22 Feb 2021

CapitalMarkets | Regulations to exercise voting rights of Peruvian securities through custodian services

Share on google
Share on print
Share on whatsapp
Share on linkedin
Share on facebook

On February 20, 2020, the official gazette “El Peruano” published Resolution No. 017-2021-SMV/02 which approves regulations for the participation of custodian entities in shareholder meetings or bondholder meetings, in accordance with article 51-B of the Peruvian Securities Market Law (hereinafter, the “Resolution”).


To begin with, it should be remembered that Urgency Decree No. 013-2020 approved the inclusion of article 51-B into the Peruvian Securities Market Law, allowing entities which provide custodian services regarding securities registered in the Public Registry of the Securities Market (RPMV), to represent owners of securities in shareholder meetings or bondholder meetings, without the need to have powers of attorney and granting competence to the Peruvian Securities Market Regulator (SMV) to issue specific regulations regarding the conditions, obligations and requirements that custodian entities must comply with.


It´s worth noting that entities allowed by the SMV to provide such custodian services are broker-dealer agencies, securities intermediation entities, clearing houses and entities authorized by the Peruvian Banking Regulator (SBS) to provide custodian services for securities.


Taking into account the participation of foreign investors in the local securities market, the Resolution includes the definition of a Global Custodian, which is understood to be the international financial entity which enters into an agreement with a locally authorized custodian so that the latter holds in custody securities which are registered in the RPMV under its account in a duly authorized clearing house, in favor of the client of such international financial entity who is the owner of the custodied securities. As such, the exercise of voting rights for international investors in the local securities market is simplified.


In order for the custodian to exercise voting rights, it must have a voting instruction which must contain, at the very least: the identification of the shareholder or bondholder, the description of the applicable security, the identification of the company, the agenda of the meeting, the specific voting instruction (in favor, against or abstention) regarding each matter of the agenda and the electronic or digital signature of the instructor.


Unless the custodian agreement states otherwise, the electronic signature must be individually linked to the signatory, so that it allows for its identification, be created by the signatory using electronic means which allow for a high degree of certainty regarding its exclusive control and be linked with the data being signed, so that any subsequent modification be detectable. For example, through the entities included in the trusted services list published by INDECOPI.


Upon the beginning of the contractual relationship, the custodian must notify the owner of the securities or the Global Custodian, with a document containing its policies regarding conflicts of interests. Custodians which have not issued such notification once the Resolution enters into force, must do so prior to March 21, 2021.


When the local custodian is to participate in the shareholders or bondholders meeting on behalf of the owner of the securities, it must notify the company or bondholders representative, through the means and within the terms that they may require, for the participation and registration of the custodian in the respective shareholders or bondholders meeting. The custodian may only act on behalf of the owner of the securities, through its own attorneys in fact or appointed representatives. For such purposes, in the notification that is to be sent, the local custodian must include information to identify the individual which will participate in the meeting.


It shall be the responsibility of the custodian to maintain confidentiality of the contents of the voting instructions which it has received. Further, the individual appointed by the custodian must identify itself using the means which the company or bondholder’s representative establishes for such purposes.


Custodians must keep, for a term of 10 years, the instructions which they receive from owner of securities or global custodians, as well as communications regarding the appointment of the custodian and registration before the company or bondholder’s representative as well as all information regarding the received instructions.


Any claims, complaints, appeals, disputes or any other situation regarding the matters regulated by the Resolution shall be solved by the applicable authority under Peruvian law (judiciary, in case no arbitration agreement exists), under the bylaws of the company, the agreement under which the securities were issued, or the agreement with the owner of the securities or global custodian or other regulations, as may be applicable.


In case you have any questions regarding this Resolution, please get in touch with Andrés Kuan-Veng ([email protected]).

Related publications

Stay informed

Join Rubio’s mailing list to receive legal updates.

Keep in touch

Follow Rubio on social media.

Rubio Leguía Studio | All rights reserved
Manya.pe | Creative solutions in the digital era