Title: TENDER OFFER AND CORPORATE GOVERNANCE LAW: CHILEAN NEW SET OF RULES TO INTEGRATE THE GLOBAL MARKETPLACE
1TENDER OFFER AND CORPORATE GOVERNANCE
LAWCHILEAN 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
2TENDER 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
3MAINLY 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
4NEW REGULATION
- THE KEY PROBLEM
- How to align the incentives of controllers
(managers) and the other shareholders, sharing
the companys 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
5THE THREE CONFLICT AREAS
- 1) Major corporate events takeovers
- 2) Transfer pricing
- 3) Insider trading
Tender offer and corporate governance
SVS - Chile
6NEW 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
7I. TAKEOVERS
- 1) Control premium
- 2) Tender offer rule
- 3) Information disclosure
Tender offer and corporate governance
SVS - Chile
8II. 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 shareholders
meeting approval
Tender offer and corporate governance
SVS - Chile
9III. 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
10CORPORATE 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
11ADDITIONAL 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
12ADDITIONAL PROTECTION FOR NON CONTROLLING
SHAREHOLDERS
- 4. Limit share issues with extra voting rights
- 5. ADRs has same voting rights as shares
- 6. Increase sanctions for inside information
Tender offer and corporate governance
SVS - Chile
13CONCLUSIONS
- 1. Harmonisation is crucial to play a role in the
global financial market. - 2. Todays 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