BUENOS AIRES,

 

                   WHEREAS, File No. 001-001306/2001 of the Registry of the Ministry of Economy, the provisions of Act 17,811 and its amendments, Act 24,083 and its amendments, and the powers granted to the FEDERAL EXECUTIVE BRANCH by section 1, subsection I, paragraph d), and subsection II, paragraph e) of Act 25,144, and

 

                   WHEREAS:

That it is necessary to ensure the full enforcement of the rights granted by section 42 of the NATIONAL CONSTITUTION, determining the rights of the “financial consumer”, mainly referring to the Public Offering transparency and creating an adequate legal framework to increase the investor’s protection within the capital market.

That the natural goals of financial markets are to promote their own development, encourage liquidity, stability, solvency and transparency and to create mechanisms to ensure an efficient reallocation from savings to investments.

That these goals arise from the main objective, i.e. the generation of the necessary “confidence” and “security” to reduce the cost of obtaining capital and augment the financing available to companies.

          That in the last few years there were several events such as the larger relative importance of the private sector in the creation of wealth, the arising of the so-called “institutional investors” as main agents in savings channeling, and the separation of the companies owners from their management.

          That under these conditions there is a deeper global awareness of the importance of having adequate corporate governance practices and a legal framework to enforce principles such as “full information,” “transparency,” “efficiency,” “public investor’s protection,” “fair treatment among investors” and “protection of the stability of financial entities and intermediaries.”

          That, consequently, the lack of legal safety engendered by financial systems with insufficient transparency or with an inadequate legal framework and/or enforceability, distorts the options available to investors as to savings and investments, militating them towards less risky liquid assets.

          That, therefore, inadequate protection “weakens” financial systems, by pushing investors to safer markets.

                   That it is necessary to adjust the legal framework in Argentina with regard to these issues so that the Argentine capital market can adequately perform its own goals.

                   That from the point of view of the “globalized” financial markets, good corporate governance practices are ubiquitously promoted and have a positive impact on a company’s financial risk rate.

                   That most of the following reforms are in line with world trends pertaining to corporate governance practices that have already been adopted by many emerging markets.

                   That the delay to adopt these principles will place Argentina in a disadvantageous position in the competition to attract investors.

                   That the adequate investors’ protection is a desirable goal to attract financial capital to Argentina and consequently raise the growth rate of the economy.

                   That, additionally, this goal is specially important for the public interest of the REPUBLIC OF ARGENTINA as larger investments in the domestic market are made by pension funds.

                   That, consequently, due to the needs of the Argentine economy and as a result of the recent global and regional developments, one of the biggest challenges is encouraging an “investment culture” in stock and other financial instruments by integrating institutional savings sources (pension funds, investment funds, insurance companies, etc.) and individual investors into the Argentine capital market.

                   That the development of the capital market in Argentina requires the strengthening of investors’ rights and of the available public information system, focused on the hierarchical arrangement of regulations and the sanctioning of conduct adverse to the public offering procedure, a greater transparency in the control transfers among stock issuers, the regulation and creation of specific solutions for those listed companies under an almost total control that affect liquidity, the amelioration of weak aspects within the current regulatory and legal framework, the creation of efficient conflict resolution methods within the market and the improvement of regulations of the traditional operations of capital markets.

                   That, although some issues related to corporate governance should be self-regulated by the private sector, there are other aspects that, due to their nature, necessitate legislated guidelines.

                   That, consequently, it is necessary to amend the current legal framework, establishing adequate corporate governance practices with regard to those aspects that naturally belong to the public sector jurisdiction in order to encourage the development of our capital market based on greater transparency.

That the rules established hereby define the requisites for enhanced performance of the capital markets by repressing elements that have an adverse impact on the public offering of financial instruments.

       That the new law also includes several definitions to clearly establish the scope of several concepts that are essential to understanding the new reforms.

       That, among the most important definitions, the “negotiable securities” concept  that follows the guidelines of modern securities law, expanding on the traditional financial “instruments” concept that has been historically identified with the securities “cartulary” nature.

       That the “negotiable securities” concept comprises recorded or book entry registered securities, an almost essential type when referring to securities issued in series within capital markets.

       That the disassociation of the negotiable securities concept from that of a legal instrument is also essential as it includes the “investment contract” that is equivalent to the US legal concept.

       That a wider concept is adopted that is more similar to the US “security” and that is found in international capital markets, abandoning the more formal nature characteristic of the “instrument” concept.

       That the main characteristics of this concept are related to their capacity of being traded and issued in series.

       That, in addition, the new law confirms the freedom to issue negotiable securities and comprises all the legal rules applicable to book entry registered or recorded instruments.

                   That the “Public Offering Transparency System” that is created hereby includes several provisions related to the information to be provided by issuers, intermediaries and other participants in the public offering procedure; the secrecy to be kept by those having access to privileged information; the behavior to be followed by intermediaries; the obligations of self-regulated entities as well as the explicit description of certain types of behavior that are contrary to transparency.

That the loyalty and diligence duties applicable to market participants are also specially considered in these regulations to rule over the acts of issuers’ managers, the “corporate interest” expressly described as the “common interest of all shareholders” including, with regard to companies participating in the capital market, the idea that is defined as the “creation of value for shareholders” in other legal systems and international capital markets.

That the regulation of aspects related to external auditors and the audit committee are relevant and important, consequently acknowledging that the quality of the information provided by issuers to the market is one of the essential elements in the optimal performance of the capital market.

That in order to ensure the independence and transparency of functions entrusted to the audit committee, the majority of its members have to be “independent”, as applied in several international markets and as it is required by corporate governance codes or regulations.

That in order to be independent, the director who is a member of the audit committee shall be independent from the company and from the controlling shareholders, and shall not have executive functions within the company.

       That another central aspect is the regulation of Public Offerings, Public Offerings for the Acquisition of Residual Stakes and the Public Offering Withdrawal System.

That, with regard to the first issue, a mandatory public offering system has been implemented. It has to be exercised prior to obtaining control, either partially or totally, as eventually determined, to encourage transparency within the corporate control market and thus to ensure a competitive market and minimize costs arising from this type of regulation to be paid by the bidder or purchaser of the controlling interest.

       That a residual stake acquisition system is implemented mainly to optimize the efficiency of corporate structures and defend minority shareholders in companies that have already lost their “open” nature, granting both controlling and minority shareholders the right to purchase or sell their stakes at a fair price. The determination of the fair price is similar to the one established for the public offering withdrawal.

That the goal of the public offering withdrawal system is to ensure a fair price estimated pursuant to market guidelines, and said fair price shall be never lower than the mean price of the securities during the semester immediately before the execution of the withdrawal agreement.

That, in addition to this, with regard to self-regulated markets, an arbitration system is adopted that is binding for issuers and optional for investors. This system shall be essential to instill confidence in the system, ensuring the application of law and legal safety for investors.

That, furthermore, modifications are made to Act 17,811 and its amending rules so that, among other aspects, the public offering system is reformed to grant new instruments and powers to the SECURITIES AND EXCHANGE COMMISSION, an autarchica semi-financially independent, but autonomous, agency under the UNDERSECRETARIAT OF FINANCIAL SERVICES of the SECRETARIAT OF FINANCE of the MINISTRY OF ECONOMY, always pursuant to an adequate legal framework for companies, also regulating certain aspects that are characteristic of the type of listed or open company, through new information requirements for issuers and accepting the possibility of holding meetings of the Board of Directors and Shareholders without the physical attendance of the members.

That more flexibility is given to the capital structure of corporations, thus enabling transactions that are common in capital markets, such as the acquisition, within certain limits, of shares of stock of the company, holding of shares of stock of the company and issue of options, warrants, etc. Also, the right to receive information corresponding to minority shareholders is improved, including comments or proposals made by them in the agenda of Shareholders’ General Meetings.

That the transactions with parties related to the issuer are regulated by the guidelines of the Principles of Corporate Governance of the American Law Institute, including the transfer of burden of proof to ensure a greater legal control over those transactions that have not been under a context that, at first sight, considers the execution of an agreement with said related parties at market prices and between independent parties.

That, in addition, reforms include the submittal and solution of issues related to the responsibility of the members of the issuers’ bodies, admitting the exercise of shareholder’s derivative suits (section 276 of Act 19,550 and its amendments) due to indirectly suffered damages, also acknowledging the defendant’s right –when the latter has been charged with the responsibility of the damages suffered by the company- to agree to the payment to the claimant shareholders of the amount for “indirect” damages determined proportionally to the stakes owned by the claimant shareholders.

That, consequently, the rights of the controlling shareholders are more evenly balanced against the rights of the minority shareholders, thus avoiding possible situations of minority abuse.

That, additionally, the performance of the publicity requirements established by the SECURITIES AND EXCHANGE COMMISSION with regard to the ”assignment of functions” of directors shall consider the individual performance of each director as the main factor to determine their responsibility, which is essential for the modernization of the operations of the Board of Directors pursuant to international practices.

That this does not mean fewer responsibilities for the management body, but rather a more adequate distribution of responsibility in the case of breach of the diligence duty.

                   That Act 24,083 is also amended, establishing several guidelines with regard to the appointment of the SECURITIES AND EXCHANGE COMMISSION as the authority in charge of implementing this Executive Order, thus granting this agency express powers to establish information systems and differential requirements, including a digital signature system, encouraging better coordination among the entities in charge of the control of the financial system and regulating financial and budget aspects of the SECURITIES AND EXCHANGE COMMISSION.

                   That the GENERAL MANAGEMENT OF LEGAL MATTERS of the MINISTRY OF ECONOMY made the applicable intervention.

                   That this Executive Order is issued pursuant to the powers granted by section 1, subsection I, paragraph d) and subsection II, paragraph e) of Act 25,414.

 

                   Therefore,

THE PRESIDENT OF THE ARGENTINE NATION

ORDERS:

SECTION 1.- The “Public Offering Transparency System” is hereby approved and is enclosed hereto as an Annex and is part of this Executive Order.

SECTION 2.- Be it informed, published, passed to the Federal Management of the Official Registry and filed.

 

EXECUTIVE ORDER No.


TITLE I – PUBLIC OFFERING TRANSPARENCY SYSTEM

ANNEX

 
CHAPTER I

General Principles

SECTION 1.- Jurisdiction. The provisions of this Executive Order shall be applied to those persons participating in the public offering and to self-regulated entities.

SECTION 2.- Definitions. For the purposes of Titles I and II hereof and other provisions issued hereunder, the following definitions shall be applied:

Negotiable Securities: The securities mentioned in section 17 of Act 17,811 and its amendments, either held in certificate formcartulary or those securities filed in a book entry registry, specially including those credit instruments or instruments representing credit rights, shares of stock, unit shares of investment funds, debt bonds or financial trust certificates or certificates of other collective investment tools and, in general, any security or investment contract or homogeneous and fungible credit rights, issued or grouped in series and equally negotiable and with similar effects to securities that, due to their form and transmission system, are susceptible of general and impersonal trading on financial markets. All the provisions of Act 17,811, as well as any amendments related to securities, are applicable to negotiable securities.

Public Offering: The public offering mentioned in section 16 of Act 17,811. In addition, a public offering shall include any invitation with regard to legal acts with other financial instruments, whichever their nature may be, traded on an authorized market, such as forward contracts or options.

Self-Regulated Entity: Stock exchanges authorized to list negotiable securities and stock markets in adherence to the provisions of Act 17,811 and its amendments, forward and option markets, and other non-stock entities authorized to act as self-regulated ones by the SECURITIES AND EXCHANGE COMMISSION.

“Controlling”, “Controlling Group” or “Control Groups”: Any natural or artificial person that holds, either directly or indirectly, individually or jointly, whichever the case may be, a share in the capital stock or voting rights that, de jure or de facto, in this case if it is stable, grant enough votes to take a corporate decision in shareholders’ general meetings or to chose or remove the majority of the directors or auditors.

Coordinated Acts: Acts coordinated by TWO (2) or more persons, pursuant to a formal or informal agreement or understanding, to actively cooperate in the acquisition, holding or disposal of shares of stock or other securities or rights convertible into shares of stock of an entity whose securities can be included in a public offering, either through said persons, a company or in association in general, or through other persons related, connected or controlled by them, or through holders of voting rights on behalf of the former. The SECURITIES AND EXCHANGE COMMISSION shall rule over the types of relationships giving grounds to coordinated acts, unless rebutting proof is submitted.

Confidential or Privileged Information: Any concrete information related to one or several securities, or to one or several issuers, that has not been disclosed and that, if disclosed, may substantially affect or have affected the underwriting conditions or price or the negotiation of said securities.

SECTION 3.- Freedom of Creation. Any artificial person may create and issue negotiable securities grouped in series to be negotiated on stock markets pursuant to the types and conditions chosen by it, including the rights granted to holders and other conditions established when issuing them, as long as there is no confusion with regard to the type, name and conditions of the securities, as specified under the current law.

                   For the purposes of determining the scope of the rights arising from a negotiable security to be issued, a stock certificate, issue or registration shall be sent to the competent controlling authorities.

SECTION 4.- Recorded or Book Entry Registered Securities Legal System. Global Certificates. Notwithstanding special provisions applicable to each negotiable security or those established in the issue documents, the following legal system shall be applied to registered or book entry recorded securities:

a)                               The creation, issue, transmission or creation of interests, liens, preventive remedies or any other imposition on the rights granted by the negotiable security shall be filed in special registries kept by the issuer or, on behalf of the issuer, by an authorized securities depository or commercial or investment banks, or appointed registration agents, and shall have legal effects enforceable to third parties as from the date of said registration.

b)                               The authorized entity keeping book entry registry of the negotiable securities shall give the holder a certificate of the account opening and of any movement therein. Holders shall have the right to have delivered, at any time, a certificate of the account balance, at their own expense. Certificates shall specify date, time and number; type, number and issuer of the securities, and any other information that may identify the issue; the holder’s complete identification, interests and precautionary measures affecting the securities and evidence of the issue of the account balance certificates and type, specifying date when they are issued and the maturity date.

c)                                The issue of an account balance certificate for the purposes of transferring securities or creating interests on them shall cause the account to be frozen during TEN (10) days.

d)                               The issue of account balance certificates for the purposes of the attendance to shareholders’ meetings or the exercise of voting rights shall cause the account to be frozen until the day after the one when the corresponding meeting is held. If the shareholders’ meeting is adjourned or is held on a different day or time, new certificates shall be issued to the name of the same persons who have been authorized through the issue of the original certificates.

e)                               Account balance certificates may be issued to authorize the holder to file legal claims, or file arbitration proceedings if the case may be, including summary proceedings if applicable, submit credit verification applications or participate in universal actions for which purpose said certificate shall be enough evidence, without being necessary any further authentication or requirement. Its issue shall cause the respective account to be frozen, except to register acts of disposal by the holder, during THIRTY (30) days, unless the holder returns the certificate or receives within said term an order to extend the time during which the account should be frozen issued by the judge or Arbitration Court before which the certificate should have been submitted. Certificates shall mention these circumstances.

The third party purchasing book entry registered or recorded negotiable securities for consideration to a person that, pursuant to the corresponding registry, is legally capable of transferring them, shall not be subject to repossession, unless said person, when purchasing the securities, has acted with bad faith or fraud.

Global Certificates. For the purposes and with the scope mentioned in subsection e), global certificates representing securities may be issued in favor or the persons having a stake in them. The account freezing shall only affect those securities mentioned in the certificate. Certificates shall be issued by the domestic or foreign entity in charge of the administration of the collective deposit system where the global certificates are registered. When said entities in charge of the administration of the collective deposit system have participation in global certificates registered in collective deposit systems administrated by another entity, certificates can be directly issued by the former. In the case of global debt certificates, the trustee, if any, shall obtain the authorization mentioned in subsection e) by simply proving the respective appointment.

CHAPTER II

Obligations of those participating or intervening in public offerings

SECTION 5.- Duty to inform the SECURITIES AND EXCHANGE COMMISSION. The persons mentioned in this section shall directly, truly, adequately and eventually inform in writing, or in any other way whatsoever established by the applicable regulations, to the SECURITIES AND EXCHANGE COMMISSION, pursuant to the formal requirements or time periods established by it, the following events and circumstances, among others:

a)      The administrators of issuers making public offering of negotiable securities and the members of their supervisory council –the latter based on their jurisdiction- shall notify the SECURITIES AND EXCHANGE COMMISSION of any event or situation that, due to their importance, may substantially affect the underwriting of the negotiable securities or their negotiation. The obligation to inform established herein shall become in force as from the moment when the public offering application is submitted and the SECURITIES AND EXCHANGE COMMISSION shall be notified immediately. The administration body, with the participation of the issuers’ supervisory council, shall appoint a person who shall be in charge of market relations, i.e. of the communications and disclosure of the information mentioned in this subsection. Issuers shall inform the SECURITIES AND EXCHANGE COMMISSION and the respective self-regulated entity of the appointment of the person in charge of the market relations within one working day after said appointment. The election of the person in charge of the market relations shall not exempt the persons mentioned in the first paragraph of this subsection from the obligations established in this section.

b)      Intermediaries authorized to act in public offerings shall inform the SECURITIES AND EXCHANGE COMMISSION of any unusual event or situation that, due to its importance, may affect the business, responsibility or decisions with regard to investments.

c)      Directors, administrators, auditors, managers appointed pursuant to section 270 of Act 19,550 and its amendments, and the members of the supervisory council, both permanent and alternate members, as well as the controlling shareholders of issuers making a public offering of their negotiable securities, shall inform the SECURITIES AND EXCHANGE COMMISSION of the number and class of shares of stock, debt bonds convertible into shares and options of negotiable securities held by them in the entity they are related to.

d)      The members of the qualification council, directors, administrators, managers, auditors or members of the supervisory council, either permanent or alternate members, of risk rating agencies, shall inform the SECURITIES AND EXCHANGE COMMISSION of the number and classes of shares of stock, debt bonds or options held by them in the companies authorized to make public offerings of their negotiable securities.

e)      Directors and officers of the SECURITIES AND EXCHANGE COMMISSION, self-regulated entities and securities depositories shall inform the SECURITIES AND EXCHANGE COMMISSION of the number and classes of shares of stock, debt bonds, and options held by them in companies authorized to make public offerings of their negotiable securities.

f)       Any natural or artificial person that, either directly or through other natural or artificial persons, or all the persons belonging to groups acting in a coordinated way, purchases or sells shares of stock in a company making public offering of its negotiable securities for an amount that implies changes in the stakes held by the controlling group or groups and thus affecting the structure, shall inform the SECURITIES AND EXCHANGE COMMISSION of any transaction or group of transactions made in a coordinated way, notwithstanding, however, the performance of the procedure established in section 23 of this Executive Order.

g)      Any entity or individual that is not comprised by the above paragraph and that, either directly or through other natural or artificial persons, or all the persons forming groups that act in a coordinated way, purchases or sells shares of stock of an issuer whose capital stock is comprised by the public offering system and that grants FIVE PERCENT (5%) or more of the votes for the purposes of making corporate decisions at general shareholders’ meetings, shall inform the SECURITIES AND EXCHANGE COMMISSION of said transactions when they exceed the above mentioned limit.

h)      Any entity or individual entering into shareholders’ agreements or understandings aimed at exercising the voting right in a company whose shares are publicly offered or in the company controlling it, which ever may be, including but not limited to, agreements creating the obligation to consult prior to exercising the vote, that limit the transfer of the corresponding shares or negotiable securities, granting the right to purchase or subscribe them, or establishing the purchase of said securities and, in general, having as object or effect the joint exercise of a dominant influence in said companies or substantial changes in the structure or power relationships in the corporate governance, shall inform the SECURITIES AND EXCHANGE COMMISSION of said agreements, understandings or changes. Directors, administrators, auditors and members of the supervisory council, as well as the controlling shareholders of said company, shall be also obliged to, when they are party of said agreements or when they are aware of their existence, inform the SECURITIES AND EXCHANGE of the signing or execution of the mentioned agreements. Said agreements or understandings shall be submitted to the SECURITIES AND EXCHANGE COMMISSION in order to further disclose any relevant information, within the terms and pursuant to the conditions established by it. The notification and submittal of said agreements or understandings to the SECURITIES AND EXCHANGE COMMISSION shall not imply the acknowledgement of their validity.

In the cases mentioned in subsection c), d) and e) of this section, the scope of the obligation to inform the SECURITIES AND EXCHANGE COMMISSION shall comprise anything related to stakes held by the persons as well as by the mentioned companies or controlling companies, subsidiaries or affiliates that are directly or indirectly administered by them.

                   In all the cases mentioned in this section, the SECURITIES AND EXCHANGE COMMISSION shall establish the information to be included in the statement to be submitted by the comprised persons.

                   The duty to inform shall remain in force during the term for which the persons have been appointed and, in the case of the persons comprised by subsections c), d) and e) of this section, during SIX (6) months after the effective discontinuance of their functions.

The statements made by the above mentioned persons before the SECURITIES AND EXCHANGE COMMISSION shall, for the purposes of this Executive Order, have the effect of an affidavit.

SECTION 6.- Duty to Inform Self-Regulated Entities and the Public. The persons mentioned in subsections a), b), c), f), g) and h) of the previous section shall simultaneously send similar communications to, except the case mentioned in the following paragraph, those self-regulated entities where the authorized intermediaries or said negotiable securities are registered. Self-regulated entities shall immediately publish the communications in information gazettes or any other means ensuring their wide disclosure.  In the case of negotiable securities not traded on the self-regulated entities mentioned in section 2, the communications shall be deemed accomplished when they are published in a newspaper with wide federal circulation.

                   The SECURITIES AND EXCHANGE COMMISSION shall establish the conditions to, when requested by a party or due to a grounded resolution and for a specific term, suspend the duty to inform the public of certain events and facts included in subsections a), b) and h) of the previous section that have not been publicly disclosed and whose disclosure may affect corporate interests. The exemption related to subsection h) of the previous section shall be for an indefinite term when it refers to aspects that, at the discretion of the SECURITIES AND EXCHANGE COMMISSION, refer to agreements that only affect the parties’ private interests.

SECTION 7.- Duty of Confidentiality. Directors, administrators, managers, auditors, members of the supervisory council, controlling shareholders and professionals participating in an entity authorized to make public offering of negotiable securities or a person making a bid to purchase or swap securities with regard to an entity authorized to make public offering, and agents and intermediaries in the public offering, including financial trustees and managers and depositories of investment funds and, in general, any person who, by virtue of his position or activity, has information with regard to an event that has not been publicly disclosed and that, due to its importance, may affect the underwriting or negotiations of the negotiable securities in an authorized public offering or forward contracts and options, shall be strictly confidential and shall refrain from negotiating until said information is publicly disclosed.

                   Public officers as well as authorities officers and employees of risk rating agencies and of public or private controlling entities, including the SECURITIES AND EXCHANGE COMMISSION, self-regulated entities and securities depositories, and any other person who, by virtue of his functions, has access to similar information, shall hold it in confidence.

                   The duty of confidentiality is extended to those persons that, due to a temporary or accidental relationship with the company or with the above mentioned persons, may have access to the described information and, additionally, to employees and third parties that, due to the nature of their functions, may have had access to the information.

SECTION 8.- Loyalty and Diligence Duty. When exercising their functions, those persons mentioned hereafter shall act in a loyal and diligent manner, specifically those:

a)                               Directors, administrators and auditors of issuers -the latter with regard to issues within their jurisdiction- shall:

I)               Without exception, place the corporate interests of the issuer where they work and the common interest of the shareholders above any other interest, including the controlling shareholder’s interests.

II)              Refrain from obtaining a personal benefit from the issuer other than the compensation paid for their functions.

III)            Organize and implement preventive systems and mechanisms to protect the corporate  interests, reducing the risk of conflicts of interests, either permanent or temporary, in the personal relationship with the issuer or with persons related to the issuer. This duty specifically refers to activities competing with the issuer, the use or imposition of a lien on corporate assets, the determination of compensations or proposals related thereto, the use of non public information, the use of business opportunities for their own benefit or for the benefit of third parties and, in general, any situation that may generate a conflict of interests affecting the issuer.

IV)          Make the necessary arrangements to perform the issuer’s activities and implement the necessary internal control to ensure a careful management and avoid breaches of the duties established by the regulations of the SECURITIES AND EXCHANGE COMMISSION and of self-regulated entities.

V)           Act with due diligence when preparing and disclosing the information to the market, and maintain the independence of external auditors.

b)      Intermediary agents shall act professionally and loyally to their principals and other market participants, avoiding practices that may lead to mistakes or that may somehow void the consent of the counterpart or that may affect the transparency, stability, integrity or reputation in the market. Furthermore, they shall keep their principals’ interest above theirs and shall refrain from acting in the case of conflicts of interests.

SECTION 9.- Duty to Inform. Any person subject to an investigation procedure shall provide to the SECURITIES AND EXCHANGE COMMISSION the information required by it. The repeated denial during the procedure shall become a factor in deciding whether to initiate summary proceedings and may become adducible evidence, which, in conjunction with other evidence, may influence the final outcome. The person who is the object of investigation shall be previously notified, either personally or through other due notices sent to his actual domicile or domicile of choice, informing him of the effects of the breach or withholding of the duty to inform established herein.

SECTION 10.- Control Systems. Self-regulated entities shall ensure control procedures and systems stipulated in herein to be controlled by them in order to avoid or detect breaches to this Executive Order. The SECURITIES AND EXCHANGE COMMISSION shall supervise the due performance of the obligations imposed herein.

SECTION 11.- Negotiation Systems. The negotiation systems of negotiable securities and forward contracts and options, whichever their nature may be, in a public offering on authorized markets shall ensure the enforcement of several principles such as the investor’s protection, equity, efficiency, transparency, lack of severability, and systemic risk reduction. Self-regulated entities shall establish their respective regulations that will be approved by the SECURITIES AND EXCHANGE COMMISSION.

CHAPTER III

External Auditors and Audit Committee

SECTION 12.- Information of Penalties. Financial statements of companies making a public offering of their securities, closed as from the date established by the SECURITIES AND EXCHANGE COMMISSION, shall only be audited by accountants who have previously submitted an affidavit informing the SECURITIES AND EXCHANGE COMMISSION of any penalties previously imposed on them, either criminal, administrative or professional, except the professional ones that have been assessed as private by the competent professional council. Said information shall be permanently updated by the interested parties and shall be disclosed to the public through the procedures established by the regulations of the SECURITIES AND EXCHANGE COMMISSION. Any false information, or the failure to report it or its updates, shall be considered a serious offense for the purposes of section 10 of Act 17,811 and its amendments.

SECTION 13.- Appointment and Independence. The shareholders’ general meeting, when approving the financial statements, shall appoint independent chartered accountants to be in charge of the external audit corresponding to the new fiscal year pursuant to the criteria established by the regulations of the SECURITIES AND EXCHANGE COMMISSION. If the proposal is made by the administration body, it shall be previously analyzed by the audit committee established in section 15 of this Executive Order. The shareholders’ meeting may revoke the appointment when there are enough reasons. When said revocation is based on a proposal of the administration body, it shall be previously  analyzed by the audit committee.

SECTION 14.- Powers of the SECURITIES AND EXCHANGE COMMISSION. Duties of professional councils. The SECURITIES AND EXCHANGE COMMISSION shall control the activity and independence of the accountants and external auditors in companies making public offering of their securities, additionally to and notwithstanding the jurisdiction of professional councils with regard to the control of the professional performance of the members. Professional councils shall immediately inform the SECURITIES AND EXCHANGE COMMISSION of any breach of the professional rules as well as of penalties imposed to chartered public accountants who, to the best knowledge of the council, have certified financial statements of companies making a public offering of securities during FIVE (5) years before the breach or penalty. Within SIX (6) months as from the enforcement of this Executive Order, professional councils shall inform the described penalties corresponding to the last FIVE (5) years before said date. For the purposes of performing its functions, the SECURITIES AND EXCHANGE COMMISSION, shall have the following powers:

a)                               Request accountants, or companies, associations or firms to which they belong or professional councils, to provide either periodically or eventually, as determined, data and information related to acts or events connected with their activity with regard to companies making public offering of their securities.

b)                               Carry out inspections and request explanations.

c)                                Recommend principles and criteria to be adopted for the accounting audit.

d)                               Determine independence criteria.

e)                               If the minority shareholders’ rights may be affected, and when requested by shareholders representing at least a FIVE PERCENT (5%) stake of the capital stock of the company making public offering of its shares, the SECURITIES AND EXCHANGE COMMISSION shall, after obtaining the opinion of the supervisory council and of the audit committee of the company, request the company to appoint an external auditor proposed by the former in order to carry out one or several specific or limited tasks to be paid by the parties requesting them. In order to approve said request, the SECURITIES AND EXCHANGE COMMISSION shall consider the likelihood of the damages made to the shareholders and the scope of the requested measure, so as to avoid hindering the normal development of the company’s business.

SECTION 15.- Audit Committee. Those companies making public offering of their shares of stock shall create an audit committee that will be formed by THREE (3) or more members of the Board of Directors, the majority of which shall be independent pursuant to the criteria established by the SECURITIES AND EXCHANGE COMMISSION. Said criteria shall determine that in order to be independent, the director shall be so with regard to the company as well as to the controlling shareholders, and shall not perform executive functions in the company.

                   Functions of the Audit Committee. The audit committee shall have the following powers and functions:

a)                               Give an opinion with regard to the proposal of the Board of Directors as to the appointment of external auditors to be hired by the company and control their independence.

b)                               Supervise the performance of the internal control systems and of the administrative-accounting system, as well as the trustworthiness of the latter and of all the financial information and of other relevant events submitted to the SECURITIES AND EXCHANGE COMMISSION and to self-regulated entities pursuant to the applicable information regulations.

c)                                Supervise the application of the information policies with regard to the company’s risk management.

d)                               Provide the market complete information with regard to transactions where there is conflict of interests with members of corporate bodies or controlling shareholders.

e)                               Give its opinion about the reasonability of the proposals on fees and option plans for directors or managers of the company made by the management body.

f)                                  Give its opinion about the performance of the legal requirements and about the reasonability of the conditions to issue shares or securities convertible into shares, in the case of capital increase excluding or limiting the  preemptive right.

g)                               Verify the performance of the applicable behavior rules.

h)                                Give a well-founded opinion with regard to operations with related parties in the cases established by this Executive Order. Give a well founded opinion and communicate it to self-regulated entities pursuant to what is determined by the SECURITIES AND EXCHANGE COMMISSION whenever there is or there may arise a conflict of interests in the company.

                   Once a year, the audit committee shall prepare a plan for the fiscal year that will be submitted to the board of directors and to the supervisory council. The directors, members of the supervisory council, managers and external auditors shall, when requested by the audit committee, attend its meetings and assist it and give access to the information held by them. For a better performance of the powers and functions herein described, the committee shall be able to request the counseling of attorneys and other independent professionals and to hire their services that will be paid by the company pursuant to the budget approved for said purpose by the shareholders’ meeting. The audit committee shall have access to the information and documents it may deem convenient for the performance of its obligations.

CHAPTER IV

Limits to the purchase or bid to purchase by those participating in the underwriting of negotiable securities

SECTION 16.- Limits. Those persons participating in the underwriting of negotiable securities shall be only able to purchase or make a bid to purchase, either directly or indirectly, said negotiable securities, as well as other securities of the same class or series, or the right to purchase them, in the cases and conditions determined by the SECURITIES AND EXCHANGE COMMISSION, until after they complete their participation in said underwriting.

                   Additionally, the regulations shall establish the conditions so that the persons mentioned in the first paragraph may sell, either directly or indirectly, negotiable securities, or the rights to sell them, corresponding to the issuer to which the underwriting where they participate is related, during their participation therein, in order to avoid the artificial determination of prices or manipulation practices comprised in section 34 of this Executive Order.

SECTION 17.- Market Stabilization. The SECURITIES AND EXCHANGE COMMISSION shall rule over the aspects related to the transactions made by those participating in the underwriting of negotiable securities or the issuers, in order to stabilize the market. When these transactions are made pursuant to said regulations, they shall not be comprised in the acts described in section 34 of this Executive Order.

CHAPTER V

Transactions Publicity and other Public Offering Aspects

SECTION 18.- Information Contents. The name of the negotiable security, the amount, price and moment when the transactions are completed on an authorized market, as well as the name of the intermediaries of the corresponding market that have participated in them and the type of participation shall be informed to the public as from the moment they become available.

SECTION 19.- Prohibitions. Power of the SECURITIES AND EXCHANGE COMMISSION to change or suspend publicity. Any publicity, advertising or disclosure, of any means whatsoever, made by the issuers, self-regulated entities, intermediaries or any other person or entity participating in the issue or underwriting of negotiable securities or forward contracts or options, shall not include statements, references, names, expressions or descriptions that may generate mistakes, errors or confusion among the public with regard to the nature, price, return, redemption, liquidity, guarantee or any other characteristic of the negotiable securities, their issuers, forward contracts, options or the offered services.

                   The names used in this Executive Order to mention entities and their transactions shall be only used by the authorized entities.

                   Similar names, or names deriving from them or that may generate doubts about their nature or individuality shall not be used.

The SECURITIES AND EXCHANGE COMMISSION shall be able to order the persons mentioned in this section to preventively suspend publicity or the use of names or expressions or other references that may lead to mistakes, errors or confusion among the public, notwithstanding, however, other applicable penalties.

                   The provisions included in the previous paragraphs shall be applied to the publicity requested by the issuer, the intermediaries or any other natural or artificial person, notwithstanding the means chosen for the publicity.

                   However, they shall not be applied to editorials, notes, articles or any other journalistic work.

SECTION 20.- Resolutions Publicity. The resolutions of the SECURITIES AND EXCHANGE COMMISSION with regard to summary proceedings and the final outcome may be publicly disclosed as determined by its regulations. Those resolutions establishing the filing of a criminal claim shall be contained in such public disclosure.

SECTION 21.- False News. Those persons who, in a public offering, there being fraud or gross fault, disclose false news through one of the means established by section 16 of Act 17,811 and its amendments, even when they do not stand to gain advantages or benefits for themselves or for third parties, or damages to third parties, including the issuer, shall be subject to the penalties established in section 10 of Act 17,811 and its amendments.

CHAPTER VI

Public Offering

SECTION 22.- Public Offering. All public offerings of voting shares of a company whose shares are available on a public offering system, either in a voluntary or binding manner pursuant to the provisions of the following sections, shall be addressed to all holders of said shares, and in case of binding offerings it shall further include the holders of subscription rights or stock options, of convertible debt securities or other similar securities that in a direct or indirect way may grant a subscription, acquisition or conversion right on voting shares, proportionate to their holdings and to the amount of the holding to be acquired, and shall fulfill the procedures established by the SECURITIES AND EXCHANGE COMMISSION, adjusted to the transparency rules regulating primary underwritings and secondary negotiation of negotiable securities.

                   The procedure established by the SECURITIES AND EXCHANGE COMMISSION shall assure and foresee:

a)                               Equal treatment among shareholders, both as to economic and financial conditions and as to any other acquisition condition, for all shares, securities or rights of the same category or class.

b)                               Reasonable and sufficient terms so that those receiving the offering shall have the necessary time to adopt a decision regarding the offering and the way to calculate said terms.

c)                                The obligation to provide the investor detailed information that may allow him to take his decision counting with the necessary data and elements and with full knowledge.

d)                               The terms according to which the offering shall be irrevocable, or upon which it may be submitted to a condition –in which case there shall be objective causes that shall be stated in a clear and highlighted way in the offering’s prospectus – and when it is thus established by the enforcing authority, the demandable guarantees according to which the offered consideration shall be money, issued securities or securities whose issue has not been agreed yet by the offeror.

e)                               The regulations of the duties of the administration body to give, for the interest of the company and all holders of securities object of the offering, their opinion as regards the offering and the offered prices or consideration;

f)                                  The system of the possible competing offerings.

g)                               The rules regarding the withdrawal or revision of the offering, prorating, revocation of acceptances, rules about the best-offered price and the minimum offering period, among others.

h)                                The information to be included in the offering’s prospectus and in the registration form thereof, which shall foresee the intentions of the offeror regarding the future activities of the company.

i)                                  The rules with respect to the offering’s publicity and to related documents issued by the offeror and the administrators of the company.

j)                                  In case of securities swap offerings, the regulations of financial and accounting information of the issuer of the offered swap securities that shall be included in the offering’s prospectus.

k)                                The enforcement of the principle that the company’s administration body is forbidden to hinder the normal development of the offering, unless it is related to the search of alternative offerings or has received the previous authorization for that purpose from the shareholders’ meeting during the term of the offering.

l)                                  That the company does not see its activities hindered by the fact its securities are the object of an offering for more time than is reasonable.

m)                             The exceptions applicable to said procedure.

SECTION 23.- Binding Public Offering and Significant Stake. The person or entity who, with the intention to obtain the control, either directly or indirectly, of a company whose shares are admitted by the public offering system, proceeds to acquire for valuable consideration, acting individually or in agreement with other persons, in a unique act or in successive acts, a number of voting shares, of subscription rights or stock options, of convertible debt securities or other similar securities that may directly or indirectly grant a subscription, acquisition or conversion right on voting shares, whatever their implementation form may be, granting the right, or that exercised may grant the right to a “significant stake” according to the terms established by the SECURITIES AND EXCHANGE COMMISSION, in the corporate capital and/or in the votes of a company whose shares are admitted to the public offering system, shall previously promote within the term established by the regulation a binding public offering or securities swap according to the procedure determined by the SECURITIES AND EXCHANGE COMMISSION. This offering shall be addressed to all security holders and shall minimally refer to the holdings established by the regulation, that shall determine the obligation to promote total or partial binding offerings and differentiated according to the percentage of corporate capital and of the votes it aims to reach.

                   This obligation shall not apply in cases where the acquisition of the significant stake does not imply the acquisition of the company’s control. Neither shall apply in the cases where a change of control takes place as a consequence of the company’s restructure, a merger or a spin-off.

                   The binding system established in the first paragraph of this section shall not be applicable to the acquisition of shares or other securities described therein as long as, as a whole, they do not surpass the “significant stake”. The free negotiation principle shall rule between the parties up to the limit established as “significant stake”.

In those cases in which the holding indicated in the first paragraph of this section has been achieved without the due and prior fulfillment of the conditions established therefor, the SECURITIES AND EXCHANGE COMMISSION, without prejudice of the powers granted in subsection h) of section 6° of Act No. 17,811 and its amending regulations, may opt for the arbitration procedure foreseen in section 38 of this Executive Order, and may further require the precautionary measures it may deem pertinent.

                   The SECURITIES AND EXCHANGE COMMISSION shall rule the procedures in case of binding public offerings, especially, the percentage(s) that shall constitute “significant stake”. In no case shall the holding in the corporate capital and/or in the votes where there is a “significant stake” be inferior to THIRTY FIVE PERCENT (35%). The regulation may establish different significant stakes over the latter. In the other cases, the principles of section 22 of this Executive Order and the rules established in accordance therewith shall rule.

SECTION 24.- Optional Statutory System for Binding Public Offering. The companies whose shares are admitted to the public offering system shall be comprised in the Binding Public Offering System determined in the previous section (hereinafter “the System”) as from the meeting’s resolution accepting the same or, automatically, as from the closing of the first meeting held after TWELVE (12) months as from the date of enforcement of the regulation foreseen in the previous section. In order that a company whose shares are admitted to the public offering system is not comprised in the System established in section 23 hereof, at the latest at the above mentioned meeting, an express resolution shall be adopted through which a clause shall be incorporated to its bylaws establishing that it is a “Company not Subject to the Optional Statutory System for Binding Public Offering”.

The companies entering the public offering system after the regulations of this Executive Order are enforced shall automatically be comprised by the System, unless at the time of their incorporation to the public offering system its by-laws establish that it is a “Company Not in Accordance With the Optional Statutory System for Binding Public Offering”.

                   After the special meeting analyzes the non-adherence at the System or, to the latest, after EIGHTEEN (18) months as from the enforcement of the regulations hereof, in the Balance Sheets and in the Annual reports as well as in all other documents indicated by the SECURITIES AND EXCHANGE COMMISSION, it shall be established in a highlighted space that it is a “Company Not in Accordance With the Optional Statutory  System for Binding Public Offering”.

CHAPTER VII

System of Residual Stakes

SECTION 25.- System of Residual Stakes. The provisions of this Chapter are applicable to all listed corporations.

When a corporation is under almost total control:

a)                               Any minority shareholder, according to section 26 hereof, may, at any time, demand the controlling party to make an offering to purchase all minor shareholders;

b)                               Within a term of SIX (6) months as from the date when it was almost completely controlled by another person, the latter may issue a unilateral statement of its decision to acquire the total remaining corporate capital held by third parties.

SECTION 26.- Almost Total Control. Minority Shareholders. For the Purposes of This Chapter:

a)                               All corporations with respect to which another individual or artificial person, either directly or though one or more companies controlled by it, holds NINETY FIVE PERCENT (95 %) or more of the subscribed capital have procured an almost total control.

b)                               The date when the corporation became under the almost total control of another person shall be the date when the perfection of the conveyance of title of the shares with which the percentage established in the previous subsection a) is achieved.

c)                                For those companies considered in an almost total control situation, a period of SIX (6) months, beginning the day the company is considered under almost total control, is allotted to issue the statement of acquisition .

d)                               Minority shareholders are the holders of any type or class of shares, as well as the holders of all the other securities convertible into shares not corresponding to the controlling party.

e)                               The ability to exercise the right attributed to the minority shareholders only corresponds to those evidencing the holding of their shares or other securities to the date when the company fell under almost total control; when companies that are in said situation, the ability corresponds to those evidencing said holding on this last date; the ability may only be transferred to general devisees.

f)                                  The controlling company or person and the controlled company shall inform the SECURITIES AND EXCHANGE COMMISSION and the self-regulated entity in which the controlled company is listed information pertaining to its almost total control state. Said communications shall be within TEN (10) days as from the date in which the company first fell under almost total control, as is defined in subsection b) hereof. In case of companies in an almost total control situation to the date of enforcement hereof, communications shall be within SIXTY (60) days counted as from the latter. The SECURITIES AND EXCHANGE COMMISSION may establish the procedures so that minority shareholders are informed of said fact. Without prejudice of other penalties that may correspond, the right established in section 28 may not be used until the fulfillment of the precedent communications. If communication by the controlling party or the controlled party is inadequate, minority shareholders may request the SECURITIES AND EXCHANGE COMMISSION to evaluate the almost total control situation. In the event of said situation, the SECURITIES AND EXCHANGE COMMISSION shall give notice thereof to the minority shareholders through the means it deems adequate, and they shall be able to exercise the right granted by section 27 hereof.

                   Application to cases of shared or agreed control. The provisions of this Chapter are further applicable to the case of exercising the almost total control  shared by or agreed between TWO (2) or more companies, or between a company and other individuals or artificial persons, though they are not part of the same group or are not related among themselves, as long as the exercise of said common control is characterized by stability and it is thus declared, assuming the joint and several liability among themselves.

SECTION 27.- Right of Minority Shareholders. Once the controlling party is given notice to make a purchase offering to the total number of minority shareholders, if the controlling party accepts the offering, it may opt for making a Public Offering or using the method of the statement of acquisition regulated in section 28 and subsequent sections hereof.

                   In event that the controlling party is a listed corporation and its shares have public offering in domestic and foreign markets authorized by the SECURITIES AND EXCHANGE COMMISSION, the controlling company, in addition to the cash offering, may offer the total number of minority shareholders of the company under almost total control that they opt for an exchange of stock, also referred to as stock swaps, for shares of the controlling company. The controlling company shall propose the swap relation on the basis of balance sheets prepared according to the rules established for merger balance sheets. The swap relation shall count with the opinion of one or more independent evaluators specialized on the matter. The SECURITIES AND EXCHANGE COMMISSION shall rule on the requirements so that minority shareholders may exercise the option.

After SIXTY (60) days as from the notice to the controlling party without a Public Offering of Shares thereby nor a statement of acquisition, the shareholder may demand a statement that his shares have been acquired by the controlling party, that the competent legal or arbitration court shall fix the fair price in cash of his shares, according to the guidelines of section 32 subsection d) hereof, and that the controlling party shall have to pay.

In any possible case established in this section, even for all purposes foreseen in the previous paragraph, or to challenge the price or the swap relation, the procedural rules established in section 30 hereof. These rules shall equally rule when minority shareholders opt for the arbitration procedure foreseen in section 38 of this Executive Order.

SECTION 28.- Statement of Will to Acquire the Total Remaining Capital. Requirements, Publicity and Registration. Valuation and Funds Deposit. The unilateral statement of the will to acquire the total remaining corporate capital in power of third parties referred to in subsection b) of section 25 of this Executive Order, called the statement of acquisition, shall be decided by the administration body of the controlling artificial person or performed in a public instrument in case of individuals. It is a validity condition of the statement that the acquisition comprises the total number of outstanding shares, as well as all other securities convertible into shares held by third parties.

The statement of acquisition shall comprise the fair price that the controlling party shall pay for each remaining share held by third parties. In said case, it shall further state the fair price to be paid for each security convertible into shares. For the determination of the fair price the provisions of section 32, subsection d) hereof shall be fulfilled. If the controlling party is a listed corporation and fulfills the remaining conditions established in the second paragraph of section 27 hereof, it may offer the minor shareholders the option of an exchange of stock, or stock swaps, is foreseen therein, under the same conditions therein established.

Within a term of FIVE (5) days as from the issue of the statement, the controlling party shall give notice to the company under almost total control of the statement of acquisition and shall submit the request of withdrawal of the public offering to the SECURITIES AND EXCHANGE COMMISSION and to self-regulated entities where its shares are listed.

                   The statement of acquisition, the fixed value and the remaining conditions, including the name and domicile of the financial institution mentioned in the following paragraph, shall be published for THREE (3) days in the Official Gazette of the self-regulated market where the shares are listed, in the Official Gazette and in one of the newspapers with vast circulation throughout the REPUBLIC OF ARGENTINA.

                   Within FIVE (5) business days as from the acceptance by the SECURITIES AND EXCHANGE COMMISSION, the controlling party shall be obliged to deposit the monetary amount corresponding to the total value of shares and other convertible securities comprised in the statement of acquisition, in an escrow account especially opened for said purpose in a financial institution where PENSION FUNDS managers may make asset investments as term deposits. In case of exchange of stock offers, the securities representing the exchange of stock by minority shareholders who opted for compensation by exchange of stock shall be deposited in escrow accounts of institutions authorized by the SECURITIES AND EXCHANGE COMMISSION. The deposit shall have a list of the minority shareholders and, in its case, of the holders of other convertible securities, with the specification of their personal information and the number of shares and amounts and, in its case, of the exchange of stock corresponding to each of them. The SECURITIES AND EXCHANGE COMMISSION shall decide the means to keep relevant information updated and at the public's disposal the list of the financial institutions admitted for the purposes of the mentioned deposit.

SECTION 29.- Effects of the Statement of Acquisition and of the Funds Disposition. After the last publication and registration at the PUBLIC REGISTRY OF COMMERCE the authorization of the SECURITIES AND EXCHANGE COMMISSION, and once the deposit has been made, the controlling party shall convert the statement of acquisition into a public deed. In it the following shall be included:

a)                               The statement of the controlling party that, through said act, acquires all the shares held by the minority shareholders and, in its case, all convertible securities held by third parties, as well as the reference to the resolution of the administration body that decided to issue the statement of acquisition, if it may correspond.

b)                               The price per share and the price of each other convertible security.

c)                                The data of the deposit, including the date, financial institution and the account

d)                               The information about the publications made.

e)                               The registration data of the controlled company.

f)                                  The agreement data of the SECURITIES AND EXCHANGE COMMISSION and the evidence that the company withdraws the public offering of its shares.

                   The public deed with this statement shall be registered at the PUBLIC REGISTRY OF COMMERCE and submitted to the SECURITIES AND EXCHANGE COMMISSION and to the self-regulated entities in which the company was listed.

                   The public deed by law turns the controlling party into the holder of the shares and convertible securities. The controlled company shall cancel the previous securities and shall issue new securities to the order of the controlling party, registering the change of the holder in the Shareholder Register or in the register of registered shares, as it may correspond.

                   The statement of acquisition per se and by law shall imply the withdrawal of the public offering and of the listing of the shares as from the date of the public deed.

With respect to the companies under almost total control subject matter of the statement of acquisition regulated by this section, the provisions of section 94, subsection 8, of Act No. 19,550 and amending regulations shall not be applied.

                   As from the crediting date of the deposit referred to in the last paragraph of section 28 hereof, minority shareholders and, in its case, the holders of the remaining convertible securities, shall have the right to withdraw from the bank account the funds corresponding to them, plus the interests accrued for the respective amounts. The voluntary withdrawal of the funds shall imply the acceptance of the fair price assigned by the controlling party to the shares and other convertible securities.

SECTION 30.- Objection to the Fair Price. Within a period of THREE (3) months as from the date of the last publication referred to in the penultimate paragraph of section 28 of this Executive Order, every minority shareholder and, in its case, every holder of any other convertible security, may object to the value given to the shares or convertible securities or, in its case, the proposed swap relation, alleging that the value assigned by the controlling party is not a fair price. Once the expiration term has lapsed, the published valuation regarding the minor shareholder that has not been objected to shall be final. The same expiration is applied to the holder of convertible securities who has not objected to the value given to the convertible securities.

                   The objection does not alter the transmission by law of the shares and convertible securities in favor of the controlling party. During the objection, all rights corresponding to the shares, securities convertible into shares or not, correspond to the controlling party.

The Arbitration Court specified in section 38 hereof shall take part, or in case the minor shareholder opts for the legal objection, the court in commercial matters of the jurisdiction corresponding to the domicile of the controlled party. All objections of minority shareholders and, in its case, the holders of the other convertible securities shall be aggregated before the same court. The objection shall be suspended until the expiration period referred to in the first paragraph of this section or until all the legitimated parties have brought an objection action. For that purpose the legitimate objecting parties shall be all those shareholders or holders of other convertible securities that have not voluntarily withdrawn the funds form the escrow account mentioned in the last paragraph of section 29 of this Executive Order.

The objection, which may only refer to the valuation of the shares and, in its case, of the other convertible securities and to the swap relation, as the case may be, shall be forwarded to the controlling party for a term of TEN (10) business days. The evidence shall be offered with the brief of compliant and with the responsive pleading. The Arbitration Court or the judge, as it may correspond, shall appoint the valuating experts in the number he considers corresponds to the case and, after a new forwarding for FIVE (5) business days, it shall pronounce judgement fixing the final fair price in a term of FIFTEEN (15) business days. The decision is appealable, and the appeal may be filed duly grounded, within a term of TEN (10) business days. The forwarding shall be for the same term, and the Court of Appeals shall make a decision within TWENTY (20) business days.

                   The attorneys and experts’ fees shall be established by the Arbitration Court, as they may correspond, according to the scale applicable to the incidents. Each party shall bear its attorneys and experts or technical consultants’ fees. The fees of the experts appointed by the judicial or arbitration Court shall be always born by the controlling party, except that the difference between the fair price pretended by the objecting party is THIRTY PERCENT (30%) over the price offered by the controlling party, in which case the provisions of the first paragraph of section 154 of Act N° 19,550 and amending regulations shall be applied.

                   In case it corresponds, in a term of FIVE (5) business days after the final decision becomes a matter decided, the controlling party shall deposit in the escrow account indicated in the last paragraph of section 29 hereof the amount of the determined price differences. The delay in the fulfillment of the deposit shall accrue in charge of the controlling party a default interest equal to one time and a half the mean active rate for loans in pesos published by the CENTRAL BANK OF THE REPUBLIC OF ARGENTINA, corresponding to the month when the delay takes place. If the delay exceeds THIRTY (30) running days any shareholder shall be legitimated to declare the expiration of the sale of its securities. In said case, the controlling party shall return the holding of the shares and other rights of the shareholder to the previous situation, apart from his liability for the generated damages.

Minority shareholders and, in its case, the holders of other convertible securities, may withdraw the funds corresponding to their shares or convertible securities as from the date when the last deposit was credited, plus the interests accrued by the respective amounts.

CHAPTER VIII

Withdrawal of the Public Offering

SECTION 31.- Voluntary Withdrawal From the Public Offering System. When a company, whose shares are placed on the public offering and listing systems, proceeds to voluntarily withdrawal from any of them, it shall follow the procedure established by the SECURITIES AND EXCHANGE COMMISSION and, it shall further, promote in a binding way the Public Offering of its shares, subscription rights, obligations convertible into shares or stock options under the terms of the following section.

                   The acquisition of the own shares shall be made with the net profits or with free reserves, when they are completely paid-in, and for their repurchase or disposition in the term of section 221 of Act N° 19,550 and amending regulations. The company shall evidence before the SECURITIES AND EXCHANGE COMMISSION it satisfies the necessary liquidity requirements and that the payment for the shares does not affect the company’s solvency. If these extremes are not evidenced, and in the cases of corporate control, the obligation herein established shall be in charge of the controlling party, which shall evidence identical extremes.

SECTION 32.- Conditions. The Public Offering established in the previous section shall be subject to the following conditions:

a)                               It shall be extended to all obligations convertible into shares and other securities granting the right to their subscription or acquisition.

b)                               It shall not be necessary to extend the offering to those who had voted in favor of the withdrawal at the meeting, who shall immobilize securities until the lapsing of the acceptance term determined by the regulations of this Executive Order.

c)                                In the prospectus of the Public Offering, said circumstance shall be clearly expressed and the securities immobilized shall be identified as well as their holders identity.

d)                               The offered price shall be a fair price, weighting for such determination, among other acceptable criteria, those indicated as follows:

I)               Book value of the shares, considering a special balance sheet for the listing withdrawal.

II)              Enterprise value according to criteria of discounted cash flow and/or indicators applicable to companies or comparable ventures.

III)            Liquidation value of the company.

IV)          Mean price of the securities during the semester immediately previous to the withdrawal request agreement, whatever the number of negotiation sessions would be.

V)           Price of the offered consideration or underwriting price of the new shares in case a Public Offering has taken place regarding the same shares or if new shares were issued as it may correspond during the last year, as from the date of the withdrawal request agreement.

These criteria shall be taken into account jointly or separately and justifying its respective relevance at the moment of the offering and duly grounded in the offering prospectus, with the opinion of the administration and control bodies and of the audit committee of the entity. In all cases the price shall not be lower than that resulting from the criterion indicated in paragraph IV.

The SECURITIES AND EXCHANGE COMMISSION may object to the offered price when it perceives that it is not a fair price. The lack of objection to the price does not hinder the right of the shareholders to object the offered price before a judicial or arbitration court. For the objection of the price, the provisions of section 30 hereof shall be fulfilled. For the purposes of this Executive Order, the SECURITIES AND EXCHANGE COMMISSION shall especially take into account the decision process fixing the offer price, especially the previous information and the grounds for said decision, as well as the fact that for said decision the opinion of an independent specialized evaluator was requested and there is the favorable opinion of the audit committee and of the control body. In case of objection of the price by the SECURITIES AND EXCHANGE COMMISSION, the company or the controlling party may resort to the procedure established in section 30 of this Executive Order.

CHAPTER IX

Behavior Against Transparency in the Public Offering

SECTION 33.- Prohibition to Use Privileged Information for Own Benefit or For Third Parties’ Benefit. Short Swing Profit. The persons mentioned in section 7 of this Executive Order may not use the confidential information referred to therein in order to obtain, for them or for others, any type of advantage, deriving from the purchase or sale of negotiable securities of any other operation related with the public offering system. These provisions are further applied to the persons mentioned in section 35 of Act N° 24,083 and amending regulations.

                   In the cases of violation of the prohibition established in the first paragraph, the positive price difference obtained by the persons comprised in the previous paragraph from any purchase and sale or from any sale and purchase within a period of SIX (6) months, regarding any negotiable security of the issuers to whom they are registered, shall correspond to the issuer and shall be recoverable by him, without prejudice of the penalties that may correspond to the defaulting party.

                   If the issuer does not bring the corresponding action or if he does not do so within SIXTY (60) days after being noticed to do so, or he does not duly initiate the action after the notice, said action may be instituted by any shareholder.

                   The statute of limitation for recuperation of short swing profits shall be THREE (3) years as from the proscribed transactioin, and may be aggregated with the action established in section 276 of Act No. 19,550 and amending regulations, without it being necessary the previous meeting resolution.

SECTION 34.- Market Manipulation and Fraud. The issuers, intermediaries, investors, or any other party taking part in the markets of negotiable securities or forward contracts, futures and options of any type whatsoever, shall abstain from making, per se or through an intermediary, in the initial offerings or secondary markets, practices or behaviors that may intend or allow the manipulation of prices or volumes of the negotiable securities, rights or forward contracts, futures and options, altering the normal development of the supply and demand; especially fulfilling the pertinent legal and regulatory provisions.

                   Moreover, said persons shall abstain from deceitful practices or behaviors that may induce any party taking part in said markets to make an error pertaining to the purchase or sale of any negotiable security in the public offering or of forward contracts, futures and options of any type, either through the use of artifices, false or inaccurate statements or statements omitting essential events, or through any act, practice or course of action that may have deceitful and detrimental effects on any person in the market.

                   For the purposes of the determination of the penalty for said behavior considered market manipulation and/or fraud, the SECURITIES AND EXCHANGE COMMISSION shall consider an aggravating circumstance if the penalized behavior corresponded to the controlling shareholder, the administrators, managers, auditors, intermediaries or officers of the control bodies.

                   The SECURITIES AND EXCHANGE COMMISSION shall define the concept of market maker or specialist. Moreover, the SECURITIES AND EXCHANGE COMMISSION or self-regulated entities with its authorization, shall assess the performance of market makers or specialists, not being comprised in this section the acts performed pursuant to said resolution.

SECTION 35.- Information in the Prospectus. The issuers of securities, jointly with the members of the administration and control bodies, the latter for matters for which they are competent, and in its case, the offerors of securities as regards information related to them, and the persons signing the prospectus for the issue of securities in public offering, shall be liable for all information included in the prospectus registered by the before the SECURITIES AND EXCHANGE COMMISSION. The intermediary entities and agents in the market taking part as arranger or underwriters of a public offering for the sale or purchase of securities shall diligently revise the information contained in the offering prospectus. Experts or third parties giving an opinion on certain parts of the prospectus shall only be liable for the part of said information on which they have given an opinion.

                   The legitimate complaints must be made by the purchasers or acquiring parties of the securities in the public offering offered through the respective prospectus, and shall prove the existence of an error or omission of an essential aspect in the information regarding the offering. For said purpose, the information that a common investor had deemed relevant in deciding the purchase or sale of the offered securities shall be considered essential. If it is proven that the error and/or omission are essential, except evidence to the contrary presented by the issuer or offeror, the causality relation is assumed between the error and/or omission and the generated damage, except when the defendant proves that the investor had prior knowledge of the defective nature of the information.

                   The compensation amount shall not be over the loss caused to the investor, referred to the difference between the purchase or sale price fixed in the prospectus and duly paid or perceived by the investor, and the price of the respective security to the moment of filing the complaint or, in its case, the transfer price by the investor, if it is prior to said date.

                   The liability among the defaulting parties shall be jointly and severally. The system of contributions or participation among the defaulting parties shall be determined when taking into account the individual performance of each of the defaulting parties and the degree of access to the erroneous or omitted information.

                   The complaint for damages stated in this shall be filed within a statute of limitations period of ONE (1) year after taking notice of the error or omission of the mentioned prospectus by the plaintiff and never after TWO (2) years of the date on which the respective prospectus was authorized by the SECURITIES AND EXCHANGE COMMISSION.

SECTION 36.- Prohibition to Take Part in the Public Offering Without Authorization. All individuals or artificial persons taking part in the public offering of negotiable securities, forward contracts, futures and options without the pertinent authorization of the SECURITIES AND EXCHANGE COMMISSION, or violating the provisions of this Executive Order, of Act No. 17,811 and amending regulations and of the regulations of the SECURITIES AND EXCHANGE COMMISSION shall be penalized according to the provisions of section 10 of Act No. 17,811 and amending regulations.

SECTION 37.- Liability Before Contemporaneous Participants. Without prejudice of the provisions of sections 31 and 34 of this Executive Order, every person operating in an authorized market, violating the duties imposed in this Title shall be liable for the damages caused to those persons that contemporaneously with the purchase and sale of negotiable securities or forward contracts, futures and options of any nature whatsoever object of said violation, have purchased (when said violation is based on the sale of negotiable securities or forward contracts, futures and options of any nature whatsoever), or sold (when said violation is based on the purchase of negotiable securities or forward contracts, futures and options of any nature whatsoever) or that a right, revenue or interest may be affected as a consequence or due to the alleged violation of duties.

                   The compensation shall not be over the obtained positive price difference or the prevented loss in the transaction or transactions object of the violation, except in the cases provided for in section 34 hereof.

                   The operations motivated by compensation actions provided for in this Title shall not be annullable.

CHAPTER X

Arbitration

SECTION 38.- Arbitration. Within a term of SIX (6) months as from the publication of this Executive Order, self-regulated entities shall create a permanent Arbitration Court to which all entities whose shares, negotiable securities, forward contracts futures contracts and options are listed or negotiated in their scope shall be subject in a binding way in their relations with the shareholders and investors. All actions derived from Act No. 19,550 and amending regulations shall be comprised in the arbitration jurisdiction, even claims for objecting resolutions of corporate bodies and liability actions against its members or other shareholders, as well as nullity actions of clauses of the by-laws or regulations. Self-regulated entities shall proceed in the same way with regards to issues set forward by the shareholders and investors regarding the agents acting in their scope, except for the discipline power. In all cases, regulations shall set aside the right of shareholders and investors in conflict with the entity or the agent, to opt for resorting to the competent legal courts. In the cases where law establishes the aggregation of claims brought with the same purpose before one court, the aggregation shall be before the Arbitration Court. The person making a public offering as it pertains to the addressees of said acquisition are further subjected to the arbitration jurisdiction established in this section.

TITLE II – AMENDMENTS TO ACT No. 17,811 AND AMENDING RULES

SECTION 39.- Sections 6º, 10, 12, 13, 14 and 15 of Act No. 17,811 and amending rules shall be substituted by the following:

“SECTION 6°.- The SECURITIES AND EXCHANGE COMMISSION shall perform the following functions:”

“a)     To authorize the public offering 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)     To keep the general index of brokers registered in the capital markets.”

“d)     To keep a registry of individuals and artificial persons authorized to make a public offering of securities and to establish the rules to be fulfilled by them and those who act in their name.”

“e)     To approve the regulations of stock exchanges related with the public offering of securities and of the capital markets.”

“f)      To control the fulfillment of the legal, by-law and regulatory rules as regards the application scope of this law.”

“g)     To request the FEDERAL EXECUTIVE BRANCH to withdraw the authorization to operate a stock exchange whose by-laws foresee the listing of securities and to the capital markets, when said institution do not fulfill the functions established by law.”

“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 10.- Penalties. The individuals and artificial persons violating the provisions of this law and regulating provisions, without the prejudice of the applicable civil or criminal actions, shall be subject to the following penalties:”

“a)     Warning.”

“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 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.- The warning penalty may only be appealable before the SECURITIES AND EXCHANGE 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.”

SECTION 40.- Incorporation of the following section to section 10 bis of Act No. 17,811 and amending regulations:

“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 Procedural Court on Civil and Commercial Matters of the Nation. For said purpose, the evidence issued by the SECURITIES AND EXCHANGE COMMISSION shall be enough, which shall be subscribed by its legal representative or the person vested in said power, and no other exceptions may be argued except for prescription, stay and documented payment. Moreover, the interests of said fines shall accrue commensurate with the interests offered by BANCO DE LA NACIÓN ARGENTINA for ordinary discount operations beginning from the expiration of the term of TEN (10) days until its effective payment. The final decision of the SECURITIES AND EXCHANGE COMMISSION to impose a fine shall make the decision for an injunction, or any other equitable remedy, possible and the submission of the evidence for said decision shall have similar effects to the case established in section 212, subsection 3 of the Code of Procedure in Civil and Commercial Matters of the Nation.”

“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 41.- Re-enumeration of Chapter VIII of Act No. 17,811 and amending regulations by Chapter IX, and sections 63 to 68 by sections 78 to 83, respectively.

SECTION 42.- Incorporation of the following as Chapter  VIII of Act No. 17,811 and  amending regulations:

“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.”

TITLE III – AMENDMENTS TO ACT No.  24,083 AND AMENDING REGULATIONS

SECTION 43.- Replacement of section 35 of Act No. 24,083 and amending regulations by the following:

“SECTION 35.- Violations to the provisions of this law, as well as to the rules established by the control body, may be penalized as follows:”

“a)     Warning.”

“b)     Fines for the amount resulting from applying subsection b) of section 10 of Act No. 17,811 and amending regulations of ONE THOUSAND PESOS ($1,000) TO ONE MILLION FIVE HUNDRED THOUSAND PESOS ($1,500,000).  It shall further be applied to directors, administrators, auditors, counselors, and managers joint and severally.”

“c)     Temporary disqualification to act. During the term of the disqualification, the following shall only be carried out, as regards the fund: common acts of administration and to attend quotas redemption requirements, being able to sell for that purpose the necessary property in the portfolio, under the control of the SECURITIES AND EXCHANGE COMMISSION.”

“d)     Definite disqualification to act as managing company or depositary of mutual funds.

“e)     Disqualification of up to FIVE (5) years to be underwriter and to fill other positions indicated in subsection c) of section 10 of Act No. 17,811 and amending regulations, as regards the scope of this law.”

“These penalties shall be applied by the SECURITIES AND EXCHANGE COMMISSION, previous application of the summary statutory system in sections 12 and 13 of Act No. 17.811 and amending regulations. The control body shall renew the preventive suspension for successive resolutions.”

TITLE IV – COMPLEMENTARY PROVISIONS

SECTION 44.- SECURITIES AND EXCHANGE COMMISSION. The SECURITIES AND EXCHANGE COMMISSION shall be the application authority of this Executive Order. Said entity shall rule the manner in which the information and control required shall be carried out. For that purpose, it shall require the bodies subjected to its jurisdiction to implement the mechanisms it may deem necessary for a more effective control of the above described conducts.

                   The SECURITIES AND EXCHANGE COMMISSION may establish different information systems and requirements for the public offering taking into account the nature of the issuer, the amount of the issue, the restricted number or special characteristics of investors to whom the issue is directed and, in general, any circumstance that makes it advisable. Furthermore, it may grant exemptions as general nature, to small and medium sized companies from forming the audit committee provided for in section 15 of this Executive Order.

SECTION 45.- Digital Signature. The documents signed digitally sent by electronic means to the SECURITIES AND EXCHANGE COMMISSION pursuant to the rules of said Commission for its identification, for all legal and regulatory purposes, shall be identically valid and shall have the same force as those signed in paper.

SECTION 46.- The restrictions and limits established in section 8 of Act No. 17,811 and amending regulations shall not rule when dealing with information to be sent to the FINANCIAL INFORMATION UNIT in the framework of the provisions of Act No. 25,246 and amending regulations.

SECTION 47.- The expenses incurred to fund the SECURITIES AND EXCHANGE COMMISSION system shall be partially paid with the income resulting from control rates and authorization fees. The SECURITIES AND EXCHANGE COMMISSION’s personnel shall be ruled by the Labor Contract Law and by the rules passed or to be passed in the future by the Board of Directors of the SECURITIES AND EXCHANGE COMMISSION. In the case where civil or criminal proceedings brought against officers of the SECURITIES AND EXCHANGE COMMISSION by virtue of acts or omissions in the exercise of their functions, the SECURITIES AND EXCHANGE COMMISSION or the National State shall advance the reasonable costs that the officer’s attorney may need for legal assistance depending on the final decision of the legal actions. If the final judgement states that the officer is liable, he shall be obliged to return all the advances that he had received, plus the corresponding interests.

The term “officer” shall include the members of the board of directors and the SECURITIES AND EXCHANGE COMMISSION’s remaining personnel.

SECTION 48.- Enforcement. General Principle. This Executive Order shall be enforced on the first business day of the month following its publication, except for those provisions subject to regulation of the SECURITIES AND EXCHANGE COMMISSION that shall be enforced as from their publication.

                   Exception. The enforcement of the regulatory rules referring to the audit committee provided for in section 15 of this Executive Order, shall not exceed the term of THREE (3) years as from their publication in the Official Gazette. The SECURITIES AND EXCHANGE COMMISSION shall establish the moment as from which said regulation shall be binding.

SECTION 49.- Regulation term. The SECURITIES AND EXCHANGE COMMISSION shall regulate this Executive Order within ONE HUNDRED AND EIGHTY (180) days as from the date of enforcement.