Latin American Capital Markets

76 GEORG WITTICH, ETHIOPIS TAFARA, AND ROBERT J. PETERSONnet activity. With regard to Internet prospectuses, regulators have insisted on the importanceof satisfying the objectives of existing prospectus requirements, that is, allowinginvestors to make informed decisions about securities offers. At the same time,regulators generally allow for the delivery of disclosure documents via the Internet,provided there is proof that the recipients have Internet access and there is electronicevidence of the delivery of the disclosure documents. 1 ' Record-keeping requirementsestablished by regulators appear to be largely the same for Internet-based and noninternet-basedsecurities activities. 12However, in a number of countries, regulators have found that certain uses ofthe Internet require the enactment of new laws or the amendment of existing laws.For example, in some jurisdictions, it is not possible, under the existing law, to holdshareholder and directors' meetings, disseminate voting information, or vote by proxyvia the Internet. In other jurisdictions, company laws require physical meetings to beheld. Some company laws require paper-based prospectuses, contract notes, and statementsof account. In addition, some laws require proxy voting to be effected in person.In light of these restrictions, several developed markets are considering new oramended legislation to facilitate use of the Internet for voting and holding shareholdermeetings.Regulators in most of the developed markets, through guidance or interpretivereleases, also have clarified the circumstances leading to their exercise of regulatoryauthority over cross-border securities activity. Generally, these statements indicatethat asserting regulatory jurisdiction revolves primarily around the readily identifiableand constant set of factors developed by the International Organization of SecuritiesCommissions (IOSCO) in I998. 13 In this regard, IOSCO recommends that the assertionof regulatory jurisdiction (the imposition of licensing, registration, and otherrequirements) be predicated on conditions. The first is that the offeror of securitiesor services be located in a regulator's own jurisdiction.The second is that the offer ofsecurities or services has a significant effect on residents or markets in a regulator'sjurisdiction. In determining whether the offer meets the second test, regulators considerwhether, among other things, the following hold:" See, for example, Ontario Securities Commission (1999); and U.S. Securities and Exchange Commission, "Use ofElectronic Media for Delivery Purposes," Final Rule, Release No. 33-7289,34-37183, IC-21946, 17 CFR Parts 200,228,229, 230, 232,239, 240, 270 and 274, (May 9, 1996) (available at http://www.sec.gov/rules/final/33-7289.txt).12 IOSCO Internet Report /.Annex, supra note I.13 See IOSCO Internet Report I, supra note I. IOSCO Internet Report I did not address the circumstances under whichCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pubregulators would assert enforcement jurisdiction.