients of the offer, and that the number of one hundred (100) persons to which it refers is composed of persons who do not have the status of institutional investors, on the understanding that the latter, due to their knowledge and financial solvency, do not require public protection. Additionally, it states that it would not make sense to interpret that, in order to determine a possible need for public protection, persons who do not require it are counted as members of the possible segment. It adds that, discounting the number of persons who signed the sworn statements, the number of those to whom the invitation was addressed does not exceed the threshold of one hundred (100), in the case of each fund.

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"

As already referred to above, the first paragraph of subsection d) of article 6 of the Public Offer Regulation takes into account the purpose established in article 2 of the same regulation. Now, the second paragraph of subsection d) of the referred article provides that, without prejudice to the provisions of its first paragraph, for the purposes of qualifying the “segment of the public”, a group of 100 or more persons addressed by the invitation is considered, without making any differentiation between institutional or non-institutional investors.

The foregoing is so that the aforementioned threshold generates direct consequences in relation to the burden of proof. Thus, any person who makes an invitation to acquire securities that is addressed to 100 or more recipients (regardless of their status) must take into account the reversal of the burden of proof provided by the regulations and have the respective evidence.

Consequently, having evaluated all the arguments contained in this point IV.1 – Issues related to the Regulation of the Securities Market, under the provisions of article 4 of the LMV (definition of public offer) and article 6 of the Public Offer Regulation (elements of the public offer), it is concluded that it has been evidenced that in the offers made to subscribe the participation certificates of the ZBL and ZIL Funds, all the necessary elements were present to qualify said offers as public offers of securities, that is, there exists: (a) an invitation (b), which was adequately disseminated (c) addressed to a segment of the public (d), in addition to dealing with legal acts related to the placement or disposal of the securities.

Therefore, in the present case, viewed all the elements together, including Zest's final arguments, it is confirmed that two public offers of securities have been made in the offers of participation certificates of the ZBL and ZIL Funds. In that sense, the making of public offers of securities without the prior registration of the securities in the RPMV is conduct that harms transparency, investor protection, and the proper functioning of the market. In that line, as stated by THE RESOLUTION in its recital 265, making public offers without the prior registration of the securities in the RPMV contributes to increasing the perception of risk of investing in this type of financial instruments and generates incentives to make public offers under the denomination of private offers, avoiding the protection of investors.80

IV.2 Issues related to Administrative Law

On the principle of typicity

a) With regard to what was stated by Zest regarding the fact that there is no norm that has typified as a punishable infraction the fact of having sent the informative emails to potential non-institutional buyers, it must

[80] Recital 265 of THE RESOLUTION: “the making of public offers without the prior registration of the securities in the RPMV is conduct that contributes significantly to increasing the perception of risk of investing in that type of financial instruments, and also constitutes an incentive for, under the denomination of private offer, issues of securities to be structured without providing the market, through the RPMV, with all the relevant information on said issues, thus avoiding the protection of investors”.

PERÚ
Ministerio de Economía y Finanzas
SMV
Superintendencia del Mercado de Valores

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"

take into account that what is being sanctioned is having carried out public offerings of securities without having registered them in the RPMV, which has been confirmed upon complying with all the elements of the public offering, and therefore the infraction type subject to sanction was incurred. In that sense, according to what was analyzed in point V.1 on Matters related to the Regulation of the Securities Market, the invitation was addressed in the case of the ZBL and ZIL Funds to more than 100 recipients, regardless of whether these are institutional or not, is an element of the public offering; and, therefore, a different infraction type is not necessary. Consequently, it was sanctioned for "Carrying out a public offering without having previously registered the securities in the Registry or having registered the corresponding prospectus, except in the cases of exception established in the regulations", an infraction typified in Annex III, literal A), numeral 1, subparagraph 1.1 of the Sanctions Regulation, there clearly being a sanctioning norm for the action carried out by Zest. Therefore, absence of typification cannot be alleged.

Regarding what was stated by Zest, with respect to the fact that subparagraph 2.12 of numeral 2 of Annex V of the Sanctions Regulation⁶¹ is a type of infraction related to article 5 of the LMV, which confirms that the ratio legis of the latter article is that non-institutional buyers should not participate in the private offering, we must indicate that, in the present case, according to what was analyzed in point V.1 on Matters related to the Regulation of the Securities Market, it is clear that Zest has carried out two public offerings of securities, so the infraction imputed to it is applicable, consequently, it is not within the assumption of article 5 of the LMV but of article 4 of the LMV (public offering). Now, regardless of that, both norms apply from the moment the invitation is made and not from the moment the securities are acquired. In the case of article 4 of the LMV, this is done in order to generate the adequate development and integrity of the market, creating confidence in its participants and not affecting their expectations, and in general, seeking that investors who require protection do not participate.

b) Regarding the argument that this type of infraction typification is of mere non-observance and exceptional, it must be considered that an infraction of mere observance is one where a result is not required, it being sufficient that the conduct is carried out for the infraction assumption to be configured.⁶² Taking this into account, in the present case there is a result, because Zest has treated as institutional investors investors who are not, which not only affects the transparency of the market and investor protection, but also the confidence of the market and its orderly development. Likewise, in the present case the infraction type has not been applied by extension or analogy, given that as

[61] ANNEX V - On infringements in asset securitization processes and in guarantee trusts They constitute infringements by the securitization company, by others authorized to act as trustee companies in securitization processes, by the members of the technical committee and by the natural or legal persons that provide any service linked to the securitization process, as applicable: (...) 2.- Graves (...) 2.12 Participate in securitization trusts that back the issuance of privately offered securities directed to investors other than those set forth in subparagraph a) of article 5 of the LMV.

[62] Baca Oneto, Víctor Sebastián. "The principle of culpability in administrative sanctioning law, with special reference to Peruvian law", Revista digital de Derecho Administrativo, Universidad Externado de Colombia, No. 21, 2019, pp. 331-332. doi: https://doi.org/10.18601/21452946.n21.13 In which it is stated: "In relation to the first point, some legal systems (as was the case in Spanish law) recognize some infringements of mere non-observance, which would be configured by the mere ignorance of a rule, which generally imposes an obligation of a formal nature. These are infringements in which a result is not required, but rather the mere conduct is sufficient for the infringing assumption to be configured."

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"

as has been said previously, in the offers of the ZBL and ZIL Funds all the elements of a public offer are present. Therefore, Zest's conduct constitutes a sanctionable infringement, so its arguments cannot be admitted.

c) Zest highlights that the administrative procedure is governed by the "pro homine" principle which implies carrying out the interpretation and application of the legal system most favorable to the administered, together with the presumption of lawfulness, under which only when a reasonable doubt is accredited regarding the facts or the interpretation of the law that the administered has infringed (by deceit or fault) the mandatory rule committing a specific infringement typified in the law (that harms the public interest), the application of a sanction will proceed, otherwise their right to freedom would be affected. In response, it should be noted that, in the present case, we are dealing with an investment fund manager that states that its intention was to carry out private offerings; in that sense, if its intention was to conduct its business in such a specialized market, it should have taken the corresponding precautions for carrying out its activities, which has not occurred, since it has been verified that the offerings made by Zest in the ZBL and ZIL Funds constitute public offerings of securities, in accordance with the foregoing analysis and conclusion in the last two paragraphs of point IV.1 on Matters related to Securities Market Regulation, and therefore, for not having exercised adequate diligence, it has committed a specific infringement typified in the regulations, and the application of a sanction is appropriate. In that sense, since its right to liberty is not affected, the Constitution has not been infringed.

On due process

a) The appellant states that there is a divergence between the charges formulated, the fact/infringement, and the sanctionable assumption; it alleges that the inclusion of 4 additional infringements when imposing the sanction to the one communicated in the Statement of Charges contravenes due process and the right to defense, by preventing it from arguing about the additional infringements.

On this matter, it should be highlighted that the infringement imputed in the Statement of Charges and the infringement for which it has been sanctioned is "Having made a primary public offering of participation certificates without having registered the securities of the investment funds it manages in the RPMV", however the same has been configured when Zest's behavior fell within the factual assumptions of article 4 of the LMV and article 6 of the Public Offering Regulation. Thus, having directed the offerings in one case to 103 persons and in another to 160 are behaviors carried out by Zest, which constitute elements to configure the status of public offering of securities in accordance with article 4 of the LMV and article 6 of the Public Offering Regulation. In that sense, the fact that Zest does not have an operating authorization as a SAFI is not a behavior that has been imputed or sanctioned in the present proceeding; it has only been taken into account to assess the gradation of the sanction, with respect to the regulatory costs saved. For all the foregoing, 4 additional infringements have not been included for Zest and therefore the principle of typicity has not been infringed.

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

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

Additionally, the appellant indicates that it should not be overlooked that the final mention of 4 infringements to the one formulated as a charge would be revealing that, in the SMV's criteria, subsection 1, numeral 1.1, literal A) of Annex III of the Sanctions Regulation is not fully applicable for the purpose of sanctioning it. In response, as already seen, the aforementioned infringing norm is applicable when a public offering is made that has not been registered in the RPMV, therefore, it is fully applicable in the present case.

It should be noted that, in order to determine the configuration of the imputed infringement, it has been necessary to evaluate the facts that occurred and how Zest's behavior falls within the norms that by their nature are applicable to it, such as article 4 of the LMV and article 6 of the Public Offering Regulation; where it is observed that in the offering of the ZBL and ZIL Funds all elements of the public offering were met, determining that Zest made two public offerings without having previously registered the participation certificates of the ZBL and ZIL Funds in the RPMV and therefore, incurred in the infringement typified in Annex III, literal A), numeral 1, subsection 1.1. of the Sanctions Regulation.

b) Zest indicates that due process has been disregarded, since it was not made known to it that after the final report of the instructing authority, the sanctioning body had ordered the carrying out of complementary actions aimed at determining the aforementioned additional infringements. In this regard, this argument lacks any basis, first because complementary actions are mentioned, but it is not specified which ones, and in the file, to which Zest has had access at all times, there is no record that any complementary action has been carried out.

On the principle of legality

a) The appellant again states that THE RESOLUTION contemplates in its analysis the existence of possible infringements that were not duly imputed at the beginning of the sanctioning procedure, and therefore its right to defense would have been violated, since it can only be investigated and sanctioned for the infringement set out in the Statement of Charges. Zest argues that the nullity requested is insurmountable, since there is a violation of the right to defense, and the principle of conservation of the administrative act is not applicable, as it does not have the possibility to present defenses to the alleged imputations made and that were not duly notified.

In response, we refer to what was stated in the previous point regarding "On due process". It should be noted, furthermore, that all the substantive rules and the type of infraction mentioned are set out in the Statement of Charges, so we reject that there has been a violation of the principle of legality; likewise, the right of defense of Zest has not been infringed at any time. We agree with Zest that in the present case it was only possible to investigate and sanction for the infraction set out in the Statement of Charges, and that is what has occurred, given that THE RESOLUTION does not analyze or refer to any type of infraction other than that contained in the Statement of Charges. Based on the foregoing, it is concluded that paragraphs 2 and 4 of article 248 of the TUO of the LPAG have not been infringed in the issuance of THE RESOLUTION and therefore, it is rejected that there exists a

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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"

defect of nullity of THE RESOLUTION, given that none of the grounds for nullity of article 10 of the TUO of the LPAG is configured.

b) With regard to the alleged breach of the principle of legality, as in the present case there is no typification describing the conduct of the administered party as a sanctionable infraction, account must be taken of the provisions of paragraph 1) of article 248 of the TUO of the LPAG, when it develops the Principle of Legality, which establishes that "Only by a norm with the rank of law may the sanctioning power be attributed to entities and the consequent provision of the administrative consequences that as a sanction are possible to apply to an administered party, which in no case will enable the deprivation of liberty to be ordered". In that sense, the Board of Directors of the SMV, in use of the powers granted by literals b) and d) of article 5 of the Consolidated Text of the Organic Law of the Superintendency of the Securities Market, approved by Decree Law No. 26126, has regulated the type of infraction and Zest has incurred in it, with the carrying out of a series of actions performed. Therefore, in accordance with what was analyzed in point IV.1 on Matters related to the Regulation of the Securities Market, Zest has been sanctioned for having carried out two public offerings of securities, which comply with all the elements of said legal figure, without having registered the securities in the RPMV, conduct that is fully typified in Annex III, literal A), numeral 1, subparagraph 1.1 of the Sanctions Regulations, so it is not appropriate to apply subparagraph a) of article 5 of the LMV, nor numeral 2.12 of numeral 2 of Annex V of the Sanctions Regulations.

On the principle of presumption of truthfulness and presumption of lawfulness

The appellant indicates that the SMV must presume that Zest acted in accordance with the legal system, that is, that it complied with the requirement of having directed the offer made solely to institutional investors, and only with reliable evidence of the falsity of the sworn statements submitted can the legally established presumptions be rebutted. It adds that it is not possible to shift the burden of proof to the administered party, when the norm already establishes presumptions, making said shift would mean disregarding the legal principle that governs all procedures and would lead to its nullity.

As analyzed in point IV.1, on Matters related to the Regulation of the Securities Market and in the Annex of this resolution, the invitations to the recipients to subscribe participation certificates of the ZBL and ZIL Funds qualify as public offerings of securities, likewise it was observed that Zest has not sent all the sworn statements of the invitees to acquire participation certificates of the aforementioned funds and some of these do not even evidence that they are Institutional Investors. Therefore, it cannot be presumed that Zest has carried out a private offering, even less so without presenting the respective evidence. In that line, THE RESOLUTION does not infringe the principle of truthfulness and the presumption of lawfulness, since it was verified that Zest directed its invitations on securities to a segment of the public, which, together with the other elements analyzed, evidences a public offering of securities.

In accordance with what was analyzed in point IV.1, on Matters related to the Regulation of the Securities Market, Zest has carried out two public offerings of securities in the ZBL and ZIL Funds, by complying with all the necessary elements to qualify its conduct as such. Now, regarding the evidence presented by

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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"

Zest, specifically, the sworn statements submitted, it must be noted: i) not all sworn statements of the persons invited to acquire the quotas of the ZBL and ZIL Funds have been submitted; and ii) most of the statements submitted do not evidence that participants of the ZBL and ZIL Funds have the status of institutional investors [as seen in the response to literal a) of the section On the segment of the public, of point IV.1; and detailed in Annex No. 1 of this resolution].

Therefore, after reviewing the different evidence and arguments of Zest, it is concluded that there are no elements to affirm that the principles of presumption of veracity and lawfulness have been violated.

On the criteria for the graduation of the sanction

Next, the arguments outlined by Zest on the criteria for graduating the sanction are analyzed:

a) Background of the Offender

Since Zest does not observe what is referred to in THE RESOLUTION, we refer to what is indicated therein, so it is unnecessary to rule on it.

b) The severity of the damage to the public interest and/or protected legal interest.

The appellant states that it has been possible to verify, with the sworn statements, that the offers of the ZBL and ZIL Funds were made exclusively to Institutional Investors. In that line, it concludes that there was no damage to the public interest and/or protected legal interest, since private investment funds do not require registration in the RPMV and their investors do not require State protection.

First, as observed in recitals 260 to 263 of THE RESOLUTION,83 it is concluded that making a public offer of securities

[83] The recitals 260 to 263 of THE RESOLUTION state:
"260. About the severity of the damage to the public interest and/or protected legal interest. In the present case, the action of ZEST in the commission of the infraction analyzed in this sanctioning procedure has caused damage to the public interest since public offers of securities have been made without previously submitting to the RPMV and consequently to all recipients of such offers, the necessary information so that the recipients of the offer have sufficient and timely information to adopt their investment decisions. It is necessary to specify that a situation of this nature would not have occurred if the offer of the securities had been public since the pertinent regulations establish the information that must be provided to potential investors through the RPMV, within a framework of transparency. 261. In this sense, it must be taken into account that the non-registration of a security publicly offered without its prior registration in the RPMV affects the protected legal interest referred to investor protection, since it is the investor to whom all necessary information must be provided to be able to make a proper investment decision; 262. Likewise, as mentioned, the lack of prior registration of a security in the RPMV affects the principle of transparency since the market will not have truthful, sufficient and timely information that allows other investors, regardless of not choosing to acquire said security, to be able to know said security as well as the issuer that backs it. In a private offer directed exclusively to Institutional investors, such investors have sufficient knowledge to ask the appropriate questions, require and obtain the necessary information to adopt a sensible investment decision, appreciate and assume the risk of a securities investment, among others, characteristics that are not necessarily observed in a public offer, so there is an affectation to the legal interests of investor protection and transparency;

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"

securities without previously registering them in RPMV affects the legal interests referred to investor protection and transparency.

In that line, Zest states that the offer was made to Institutional Investors (private offer), so the protected legal interest has not been affected. In view of this, in accordance with what was analyzed in point IV.1 on Matters related to the Regulation of the Securities Market, it has been determined that Zest did make two public offers of securities, regarding the ZBL and ZIL Funds, and that said offers were not directed exclusively to institutional investors, so they should have been registered in the RPMV.

The foregoing implies that, in the public offers of the ZBL and ZIL Funds, all the securities market regulations that protect the investor were not applied (LMV, Investment Funds Law, Investment Funds Regulation, among others), and, therefore, the principle of investor protection and transparency was affected. Consequently, the information was not presented following the standards of the regulations, in addition to the fact that the offers were made as if they were private when in reality they were public, which affects the investment decision of the participants, undermines the transparency of the market and generates distrust in the participants by not having certainty whether they are in a public or private offer.

Now, as analyzed in literal a) of the section On the public segment, of point IV.1, and as detailed in Annex No. 1 of this Resolution, Zest invited a group of non-institutional investors, so although we agree with what is stated in THE RESOLUTION, in the sense that there was harm to the public interest and/or protected legal right, we differ in the degree of affectation, to the extent that, as there is also a group of institutional investors, the degree of affectation differs between these investors and those who are not. It must be recognized that institutional investors have the capacity to better process the information they have and the investment proposed to them, so the affectation is not the same for all investors invited to acquire the participation quotas of the ZBL and ZIL Funds, such affectation being lesser in the group of investors recognized as institutional.

c) The harm caused and the repercussion in the market

Regarding the economic harm (no concrete economic harm is evidenced),84 Zest indicates that "the Deputy Superintendence has verified and therefore specifies that Zest Capital has not generated an economic harm to the participants or the market in its recital 264, we agree with said assertion". In this regard, it should be noted that it clearly follows from recital 264 of THE RESOLUTION that it has not been possible to evidence that the infraction committed by Zest has caused a concrete economic harm to the market participants.

[263] Such situations contravene the provisions of the LMV and the REGULATION, which undermines the adequate development and integrity of the market, creating distrust among its participants.

[84] Recital 264 of THE RESOLUTION: "Regarding the economic harm and the repercussion in the market, it has not been possible to evidence that the infraction in which ZEST has incurred has caused a concrete economic harm to the market participants".

PERÚ
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"

On the other hand, Zest states that it does not agree with the assertions contained in recitals 26585 and 26686 of THE RESOLUTION, which it considers speculative and that do not have any causal link with the graduation element being analyzed. It adds that the SASP asserts that the alleged infraction motivated the Association of Mutual Funds (hereinafter, the Association) to file a complaint with the SMV (unless there have been more complaints), which it states does not have adequate evidentiary means, and also that said Association did not respond to further information requests by the SMV and that its complaint was filed after the submission of its application for organization of SAFI. It states that it is evident that the Association sought to delay Zest's formalization process and prevent competition in the industry.

In this regard, it is specified that only one complaint was made by the Association, which presented indications, thus, this administrative sanctioning procedure was initiated ex officio. Thus, it is only with the information presented by Zest at the request of the SMV that the realization of two public offerings of securities is evidenced. Likewise, it is noteworthy that Zest's behavior had a repercussion in the market to the point that the Association filed a complaint, so it was not a minor behavior, being a clear indication for the initiation of preliminary inquiries.

Regarding the repercussion in the market to the point that a complaint was filed, the appellant indicates that the SMV does not specify what the magnitude of said repercussion was, the significance of the evidentiary means presented in the complaint, and appearing to set aside the possible intention of the complainant, who is the direct beneficiary of there being one less competitor in the market and that the complaint favors an oligopoly in the market.

In response, regardless of the complainant's intention, Zest's infractions were detected based on said complaint, and in particular on the information provided by Zest. On the other hand, the complaint was not made by another investment fund manager but by the Association, which has several managers as members, which implies that several entities were aware of Zest's behavior. Likewise, what was stated in the complaint warranted the initiation of preliminary inquiries. Finally, the evaluation of the possible existence of an oligopoly in the market is beyond the scope of this procedure.

d) Recidivism

[85] Recital 265 of THE RESOLUTION. Without prejudice to the foregoing, it should be noted that conducting public offerings without the prior registration of the securities in the RPMV is conduct that contributes significantly to increasing the perception of risk of investing in that type of financial instruments, and also constitutes an incentive for, under the denomination of private offering, securities issues to be structured without providing the market, through the RPMV, with all the relevant information of said issues, thus avoiding the protection of investors.

[86] Recital 266 of THE RESOLUTION. "Likewise, this type of action does have a repercussion in the market because the purposes pursued by the prudential requirements that the regulations demand for entities authorized by the SMV and that are intended to manage collective investment vehicles are violated. Thus, a public offering made by entities that do not have an operating authorization, in addition to the lack of transparency, generates additional risks derived from the non-requirement, compliance or supervision of the prudential parameters that every authorized entity must comply with. This has also led to guilds of authorized entities having filed the corresponding complaint with the SMV". (The underline is ours).

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

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

Given that Zest does not observe what is indicated in THE RESOLUTION, we refer to what is stated therein, so it is unnecessary for us to rule on the matter.

e) The circumstances of the commission of the infraction

Regarding the circumstances of the commission of the infraction, the appellant states that she has no further comments, again highlighting her arguments referring to the fact that the Association's complaint does not have adequate evidentiary means since the emails presented deviate from the standard format, among others. In response, as already analyzed in the previous point, the information that the SMV takes into account in the present case is that presented by Zest itself regarding the emails sent by it.

f) The illicit benefit resulting from the commission of the infraction

Regarding the illicit benefit resulting from the commission of the infraction (referring to the fact that Zest saved a series of costs linked to carrying out a public offering of securities⁸⁷, Zest indicated that it submitted its application for organization of an Investment Fund Management Company (SAFI), so the argument of saving the referred costs is not logical and consistent with what was expressed for two years to the SMV. It adds that Zest's intention was always to obtain a SAFI license and submit to the supervision of the SMV; however, on the recommendation of the IGSE and Mr. García, Zest withdrew from the procedure until the present administrative sanctioning procedure is concluded, since this would benefit the licensing process. All of this hoping that the SMV gives it the opportunity to clarify the present imputations and submit to its regulation and supervision.

Regarding this argument, it should be highlighted that the offers subject of the present administrative sanctioning procedure were made in the period from May to August 2019, that is, they began before Zest submitted its application for organization authorization, July 2019, and then withdrew from it, so it can indeed be affirmed that Zest saved the costs linked to carrying out the two public offerings and received the benefits of this action, by not incurring them. Regarding the reason for the withdrawal, there is no evidence proving that it occurred at the request of SMV officials, so what Zest states cannot be accepted.

Now, it must be taken into account that, for an Investment Fund Management Company to be able to place participation quotas of a fund, it must follow the following steps: first request the organization authorization, only after obtaining this can it request the operating authorization and subsequently it can request the registration of the Investment Fund it wishes to manage, which it could not have done in the period analyzed.

[87] Considerando 272 of THE RESOLUTION: "With regard to the illicit benefit resulting from the commission of the infraction, we must point out that by having placed the participation quotas of the ZIL FUND via private offering, ZEST saved the costs that must be assumed in order not to affect the legal interests related to investor protection, transparency and market integrity, which implies obtaining an authorization from the SMV, complying with the prudential requirements of minimum capital and equity, adopting standards for the prevention of money laundering and terrorist financing, risk management, internal control systems, presenting financial information of the fund, material events, among others." (The underline is ours).

"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"

In this sense, it is necessary to make a clarification in this regard. The costs saved by Zest are: i) the cost of carrying out the public offering of the quotas of the ZBL Fund; ii) the cost of carrying out the public offering of the quotas of the ZIL Fund; iii) the cost of obtaining an organization authorization as a SAFI by Zest; and iv) the cost of obtaining an operating authorization as a SAFI by Zest. Consequently, Zest saved all the aforementioned costs by carrying out two public offerings of securities without complying with the regulations.

This position finds support in doctrine; in this regard Morón Urbina indicates that the illicit benefit from the commission of the infraction is understood as the real economic advantage that favors the offender or a third party linked to it for carrying out the sanctionable conduct; this benefit includes (among others) the avoided costs that had to be incurred before the infraction in order to comply with the regulations.88

Regarding the illicit benefit resulting from the commission of the infraction, and the saving of costs linked to a public offering, the appellant asks: would Zest have done this to save those costs? What are the benefits of this action when Zest has only contracted with participants that are institutional investors and do not require protection?

In response, regardless of Zest's reasons, committing the sanctionable conduct produced a benefit for Zest consisting of avoiding or saving the costs of complying with the regulations to carry out two public offerings of securities. This is taking into account that the carrying out of two public offerings of securities has been determined in point IV.1 of Matters related to Securities Market Regulation of this resolution, so its argument on this point is rejected.

Without prejudice to the foregoing, Zest has demonstrated its willingness to incur some of these costs voluntarily. Thus, Zest is currently in a procedure where it has requested authorization as an organization (one of the costs saved by not complying with the regulations). In that sense, although there was a saving at a certain moment, Zest also seeks to incur them through the formalization of its actions.

g) The existence or not of intentionality in the offender's conduct

[88] Juan Carlos Morón Urbina. Administrative Fines. Editorial Praxis. September 2023. P. 154.

"In principle, this criterion focuses on the real economic advantage that favors the offender directly or third parties linked to him by carrying out the sanctionable conduct as a fault. It is equivalent to the economic value that not complying with the expected standard of conduct brings him. It is about identifying the undue benefit obtained in gross terms and not determining whether the action carried out brought him net profits. It does not comprise a single form of benefit, because within this criterion the following are usually considered:

• Direct illicit income itself: that is, the greater additional or anticipated increase in income caused directly by the illicit act and that otherwise would not have been received.

• The avoided costs that had to be incurred before the infringement to comply with the regulations. We thus refer to the saving of expenses that benefits the offender for not having made investments or payments in capital, omitting to carry out the maintenance of the investments or the operation of its investments required by the regulations or the standards of its activity;

• The costs postponed or delayed by the commission of the infringement, that is, the value of money over time for not making at the time the expenses or investments required by the legal system, commitment or authority mandate." (...)

PERU
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"

Regarding the intentionality of the offender's conduct, it must be specified that Zest states that "the Deputy Superintendency states that Zest Capital did not have intentionality in the alleged commission of the infringement. We agree with said conclusion." It must be specified that recital 273 of THE RESOLUTION to which the appellant refers actually states that Zest's intentionality in the commission of the infringement has not been evidenced.

In reference to the argument that supposedly the OAJ Report would be concluding that although Zest's intentionality has not been evidenced, this does not mean that it did not act intentionally at the time of committing the alleged infringement. Zest argues that an express acknowledgment of the nonexistence of intentionality on its part would be hidden.

On the matter, it is worth mentioning that THE RESOLUTION in its recital 273 has stated that "it has not evidenced Zest's intentionality in the commission of the infringement" while Zest maintains that "the Deputy Superintendency states that Zest Capital did not have intentionality in the alleged commission of the infringement. We agree with said conclusion." In that sense, no conclusion or assumption has been made, but rather it has simply been specified what THE RESOLUTION said regarding what was alleged by the appellant.

On the other hand, the appellant states that it is relevant that the SMV acknowledges that it has not been able to evidence the existence of intentionality, since the burden of proving the occurrence of the circumstances that allow the application of a sanction within a sanctioning procedure belongs to the Administration, not to the administered, all based on numeral 4 of article 255 of the LPAG.

In response, numeral 4 of article 255 of the LPAG,⁸⁹ provides that all necessary actions will be carried out for the examination of the facts, and relevant data and information will be gathered to determine the responsibility susceptible to sanction. In that sense, in the present case the respective facts and circumstances have been accredited, by complying with all the elements of the carrying out of public offerings of securities as concluded in the last two paragraphs of point IV.1 of Matters related to Securities Market Regulation; and verifying the respective infringement in the Sanctions Regulation.

Zest states that numeral 10 of article 248 of the LPAG provides that administrative responsibility is subjective, except when it is provided by law or legislative decree that it is objective, which does not occur in the present case. Along these lines, it indicates that if the existence of intentionality on Zest's part has not been evidenced, under what legal framework are the sanctions applied? If numeral 10 of article 248 of the LPAG requires intentional action on the part of the administered to apply them. It adds that since such a situation is not accredited, the application of the challenged sanctions is null, based on numeral 1 of article 10 of the LPAG.

[89] Article 255.- Sanctioning procedure
The entities in the exercise of their sanctioning power adhere to the following provisions:
(...) 4. Once said period has expired, with or without the respective defense, the authority conducting the procedure shall ex officio carry out all necessary actions to examine the facts, gathering the data and information that are relevant to determine, where applicable, the existence of liability subject to sanction.

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"

Regarding what was stated by Zest, concerning administrative liability, we must indicate that in the present case the appellant incurred subjective administrative liability and not objective liability. Subjective administrative liability is configured when at least one of two assumptions is present: i) intent (knowledge and intentionality); or ii) negligence (carelessness). In that sense, it is sufficient that intent or negligence is present for administrative liability to arise and for the principle of culpability referred to in Article 248° subsection 10 of the LPAG to be complied with. In the present case, as has been stated in THE RESOLUTION in recitals 273 to 275; although intentionality in the commission of the infraction has not been evidenced, it cannot be ignored that Zest has not been sufficiently diligent in complying with the regulations, a situation that led to the commission of the two infractions subject of this sanctioning procedure, for which reason administrative liability due to negligence is proven.

Thus, Zest has breached the securities market regulations (LMV and Public Offering Regulation) by having carried out public offerings of securities issued against the ZBL and ZIL Fund without registering them in the RPMV, which implies clearly negligent conduct since these rules are of public knowledge, and it could and should have avoided the occurrence of the facts subject of this sanctioning procedure. In that sense, Zest's involuntary carelessness in becoming aware of and complying with the securities market regulations constitutes negligent behavior⁹⁰.

Now, regarding the argument that, on the recommendation of the IGSE and Mr. García Tipismana, Zest withdrew from the authorization of organization procedure until the present administrative sanctioning procedure is concluded, it must be indicated that, from the review of the file, no evidence has been observed that the SMV or any official of this entity made a recommendation such as the one indicated by Zest; likewise, Zest in its withdrawal brief does not even mention that it does so due to suggestions received nor that it does so until the administrative sanctioning procedure being followed against it is concluded, therefore, as there is no evidence supporting what it indicates, said argument cannot be admitted. It is important to mention that from the review of the file of the application for authorization of organization, it is observed that Zest submitted a withdrawal request on 17 March 2021.

h) The probability of detection of the infraction

The appellant comments that the statements in THE RESOLUTION are contradictory, since on the one hand it indicates that the probability of detection of the infraction is low because the information has not been contained in journalistic publications or web pages, while, on the other hand, it points out that detection was possible due to the complaint by the Association (which uses information contained on the internet).

[90] https://dpei.rae.es/lema/negligencia
"Negligence: Omission of due attention due to inaction or carelessness or due to incorrect, inadequate or insufficient action. Disregard of one's own obligations or carelessness in complying with rules and regulations, without there being any malicious intent, that is, a direct willingness to omit or delay the due action, since it is, rather, a situation of culpable inertia and lack of care."

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.firmadigital.gob.pe/verifica/validador.html

PERÚ
Ministerio de Economia 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"

Given this, as can be read in recitals 276 and 277 of THE RESOLUTION,⁹¹ ⁹² the infraction was detected based on a complaint filed by the Association, and in particular, by the information and documentation provided by Zest itself, not being obtained through mass media (web pages or journalistic publications). On the other hand, it is noteworthy that the information disseminated through web pages and journalistic publications does not disclose characteristics of the offers subject of this procedure.

In that sense, the contradiction pointed out by Zest is not observed, since initially the SMV uses the indication presented by the Association (regarding the dates of sending emails) to request information, and subsequently, it requests information from Zest itself, which is used in the present case.

Now, the information from the emails requested from Zest is clearly internal information that is not public. However, said information was not only in Zest's internal sphere but was also held by all those invited to acquire participation quotas of the ZBL and ZIL Funds. In that sense, the information was also held by the invitees (parties external to Zest) via email. So much so, that it was the Association that filed the complaints with information about email invitations to acquire participation quotas in the Zest funds. Consequently, the probability of detection of the infringement is medium and not low.

i) The voluntary declaration of the commission of the infringement and the offender's contribution to its clarification

Regarding the voluntary declaration of the commission of the infringement, Zest has not acknowledged the commission of the infringement; on the contrary, it states that it acted considering compliance with the regulations and rules applicable to it, considering that the offers of the ZBL and ZIL Funds are private, since they were directed to Institutional Investors; however, as analyzed in point IV.1 on Matters related to Securities Market Regulation, it has been established that Zest made two public offerings of securities since all the elements required by the regulations to qualify an offer as public were present, so its arguments on this point must be rejected.

However, regarding Zest's contribution to the clarification of the infringements, we must point out that there was information that it did not submit during the investigation and the argument that in various informal conversations with the IGSP, emphasis was only placed on the need for the sworn statements of the participants, in which they declared that they were institutional, cannot be accepted. On the other hand, as can be evidenced in the record, the information has been corrected and expanded during the proceeding and this cannot be attributed to the fact that

[91] Recital 276 of THE RESOLUTION: "With regard to the probability of detection, it should be noted that, in the case analyzed, this infringement has been detected based on the complaint filed by the ASSOCIATION and, in particular, on the information and documentation provided by ZEST to this Superintendency."

[92] Recital 277 of THE RESOLUTION: "The detection was possible due to the documentation attached to the complaint regarding the fact that on certain dates ZEST had sent emails to persons who are not its clients, so that, upon becoming aware of this information that is in ZEST's internal systems, and not in mass media such as websites or newspaper publications, the infringement could be detected; therefore, the probability of detection of the infringement by this Superintendency is low."

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

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

they declared states of emergency as a result of COVID, so it cannot be concluded that Zest contributed to the clarification of the infringements.

Regarding the principle of procedural good faith, Zest maintains that it has made its best efforts to provide all the information and clarify all the doubts that both the IGCP and the SASP have required. However, the deployment of said effort was limited by the imposition of States of Emergency regarding the appearance of Covid-19 in Peru. It argues that, with respect to the facts not clarified, in various informal conversations with the IGCP, emphasis was only placed on the need for the sworn statements of the participants in which they declared that they are Institutional Investors.

In view of this, as already indicated in recital 98 of THE RESOLUTION,93 Zest has not complied with providing all the information requested by the SMV, such as copies of all emails sent by Zest (from info@zestcapital.com.pe) on 6 and 27 May, 25 June and the months of July and August 2019 to participants, former participants or potential clients offering the products of its represented company, in which the date of sending, the recipient's email address and the content can be seen. Therefore, it cannot be asserted that Zest has had a collaborative behavior in this proceeding. Notwithstanding this, it should be noted that according to the information contained in Annexes 1, 4, 5, 6 and 7 of its brief submitted on 27 January 2020, it has been possible to determine the number of recipients of the invitation to acquire quotas of the ZBL and ZIL Funds.

On the principle of reasonableness and proportionality

a) Based on the regulations on the principle of reasonableness,94 a judgment of the TC and a resolution of the Supreme Court, the appellant alleges that a fine of 240 UIT was imposed on it, even though the fine proposed by the IGCP amounted to 26 UIT, which although it is not a binding opinion and that in its formulation only a public offering was contemplated, the clear basis for the graduation of the fine imposed has not been evidenced or, failing that, the reasonableness of the increase or difference with respect to the fine proposed by the IGCP. Moreover, when it has been proven that Zest has no record of infringement, has not incurred in recidivism, the existence of intentionality or harm to the market has not been proven, as well as the probability of detection is high.

As analyzed in the section On the criteria for the graduation of the sanction of point IV.2, THE RESOLUTION has applied all the sanction criteria established in numeral 3 of article 248 of the TUO of the LPAG, article 25 of the Sanctions Regulation and article 348 of the LMV, which have been analyzed, substantiated and weighed to establish the sanction imposed on Zest. In that line, regarding the fact that Zest: has no record of infringement, has not incurred in recidivism, the existence of intentionality, nor harm to the market has been proven; we refer to what was already indicated in literals a), d), g),

[93] Recital 98 of THE RESOLUTION: "(...), and furthermore ZEST has failed to send copies of the electronic mails of 6 and 27 May, 25 June and of the months of July and August 2019, which it sent, among others, to its potential clients, where it can be seen to which particular person it was sent, when and what information it provided, among other information".

[94] Specifically, numeral 3 of article 248 of the TUO of the LPAG and article 25 of the Sanctions Regulations, read in conjunction with article 348 of the LMV and item 10 of article 248 of the TUO of the LPAG.

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

"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"

and c) of the section On the criteria for the graduation of the sanction of point IV.2. On the other hand, it must be specified that regarding the probability of detection of the infringement, in the opinion of the sanctioning body, this was low and it set out the reasons why in its opinion it was low; however, this Office considers that the probability is medium, the analysis being found in letter h) of the section previously mentioned.

With regard to the difference between the fine of 240 UIT imposed in THE RESOLUTION and the fine proposed by the IGCP of 26 UIT and the alleged lack of a clear basis, it should be noted that THE RESOLUTION determined that two public offerings were carried out and not one public offering as the IGCP considered. Consequently, THE RESOLUTION determined that Zest has committed two very serious infringements to which a fine of not less than fifty (50) UIT and up to seven hundred (700) UIT applies (and not just for one infringement as stated in the IGCP Report).

Now, in order to determine the sanction, THE RESOLUTION has taken into account as the main factor the costs that Zest has saved by issuing two public offerings of securities without complying with the regulations. And it is that the sanction has been imposed taking into account the economic value that non-compliance with the expected standard of conduct reports to the offender, which (among others) implies the costs avoided that had to be incurred before the commission of the infringement in order to comply with the regulations.95 This is because failing to comply with the regulations cannot be more beneficial for the regulated party than complying with them, which would deprive the sanction of its deterrent character. In this regard, although this Office considers that an illicit benefit has arisen from the cost savings, it also believes that it must be taken into account that the appellant seeks to incur in one of them, as set out in letter f) of the section On the criteria for the gradation of the sanction of point IV.2. Similarly, a different assessment has been made with respect to the criteria of severity of the damage to the public interest and/or the protected legal asset, and probability of detection of the infringement, as seen in letters b) and h) of the aforementioned section, which will be taken into account to gradate the sanction.

For all these reasons, THE RESOLUTION applied the principle of reasonableness, regulated in numeral 3 of article 248 of the TUO of the LPAG and article 25 of the Sanctions Regulation, as well as article 348 of the LMV and subsection 10 of article 248 of the TUO of the LPAG, these not being affected, although this Office has a different assessment.

b) The appellant argues that it is not reasonable that a sanction of 240 UIT has been applied, even more so if the Final Report of the Instruction Body is taken into consideration, which is not binding, but sets the guideline for the SMV's criterion of analysis as a single administration vis-à-vis the administered party. Thus, Zest considers that going from a suggestion of 26 UIT to 240 UIT in the same case, same facts and evidence, evidences a violation of the principle of reasonableness and predictability, demonstrating that the administration is not objective when analyzing the case. It requests that the graduation of the sanction imposed be reconsidered.

[95] Juan Carlos Morón Urbina. Administrative Fines. Praxis. First Edition 2023. Page 154.

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"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"

On this matter, first, it must be indicated that, as Zest points out, the Final Report of the IGCP is neither binding; nor does it establish a guideline for the SMV's criterion of analysis vis-à-vis the single administration. This is because the instruction report seeks to accelerate the process of understanding of the SASP (resolving instance) by providing it with elements so that, at the time of resolving, it is easier for it to form its own criterion, for which the latter retains full freedom to analyze the instruction and decide what in its judgment is most appropriate96.

Taking into account the foregoing, it cannot be alleged that there is a "guideline for the criterion of analysis" between the instruction body and the sanctioning body, since such an affirmation would imply that the areas within the SMV lose their impartiality and independence, having to limit themselves to ruling in the same way in all aspects.

Now, it is observed that the SASP has taken a position different from the IGCP, which is justified and motivated as mentioned in subsection a) of this section, explained, mainly, by the execution of two public offerings of securities without the respective registration in the RPMV (constituting two very serious infractions), and by the savings or avoided costs of complying with the securities market regulations.

Finally, it should be mentioned that we consider the fine sanction appropriate but not the amount imposed. Thus, considering the possible sanctions established in article 33 of the Sanctions Regulation, in accordance with article 358 of the TUO of the LMV, upon the commission of very serious infractions, such as those that are the subject of this proceeding, there is no sanction other than the fine that could be imposed, given that the offender is a legal person, it is not an authorized entity, therefore, it is not possible to suspend, cancel or revoke its operating authorization, the securities cannot be excluded, given that they are not registered and keeping them unregistered would be keeping them in an irregular situation. Likewise, the sanction is necessary, since otherwise it would allow non-compliance with the regulations to be more beneficial for the administered than complying with it. Finally, the sanction is balanced, as there is a direct relationship between it and the desired result (deterring the commission of the illicit act), although we have a different appreciation regarding the graduation of the sanction.

c) The appellant indicates that the SMV must take into account that the simultaneous application of the fine and the corrective measure imposed is equivalent, in fact, to the application of a closure sanction on Zest, which is disproportionate. Zest points out that the main asset that a private fund manager has is its reputation, thus demanding compliance with the corrective measure (change of manager and registration of securities in the RPMV) would entail reputational damage, which could bring with it that the participants of the other investment funds it manages make a similar decision to change manager and that, therefore, it is left without funds to manage.

Regarding the above, it should be indicated that the fine and the corrective measure have two different purposes, while the first has a deterrent purpose, the corrective measure seeks to reverse the situation of illegality in which the

[96] Morón Urbina, Juan Carlos. Comments to the General Administrative Procedure Law. Volume II. Gaceta Jurídica, 2020. Page 53. "The report seeks to accelerate the process of understanding the resolution instance, although it does not bind it to the criteria of the instructor, it maintains full freedom to analyze the instruction and decide what is most convenient according to its criteria."

PERU
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"

ZBL and ZIL Funds; in that sense, it is clear that the fine does not seek to revert the situation to the previous state of things, but rather that Zest does not commit the same infraction again. Under that logic, the application of the corrective measure is complementary to the sanction, in accordance with the regulations, as well as proportional.

Regarding the reputational damage that Zest could suffer, it is indeed potential, but if it occurred it would be as a consequence of the performance of an illegal behavior by Zest, being a situation that it should have foreseen, all the more so if it is its main asset, as the company states. And it is that, in general, the "affectation to the company's patrimony should be a foreseeable consequence that the administered must take before committing the infraction"⁹⁷ For the aforementioned, it is not considered pertinent to graduate the sanction taking into account this factor.

d) The appellant indicates that the fine is notoriously high and disproportionate in relation to the alleged damage that is sought to be sanctioned, even more so taking into account the expiration of the two funds (December 2023 and May 2024), with no complaint from the investors, which shows that there was no damage that is sought to be protected (lack of delivery of sufficient information to carry out the investment).

Regardless of whether the investors have not complained and/or are satisfied with the investment they made (which does not imply that this has happened), none of those factors implies that there was no damage. In that sense, we refer to what is indicated in subsection c) of the section On the criteria for the graduation of the sanction of point IV.2.

e) Zest argues that the sanctioning measure does not seek to remedy a concrete damage to the investors, but rather an alleged danger due to non-compliance with the regulations, despite the fact that it has not caused damage to the public and that no tutelary intervention has been required.

The sanctioning measure seeks to deter the performance of illicit behaviors and that committing them is not more beneficial than the sanction imposed. Regarding the damage to the public, in accordance with what was analyzed in point V.1 on Issues related to the Regulation of the Securities Market, the execution of two public offerings of securities without the respective registration in the RPMV was determined, consequently the protection of the investor and transparency of the market have been affected by not complying with the securities market regulations.

f) Based on Superintendency Resolution No. 071-2023-SMV/02, the appellant indicates that in that case (where the infractions committed were very serious and where in the first instance the maximum sanction permitted by the Regulation had been imposed), the SMV, judiciously using the criteria mandated by the legal system, decided that it was reasonable to modify the maximum sanction imposed and not only lift the disqualification, but impose a sanction of 49 UIT (within a range of 40 to 700 UIT). It adds that according to the TUO of the LPAG and under the principle of predictability, the administration's actions in all their manifestations generate an expectation in the administered in general and,

[97] Christian Guzmán Napurí. General administrative procedure. Volume II – Instituto Pacífico. Page 439.

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

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

evidently, the same entity cannot use a different criterion to determine what the correct sanction is in the present case.

In this regard, it should be noted that Superintendency Resolution No. 071-2023-SMV/02 does not constitute an administrative precedent, in the terms referred to in numeral 2.8 of Article V of the TUO of the LPAG, or in the terms referred to in Article VI of the TUO of the LPAG. Furthermore, it is observed that said resolution has particular characteristics, such as: i) there was no substantial cost saving or high benefit from transgressing the regulations, ii) the transactions were annulled, iii) the sanction was applied to a natural person and not to a legal person; among other characteristics, which were taken into account when establishing the sanction in the respective resolution. In that sense, since there are no elements in the present case that lead us to apply a lesser sanction than the range provided in the Sanctions Regulation, the argument formulated by Zest is dismissed.

On the motivation

a) Regarding the fact that THE RESOLUTION contains an arbitrary administrative act, lacking sufficient motivation, which does not allow proving that the same entity with the same facts and rights concludes to depart from the content of the Final Instruction Report, without making the respective analysis of defenses, evidence, facts, among others, imposing a higher fine than the one suggested. Furthermore, the clear, detailed and specific reasons for the sanction imposed that excessively exceeds the applicable minimum sanction of 50 UIT would not have been specified, limiting itself to making an affirmation of responsibility for the imposition of the sanction. It concludes by indicating that the duty of motivation is violated and that it is an administrative act that becomes null according to article 10 of the TUO of the LPAG.

Regarding the difference between the fine of 240 UIT imposed in THE RESOLUTION and the fine proposed by the IGCIP of 26 UIT, we refer to what is indicated in literal a) of the section On the principle of reasonableness and proportionality of point IV.2, where it is indicated that THE RESOLUTION contemplated, among others, the commission of two very serious infractions (and not one), as well as the cost saving for carrying out two public offerings of securities without registering them in the RPMV.

It is important to mention that both in THE RESOLUTION and in the present one, all the arguments put forward by Zest have been analyzed, as well as the elements that determined that Zest carried out two public offerings of securities (according to the facts and evidence presented) in accordance with what was analyzed in point V.1 on Issues related to the Regulation of the Securities Market. Likewise, the criteria for grading the sanction were analyzed and weighed, determining at the discretion of the sanctioning body that a sanction of 240 UITs corresponds, although this Office has a different appreciation regarding the assessment and application of some criteria for grading the sanction and therefore of the amount of the sanction.

For all the above, we do not consider THE RESOLUTION as an arbitrary administrative act lacking sufficient motivation and we do not observe the contravention of any principle, so THE RESOLUTION does not become null;

[*] 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.firmadigital.gob.pe/verifica/validacion.html

"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"

without prejudice to this Office having a different appreciation of the criteria for grading the sanction.

b) In relation to the sufficiency of the disclaimer established in the invitation email and its attachments, no reference is observed in this regard that the invitation was addressed exclusively to institutional investors, so we refer to what is indicated in literal b), On the Invitations, of point IV.1 of this resolution.

c) Zest states that the duty of sufficient motivation is violated (numeral 4 of article 3 and article 6 of the LPAG), cites a resolution of the TC, which indicates that nullity of the act is incurred, in case of absence of motivation or when the motivation is generic, apparent or insufficient because all of it constitutes an arbitrariness challenged by law.

In this regard, as can be seen in THE RESOLUTION, each of the decisions adopted therein is motivated; likewise, this resolution analyzes each of the arguments put forward by the appellant, so it cannot be alleged that the duty of sufficient motivation has been violated, much less can the nullity of the act be alleged due to the absence of motivation. Thus, no impairment of due process (Article IV of the Preliminary Title of the LPAG) or invalidity of the administrative act regarding motivation (Articles 3.4, 6.1, 6.2 and 6.3 of the LPAG) is observed.

d) The appellant argues that the duty of sufficient motivation is not fulfilled by not detailing the reasons that lead to the conclusion, in an extremely succinct manner, "it is a proportional and reasonable sanction for Zest's infringing conduct", concluding that therefore, it does not consider reducing the sanction. Likewise, it points out that there is a failure to analyze all the arguments presented by the administered party regarding the reasons why said sanction is not reasonable, and therefore the OAJ Report suffers from elements of nullity.

In this regard, it is considered that in the OAJ Report, each of the arguments presented by the appellant has been analyzed, including the criteria for grading the sanction, with the OAJ basing its position on them, invoking the corresponding legal norms, and based on that, it concludes that Zest made two public offerings of securities; and, therefore, said report is indeed motivated, in addition to the fact that it is not binding.

e) Zest points out that it is a legal obligation of the decision-making authority to carry out a detailed evaluation of all the arguments set forth in the appeal, specifying the clear and specific reasons that lead it not to discuss the imposed sanction, which, it indicates, does not have sufficient support for its determination and which excessively exceeds the sanction suggested by the IGCB. Likewise, it mentions Article 239.4 of the LPAG, regarding the responsibility of public officials and the need to motivate their decisions.

In response, throughout this resolution, each and every one of the arguments put forward by Zest has been analyzed regarding the infractions for which it has been sanctioned, as well as each of the criteria for grading the sanction set forth in the regulations and, as has been stated, this Office has a

"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"

different appreciation regarding some criteria for grading the sanction, so this Office considers that Article 261.1, item 4 of the TUO of the LPAG is not applicable, since THE RESOLUTION and this resolution are duly motivated.

IV.3 On the corrective measure imposed

Before analyzing Zest's arguments, it is pertinent to mention the corrective measure imposed in Article 5 of THE RESOLUTION:

"Order as a corrective measure the registration of the Zest Bond Liquid and Zest Income Liquid funds in the Public Registry of the Securities Market. For this purpose, within a period of 30 business days from notification of this resolution, Zest Capital Perú must adopt the necessary actions to transfer the management of the investment funds called Zest Bond Liquid and Zest Income Liquid to an Investment Fund Management Company duly authorized by the SMV."

a) Zest maintains that the Sanctions Regulation must observe the principles of sanctioning power and the structure of guarantees provided for the administrative sanctioning procedure in reference to the corrective measure.

In relation to said argument, it must be noted that the Sanctions Regulation observes the principles of sanctioning power. Likewise, it should be highlighted that doctrine is clear in stating that the corrective measure does not have a sanctioning nature, but on the contrary, imposes on the administered party the fulfillment of a duty of legal behavior, by which it is required to restore the legal or physical situation affected by its action or omission.98 In this line, it is affirmed that the principles of sanctioning power are not applicable to corrective measures,99 consequently, the argument regarding the corrective measure must be rejected, since the latter has a different nature.

b) The appellant states that the corrective measure imposed is illegal, since according to Article 21 of the Sanctions Regulation, the possible corrective measures that may be issued are detailed in an enunciative manner in Annex XX of said regulation; however, in the aforementioned annex (or in another norm of a general nature) the corrective measure imposed, which entails an obligation to do on the part of Zest, is not described in a taxative manner. It adds that the corrective measure imposed does not comply with the requirement of typification, its action must be expressly defined by law, rejecting the use of vague or generic forms, indicating that numeral 27 of Annex XX of the Sanctions Regulation is a generic clause that allows establishing any type of measure. Additionally, the corrective measure is not related to the breach of

[98] The doctrine is unanimous in stating that the corrective measure does not have a sanctioning nature, given that the purely punitive purpose inherent to administrative sanctions is foreign to it. On the contrary, the corrective measure imposes on the administered party the correct conduct or, in other words, concretizes a duty of lawful behavior, but it also coercively requires the restoration of the legal or physical situation affected by its action or omission. Hugo Lora cited by Morón Urbina (2010). Act-measures (corrective, provisional and security measures) and the sanctioning power of the Administration. Revista de Derecho Administrativo, (9) Pág. 151. Retrieved from https://revistas.pucp.edu.pe/index.php/derechoadministrativo/article/view/13710

[99] The principles of the sanctioning power (E.g. Causality, culpability or presumption of innocence) are not applicable to corrective measures, nor are their existence and execution subject to the statute of limitations of sanctions, and they may be applied and executed even if the sanction is extinguished for any reason. Furthermore, due to its nature as a non-sanction, the corrective measure is not limited by the principle of "non bis in idem". Jorge Danós cited by Morón Urbina (2010). Ibidem Pág. 152.

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

the regulations on primary public offering, nor with the definition of corrective measure and its purposes, it being possible instead to suspend the offering. Finally, it requests the annulment of the corrective measure.

As stated in recital 284 of THE RESOLUTION, the corrective measure was imposed on the basis of the provisions of Annex XX, item 27 of the Sanctions Regulations, which establishes:

ANNEX XX

Of Corrective Measures

In accordance with the provisions of article 21 of the Regulations, the SMV, upon determining administrative liability, may issue the following corrective measures:

(…)

"27) Other measures directly related to compliance with the infringed rules".

In this way, the corrective measure ordered was typified in item 27) of Annex XX of the Sanctions Regulations. Thus, said item clearly establishes that corrective measures directly related to compliance with the infringed rules may be imposed. In that sense, if the infringed rule is having made public offerings without having previously registered the participation certificates of the ZBL and ZIL Funds; then, the direct and natural consequence to regularize said non-compliance is precisely to register the aforementioned securities in the RPMV.

Now, bearing in mind that in the present case, the registration of the securities could not be carried out immediately since the ZBL and ZIL Funds were managed by an entity that does not have operating authorization granted by the SMV, THE RESOLUTION required that said funds be previously transferred to a management company authorized to manage investment funds, Zest having to carry out all the necessary actions to be able to transfer said funds, this being the direct obligation of responsibility of Zest.

Consequently, the assertion that the aforementioned item 27 is a generic clause that allows establishing any type of measure is rejected; quite the contrary, it concretely limits the corrective measure to being directly related to compliance with the infringed rules. Thus, in the present case, it seeks to reverse the infringements of not having registered the public offerings in the RPMV, in accordance with the definition of corrective measure and its purposes. On the other hand, at the time of establishing the corrective measure, the proposal to suspend the offering was discarded, as this would imply that the ZBL and ZIL Funds would remain in their situation of irregularity and would not fall within the scope of a corrective measure. Likewise, Zest has not put forward an argument to support declaring the corrective measure null and void.

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

c) Zest, based on subsection r) of article 9 of the Investment Funds Law, indicates that the participation regulations must contain the procedure for transferring the management of the investment fund and comments that the participation regulations of the ZBL and ZIL Funds (and their subscription contracts) do not contemplate compliance with the imposed corrective measure as a cause for the transfer of the funds, nor do they contemplate any ad hoc procedure for this purpose. It adds that the decision to transfer the ZBL and ZIL Funds is not possible for Zest to comply with, since the transfer decision always falls on the participants of these funds and not on the management company. In that sense, the corrective measure is not under the control of Zest, exposing it to sanctions for actions that are under the control of third parties (participants of the ZBL and ZIL Funds). Zest argues that these third parties have not been part of the present administrative sanctioning procedure and that it would not be possible to sanction them or impose corrective measures on them. For all of the above, a cause for nullity would be incurred.

Regarding the arguments put forward by Zest, it must be specified that, no public offering of securities can be exempt from the securities market regulations. In that vein, and having determined that Zest carried out two public offerings of securities with respect to the ZBL and ZIL Funds, it has breached the securities market regulatory framework, which is constituted by mandatory rules of public order; therefore, it falls to the SMV, in the exercise of its functions, to adopt the corresponding measures so that such situation is regularized and the investors involved are protected.

Now, while there is no procedure that expressly sets out the transfer of funds from a non-authorized manager to another authorized by the SMV; it is clear that once the SMV determines the nature of the public offerings of securities of the ZBL and ZIL Funds, it is its responsibility to issue the corrective measures to reverse or regularize such situation. It should be noted that the absence of an express transfer procedure for the specific case is not grounds for breaching securities market rules.

On the other hand, it is evident that the transfer of the funds is not entirely within the sphere of control of Zest, since ultimately this will depend on the decision of the participants. Precisely for this reason, the corrective measure states that "(...) Zest Capital Perú must adopt the necessary actions to transfer the management of the investment funds (...)"; which is indeed within the sphere of control of Zest. In that vein, Zest would not be exposing itself to sanctions for the actions of third parties (participants in the ZBL and ZIL Funds), and the SMV could only require it to demonstrate that it adopted the necessary actions to transfer the management of the funds, that is, actions that are within its scope.

It is important to mention that although the corrective measure was imposed on Zest, it is evident that its execution required the participation of the holders of the participation units of the ZBL and ZIL Funds, since their consent was needed to determine to which management company the transfer would be made. For all of the above, no ground for nullity has been incurred in issuing the corrective measure.

Electronic document digitally signed within the framework of Law No. 27269, Law on Digital Signatures and Certificates, its Regulations and amendments. The integrity of the document and the authorship of the signature(s) can be verified at https://apps.firmadigital.gob.pe/verifica/view. The integrity of the document and the authorship

"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"

Regarding the appellant's argument that the corrective measure presupposes acts of third parties, we refer to what is stated in the preceding paragraphs of this section, in the sense that it is clear that Zest could only be held responsible for its own actions and not for the decisions adopted by third parties.

d) Zest argues that the corrective measure imposed is unconstitutional, as it affects the property and contracting rights of the participants of the Investment Funds, who are not obligated to transfer their property due to a sanction for which they are not responsible. Likewise, it points out that the participants (based on their constitutional right to contract) may not transfer or liquidate their investment funds; or they may transfer them to another management company not supervised by the SMV domiciled in Peru or abroad, and not only to a SAFI regulated and supervised by the SMV.

Regarding the affectation of the property and contracting rights of the participants of the Investment Funds, it should be indicated that none of these rights is unrestricted and even less can they contravene public order regulations, which are their limits. Otherwise, it would suffice to invoke the right to property and/or contracting to breach securities market regulations, which is inadmissible.

Regarding the possibility of transferring the funds to a company not supervised by the SMV, it should be taken into account that it has been determined that the offers of the ZBL and ZIL Funds made by Zest were public and, consequently, are within the Peruvian securities market regulations. Taking this into account, investors should adopt decisions within the scope of said regulations and, therefore, could not transfer the administration of the ZBL and ZIL Funds to a manager not supervised by the SMV, since it would not be authorized to manage publicly offered funds and would not comply with public order regulations.

Finally, in reference to a potential sanction on Zest for non-compliance with the corrective measure imposed in THE RESOLUTION, it should be noted that this should be evaluated in due course, based on the actions it would have carried out for the transfer of the ZBL and ZIL Funds.

e) Zest indicates that the corrective measure imposed is disproportionate and unreasonable as it does not conform to the legal system, being unlawful, imprecise, physically and legally impossible, and does not include the issues arising from the motivation for what was expressed in the previous arguments, specifically the impossibility of the transfer of the ZBL and ZIL Funds by Zest. It points out that the corrective measure imposed lacks motivation in proportion to the sanction imposed, to the regulations allegedly infringed regarding public offering, to the purpose pursued by the corrective measures, since its compliance affects the rights of third parties. It argues that it would be different if Zest were required to organize itself as a SAFI licensed and supervised by the SMV, a measure that would be related to the intensity, proportionality, and needs of the protected legal assets.

As already analyzed in the responses to subsections b), c), and d) of this section, the corrective measure is not illegal, unconstitutional, or even impossible to comply with at the time it was issued; it is also recalled that the

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

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

corrective measure required Zest to carry out the necessary actions to transfer the ZBL and ZIL Funds, which was within its sphere of control.

Likewise, the corrective measure imposed observes the principles of proportionality and reasonableness, as well as that of motivation, since it seeks to restore, reverse, repair, or reinstate that situation altered by Zest's breach of the regulations under the supervision of the SMV; thus, if the rule infringed is having carried out public offerings without having previously registered the participation certificates of the ZBL and ZIL Funds, then the direct and natural consequence to regularize said breach is precisely to register the aforementioned securities in the RPMV. It is important to note that not carrying out the corrective measure in its entirety while the funds are in force would imply that the ZBL and ZIL Funds remain in a continuous situation of illegality.

Likewise, the corrective measure seeks to protect investors (participants in the funds) not only by alerting them to the serious transgression of the regulations committed by Zest, but also by regularizing the transactions carried out without observing the current legal order.

For all these reasons, it cannot be maintained that subsection 4) of article 3 (validity requirement of the administrative act: motivation), article 5 (Object or content of the administrative act), article 6 (motivation of the administrative act), article 8 (Validity of the administrative act), article 10, article 251 (Determination of responsibility) of the TUO of the LPAG, as well as article 19 of the Sanctions Regulation, are infringed. Finally, it should be noted that article 32 of the Investment Funds Regulation regulates the case of Registration of Funds Placed by Private Offering, and in the present case we are dealing with two public offerings whose registration must be regularized.

f) Zest points out that the corrective measure does not seek to correct harm to the protected legal interests, which is the delivery of information to the public so that it may make a free and fully informed investment decision (in the event that they had not yet executed their investment decision), but rather a change of manager or liquidation of the funds and with it the redemption of the investment and closure of the ZBL and ZIL Funds.

As analyzed above, if the rule infringed is having carried out public offerings without having previously registered the participation certificates of the ZBL and ZIL Funds, then the direct and natural consequence to regularize said breach would be precisely to register the aforementioned securities in the RPMV.

Now, it should be remembered that the registration of securities in the RPMV implies that the company must continuously deliver information following the standards of the regulations, as well as comply with prudential obligations, among others. Thus, the corrective measure ordered directly seeks to correct the harm to the protected legal interests.

g) Zest alleges that pursuant to article 226 of the TUO of the LPAG, the filing of any appeal does not suspend the execution of the challenged act (unless a rule provides otherwise). Along these lines, it states that it is up to the Superintendent of the SMV to resolve the request for suspension of the execution of the challenged act. Therefore,

"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"

what it requests is the suspension of the execution and effects of THE RESOLUTION. It adds that the execution of THE RESOLUTION generates damages that are impossible or difficult to repair: i) the payment of the imposed fine is equivalent to 1 year of Zest's profits; ii) the market repercussion may affect its business; and iii) irreversible damage would be done to its image. Lastly, it states that the challenged act has significant nullity defects because, on the one hand, the sanctions and fines imposed infringe subsection 1) of article 10 of the TUO of the LPAG, since it contravenes the Constitution, the laws or the regulatory provisions, and on the other hand, the measure infringes subsection 2) of article 10 of the TUO of the LPAG regarding the defect of omission of the validity requirements of the administrative act, by lacking an object that is physically and legally possible.

In relation to the request for suspension of the execution and effects of THE RESOLUTION, we must indicate that although subsection 226.1 of article 226 of the TUO of the LPAG¹⁰⁰ states that the filing of any appeal, except in cases where a legal rule establishes otherwise, shall not suspend the execution of the challenged act; there are exceptions to the principle of enforceability. One of these exceptions is the one established for administrative sanctioning procedures (such as the present one), in which subsection 258.2 of article 258 of the TUO of the LPAG¹⁰¹ applies, under which THE RESOLUTION shall be enforceable or executed when the administrative route has been exhausted, which will occur when this resolution ruling on the appeal filed is issued. Likewise, it should be noted that, in the present case, no precautionary measure has been issued, which would be enforceable within the granted term, but rather a corrective measure.

For all these reasons, and based on the responses contained in subsections b), c) and d) of this section, it can be stated that the corrective measure does not contravene the Constitution, the laws or the regulatory provisions; nor does it lack an object that is physically and legally possible; consequently, subsections 1) and 2) of article 10 of the TUO of the LPAG are even less infringed.

h) Zest points out that even if the SMV proposes to vary the corrective measure and only require Zest to prove the adoption of the "necessary" measures for the transfer of the funds and, if this does not occur, to proceed with their liquidation, this action (liquidating the funds) is also not within the scope of what Zest can execute, since said decision corresponds to the Assembly of participants and not to the Fund's administrator.

In this regard, it should be noted that there is no need to rule on the variation of the corrective measure, considering what will be analyzed below in the following literal.

[100] "Article 226.- Suspension of execution
226.1 The filing of any appeal, except in cases where a legal norm provides otherwise, shall not suspend the execution of the challenged act. (...)"

[101] "Article 258.- Resolution
(...) 258.2 The resolution shall be enforceable when it puts an end to the administrative route. The administration may adopt the necessary precautionary measures to guarantee its effectiveness, as long as it is not enforceable. (...)"

PERU
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"

i) Zest has communicated in its brief of 27 October 2023 (and confirmed in brief of 09 April 2024) as the expiration date of the funds December 2023, for the ZBL Fund and May 2024 for the ZIL Fund.

In that sense, in application of the principle of presumption of veracity and in the understanding that given the context Zest has not proposed and/or accepted the extension thereof, knowing the situation of the administrative sanctioning procedure, it is pertinent to leave without effect the corrective measure imposed by article 5° of THE RESOLUTION and based on the aforementioned circumstances, require Zest that, no later than 28 June 2024 and 28 August 2024, it prove before the General Superintendency of Supervision of Entities the liquidation of the ZBL and ZIL Funds.

IV.4. Other aspects

Final Request

Regarding Zest's request referred to the issuance of new regulations that clarify confusing or obscure aspects of the norms involved in this procedure and therefore, the sanction imposed be revoked, it should be noted that although every norm is perfectible, in the present case the need to issue regulations to resolve the case under analysis is not considered, to the extent that the SMV has no doubts about the nature or purpose and scope of the securities market norms involved in the present case.

Changes in Zest's management team

By brief presented on 3 February and 3 April 2023, Zest communicated the appointment of its new General Manager and the appointments of its new managers, of investment, commercial and of technology and operations; respectively. In this regard, since these are subsequent facts that do not affect the commission or non-commission of the infraction nor Zest's responsibility in the imputed facts, it is not appropriate to make any comment or analysis in this regard.

Request for Authorization of Organization

a) Regarding what was informed by Zest, in relation to the fact that it has submitted its authorization request to organize a mutual fund management company to be named "Zest Capital Sociedad Administradora de Fondos de Inversión S.A.C.", as previously indicated, this fact is an indication that Zest wants to regularize its situation, even more so if it has filed a reconsideration appeal, attaching further documentation, in order that Resolution of the General Superintendency of Supervision of Entities No. 017-2024-SMV/10.2 be left without effect, by which the authorization request to organize a mutual fund management company is denied, said appeal being under evaluation by the General Superintendency of Supervision of Entities.

b) The appellant states that since it was created it has had no complaints from its clients, and has also shown a desire to be regulated by the SMV in order to continue growing, since it initiated a procedure to obtain its authorization of

"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"

organization from which it later withdrew upon the suggestion of the IGSE and Mr. Garcia, because the present sanctioning procedure was pending resolution. It adds that the foregoing is also corroborated because within its economic group is the company Zest Capital LLC headquartered in the United States of America under RIA regulation, with code ZEST (CRD # 316889/SEC#:801-122725) and attaches an access link.

In this regard, as previously mentioned, the fact that no complaints have been filed does not imply that investors would not have been affected by Zest's actions, as there is harm to transparency and investor protection, by not complying with the regulatory standard. However, in reference to the authorization request of organization presented before the Office of Charges and the withdrawal thereof, this argument was already analyzed when evaluating the aspects related to the graduation of the sanction. Regarding the regulation of Zest Capital LLC in the United States, it should be remembered that this company is not part of the present procedure, consequently, it is not appropriate to analyze its behavior.

That, for the foregoing, it has been proven that Zest made two public offerings of securities without having previously registered the participation certificates of the ZBL and ZIL Funds in the RPMV and, therefore, incurred in two (02) infractions of a very serious nature, typified in Annex III, literal A), numeral 1, subsection 1.1. of the Sanctions Regulation. Likewise, it has been determined that although Zest did not act intentionally in the commission of the infraction, it has acted with negligence. Thus, Zest has not had due diligence when making said public offerings by not observing the securities market regulations;

That, for all the aforementioned, and in order to ensure proportionality between the sanction to be imposed and the facts charged, in the case analyzed, this Office considers that the sanction imposed on Zest of 240 UITs corresponding to two (02) very serious infractions must be modified to a fine of one hundred two (102) UIT in force at the date of commission of the infractions, equivalent to S/ 428,400.00 (four hundred twenty-eight thousand four hundred and 00/100 Soles);

That, subsection 6.3 of article 6 of the TUO of the LPAG recognizes that it does not constitute a cause for nullity the fact that the hierarchical superior of the authority that issued the act being challenged (in this case the Superintendent of the Securities Market) has a different appreciation regarding the assessment of the evidence or the application or interpretation of the law contained in the challenged act.102 Thus, the same norm states that the different appreciation leads to estimating

[102] Article 6.- Motivation of the administrative act

(...)

6.3 Not admissible as motivation are the exposition of general formulas or those empty of foundation for the specific case or those formulas that due to their obscurity, vagueness, contradiction or insufficiency are not specifically enlightening for the motivation of the act.

It does not constitute a cause for nullity the fact that the hierarchical superior of the authority that issued the act being challenged has a different appreciation regarding the assessment of the evidence or the application or interpretation of the law contained in said act. Such different appreciation must lead to granting partially or totally the appeal filed against the challenged act.

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"

partially or totally the appeal filed against the challenged act, in this case, THE RESOLUTION;

That, finally, from the arguments presented throughout this Resolution, it is evident that THE RESOLUTION does not suffer from nullity defects and that all the arguments raised by Zest have been evaluated, therefore, the principles of the administrative sanctioning procedure have been respected and complied with and it has not been determined that article 10 of the TUO of the LPAG has been infringed nor that a nullity defect has been incurred; and,

In accordance with the provisions of numeral 26 of article 12° of the Regulation of Organization and Functions of the SMV, approved by Supreme Decree No. 216-2011-EF;

RESOLVES:

Article 1°.- Declare partially founded the appeal filed by Zest Capital Perú S.A.C. against the Resolution of Deputy Superintendent SMV No. 031-2021-SMV/10, in the extremes referring to the sanction imposed by article 4° of said Resolution and to the corrective measure ordered by article 5° of the referred Resolution; and unfounded in the other extremes.

Article 2°.- Graduate the amount of the fine imposed by article 4° of the Resolution of Deputy Superintendent SMV No. 031-2021-SMV/10 to one hundred two (102) UIT in force at the date of commission of the infractions indicated in articles 1° and 2° of said resolution, equivalent to S/ 428,400.00 (four hundred twenty-eight thousand four hundred and 00/100 Soles).

Article 3°.- Leave without effect the corrective measure ordered by article 5° of the Resolution of Deputy Superintendent SMV No. 031-2021-SMV/10, for the reasons set forth in the recital part of this resolution. Zest Capital Perú S.A.C. must prove with the corresponding supporting documentation, before the General Intendancy of Supervision of Entities, the liquidation of the Zest Income Liquid and Zest Bond Liquid Funds, no later than 28 June 2024 and 29 August 2024; respectively.

Article 4°.- Declare the administrative route exhausted.

Article 5°.- Notify this resolution to Zest Capital Perú S.A.C.

Article 6°.- Order the dissemination of this resolution on the Institutional Page of the Superintendency of the Securities Market on the Single Digital Platform of the Peruvian State (www.gob.pe/smv).

Register, communicate and publish.

Signed by: PICHIHUA SERNA Zosimo Juan
Reason: Date: 13/05/2024 17:10:55
Zósimo Juan Pichihua Serna
Superintendent of the Securities Market

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"

Signed by: SOTOMAYOR REDOLET Silvia Grimanesa F.
Reason:
Date: 13/05/2024 12:52:05

Signed by: VARGAS PIÑA Julio Cesar FAU 20131016395 Reason:
Date: 13/05/2024 13:10:27

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.firmasegura.gob.pe/web/validador.xhtml

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"

ANNEX

Below are shown the lists of invitees (potential clients and participants) to acquire units of the ZBL and ZIL Funds and in relation to the 29 and 25 sworn statements presented by Zest corresponding to the recipients of the invitation to the ZBL and ZIL Funds; respectively, the determined observations are indicated (Detail at the end of the Annex):

ZBL FUND

List of Potential Clients invited to acquire units of the ZBL Fund between May and August 2019

	Potential Clients	Do you have a Sworn Statement?	Observations (*)
1		No	-
2		No	-
3		No	-
4		No	-
5		No	-
6		Yes	1) and 2)
7		No	-
8		No	-
9		No	-
10		No	-
11		Yes	None
12		No	-
13		No	-
14		No	-
15		No	-
16		No	-
17		No	-
18		No	-
19		No	-
20		No	-
21		No	-
22		No	-
23		No	-
24		No	-
25		No	-
26		No	-
27		No	-
28		No	-
29		No	-

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

"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"

30		No	-
31		No	-
32		No	-
33		No	-
34		No	-
35		No	-
36		No	-
37		Yes	1) and 2)
38		No	-
39		No	-
40		No	-
41		No	-
42		No	-
43		No	-
44		Yes	1) and 2)
45		No	-
46		No	-
47		No	-
48		No	-
49		No	-
50		No	-
51		No	-
52		No	-
53		No	-
54		No	-
55		No	-
56		No	-
57		No	-
58		No	-
59		Yes	None
60		No	-
61		Yes	1) and 2)
62		No	-
63		No	-
64		No	-
65		No	-
66		No	-
67		No	-
68		No	-
69		No	-
70		No	-
71		No	-

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

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

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

72		No	-
73		No	-
74		No	-
75		No	-
76		No	-
77		No	-
78		No	-
79		No	-

Source: Annexes 5, 6, 7 and 8 of the brief submitted by Zest on 27 January 2020.

List of Participants of the ZBL Fund between May and August 2019

	Participants	Does it have a Sworn Statement?	Observations (*)
80		Yes	None
81		Yes	1) and 2)
82		Yes	1) and 2)
83		Yes	None
84		Yes	1) and 2)
85		Yes	3)
86		Yes	None
87		Yes	None
88		Yes	None
89		Yes	None
90		No	-
91		Yes	None
92		Yes	None
93		Yes	3)
94		Yes	None
95		Yes	None
96		Yes	None
97		Yes	None
98		Yes	3)
99		Yes	None
100		Yes	None
101		Yes	None
102		Yes	None
103		Yes	None

Source: Annexes 1 and 4 of the brief submitted by Zest on 27 January 2020.

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

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

In conclusion, of the 103 invitees of the ZBL Fund:

	No.	Situation
1	19	Sworn statements in the file comply with current regulations.
2	74	Their sworn statement is not in the file.
3	7	In sworn statements in the file, the amount of the patrimony and the investment portfolio is outdated and it is not differentiated whether the investor qualifies under the contract definitions as institutional or qualified.
4	3	From the sworn statements in the file, the quality of the investors cannot be determined because they have declared (by marking) being institutional investors as well as qualified investors.

ZIL FUND

List of Potential Clients invited to acquire units of the ZIL Fund between May and August 2019

	Potential Clients	Do they have a Sworn Statement?	Observations (*)
1		No	-
2		No	-
3		No	-
4		No	-
5		No	-
6		Yes	1) and 2)
7		No	-
8		No	-
9		No	-
10		No	-
11		Yes	None
12		No	-
13		No	-
14		No	-
15		No	-
16		No	-
17		No	-
18		No	-

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

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

19		No	-
20		No	-
21		No	-
22		No	-
23		No	-
24		No	-
25		No	-
26		No	-
27		No	-
28		No	-
29		No	-
30		No	-
31		No	-
32		No	-
33		No	-
34		No	-
35		No	-
36		No	-
37		Yes	1) and 2)
38		No	-
39		No	-
40		No	-
41		No	-
42		No	-
43		Yes	1) and 2)
44		No	-
45		No	-
46		No	-
47		No	-
48		No	-
49		No	-
50		No	-
51		No	-
52		No	-
53		No	-
54		No	-
55		No	-
56		No	-
57		No	-
58		Yes	None
59		No	-
60		Yes	1) and 2)

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

PERU
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"

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

61		No	-
62		No	-
63		No	-
64		No	-
65		No	-
66		No	-
67		No	-
68		No	-
69		No	-
70		No	-
71		No	-
72		No	-
73		No	-
74		No	-
75		No	-
76		No	-
77		No	-
78		No	-
79		No	-
80		No	-
81		Yes	None
82		No	-
83		No	-
84		Yes	1) and 2)
85		No	-
86		No	-
87		No	-
88		No	-
89		No	-
90		No	-
91		No	-
92		No	-
93		No	-
94		No	-
95		No	-
96		No	-
97		No	-
98		Yes	1) and 2)
99		No	-
100		No	-
101		No	-
102		No	-

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

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

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103		No	-
104		No	-
105		No	-
106		No	-
107		No	-
108		No	-
109		No	-
110		No	-
111		No	-
112		No	-
113		No	-
114		No	-
115		No	-
116		No	-
117		No	-
118		No	-
119		No	-
120		No	-
121		No	-
122		No	-
123		No	-
124		No	-
125		No	-
126		No	-
127		No	-
128		No	-
129		No	-
130		No	-
131		No	-
132		No	-
133		No	-
134		No	-
135		No	-
136		No	-
137		No	-
138		No	-
139		No	-
140		No	-
141		No	-
142		No	-
143		No	-
144		No	-

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

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

Source: Annexes 5, 6, 7 and 8 of the brief submitted by Zest on 27 January 2020.

List of Participants of the ZIL Fund between May and August 2019

	Participants	Does it have a Sworn Declaration?	Observations (*)
145		Yes	1) and 2)
146		Yes	1) and 2)
147		Yes	1) and 2)
148		Yes	1) and 2)
149		Yes	1) and 2)
150		Yes	1) and 2)
151		Yes	3)
152		Yes	3)
153		Yes	None
154		Yes	None
155		Yes	None
156		Yes	None
157		Yes	None
158		Yes	None
159		Yes	None
160		Yes	None

Source: Annexes 1 and 4 of the brief submitted by Zest on 27 January 2020.

In conclusion, of the 160 invitees of the ZIL Fund:

	No.	Situation
1	11	Sworn statements in the file comply with current regulations.
2	135	Their sworn statement is not in the file.
3	12	Sworn statements in the file in which the amount of the estate and the investment portfolio is outdated and it is not distinguished whether the investor qualifies under the definitions contained in the contract as institutional or qualified.
4	2	Sworn statements in the file in which the status of the investors cannot be determined because they have declared (by marking) that they are institutional investors as well as qualified investors (both conditions at the same time, according to the definitions contained in the contract).
	160	Total invitees.

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

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

(*) Observations on the sworn statements:

1) The amounts referring to equity and investment portfolio have not been updated.

2) It is recorded as qualifying both as an institutional investor and as a qualified investor (there is no option to choose).

3) The subscribers have marked themselves as both institutional and qualified investors (despite there being an option to choose).

Further development of the observations is found in literal a), of the section On the public segment, of point IV.1, of this resolution.