The government has recently presented Bill 108 of 2001, which aims to modify and update the Colombian securities market regulations, before Congress. The Bill provides for comprehensive regulation, which the government believes will considerably strengthen and boost the local securities market. In particular, the Bill provides a framework that contains stronger protection mechanisms for investors and incorporates recent international developments in corporate governance. It also includes regulations aimed at guaranteeing efficiency, transparency and adequate disclosure of information related to securities transactions.
One of the most important features of the Bill is the broadening of the definition of public offers. Any invitation or summoning made by any means to the general public or to any group of persons, in order for them to undertake any act directed at the subscription, placement or negotiation of securities will be considered a public invitation to invest (invitación pública a la inversión). Such public invitations to invest will be subject to specific diffusion, information and disclosure standards, with the purpose of protecting potential investors' rights. The authorization of the Superintendency of Securities will be needed before any public invitation to invest is made.
Additionally, the Bill states that a distant offering of securities from abroad, when the offeror does not take necessary measures to prevent their sale to Colombian investors, will be deemed as relevant to the Colombian securities market. It is important to bear in mind that the Bill provides a definition for the purpose of the proposed law when it states that negotiable rights that are a part of an issuance, when its intended result is the reception of funds from the public, are considered securities.
Bill 108 also establishes that individual stock markets, intermediaries and, in general, all participants will be responsible for the correct functioning of the securities market. Discipline and self-regulation will be incorporated upon the adoption of individual stock market exchange regulations. Such regulations will need approval by the Superintendency of Securities in order to guarantee that they comply with the general provisions and principles provided in Bill 108.
Bill 108 will be discussed in Congress during the next few weeks. The definitive text of the law – if Congress decides to pass the Bill - will be the result of such debates.