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SVS - Chile

Analyzing the new Chilean rules for global market integration through tender offers and corporate governance. Explore deregulation, alignment of incentives, conflict areas, and solutions to enhance shareholder protection.

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SVS - Chile

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  1. TENDER OFFER AND CORPORATE GOVERNANCE LAW:CHILEAN NEW SET OF RULES TO INTEGRATE THE GLOBAL MARKETPLACE ALVARO CLARKE DE LA CERDA SUPERINTENDENTE DE VALORES Y SEGUROS DE CHILE APRIL 2000 SVS - Chile

  2. TENDER OFFER AND CORPORATE GOVERNANCE LAW THE KEY QUESTION: How the Chilean securities market will integrate the global financial capital markets in the years to come? Tender offer and corporate governance SVS - Chile

  3. MAINLY THROUGH TWO ACTIONS: 1) DEREGULATION: Capital controls Taxes 2) CHANGES IN OUR SECURITIES AND COMPANY LAW TO INTERNATIONAL STANDARDS: Tender offers and corporate governance law Tender offer and corporate governance SVS - Chile

  4. NEW REGULATION: THE KEY PROBLEM How to align the incentives of controllers (managers) and the other shareholders, sharing the company’s creation of value, in a fair and equal basis? or which is the same as to How to lower the incentives of the “insiders” to extract value from the outsiders due to their privilege position. Tender offer and corporate governance SVS - Chile

  5. THE THREE CONFLICT AREAS 1) Major corporate events: takeovers 2) Transfer pricing 3) Insider trading Tender offer and corporate governance SVS - Chile

  6. NEW REGULATIONS: THE KEY SOLUTIONS 1) Tender offers : Mandatory bids 2) Corporate governance : Directors duties 3) Insider trading : Information disclosure Tender offer and corporate governance SVS - Chile

  7. I. TAKEOVERS 1) Control premium 2) Tender offer rule 3) Information disclosure Tender offer and corporate governance SVS - Chile

  8. II. TRANSACTION AMONG AFFILIATES 1. Approval without vote of directors with conflict of interest 2. Indepent appraisal submitted to the market 3. Information disclosure for at least 20 working days 4. Shareholders right to call for a shareholder’s meeting approval Tender offer and corporate governance SVS - Chile

  9. III. INSIDE INFORMATION Mayor corporate events: 1. Take overs: Information disclosure Mayor stakeholders 2. Transaction with affiliates: Market transparency 3. Increased sanctions Tender offer and corporate governance SVS - Chile

  10. CORPORATE GOVERNANCE Directors Committee • Treatment of directors with conflict of interest • Increase self-regulatory within the company • Independent directors • Annual meetings supervision Tender offer and corporate governance SVS - Chile

  11. ADDITIONAL PROTECTION FOR NON CONTROLLING SHAREHOLDERS 1. More resources to regulatory body (SVS) 2. Strengthen rights of withdrawal * Ownership concentration above 66% 3. Increase voting quorum approval * Mayor corporate events 3/4 shares Tender offer and corporate governance SVS - Chile

  12. ADDITIONAL PROTECTION FOR NON CONTROLLING SHAREHOLDERS 4. Limit share issues with extra voting rights 5. ADR’s has same voting rights as shares 6. Increase sanctions for inside information Tender offer and corporate governance SVS - Chile

  13. CONCLUSIONS 1. Harmonisation is crucial to play a role in the global financial market. 2. Today’s regulation asymmetries between banking and capital markets are lowered. 3. Market consensus about the need of this new framework takes time. Tender offer and corporate governance SVS - Chile

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