Latin American Capital Markets

454 MIKE LUBRANOSuperintendency of Securities Resolution 275On May 23, 2001, Colombia's Superintendency of Securities issued Resolution 275pursuant to its power to prescribe certain rules for issuers whose securities (bothdebt and equity) are to be eligible for purchase by Colombia's pension funds. 22 Perhapsbecause of concern that too prescriptive a rule might be resisted in practice orchallenged in the courts on the grounds that it went beyond the Superintendency'sstatutory authority, Resolution 275 does not mandate specific shareholder protection,board practice, transparency, or enforcement provisions to be included in companycharters. 23 Rather; Article 3 of the resolution states that, in order for a company'ssecurities to be eligible for purchase by pension funds, the company must have specificmechanisms in place to ensure protection of shareholder rights and equitabletreatment of investors. 24 Articles 4, 5, and 6 require that these mechanisms be disclosedin some specificity to investors through the preparation, approval, and publicationof a company-specific code of good governance.In essence, Resolution 275 establishes a minimum disclosure regime for corporategovernance for all Colombian listed companies (since in practice companieswithout access to the pension funds market are unlikely to achieve much liquidity intheir shares or issue new securities).The companies themselves (and the market) areto interpret what the term "specific mechanisms" means, although companies will behard pressed to put in place at least the minimal measures in each of the areas specificallycovered by the resolution. The resolution also injects the potential for threelevels of enforcement. Judicial enforcement of company charter provisions will presumablynow extend to those provisions amended by, or construed in accordancewith, the provisions of the new codes (which must be approved by the board of directorsand presented at the shareholders meeting). The superintendency itself willplay a role in ensuring that companies comply, at least in form, with the resolution—a role that may eventually lead to the use of the Superintendency's disclosure oversightpowers to influence the content of codes and companies' compliance with them.Finally, Resolution 275's references to enforcement seem to contemplate the adoptionof arbitration mechanisms for enforcement of investor rights.22 Law 100 of 1993, Article 100, sections 3 and 4.23 Article 7 of the resolution does require that companies achieve at least a 20 percent public float in their shareswithin four years of the resolution's effectiveness.24 Such specific mechanisms must at a minimum cover management control and oversight, conflicts of interest identificationand disclosure of risks, the election and role of the revisor fiscal, special audits, internal controls, requirementsfor minorities to be able to call a shareholders meeting, and enforcementCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub