The new Uruguayan Securities Act, N° 18.627 (“Act”), was published in the Uruguayan Gazette on December 16, 2009 and expressly stroke down the former Securities Act (16.749) of 1996 which, when was passed, had improved the Uruguayan securities market as a complement of the General Corporation Act (16.060), mainly in terms of issuance of bonds by openly-held corporations and book-entry securities. After more than a decade in force and having been incorporated to the Uruguayan System, among others, the Trust Act and the Act regarding Closely Investment Fund of Credits, which enhanced asset securitization, it became blatant that Uruguayan system needed an updated securities Act.
The New act, more complex than the 1996 act, regulates not only tender offers and the stock market but also it pays special attention to securities brokers which regulation was not comprehensive in the former act. Also, the Act reassures the Uruguayan Central Bank (UCB) as the government agency that has to assure transparency, competitiveness and a correct operation of the securities market, by offering complete and accurate information to the investors, reducing the systemic risk. The UCB will be also in charge of administrative intervention and liquidation of market exchange entities (bolsas de valores), similar entities and securities brokers as well, in a role similar to the one it undertook regarding Banks and other financial institutions.
Corporate Governance
The Act expressly provides that market exchange entities, as well as, other institutions where securities are bought and sold and corporations involved in tender offers must follow corporate governance principles in order to assure correct supervision, control of the direction and fair and egalitarian treatment to shareholders if applicable.
Among other obligations (fiduciary duties), it will be necessary to inform in an accurate and complete way about their financial statements and further relevant information. Also, they need to use international standards regarding accountability and audit.
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