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TENDER OFFER AND CORPORATE GOVERNANCE LAW: CHILEAN NEW SET OF RULES TO INTEGRATE THE GLOBAL MARKETPLACE PowerPoint Presentation
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TENDER OFFER AND CORPORATE GOVERNANCE LAW: CHILEAN NEW SET OF RULES TO INTEGRATE THE GLOBAL MARKETPLACE - PowerPoint PPT Presentation


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TENDER OFFER AND CORPORATE GOVERNANCE LAW: CHILEAN NEW SET OF RULES TO INTEGRATE THE GLOBAL MARKETPLACE. ALVARO CLARKE DE LA CERDA SUPERINTENDENTE DE VALORES Y SEGUROS DE CHILE APRIL 2000. SVS - Chile. TENDER OFFER AND CORPORATE GOVERNANCE LAW. THE KEY QUESTION :

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TENDER OFFER AND CORPORATE GOVERNANCE LAW: CHILEAN NEW SET OF RULES TO INTEGRATE THE GLOBAL MARKETPLACE


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TENDER OFFER AND CORPORATE GOVERNANCE LAW:CHILEAN NEW SET OF RULES TO INTEGRATE THE GLOBAL MARKETPLACE

ALVARO CLARKE DE LA CERDA

SUPERINTENDENTE DE VALORES Y SEGUROS DE CHILE

APRIL 2000

SVS - Chile

tender offer and corporate governance law
TENDER OFFER AND CORPORATE GOVERNANCE LAW

THE KEY QUESTION:

How the Chilean securities market will integrate the global financial capital markets in the years to come?

Tender offer and corporate governance

SVS - Chile

mainly through two actions
MAINLY THROUGH TWO ACTIONS:

1) DEREGULATION:

Capital controls

Taxes

2) CHANGES IN OUR SECURITIES AND COMPANY LAW TO INTERNATIONAL STANDARDS:

Tender offers and corporate governance law

Tender offer and corporate governance

SVS - Chile

new regulation
NEW REGULATION:

THE KEY PROBLEM

How to align the incentives of controllers (managers) and the other shareholders, sharing the company’s creation of value, in a fair and equal basis?

or

which is the same as to How to lower the incentives of the “insiders” to extract value from the outsiders due to their privilege position.

Tender offer and corporate governance

SVS - Chile

the three conflict areas
THE THREE CONFLICT AREAS

1) Major corporate events: takeovers

2) Transfer pricing

3) Insider trading

Tender offer and corporate governance

SVS - Chile

new regulations
NEW REGULATIONS:

THE KEY SOLUTIONS

1) Tender offers : Mandatory bids

2) Corporate governance : Directors duties

3) Insider trading : Information disclosure

Tender offer and corporate governance

SVS - Chile

i takeovers
I. TAKEOVERS

1) Control premium

2) Tender offer rule

3) Information disclosure

Tender offer and corporate governance

SVS - Chile

ii transaction among affiliates
II. TRANSACTION AMONG AFFILIATES

1. Approval without vote of directors with conflict of interest

2. Indepent appraisal submitted to the market

3. Information disclosure for at least 20 working days

4. Shareholders right to call for a shareholder’s meeting approval

Tender offer and corporate governance

SVS - Chile

iii inside information
III. INSIDE INFORMATION

Mayor corporate events:

1. Take overs:

Information disclosure

Mayor stakeholders

2. Transaction with affiliates:

Market transparency

3. Increased sanctions

Tender offer and corporate governance

SVS - Chile

corporate governance
CORPORATE GOVERNANCE

Directors Committee

  • Treatment of directors with conflict of interest
  • Increase self-regulatory within the company
  • Independent directors
  • Annual meetings supervision

Tender offer and corporate governance

SVS - Chile

additional protection for non controlling shareholders
ADDITIONAL PROTECTION FOR NON CONTROLLING SHAREHOLDERS

1. More resources to regulatory body (SVS)

2. Strengthen rights of withdrawal

* Ownership concentration above 66%

3. Increase voting quorum approval

* Mayor corporate events 3/4 shares

Tender offer and corporate governance

SVS - Chile

additional protection for non controlling shareholders1
ADDITIONAL PROTECTION FOR NON CONTROLLING SHAREHOLDERS

4. Limit share issues with extra voting rights

5. ADR’s has same voting rights as shares

6. Increase sanctions for inside information

Tender offer and corporate governance

SVS - Chile

conclusions
CONCLUSIONS

1. Harmonisation is crucial to play a role in the global financial market.

2. Today’s regulation asymmetries between banking and capital markets are lowered.

3. Market consensus about the need of this new framework takes time.

Tender offer and corporate governance

SVS - Chile