STOCK TRADING MANUAL FOR EMERGING COMPANIES (NEW MARKET)

Transcription

1 STOCK TRADING MANUAL FOR EMERGING COMPANIES (NEW MARKET) Approved by Resolution No. 362 of the Chilean Securities and Insurance Supervisor dated November 12, Effective from November 12, de 2001 SANTIAGO STOCK EXCHANGE SECURITIES MARKET / STOCK EXCHANGE *THIS IS A FREE TRANSLATION OFFERED ONLY AS A CONVENIENCE FOR ENGLISH LANGUAGE READERS. ANY QUESTIONS ARISING FROM THE TEXT SHOULD BE CLARIFIED BY CONSULTING THE ORIGINAL DOCUMENT IN SPANISH.

2 TABLE OF CONTENTS PAGE 1. GENERAL BACKGROUND REGISTRATION OFFERS/BIDS AND TRADING INFORMATION SETTLEMENT CUSTODY TRADING FEES SPONSOR AND MARKET MAKER EXHIBIT: SPONSOR S RIGHTS AND OBLIGATIONS

3 STOCK TRADING MANUAL OF EMERGING COMPANIES (NEW MARKET) 1. GENERAL BACKGROUND 1.1 This manual is intended to specify in detail the general rules and instructions governing the transactions traded on the Stock Market of Emerging Companies or the New Market on the Santiago Stock Exchange. 1.2 Emerging companies shall refer to those companies consistent with any of the following corporate types: i. New companies seeking funding for an innovative business plan. ii. Companies with innovation projects in the high technology sector. iii. Rapidly expanding companies or companies with a strong potential growth. 1.3 All those matters not dealt with herein shall be subject to the specific regulations, instructions and procedures governing the rest of the securities currently traded on the Stock Exchange, as appropriate according to their nature. 1.4 Stockbrokers must comply with all provisions set forth herein to participate in the trading of shares in emerging companies to perform transactions either in their own name and on their behalf or in the name and on behalf of third parties. In addition, the provisions set forth in the Manual of Rights and Obligations of Stockbrokers as well as in the respective Manual of Transactions of National and Foreign Securities shall be applied to them. 1.5 All those entities expressly authorized by the Board of Directors which meet the requirements established in number 8 of Section B of the Stock Trading Manual may participate as direct operators of a specific stockbroker. 1.6 Transactions of Shares on the New Exchange Market shall be conducted on the trading floor. For purposes hereof, trading floor transactions shall refer to those transactions conducted by any of the following trading systems defined in the Stock Exchange Regulations: Pregón (Open Outcry), Telepregón (electronic open outcry), Auctions, and Remate Electrónico Serializado (Serialized Electronic Auction)

4 REGISTRATION 2.1 Shares in emerging companies may be traded on the Santiago Stock Exchange only if they are registered with the Register of Securities or the Register of Foreign Securities of the Chilean Securities and Insurance Supervisor. 2.2 Listing of the shares in a company on the New Market of the Stock Exchange must be requested directly by the issuer by means of a letter signed by the general manager or the individual holding such office. 2.3 For the purposes of quoting and listing shares on the New Market of the Stock Exchange, issuing companies must introduce at least one entity that will act as Sponsor, and another one that will act as Market Maker, and also the same entity may perform both functions. For introducing the Sponsor, the company will deliver an agreement duly executed with and delivered to the Stock Exchange, which will describe the rights and obligations derived from their relationship. The agreement to be entered into with the Sponsor will include at least those matters contemplated in the Exhibit annexed hereto. For introducing the Market Maker, the company shall deliver to the Stock Exchange an agreement duly executed with such entity describing the rights and obligations derived from their relationship. Such agreement shall contain the minimum conditions established by the Board of Directors by an Internal Communication. In this regard, the Board of Directors has resolved that the agreement shall contain at least the following: 1. Obligations, rights and conditions agreed upon in the relationship between the issuer and the Market Maker. 2. The effective term of the Market Maker's service agreement as well as any conditions for the continuity of such service. 3. Termination grounds of the agreement. 4. Ways in which the executed agreement may be amended or modified. The issuer of the New Market must rely at least on one Sponsor and Market Maker on a continuous basis. Thus, upon termination of the agreement entered into by one of such entities and the issuer, the latter shall introduce another Sponsor and/or Market Maker to the Stock Exchange by delivering a copy of the relevant agreement executed with such entity. Without prejudice to the foregoing, the Board of Directors may exempt an issuer from the obligation to rely on one Market Maker when the share is traded on the stock exchange as set forth in General Rule No. 103 of the Chilean Securities and Insurance Supervisor, or any other that may replace it in the future. Issuers registered with this market shall be bound to rely on one Market Maker during the first 12 months as from the date of the initial placement of its shares on the Stock Exchange. After the expiration of the term stated above, a specific issuer may be exempt from the obligation to rely on one Market Maker when 80% or more of its shares are listed on the Stock Exchange. To such effect, the issuer shall file a written application with the Stock Exchange. Moreover, the issuer exempted from such obligation shall rehire the services of a Market Maker, when less than 25 % of its shares are listed on the Stock Exchange.

5 Issuing companies listed on the New Market of the Stock Exchange shall comply with the provisions set forth in this Manual, in the Manual of Rights and Obligations of Issuers and in the Trading Manual of the Foreign Securities Market, when appropriate. Moreover, they shall meet specific requirements, which shall be defined by the Board of Directors, and shall be duly notified by an Internal Communication. In this regard, the Board of Directors has resolved as follows: 1. Admission to listing on the Stock Exchange must necessarily involve the placement of at least 10% of the shares issued among at least three institutional investors or fifty individuals not related to the controller of the company, who subscribe them either individually or through other individuals or corporations. 2. Current controlling shareholders, i.e., those registered before the new issue and who are in charge of the management of the company, may not dispose of the control of the company for a period of six months from the placement date of the new issuance and registration with the stock exchange. Moreover, prior to that date they shall inform on their strategy or intention, if any, to sell a portion of the shares held by them. Additionally, these shareholders must disclose whether the shares shall be deposited with a depositary bank with the prohibition to sell them before the initial date of their listing on the Stock Exchange. 3. New Market companies will be required to perform, at least once a year, public presentations or "road shows", i.e., meetings with free attendance of stock market participants (other than shareholders' meetings), in which they are to report on the operating results, business projects and strategies, trading capital development and any other information they deem appropriate.

6 The information to be provided by foreign issuers or entities who have applied for listing their shares on the New Market of the Stock Exchange and, subsequently, the information to be provided by them on a regular basis, shall be the same that is required by the Chilean Securities and Insurance Supervisor, by the General Rules and/or Circulars. Additionally, the Board of Directors of the Stock Exchange reserves the right to request additional information and any other relevant specific requirements it deems appropriate to ensure the development of this market and the interests of those who participate in it, which will be informed by an Internal Communication within at least three business days in advance to the effective date thereof. 2.6 New Market issuers whose shares are listed on the Stock Exchange shall cancel their listing right, which will be defined by the Board of Directors and notified by an Internal Communication no less than three business days in advance to the effective date thereof. 2.7 In the event of non-fulfillment of the obligations referred to above, issuers of shares of the New Market shall be subject, when appropriate, to the same penalties defined in the Manual of Rights and Obligations of Issuers. 2.8 The Santiago Stock Exchange shall cancel the registration of an issuer listing its shares on the New Market at the request of the Chilean Securities and Insurance Supervisor or the issuer.

7 OFFERS/BIDS AND TRADING 3.1 The offer, listing and trading of emerging companies shares may be implemented at the same times authorized for the trading of any other shares that are quoted at present, and in the same systems enabled for such purpose. 3.2 The Board of Directors of the Stock Exchange shall establish the special timetables and systems in which they are to be traded. Moreover, it shall establish the way in which they shall be distinguished from other securities; this situation shall be notified by means of an Internal Communication. In this regard, the Board of Directors has resolved as follows: The offer, listing and trading of stock certificates issued by companies on the New Market may be implemented at the same times authorized at present for the trading of any other shares that are listed at present on a low frequency basis, and in the same systems enabled for such purpose, i.e., the Telepregón (electronic open outcry) system, and at the times already defined for Auction Sale and Electronic Auction Sale. 3.3 The securities of the New Market will be identified with mnemonic codes defined according to the type of security and according to the Manuals of Operation of those securities that are traded on the Stock Exchange to which they correspond according to their nature. 3.4 Shares will be listed on the New Market in national currency, or in US dollars or in another authorized currency, expressed with two decimal places when the issuer is registered with the Register of Foreign Securities of the Chilean Securities and Insurance Supervisor.

8 INFORMATION 4.1 Tradings of shares on the New Market as well as any available information regarding such securities shall be disclosed through the computer network terminals of the Stock Exchange, the Daily and Monthly Journals, and the Stock Exchange Information Center. Without prejudice to the foregoing, the Stock Exchange shall publish on its Daily Newsletter a detailed list of the transactions and amount of shares traded on the New Market. 4.2 Traded amounts shall be incorporated in the total traded amount of the market, by converting the foreign currency, when appropriate, into Chilean pesos at the exchange rate published by the Central Bank of Chile. 4.3 The Stock Exchange shall make available to the public through its computer terminals, the Centro de Información Bursátil (Stock Exchange Information Center) (CIB by its acronym in Spanish) and on its website, any previous information on the main characteristics of this market, registered securities and issuers, among others. 5. SETTLEMENT Settlement of transactions in shares on the New Market are to be carried out in accordance with the settlement condition agreed upon at the time of the transaction and according to the rules, schedules and procedures established in the Trading Manuals of the securities or those procedures established in the Trading Manual of Foreign Securities, as appropriate.

9 CUSTODY 6.1 The custody of shares on the New Market is governed by the same rules applied to national or foreign securities, as applicable. 6.2 The Board of Directors shall have the power to establish, in accordance with the nature and origin of the securities, any instructions and additional requirements regarding the custody thereof, and shall give notice by an Internal Communication of any agreements that may be executed in such regard, no less than three business days in advance to the effective term thereof. 7. TRADING FEES The Board of Directors shall determine the trading fee policy, which situation is to be notified by an Internal Communication no less than 3 business days in advance to the effective date thereof. Any amendment to the structure of such fees shall be notified to the Chilean Securities and Insurance Supervisor no less than three business days in advance to the effective date thereof.

10 SPONSOR AND MARKET MAKER 8.1 Sponsor shall refer to those entities specialized in the development of processes applicable to companies that are going public, such as Brokerage Firms, Banks and their subsidiaries, and any other individual or corporation engaged in financial consulting and advisory activities, with an expertise of at least three years in such field. Those entities shall be engaged in advising issuers in filing the reports required to be registered with the Securities Register of the Chilean Securities and Insurance Supervisor as well to quote their shares on the Stock Exchange. Additionally, the Sponsor shall be liable for taking the necessary steps to promote the company s going public, preparing the prospectus, attracting investors and organizing regular information events, among others. 8.2 Market Maker: this entity shall be responsible for ensuring the liquidity of the securities of the company with whom the agreement has been executed, once it starts listing its securities on the New Market of the Stock Exchange. Its participation shall be subject to the conditions and rules established in paragraph 2.8 Market Maker, of the Stock Trading Manual of the Stock Exchange. The same authorized entity may simultaneously act as Sponsor and Market Maker of the same issuer.

11 E X H I B I T S PAGE l. SPONSOR S RIGHTS AND OBLIGATIONS

12 E X H I B I T No. 1 SPONSOR S RIGHTS AND OBLIGATIONS 1. The Sponsor s functions shall be exercised on behalf of the issuer, whose shares are traded on the New Market of the Santiago Stock Exchange. 2. Sponsor and issuer must enter into an agreement, which shall include but not be limited to the rights, obligations and economic terms or remuneration to be agreed upon by the parties. Given the nature of the functions performed by these entities, the agreement with the issuer shall be entered into at the time the issuer decides to participate on the New Market, that is to say, prior to starting trading on a regular basis on the Stock Market. 3. The Sponsor must perform at least the following tasks or functions: * Offering advice to the issuer on the correct fulfillment of the Chilean Securities Market Law as well as the obligations derived from the issuer s registration with the Securities Register of the Chilean Securities and Insurance Supervisor and from listing its securities on the New Market of the Santiago Stock Exchange. * Drafting the prospectus required to authorize the registration of the issuer with the Securities Register of the Chilean Securities and Insurance Supervisor. * Providing support for relationships with investors and with the public in general by the implementation of any marketing programs that may be required. * Performing financial analysis tasks on an as-needed basis. * Advising on the issuer s placement of securities on the market. * Advising on the drafting of forms and prospectus as well as on the taking of steps and proceedings derived from the obligation to disclose material information and any other kind of information contemplated in the Ley de Sociedades Anónimas (Law on Stock Corporations) and the Ley de Mercado de Valores (Securities Market Law). * Supporting any decision on capital increases or on strategies in the relationship with investors. * Organizing specific activities regarding contact with investors: At least one road show per year, presentation of new business projects of the company, etc. 4. The Sponsor must inform the issuer, at least quarterly, on the activities carried out during the period. In addition, the issuer will provide all information on a continuous basis that may be necessary for the Sponsor s correct performance of his tasks. 5. The Sponsor shall be authorized to involve a third entity in the fulfillment of its obligations provided always that the issuer has been given prior notice thereof and that it has consented to it.

13 The sponsor is free to simultaneously offer his services to other issuers of shares. Moreover, the issuer may request the services of several Sponsors simultaneously. There shall be as many agreements as Sponsors are appointed by the issuer. 7. The Sponsor shall have the right to use, for the correct rendering of its services, all reports, studies and background generated by the issuer, without any exception whatsoever. In addition, both parties must agree on the non-use or handling for their own or for third parties benefit, any confidential and privileged information and documents that may adversely affect the performance and reputation of the issuer on the Securities Market. 8. The Sponsor s limited liability shall be clearly placed on record, i.e., that the Sponsor shall not be held personally liable for any breach or default in the terms and conditions mutually agreed upon by the parties in the relevant agreement entered into by them. 9. The agreement entered into by the issuer and the Sponsor shall immediately terminate if the Sponsor fails to comply with the minimum obligations specified in the agreement entered into by and between the parties. Both parties may terminate the agreement upon the other party s breach of any of the specifications established in such document. 10. Any other matter or function not contemplated in this document shall be defined between the issuer and the Sponsor, and all rights and obligations deriving therefrom for the issuer and the Sponsor shall be notified in due course to the Stock Exchange.