ACT 17,811
To the President of the Nation:
We have the honor to submit to your
consideration the Bill referred to stock exchanges and stock markets, as well
as the public offering of securities.
The object of the bill in question is to
replace the old existing legislation contained in the Commercial Code and in
the rules and modifying decrees, with a streamlined system that shall regulate
to the fullest extent all that is referred to the organization and operation of
Stock Exchanges and Stock Markets, the public offering of securities, and to
the updating of the people devoted to the trading thereof.
The intention to revamp the institutions
essential for the Argentine economic activity combines with the project with the
aim to protect investors, especially those conforming the business community
that, due to the lack of relevant information, have suffered most the
consequences of the companies not sound enough as to guarantee internal savings
a productive and safe destination.
The importance and the technicality of the
mentioned project urge to include in this message the motives submitted to the
Secretary of State of Justice by the Drafting Committee.
God save Your Excellency
Text of the Act
In use of the powers conferred by Section 5 of
the Argentine Revolution Statute, the President of the Argentine Nation enacts
and passes the present law:
CHAPTER I
NATIONAL SECURITIES
COMMISSION
Section 1: The National Securities Commission
is an autarkic entity having jurisdiction over the entire
(*) Section
2: Its functions are carried out by a Board of Directors consisting of five
members appointed by the Executive Branch. Board members remain in office for a
seven-year term and they may be re-elected. They must have recognized
competence in the subject hereof, duly accredited by their qualifications or
professional activities.
The Chairman may not engage in any other
remunerated activity, except teaching or research assignments.
The remaining directors may not engage in, hold
or perform:
(a) Any other remunerated activity in any
national, provincial, or municipal Government agency, including the legislative
and judicial branches, except teaching or research assignments.
(b) Professional positions, tasks or advisory
assignments in any matter either directly or indirectly relating to persons
subject to the provisions hereof.
(c) Representation of others, counsel, or
action in any judicial or extra judicial proceedings before the national
Government, provinces, municipalities, instrumentalities, state-owned
companies, government corporations, banks or any other government agency.
Section 3: The National Executive Branch
appoints the Chairman and Vice Chairman of the Board. The Chairman or the Vice
Chairman, as the case may be, is the representative of the National Securities
Commission and has a casting vote in the event of a tie. Board meetings may be
validly held with three of its members present, and the decision of a majority
of the directors present at a meeting shall be the decision of the Board.
Section 4: Staff members are appointed,
suspended and removed by the Board. Board and staff members are entitled to
such remuneration as is established in the National Budget.
Section 5: Any expenses required for the
functioning of the National Securities Commission shall be defrayed with the
appropriations assigned by the National Budget. The proceeds of any penalties
herein prescribed shall accrue to the National General Revenues.
(**) Section
6: The National Securities Commission shall have the following functions:
(a) Authorize public offerings of securities;
(b) To advise the FEDERAL EXECUTIVE BRANCH with regards to the petitions
for authorization to operate within the stock exchanges, whose by-laws foresee
the trading of securities, and capital markets.
(c) Keep a record of all Stockbrokers
registered with Securities Markets;
(d) Keep a register of all natural and
artificial persons authorized to make public offerings of securities, and
prescribe the rules that such persons and those acting for their own account
are to observe;
(e) Approve the rules and regulations of
Exchanges relating to the public offering of securities and those of Securities
Markets;
(f) Supervise compliance with applicable laws,
rules and regulations in all matters within the scope of this Law;
(g) Request the National Executive Branch to
revoke the registration of Stock Exchanges and Securities Markets, whenever
such institutions should fail to comply with the functions herein assigned to
them.
(h) To declare irregular and inefficient, for administrative purposes,
the acts subject to their control, when the acts are against the law, the
regulations passed by the SECURITIES AND EXCHANGE COMMISSION, the by-laws or
the regulations.
Section 7: The National Securities Commission
establishes the rules that natural or artificial persons involved in any
capacity in the public offering of securities must observe for the purpose of
evidencing compliance with the requirements herein set forth. In the exercise
of its functions it may:
(a) Require reports and carry out inspections
and investigations in respect of natural or artificial persons subject to its
supervisory authority;
(b) Request the aid of law enforcement
agencies;
(c) Report crimes or prosecute in court.
Section 8: All information gathered by the
National Securities Commission in exercising its inspection and investigative
powers shall be kept secret. Courts shall ex officio dismiss any request for
the Commission to provide such information, save in the case of criminal
proceedings for ordinary crimes directly related to the facts being
investigated.
Section 9: The National Securities Commission
Board and staff members shall maintain the secrecy of any information obtained
in performing their functions. Upon violating such duty of secrecy, they shall
be liable to any applicable administrative and criminal sanctions.
(**) Section
10: Without prejudice of any pertinent civil or criminal actions, natural
or artificial persons failing to comply with the provisions hereof, shall be
liable to the following penalties:
(a) Censure;
(b) Fine of ONE THOUSAND PESOS ($ 1,000) to ONE MILLION FIVE HUNDRED
THOUSAND PESOS ($ 1,500,000) that may be raised to up to FIVE (5) times the
amount of the obtained benefit or the damage suffered as a consequence of the
illegal action, if any of them is higher.
(c) Suspension of up to FIVE (5) years from performing their functions
as directors, managers, auditors, members of the supervisory council, members
of the qualification council, accountants giving their opinion or external
auditors or managers of issuers authorized to make the public offering, or to
act as such in investment o depository companies of mutual funds, in rating
agencies or in companies developing the activity of financial trustees, or to
act as intermediaries in the public offering or in any other manner which may
be under the control of the SECURITIES AND EXCHANGE COMMISSION.
(d) Suspension of up to TWO (2) years to make public offerings or, in
its case, of the authorization to act in the public offering. In the case of
mutual funds, only joint administration acts may be performed and requests may
be approved for the redemption of quotas, being able to sell for that purpose
the property in the portfolio controlled by the SECURITIES AND EXCHANGE
COMMISSION.
(e) Prohibition to make public offerings of negotiable securities or, in
its case, to authorize to act in the public offering of negotiable securities
or forward contracts, futures or options of any nature whatsoever.
For the purposes of establishing the above mentioned penalties, the
SECURITIES AND EXCHANGE COMMISSION shall especially take into account: the
damage to the confidence in the capital market; the scope of the violation; the
generated benefits or the damages caused by the defaulting party; the operating
volume of the defaulting party; the individual performance of the members of
the administration and control bodies and their relation with the control
group, especially, the nature of independent or external member(s) of said
bodies; and the circumstance of having been penalized in the SIX (6) previous
years by the application of this law. In the case of the artificial persons the
following shall be joint and severally liable: the directors, administrators,
auditors or members of the supervisory boards and, in its case, the managers
and members of the qualification board, whose individual responsibility was
determined in the commitment of the penalized behaviors.
(**) Section 10 bis: Fines. The amount corresponding to fines shall be
entered by the persons bound to pay them within a term of TEN (10) days after
the date of the final decision that imposes them.
The amounts entered for the
proceeds of the fines shall be incorporated to the National Treasury.
Summary Nature, Precautionary
Measures. The lack of payment of the imposed fines and of the amounts due shall
be demandable for their payment through the procedure of fiscal execution
established by the
Penalties Register. The
SECURITIES AND EXCHANGE COMMISSION shall keep a public register of the imposed
penalties, where the successive resolutions until the last legal instance shall
appear as well as the data of the responsible parties and the measures adopted
regarding that matter.
Existence of Criminal Cases.
The concurrent proceedings of criminal cases regarding behaviors described by
this Law and that may further generate sentences in that matter, shall not
impede the prosecution and conclusion of the respective summary proceedings
before the SECURITIES AND EXCHANGE COMMISSION or in self-regulated entities.
Statute of Limitations. The statute of
limitations for which claims may be brought against actions which are in
violation of Act No. 17,811 and amending regulations, of Act No. 24,083 and
amending regulations, and/or the Regulations on Transparency of the Public
Offering, shall be SIX (6) years after the event that caused it. Said period
shall be extended by any other violation and by any acts and proceedings
inherent to the summary proceedings, once brought by resolution of the Board of
Directors of the SECURITIES AND EXCHANGE COMMISSION. The statute of limitations
to impose fines shall take place THREE (3) years as from the date of notice of
said final penalty.
Section 11: Upon ascertaining that a
Stockbroker has violated any provisions hereof or any rules or regulations in
conducting transactions at a Securities Market, the National Securities
Commission shall report such circumstance to the relevant Securities Market,
which is to take fitting disciplinary action.
(**) Section
12: The penalties established in this chapter shall be applied by the Board
of Directors of the SECURITIES AND EXCHANGE COMMISSION, through grounded
resolution, prior summary proceedings through the process established by the
regulations of the SECURITIES AND EXCHANGE COMMISSION, which shall observe and
apply the principles and rules established in this section and the procedure
rules passed by the SECURITIES AND EXCHANGE COMMISSION.
The principles and rules of administrative
procedure shall be applied in a supplementary way and all records shall be
protected through the transcription in the record of oral hearings, for the
eventual revision in second instance.
Summary proceedings shall be brought on the
basis of the conclusions of the investigation, by administrative initiative or
for denunciation, that an office of the SECURITIES AND EXCHANGE COMMISSION shall
carry out and that shall include a proposal of bringing charges to be evaluated
by the Board of Directors that shall be the competent body to decide the
opening of the summary proceedings. The summary proceedings shall be conducted
by another office of the SECURITIES AND EXCHANGE COMMISSION, separate and
independent from the one that brought the charges. The office that brought the
charges, once the summary proceedings have been tried, shall take the records
to the Board of Directors with its recommendations for its consideration and
decision.
When the proceedings are brought by a
denunciation before the SECURITIES AND EXCHANGE COMMISSION, the denouncer shall
not be considered a party of the proceedings and in no case shall he take
knowledge of said records protected by confidentiality established in sections
8° and 9° of this law. The Board of Directors of the SECURITIES AND EXCHANGE
COMMISSION prior judgement of the competent bodies, shall dismiss the
denunciation when the preliminary exam determines that the events do not
constitute violations described by the applicable law or regulation. In such a
case, notice of the decision shall be given to the denouncer who may appeal
according to the provisions of section 14 of this law.
The SECURITIES AND EXCHANGE COMMISSION may
request, at any time prior to the summary proceedings, the appearance of the
parties involved in the investigation to provide the explanations it deems
necessary and also to reconcile or minimize the differences that may exist on
questions of fact, drawing up a record of the factual accounts during said
preliminary hearing. In the summons, the purpose of the appearance shall be
specifically stated. If the alleged events are explicitly by the investigated
parties, the SECURITIES AND EXCHANGE COMMISSION may decide to terminate the
investigation and apply the corresponding penalties according to section 10 of
this law.
Prior to the trial of the case, a preliminary
hearing, apart from attaining explanation, shall be conducted, so that differences
on questions of fact shall be reduced and different procedural guidelines shall
be deliberated and agreed upon for the sake of the principles of concentration,
procedural economy and immediacy.
(**) Section
13: Whenever a systematic risk practice, or any other serious financial
threat, is identified, the SECURITIES AND EXCHANGE COMMISSION, or the
respective self-regulated entity, may suspend in a preventive manner the public
offering or the negotiation of negotiable securities, or forward contracts, futures
and options of any nature whatsoever and the execution of any act submitted to
its control. This may further be ordered when initiating an investigation or at
any stage of the summary proceedings, and it shall not be extended once the
investigation or the summary proceedings are concluded or after a year of their
initiation. When it affects self-regulated entities, it may extend for a
maximum period of THIRTY (30) days, except when the measure is extended by the
FEDERAL EXECUTIVE BRANCH.
Interruption. The SECURITIES
AND EXCHANGE COMMISSION, or the respective self-regulated entities, may
temporarily interrupt the public offering of negotiable securities or forward
contracts, futures and options of any nature whatsoever when the diffusion of
the relevant information is pending, or there are extraordinary circumstances
that make the suspension advisable, until the reasons for suspension have been
eliminated.
(**) Section
14: The decisions of the SECURITIES AND EXCHANGE COMMISSION to carry out
summary proceedings during said proceedings shall not be appealable, but they may be objected to when filing an appeal
of final decisions.
Final decisions for penalties,
which are more severe than that of a warning, may be appealed before the
Federal Court of Appeals of the corresponding jurisdiction. In the AUTONOMOUS
CITY OF BUENOS AIRES, the National Court of Appeals in Commercial Matters shall
intervene.
The remedy shall be filed and
grounded in writing before the SECURITIES AND EXCHANGE COMMISSION within FIFTEEN
(15) business days after giving notice of the measure and shall be returnable,
except for the remedy against the imposition of the fine that shall have
staying effect.
The records shall be referred to the competent
legal body with the summary proceedings within TEN (10) days after filing the
remedy.
(**) Section
15: Only rulings imposing censure are appealable for reversal to the
National Securities Commission. It shall be filed in writing
within a term of TEN (10) business days after giving notice of said penalty and
solved without any other proceeding. In case where the warning penalty is
imposed jointly with any of the remaining measures described in section 10 of
Act No. 17,811 and amending regulations, they shall both be appealable through
the procedure established in the previous section.
CHAPTER II
PUBLIC OFFERING OF
SECURITIES
Section 16: A public offering is an invitation
made to the general public or to specific groups or sectors to do any kind of
juridic act with securities, by the issuers or by sole proprietorships, firms
or companies either exclusively or partly engaged in the trading thereof, by
means of personal offers, newspapers and periodicals, radio or television
broadcasts, films, posters, placards or billboards, programs, circulars and
printed communications or any other means of public communication.
Section 17: Only securities issued in a mass
which on account of having the same characteristics and enjoying the same
rights within their class are offered generically and identified specifically
at the time of performance of the respective contract may be publicly offered.
Section 18: Public offerings of securities
issued by the Nation, the provinces, the municipalities, autarkic entities and
government corporations do not fall within the scope of this law, without
prejudice to the powers vested in the Central Bank of the Argentine Republic
(Banco Central de
Section 19: The National Securities Commission
shall resolve upon an application for authorization to make a public offering
within thirty days as of the date of the application. If at the end of such
thirty-day period no resolution has been adopted, the interested party may
require a prompt resolution thereon. If ten days after such request was filed the
National Securities Commission should have failed to issue a resolution,
authorization shall be deemed to have been granted, unless such time limit
shall have been extended by a duly grounded resolution of the Commission. Such
extension may not exceed thirty days after the date thereof. Upon expiration of
such additional time, authorization shall be deemed to have been granted. A
resolution refusing authorization is appealable, and the rules set forth in
section 14 as to competent jurisdiction and procedure shall likewise apply.
Such refusal may not be resolved on the grounds of opportuneness or expediency.
The authorization to make a public offering of
a specified number of securities does not entail an authorization to offer
other securities issued by the same issuing entity, even though their
characteristics may be the same.
Section 20: In regulating money and credit,
the Central Bank of the
Section 21: Public offerings of securities may
be made by the issuing corporations and by the natural or artificial persons
registered in the Register provided in section 6, subsection (d) hereof. Such
persons shall carry a record or file with the personal data, identification
documents, and signatures of their clients. Stockbrokers operating exclusively
as members of a Securities Markets shall be exempted from the requirements
provided for in this section.
CHAPTER III
MERCANTILE EXCHANGES
OR MARKETS IN GENERAL
Section 22: Mercantile Exchanges or Markets
shall be organized as incorporated associations or as corporations.
Section 23: The rules and regulations of
Mercantile Exchanges or Markets are to ensure the genuineness of transactions
and the accuracy of the registration and publication thereof.
Section 24: The result of transactions
regularly carried out on a Mercantile Exchange or Market determines the current
price of traded assets.
Section 25: Exchange transactions shall be
executed with a view to performance. The parties may not forgo performance
alleging they had intended to settle the transaction by payment of the bid and
ask spread prevailing at the time of execution and performance.
Section 26: The rules and regulations of
Mercantile Exchanges or Markets shall stipulate in which cases and upon which
conditions such institutions guarantee performance of the transactions therein
carried out or recorded.
Section 27: Mercantile Exchanges or Markets may
organize clearing houses to settle transactions. In addition, they may carry
out financial transactions in order to facilitate the execution of exchange
transactions according to their rules and regulations.
CHAPTER IV
REGISTERED STOCK
EXCHANGES AND SECURITIES MARKETS
Section 28: Exchanges whose corporate by-laws
provide for the listing of securities and Securities Markets wishing to
organize in the future, shall apply for appropriate authorization to the
National Executive Branch through the National Securities Commission to perform
the functions herein assigned to such institutions.
Section 29: The involvement of the National
Securities Commission as provided in the foregoing section will be without
detriment to the involvement of other national or provincial government
agencies.
Section 30: Exchanges whose corporate by-laws
provide for the listing of securities shall:
(a) Authorize, suspend and cancel the listing
of securities in the manner provided by their rules and regulations;
(b) Establish the requirements to be complied
with in order to list securities while the relevant authorization remains in
effect;
(c) Monitor compliance with existing laws and
regulations by listed corporations;
(d) Adopt such rules and measures as may be
necessary to ensure the accuracy of the financial statements and other
reporting documentation that listed corporations are to file or publish;
(e) Issue regulations ensuring the accuracy of
recorded listings and publish such listings and their current prices.
Section 31: The powers mentioned in the
foregoing section shall be exercised upon the opinion of a Listing Commission
to be set up by each Exchange. Such securities commission shall be formed by
the President, or Acting President, of the relevant Securities Market, and by
representatives of the issuers, investors and other interested sectors that the
Exchanges may designate.
Section 32: An Exchange may authorize the
listing of a corporate security only upon the National Securities Commission's
prior approval of such security for public offering.
Section 33: Exchanges whose corporate by-laws
provide for the listing of securities are hereby authorized to collect listing
fees from the issuing corporation as well as trading fees from the parties to
any transaction, such fees to be set by the Exchanges and submitted to the
National Ministry of Economy and Labor for approval. Final approval of such
fees will be considered to have been granted if the Ministry fails to resolve
thereon within sixty days of filing.
Section 34: Appeal from resolutions by the
Exchanges refusing, suspending or cancelling listing of securities may be taken
on the ground of violation of their regulations, within fifteen days, to the
Ordinary Appellate Courts of the pertinent jurisdiction. The brief of appeal
supported by a statement of the grounds therefor is to be filed with the
Exchange, which shall submit it to the Court within three days thereafter. The
Court is to rule on the appeal without any further trial, except for any
additional evidence it may require. The appeal shall be granted for purposes of
review only, with no stay of execution.
Section 35: Securities Markets shall be
organized as corporations with registered shares either transferable or
non-transferable. Only such entities as may have been authorized to do so under
this Law may use the designation Securities Markets or any other similar
designation or engage in activities pertaining to such institutions.
Section 36: Securities Markets may only allow
trading of securities whose listing shall have been authorized by the Exchange
they belong to and transactions ordered by a court. Securities transactions
ordered in the course of court proceedings shall be effected by a Stockbroker
in the respective trading floor.
Section 37: Securities Markets shall establish
all such rules and regulations as may be necessary to ensure the genuineness of
the transactions effected by Stockbrokers.
Section 38: Securities Markets are hereby
authorized to collect the trading fees payable by the parties to a transaction,
according to the provisions of section 33 as to the manner in which they are to
be set and approved.
CHAPTER V
STOCKBROKERS
Section 39: Securities Markets shall keep a
Register of Stockbrokers. No natural or artificial persons may trade on a
Securities market or use the designation Stockbroker or carry out a
stockbroker's activities unless they are registered with the relevant
Securities Market.
Section 40: Securities Markets shall report to
the National Securities Commission any information concerning any new
Stockbrokers entered in their Register, any cancellation of such registrations
and any changes in connection therewith.
Section 41: Without prejudice to any other
conditions stipulated by the respective Securities Market, the following
requirements are established to act as Stockbroker:
(a) To be of legal age;
(b) To be a shareholder in the relevant
Securities Market and to have posted security to the order thereof;
(c) According to the relevant Securities Market's
judgment, to have professional competence, moral integrity, and financial
solvency;
(d) To be a shareholder of the Exchange with
which the pertinent Securities Market is affiliated.
Section 42: The following persons may not
register as Stockbrokers:
(a) Bankrupts so adjudged for fraudulent or
grossly negligent bankruptcy; bankrupts so adjudged for involuntary bankruptcy;
and parties subject to insolvency proceedings, for up to five years after their
discharge; convicts subject to penalties barring them from holding public
office, convicts sentenced for crimes committed for profit-seeking reasons or
for crimes contrary to the public credit;
(b) Employees of listed corporations;
(c) Paid employees and officials of the
national, provincial and municipal governments, other than those performing
teaching or research assignments;
(d) Persons engaged in tasks declared to be
incompatible with a Stockbroker's functions under the Securities Markets'
regulations. In the event such incompatibility should arise after the
Stockbroker's registration, the Stockbroker shall be temporarily barred from
performing such functions until such incompatibility shall have ceased.
Section 43: Securities Markets' regulations
shall establish the manner in which Stockbroker candidates should demonstrate
fulfillment of registration requirements and conditions as well as the time
within which the Market is to decide on such application.
In the event the Securities Market should
refuse the application, the applicant may file the appeals provided for in
section 60, and the provisions set forth in sections 60 and 61 shall apply.
If refused, an application may only be filed
again two years after the pertinent final resolution shall have been issued.
Section 44: Securities Markets' regulations
shall establish the formalities and requirements to be fulfilled by
Stockbrokers firms and those formed by Stockbrokers and other parties. They
shall likewise establish the admission, professional competence, moral
integrity, and financial solvency requirements to be met by non-Stockbroker
partners.
Partners will act on behalf of the firm and
they may not deal in securities for their own account.
The provisions governing Stockbrokers'
activities are also applicable to Brokerage firms and those formed by
Stockbrokers and other parties.
Section 45: In the exercise of their
functions, Stockbrokers shall conform to the provisions of each Market's
regulations.
Section 46: Stockbrokers shall maintain the
secrecy of all transactions they may perform for the account of others, as well
as of their names. They may be relieved of this duty only by a court order
issued in criminal proceedings related to such transactions or to third parties
related thereto. They may accept orders only from persons who shall have
previously duly evidenced their identity and other personal data and registered
their signature in the record the Stockbrokers are to keep for that purpose.
Section 47: Securities Markets shall establish
which books, records, and documents the Stockbrokers are to use, without
prejudice to the provisions of applicable legislation in place.
Section 48: Securities Markets may inspect
Stockbrokers books and records and request that they furnish any kind of report
whatsoever. The information thus obtained may only be disclosed under the
circumstances set forth in section 46.
Section 49: A Stockbroker's signature will
validate the slips and other instruments for the transactions in which the
Stockbroker is involved.
Section 50: The table of commission fees to be
charged by Stockbrokers for their involvement in the various types of
transactions is to be set by the respective Securities Markets and submitted to
the National Minister of Economy and Labor for approval. Final approval shall
be deemed to have been granted if the Ministry fails to issue a resolution
within sixty days thereafter.
Section 51: Stockbrokers shall only charge the
commission fees established in the relevant fee tables. They may not waive
payment thereof, or assign them to other Stockbrokers or third parties, unless
so authorized by the respective Securities Market.
CHAPTER VI
EXCHANGE CONTRACTS AND
GUARANTEES
Section 52: Government or corporate securities
are traded on Securities Markets, in accordance with the conditions established
by the relevant regulations.
Section 53: Where a Securities Market should
guarantee performance of the contracts, it shall settle any outstanding
transactions of any Stockbroker who is adjudged bankrupt. If upon settlement a
balance to the credit of the bankrupt should arise, such balance shall be
deposited with the court in the bankruptcy proceedings.
Section 54: Where a Securities Market does not
guarantee performance of the contracts, it shall issue to the Stockbroker
incurring a loss as a result of the other party's default a certificate stating
the amount in pesos moneda nacional (national lawful currency) arising from
such default. Any such certificate grants executory rights for collection of
the debt stated therein against the debtor Stockbroker.
Section 55: The margin requirement on futures
contracts is to be set by the Securities Markets where the Market guarantees
performance thereof, and the requirement shall become effective as of the time
of its publication. The Central Bank of the
Securities Markets' regulations shall establish
the manner in which such margin is to be maintained and corrected for any
deficiency caused by fluctuations in the market price of securities in respect
of the agreed price. Initial margins and margin calls shall be deposited with
the Securities Markets.
Section 56: The customer shall deliver to the
Stockbroker the initial margin and margin call amounts within the term
established by the Securities Markets regulations. Failing this, the
Stockbroker shall be empowered to close the contract.
Section 57: Securities Markets shall set up a
Guarantee Fund to meet any commitments not honored by Stockbrokers arising out
of contracts guaranteed by the Markets, with at least fifty percent of their
liquid and realized annual profits.
The sums accruing to this fund up to an amount
equal to the subscribed stock shall be kept in cash or invested in listed
government securities. Any surplus may be invested in a manner and upon
conditions appropriate to the institution's purposes or capitalized in
accordance with the rules and regulations of the respective Securities Market. The
sums allocated to the Guarantee Fund and the Fund itself shall be exempt from
any taxes, rates or any other fiscal levies.
Section 58: A Stockbroker shall be liable to
the Securities Market for any sums the latter may have paid in the
Stockbroker's stead. Until the Stockbroker shall have corrected the situation
and demonstrated that force majeure or Act of God was involved, he shall be
suspended.
CHAPTER VII
DISCIPLINARY SANCTIONS
AND APPEALS
Section 59: Securities Markets have
disciplinary authority over Stockbrokers who may violate this Law, any
provisions that may be issued hereunder, and those institutions' rules and
regulations. They act at their own initiative, upon requirement of the National
Securities Commission or at the request of interested parties; in this last
case, they must report such request to the National Securities Commission
within three days after receiving it. They may apply the following disciplinary
sanctions:
(a) Censure;
(b) Suspension;
(c) Revocation of registration as Stockbroker.
Disciplinary sanctions shall be resolved after
the respondent has submitted his answer to the charges or, failing this, upon
expiration of the three-day period for publication of notices on the Securities
Market board. Disciplinary sanctions shall be resolved with half plus one of
the Securities Market Directors present and upon the vote of two thirds of the
Directors present at the meeting.
Notice of the disciplinary sanctions shall be
served in person or, should personal service be impracticable, by publication
of the notice on the Securities Market board. Where the disciplinary
proceedings shall have been instituted upon requirement by the National
Securities Commission, or at the request of an interested party, the Commission
shall be notified of the final ruling.
The Securities Market imposing the disciplinary
sanction shall communicate such sanction, within three days thereafter, to all
Securities Markets. The sanctions set forth in subsections (b) and (c) hereof
shall have effect with respect to all Securities Markets.
Section 60: Appeal for reversal of a
resolution on disciplinary sanctions may be lodged with the Market or a
judicial appeal may be taken to a Court having competent jurisdiction. Appeals
shall be filed by the sanctionee, or by the National Securities Commission
where the Market has acted upon its requirement, within fifteen days of service
of notice. In the case of censure or suspension for up to five days, judicial
appeal may not be taken.
If the judicial appeal has been lodged by the
National Securities Commission, the Court of Appeals for Federal Matters of the
appropriate venue shall have competent jurisdiction, and, in the Federal
Capital, the National Court of Appeals for Commercial Matters. If the appeal is
lodged by the Stockbroker only, this latter Court shall have jurisdiction in
the Federal Capital and the Ordinary Appellate Court in the provinces.
The appeal brief stating the grounds therefor
is to be submitted to the Securities Market, which shall refer it to the Court
with full background information within three days. The Court will resolve
thereon, without any further trial, save for any additional evidence it may
require. Appeal shall be granted for purposes of review only, without stay of
execution.
Section 61: If the Stockbroker has requested
reversal of the sanction, the judicial appeal must be lodged within three days
of notification of a resolution on such request for reversal or after a period
of thirty days following the filing thereof shall have elapsed without the
Market issuing a resolution.
Section 62: A Stockbroker whose registration
has been cancelled may only apply again for registration after a five- year
period has elapsed.
(**) CHAPTER VIII
ISSUING
ENTITIES’ SYSTEM
Section
63:
Applicable Rules. The provisions contained in this Chapter are applicable to
the issuing entities included in the public offering system, in a complementary
way to the applicable rules according to the legal form adopted by said
companies.
Section
64:
Accounting Information. The following provisions pertaining to accounting
information are applicable to the issuing entities included in the public
offering system.
Consolidated Financial
Statements. Only as information, without prejudice of the obligations applicable
to each company, the SECURITIES AND EXCHANGE COMMISSION in each particular case
may authorize the controlling company to exclusively disseminate consolidated
financial statements when they describe in a clear and truthful way and as
accurately as possible the situation and information of the company with the
authorized public offering.
Complementary Notes. Without
prejudice of the information required by the applicable legal rules, the
issuers should additionally include in the complementary notes to their
financial statements the following information:
(a) In the case of
corporations, the issued shares or issued shares by authorization of the
meeting or the effectively issued shares as well as, according to the
applicable legal and regulatory system, the granted options and the securities
convertible into shares and those granting rights to participate in the
company’s profits.
(b) The agreements that prevent
the encumbrance and/or disposal of all or part of its property, with the
adequate information as regards said agreements.
(c) Sufficient information as
regards the assumption and coverage policy of risks in the markets, especially
indicating the futures, options agreements and/or any other deriving agreement.
Additional Information in the Annual
Report. Without prejudice of what is established in section 66 of Act No.
19,550 and its amending regulations and the additional rules that the
SECURITIES AND EXCHANGE COMMISSION shall establish, the following shall be at
least included in the Annual Report as additional information:
(a) The projected commercial
policy and other relevant aspects related to the company’s, financial and
investment information.
(b) The aspects related to the
decision making organization and to the company’s internal control system.
(c) The dividends policy
proposed or recommended by the board of directors with a grounded and detailed
explanation.
(d) The board of directors’
remuneration system and the remuneration policy of the company’s managers,
options plans and any other remuneration system of the board of directors and
managers by the company. The obligation of informing shall be extended to that
corresponding to the controlled companies where substantially different systems
or policies are applied.
Delivery of Information. The
SECURITIES AND EXCHANGE COMMISSION may authorize the delivery of all the
accounting documents and other financial information through electronic means
or other communication means, as long as they abide by the security rules
established for that purpose.
Section 65: Distance Meetings. The
administration body of the issuing entities may conduct meetings in the
physical presence of its members or via a communications system that provides for a simultaneous
transmission of sound, images or words, when the by-laws establishes so. The
control body shall indicate the regularity of the adopted decisions.
Only present members shall be
computed as quorum, unless the by-laws otherwise establishes. Moreover, the
by-laws shall establish the manner in which the distant participation of
members will be registered in the minutes.
The minutes shall be written
and signed within FIVE (5) days from the meeting by the present members and by
the representative of the control body.
The by-laws may establish that the
meetings may be held at a distance. For that purpose, the SECURITIES AND
EXCHANGE COMMISSION shall establish the necessary means and conditions to grant
security and transparency to the meeting.
Section
66:
Excess of Subscriptions. When adopting the capital increase resolution, the
meeting may authorize the board of directors to increase the authorized number
of shares, indicating that in one issue, the subscription requests may exceed
the number of shares offered by the company. In such case, the meeting shall
fix the limit of that exceeding issue. It shall not exceed the limit
established by the SECURITIES AND EXCHANGE COMMISSION, that shall establish the
precautions to be fulfilled in these cases.
Section
67:
Stock Options. In the listed companies, when the bylaws establishes so, the
meeting may approve the issue of stock options to be issued or securities
convertible into shares and to delegate in the board of directors the
establishment of the issuing terms and conditions and the rights to be granted.
The administration body may establish the price of the options and of the
shares to which they are entitled. The meetings and board of directors’
respective decisions shall be published and registered. Additionally, the
provisions of sections 11, 12 and 17 to 27 of Act No. 23,576 amended by Acts
No. 23,962 and No. 24,435 shall be applicable.
Section 68: Acquisition of Its Shares By the
Company. A corporation may acquire the issued shares, as long as they are
admitted to be listed by a self-regulated entity, pursuant to the conditions
established in this section and those established by the SECURITIES AND
EXCHANGE COMMISSION. The rules shall respect the equality treatment principle
among the shareholders and the right to full information of the investors.
Conditions. The following are
necessary conditions for all acquisitions of its shares by the issuing company:
(a) That the shares to be acquired
are completely paid-in.
(b) That there is grounded resolution of the
board of directors with a report of the audit committee and of the control
authority. The board of director’s resolution shall establish the purpose of
the acquisition, the maximum amount to be invested, the maximum number of
shares or the maximum percentage of capital that may be acquired and the
maximum price to be paid for the shares. The board of directors shall give
complete and detailed information to shareholders and investors.
(c) That the purchase be carried out with net
profits or with free or optional reserves, having the company to evidence
before the SECURITIES AND EXCHANGE COMMISSION, that it has the necessary
liquidity and that said acquisition does not affect the company’s solvency.
(d) That all the shares acquired by the
company, including those that may have been acquired before and held by the
company, in no case shall exceed the limit of TEN PERCENT (10%) of the
corporate capital or the lower percentage limit established by the SECURITIES
AND EXCHANGE COMMISSION taking into account the traded volume of those shares.
The shares acquired by the
company exceeding said limits shall be disposed of within NINETY (90) days as
from the date of acquisition originating the excess in the manner established
in paragraph d) of this section, without prejudice of the liability
corresponding to the company’s board of directors.
Proceeding. The operations related to the
acquisition of its own shares may be carried out through operations in the
market or through a public offering. In the case of acquisitions in the market,
their amount, in one day, shall not exceed TWENTY FIVE PERCENT (25%) of the
mean daily traded volume of the company’s shares during the previous NINETY
(90) days. In any case, the SECURITIES AND EXCHANGE COMMISSION shall require
that said acquisition be carried out through a Public Offering when the shares
to be purchased represent a significant percentage with regards the mean traded
volume.
Disposal. The shares acquired
according to the provisions of this section shall be disposed by the company
within a maximum term of THREE (3) years as from their acquisition, unless the
ordinary meeting shall establish an extension. Once the term is over, and there
not being a meeting’s resolution, the capital shall be decreased by law in an
amount equal to the par value of the shares remaining in portfolio, which shall
be cancelled. At the moment of transferring them, the company shall carry out a
preemptive right offering of the shares to the shareholders according to the
terms established in section 221 of Act No. 19,550 and its amending
regulations. This offer shall not be binding in case of fulfilling a
compensation program or plan in favor of the employees of the company, or the
shares are distributed among all the shareholders according to their holdings,
or as regards the sale of a number of shares that within a TWELVE (12) month
period does not exceed ONE PERCENT (1%) of the share capital of the company, as
long as in all cases the approval of the shareholders meeting exists.
If shareholders do not exercise, all or in
part, the above established preemptive right or in the case of shares that are
included in the mentioned limit, the transfer shall be carried out in a
securities market.
Section 69: Shares for Personnel. At the
moment of voting a capital increase, the meeting may decide to allocate a part
of the new shares to be issued for delivery to the company’s employees or
employees of any or some of its controlled companies. The accumulated total of
issued shares for this purpose shall not exceed TEN PERCENT (10%) of the
corporate capital. The meeting may decide the delivery of shares as bonus, in
which case the net profits or free reserves shall be affected or the
beneficiaries shall pay them in. In such a case, it shall establish the methods
of payment.
Section
70:
Exchange of Stock Offerings. Voting Rights. Public Requests of Powers. The
SECURITIES AND EXCHANGE COMMISSION shall establish the terms with regards to:
(a) The offerings of exchange
of stock, or stock swaps, or other similar proceeding.
(b) The vote exercised by the
entities holding shares on account of third parties, as trustees, deposit or
other similar legal relations, when so authorized by the respective agreements.
(c) The public request of
proxies, in order to assure the full information right of the investor. The
shareholders that wish to publicly request the granting of proxies in their
favor shall do so according to the rules established for that purpose by the
SECURITIES AND EXCHANGE COMMISSION. The shareholders presenting that request
shall have as minimum TWO PERCENT (2%) of the capital represented by voting
shares and a shareholder’s seniority of at least ONE (1) year, and they shall
comply with all the formal requirements established by the SECURITIES AND
EXCHANGE COMMISSION. The representation shall always be irrevocable and for a
determined meeting. The shareholders presenting said requirement shall be
liable for the information included in the proxy form registered before the
SECURITIES AND EXCHANGE COMMISSION, and for the information published during the
requirement period. Said information shall allow shareholders to make a
decision with full knowledge. The representatives participating in said
requirement shall diligently verify the accuracy of said information. Without
prejudice of the responsibility of common right that may correspond to them,
the ones not fulfilling the duties established herein and the rules shall be
penalized pursuant to sections 10 and 12 of this law.
Section 71: Notice and Information Prior to a
Meeting. In listed companies, the notice of a meeting shall be published TWENTY
(20) days in advance and not before FORTY-FIVE (45) days from the date of the
meeting. The established terms shall be computed as from the last publication.
TWENTY (20) days before the date established
for the meeting, the board of directors shall place at the shareholders’
disposal in the main office or through electronic means, all the relevant
information as regards the meeting to be held, the documents to be considered
therein and the board’s proposals.
Up to FIVE (5) days before the date established
for the ordinary meeting where the documents of the fiscal year shall be
considered, the shareholders representing at least TWO PERCENT (2%) of the
corporate capital may deliver at the main office, comments or proposals related
to the company’s business corresponding to the fiscal year. The board of
directors shall inform the shareholders that said comments or proposals are in
the main office or that they may be consulted through any electronic means.
Section
72:
Shareholders’ Meeting. In listed companies, the ordinary meeting, apart from
the matters mentioned in section 234 of Act No. 19,550 and amending regulations,
shall decide the following:
(a) The disposition or encumbrance of all or a
substantial part of the assets of the company when it is not carried out in the
ordinary course of the company’s business.
(b) Entering into the company’s administration
or management agreements. It is further applied to the approval of any other
agreement in which the goods or services received by the company are totally or
partially paid with a percentage of the company’s income, results or profits,
if the resulting amount is substantial taking into account the business and the
shareholders’ equity.
Section
73:
Acts or Agreements With “Related Parties”. In listed companies, the acts or
agreements that the company enters into with a related party and involving a
relevant amount, shall fulfill the following procedure.
Definitions. Related Party. Relevant Amount. For
the purposes of this section:
(a) Related Party shall be the following
persons related to the issuing company:
I) the directors, members of the control body
or members of the supervisory council of the issuing company, as well as the
general or special managers named
according to section 270 of Act No. 19,550 and amending regulations;
II) individuals or artificial persons having
control or a significant stake, according to what the SECURITIES AND EXCHANGE
COMMISSION may determine, in the corporate capital of the issuing company or in
the capital of its controlling company;
III) another company controlled by the same
controlling company;
IV) the ascendants, descendants, spouses,
brothers or sisters of any of the individuals mentioned in the above paragraphs
I) and II);
V) the companies in which any of the persons
referred to in the above paragraphs I) to IV) have got direct or indirect
significant stakes.
For the purposes of this
section, a company controlled by the issuing company shall not be considered a
“related party”, unless it is included in any of the mentioned cases.
(b) An act or agreement shall be for a
“relevant amount” when said amount exceeds ONE PERCENT (1%) of the corporate
capital, measured pursuant to the last approved balance sheet, as long as said
act or agreement exceeds the equivalent of ONE HUNDRED THOUSAND PESOS
($100,000).
Previous Opinions. The board of
directors, or any of its members shall require the audit committee a report
stating if the conditions of the operation may be reasonably considered
adequate to the normal market conditions. The audit committee shall submit a
report in a term of FIVE (5) business and non-business days.
Without prejudice of the requirement to the
audit committee, the company may solve with the report of TWO (2) independent
evaluating firms that shall have informed about the same matter and about the
other operation conditions.
Essential Fact. The acts or agreements referred
to in this section, immediately after being approved by the board of directors,
shall be informed according to section 5, subsection a) of the Regulations on
Transparency of the Public Offering, indicating the existence of reports of the
audit committee or, as the case may be, of the independent evaluating firms.
Information. The board of
directors shall place at the shareholders’ disposal the reports of the audit
committee or of the independent evaluating firms, as may correspond, at the
main office on the business day after the board’s pertinent resolution was
adopted, communicating to the shareholders said fact in the respective market
bulletin.
Board of Directors’ Approval. In the case it
may pertain, the controlling party or the related person being the operation’s
counterpart shall place at the board of directors’ disposal, before it approves
the operation, all the antecedents, reports, documents and communications
referred to the operation, presented to competent foreign supervising or
regulating entities or foreign stock exchanges.
The vote of each director shall be stated in
the minutes of the board of directors approving the operation.
Meeting’s Approval. The operation shall be
submitted for the meeting’s approval when the audit committee or both
evaluating firms have not considered the foreseen conditions as reasonably
adequate for the market.
Objection. Burden of Proof. In the case where a
shareholder demands compensation of the damages caused by a violation of this
section, the burden of proof shall be placed on the defendant to prove that the
act or agreement was in accordance to the market conditions or that the
operations conditions did not cause any damage to the company. The transfer of
the burden of proof shall not be applicable when the operation has been
approved by the board of directors with the favorable opinion of the audit
committee or the two evaluating firms, or if it has been approved by ordinary
meeting, without the definite vote of the shareholder with respect to whom the
condition of related party is derived, or has interest in said act or
agreement.
Section 74: Remuneration of Directors. Civil
Liability Insurance. The companies authorized to make a public offering of
their shares may remunerate their directors with executive or
technical-administrative functions, as well as the managers, with stock options
of the same company, fulfilling the proceedings and requirements established by
the SECURITIES AND EXCHANGE COMMISSION for that purpose. In these cases, the
meeting shall establish the price of the options and of the shares to which
they are entitled, and the value to be computed for the remuneration pursuant
to the limits of section 261 of Act 19,550 and amending regulations. Unless
otherwise provided for by the bylaws, the company may purchase a civil
liability insurance for the directors, for risks corresponding to the exercise
of the functions.
Section 75: Liability Corporate Action. In
listed companies, the liability action foreseen in section 276 of Act No.
19,550 and its amending regulations, when it corresponds to be exercised by
shareholders individually, may be exercised to claim in the company’s benefit
the compensation for total or partial damages suffered by the company or to
claim the compensation for partial damages indirectly suffered by the
shareholder proportionally to his holding, in which case the compensation shall
become part of its equity.
When the claim is for the total of the damages
alleged to be suffered by the company, the defendant may opt to settle the
claim and acquiesce to the payment of the claiming shareholders of the compensation
amount for the indirect damages to be determined as being suffered by them, in
proportion to their shareholdings.
Section 76: Directors’ Liability. In listed
companies pursuant to the second paragraph of section 274 of Act No. 19,550 and
amending regulations, the registration of assignment of functions in a personal
manner shall be considered fulfilled with the information supplied to the
SECURITIES AND EXCHANGE COMMISSION and the self-regulated entity where the
shares are listed, according to the requirements established the relevant
authority, without prejudice of their registration in the Public Registry of
Commerce.
Section
77:
Loyalty Duty. In listed companies, the following shall be considered included
in the loyalty duty with which directors shall act:
(a) the prohibition to use corporate assets and
to use any confidential information for private objectives.
(b) The prohibition to take advantage, or to
allow another one to take advantage, by action or omission, of the business
opportunities of the company.
(c) The obligation to exercise their powers
only for the purposes for which the law, the bylaws, the meeting or the board of
directors have granted them.
(d) The obligation to take strict care so that
its acts shall never go, directly or indirectly, against the company’s
interests.
In case of doubt as regards the fulfillment of
the loyalty duty, the burden of proof shall be placed onto the director.
(***) CHAPTER
IX
GENERAL PROVISIONS
Section 78: The terms and time limits herein
set forth shall be peremptory and shall be computed in business days.
Section 79: This law shall take effect as of
January 1, 1969. Within the following one hundred and eighty days thereafter,
existing registered Stock Exchanges and Securities Markets shall adjust their
constitutions and rules to the provisions hereof and submit them for approval
to the National Executive Branch through the National Securities Commission.
For that purpose, they may change their legal
structure into any other authorized type, and any such change shall imply
neither dissolution nor organization of a new association or corporation.
Until any proposed changes shall have been
approved, the said Stock Exchanges, Securities Markets, and Stockbrokers shall
conform to the provisions of their respective by-laws and rules.
Section 80: Existing stock commission brokers
(comisionistas de bolsa) are hereby automatically registered as Stockbrokers
with the respective Securities Markets.
Section 81: Any amendments to constitutions or
changes to the institutions' legal structure as mentioned in section 64 shall
be exempt from tax or any other levy.
Section 82: As of the effective date of this
Law, the following legal provisions are hereby repealed: Sections 75 through 86
of the Commercial Code; Decree-Law No. 15,353/46 as ratified by Law No. 13,894;
section 2, subsection 4, of Law No. 13,571; sections 3, subsection (a), first
paragraph, 43, and 44 of Decree No. 25,120/40; Decree No. 12,793/49; sections
3, subsection (d), first paragraph, 44 and 45 of Decree-law No. 14,570/56;
sections 2, subsection (b), 41, and 51 of Decree Law No. 13,126/57; and any
other provision contrary to this Law.
Section 83: To be duly communicated,
published, delivered to the National Records Office, and filed.
(*) As amended by Act 22,000 dated march 18,
1979.
(**) As amended by Executive Order 677/2001
dated may 22, 2001.
(***) As re enumerated by Executive Order
677/2001 dated may 22, 2001.