1. CORPORATE GOVERNANCE ENFORCEMENT IN ARGENTINA
11/10/2018
LATIN AMERICAN CORPORATE GOVERNANCE ROUNDTABLE
OECD World Bank International Finance Corporation Santiago de Chile May, 2003
CORPORATE GOVERNANCE
ENFORCEMENT IN ARGENTINA
Narciso Muñoz Comisión Nacional de Valores República Argentina
11/10/2018

2. B) Sarbanes-Oxley Act and CNV´s goals: Comparison
AGENDA
A) The CNV´s legal framework: Highlights of recent improvements
B) Sarbanes-Oxley Act and CNV´s goals: Comparison
C) Enforcement faculties & activities (2002)
11/10/2018

3. THE CNV´S LEGAL FRAMEWORK
HIGHLIGHTS OF RECENT
IMPROVEMENTS
11/10/2018

4. THE CNV´s LEGAL FRAMEWORK: HIGHLIGHTS OF RECENT IMPROVEMENTS
Concepts as “control”, “privileged information”, etc. are legally defined
Conducts against transparency are also legally defined:
Use of privileged information, market manipulation and fraud , misleading or false prospect information, etc.
External Auditors shall be appointed by shareholders’ meeting and must be independent. Independence is defined
Enhanced conflict solving mechanisms are established
Compulsory arbitration for issuers and optional for investors
Regulation of appraisal rights and squeeze-out procedures are set:
Take over bids are compulsory for listed firms
Buy out bids of minority shareholders´ stakes for listed companies turning unlisted are compulsory
Establishes the right to buy residual stakes for majority shareholders, and right to sell for shareholders of residual stakes, at a fair price
The Audit Committee (except for SME) is created for listed Companies (At least 3 members, al least 2 of them -the majority, always- independent)
11/10/2018

5. SARBANES - OXLEY ACT
AND CNV´s GOALS:
COMPARISON
11/10/2018

6. SARBANES - OXLEY ACT AND CNV´s GOALS: COMPARISON
CEO & CFO certification of Company reports
Prohibition of loans to insiders
CNV - STANDARD SETTERS PROPOSAL
Idem S-O but only certification of the top executive
Stock options are discouraged, if used must be included as expenses in the balance sheet
Loans to management, if given under off market conditions, must be approved by the Audit Committee and informed to the Stock Exchange
Management Responsabilities
Management Compensation
11/10/2018

7. SARBANES - OXLEY ACT AND CNV´s GOALS: COMPARISON
Creation of PCAOB
Establish criteria of independence of external auditors
Previous approval of special services by the Audit Committee
CNV - STANDARD SETTERS PROPOSAL
Not considered
Strengthening of the independence of the external auditors
Previous approval of special services by the Audit Committee
Rotation of the Audit partner every 5 years
Registration of Accounting Firms
External Auditors
11/10/2018

8. SARBANES - OXLEY ACT AND CNV´s GOALS: COMPARISON
Suggests inclusion of a financial expert (or to state the reason why not)
Strengthening of the chinese walls
Yes
CNV - STANDARD SETTERS PROPOSAL
One member CPA
Not considered
Yes
Audit Committee
Research Analysts
Code of Ethics for Senior Financial Officers
11/10/2018

9. SARBANES - OXLEY ACT AND CNV´s GOALS: COMPARISON
Doesn't exist in the U.S.A. legislation
Annual financial statement must include a disclosure of Management´s Assessment of Internal Controls
CNV - STANDARD SETTERS PROPOSAL
Its members must be lawyers or CPA. Proposed: one must be lawyer, one must be CPA
Compulsory: Internal Control Manual or Internal Audit Department
Board Overseeing Commission
Internal Control
11/10/2018

10. ENFORCEMENT FACULTIES
& ACTIVITIES (2002)
11/10/2018

11. ENFORCEMENT FACULTIES & ACTIVITIES (2002)
ENFORCEMENT FACULTIES OF THE CNV
The CNV supervises all corporations and persons involved in any capacity in the public offering & trading of securities, futures & options, such as:
Securities and Futures exchanges & OTC markets
Listed companies
Brokers
Depository Houses, including the authorization to establish themselves
Corporate Bonds issues & its issuers
Risk rating agencies
Mutual Funds
Public Trusts
SELF REGULATION
Argentine market supervision is based on the SELF REGULATION principle
AUTHORIZATION
The CNV must authorize the Public Offer of any issue of securities, EXCEPT GOVERNMENT BONDS
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12. ENFORCEMENT FACULTIES & ACTIVITIES (2002)
POLICE POWERS
The CNV exercises police powers controlling the enforcement of the legal regulations –latu sensu- statutory & regulatory
In the process of any investigation it is empowered to request from any personnel of the Company any type of information or documents it may consider necessary for its purpose
The CNV may:
1) Declare irregular & ineffective the acts of subjects under supervision
2) Suspend preventively the P.O. or the trading of securities, futures, options etc.
3) Temporarily interrupt Public Offers, trading of securities, futures & options if relevant information concerning these instruments has not been released in due time or if any other extraordinary circumstance arises
11/10/2018

13. ENFORCEMENT FACULTIES & ACTIVITIES (2002)
ENFORCEMENT PROCEDURES (# of cases)
Denunciation / Market monitoring (28)
Assignment of an investigator
Determination of complementary measures
Evidence collection
Legal opinion
RESOLUTION BY THE BOARD: options
Warning (24)
Rejection of the claim
Starting of administrative Process (22)
Findings of the Administrative Process (24)
Legal opinion (24)
RESOLUTION BY THE BOARD: Sanctions
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14. ENFORCEMENT FACULTIES & ACTIVITIES (2002)
11/10/2018
ENFORCEMENT FACULTIES & ACTIVITIES (2002)
SANCTIONS
Admonition (5)
Fine (to members of Board) (143)
Suspension
Delisting (1)
5 year ban to offenders to act as Directors, Officers, Auditors, Managers of Mutual Funds or Trusts, Risk Rating Agents, or in any other activity under the surveillance of the CNV
LEGAL PROCEDURES
Start judicial procedures
Denounce criminal activities
Be plaintiff in judicial procedures
Request to the judge the suspension of Board of Directors, the intervention of the administrative structures and the dissolution of the company
Concerning Legal Procedures the CNV is mostly involved in the defense of appealed sanctions, 66 cases in 2002 and iniciated 3 judicial claims in the same period
11/10/2018

15. CORPORATE GOVERNANCE ENFORCEMENT IN ARGENTINA
11/10/2018
LATIN AMERICAN CORPORATE GOVERNANCE ROUNDTABLE
OECD World Bank International Finance Corporation Santiago de Chile May, 2003
CORPORATE GOVERNANCE
ENFORCEMENT IN ARGENTINA
Narciso Muñoz Comisión Nacional de Valores República Argentina
11/10/2018