By means of Legislative Decree 817 of 2020, the National Government authorized simplified stock companies ("SAS") so that for the first time since their regulatory creation, they can obtain resources through the issuance of debt securities in the public stock market, with the objective of providing them with tools to face the economic, social and ecological emergency.
The new rule is a temporary exception to the prohibition contained in Article 4 of Law 1258 of 2008, which establishes the impossibility of trading securities in the public market for this type of companies.
The Decree states that for a term of two (2) years starting from June 4, 2020, debt securities issued by the SAS may be registered in the National Registry of Securities and Issuers - RNVE and may be offered in the Segundo Mercado, where only those persons or entities that are considered professional investors may participate.
In addition, the new regulation mandates that the term of the issuances made under this Decree may not exceed five (5) years. On the other hand, the Decree allows the issuance carried out by the SAS to be guaranteed by the Fondo Nacional de Garantías S.A.
This new flexibility in the legal system that opens the door to new issuers in the local market will be subject to the development and regulations set forth by the National Government that must establish the statutory and corporate governance conditions with which the SAS must comply to access the Segundo Mercado.
Currently, Law 964 of 2005 establishes the parameters with which securities issuers in Colombia must comply, covering aspects related to the composition of the board of directors, independent members, audit, and risk committees. Therefore, the creation of the complementary decrees will be important to establish the requirements that SAS will need to comply with.
This Decree reflects the importance of the capital markets for the local economy and follows the regulations and mechanisms that are being implemented by the National Government to address the crisis. In addition, proof of the National Government's support for the stock market is Decree 811 of 2020, which establishes the rules for the acquisition and divestment of State holdings in companies affected by COVID-19.
Consequently, the alienation of the Nation's share participation will be carried out using mechanisms that contemplate conditions of wide publicity and free concurrence. For the above, the option is opened to offer these participations through public auctions using the BVC procedures and regulations established by the Superintendence of Finance.