Introduction

The new Uruguayan Securities Act, N° 18.627 (“Act”), was published in the Uruguayan Gazette on December 16, 2009 and expressly struck down the former Securities Act (16.749) of 1996 which, when was passed, had improved the Uruguayan securities market as a complement of the General Corporation Act (16.060), mainly in terms of issuance of bonds by openly-held corporations and book-entry securities. After more than a decade in force and having been incorporated to the Uruguayan System, among others, the Trust Act and the Act regarding Closely Investment Fund of Credits, which enhanced asset securitization, it became blatant that our system needed an updated securities Act.   

The Act relaunched the Uruguayan Securities market, as a trigger to obtain economic development, something that was originally projected by lawmakers when passed the General Corporation Act of 1989, and in order to achieve corporate financing in a way different from the banking system getting access to private investors.   

The New act, more complex than the 1996 act, regulates not only tender offers and the stock market but also it pays special attention to securities brokers which regulation was not comprehensive in the former act. Also, the Act reassures the Uruguayan Central Bank (UCB) as the government agency that has to assure transparency, competitiveness and a correct operation of the securities market, by offering complete and accurate information to the investors, reducing the systemic risk. The UCB will be also in charge of administrative intervention and liquidation of market exchange entities (bolsas de valores), similar entities and securities brokers as well, in a role similar to the one it undertook regarding Banks and other financial institutions. 

In Section 2 of the Act a tender offer is defined as a communication targeted to either general public or specific groups of investors, in order to acquire, sell or exchange securities. Even though the Act excluded private issuances (as the former act did) it does include the invitation to buy securities made to clients of a specific institution in a generic way even when no publicity is conducted.  

Likewise, the Act renewed the relevance of the Financial Services Agency of the UCB (“Agency”) stressing the fact that a tender offer can be made only if the corresponding securities and the corporation offering them are registered with the Agency. The Agency is only in charge of controlling securities brokers.

A commission for securities market promotion (“Commission”) was created by the Act in order to assist the Executive Power in promotion and development of securities market.

The idea of “security” that is used by the Act, as well as the former act, includes those assets (tangible and intangible) and rights easy transmissible such as stock, bonds, commercial papers, shares of investment funds, etc.

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