Regulation on Risk Rating Agencies

This Regulation establishes the norms and procedures that regulate the classification of risk and the functioning of risk rating agencies in the Honduran securities market, in accordance with the provisions of Title V of the Securities Market Law. Likewise, the provisions of this regulation shall be understood as applicable to the classification of risk for financial intermediation companies.

In addition to those contained in Article 6 of the Securities Market Law, for purposes of this Regulation, the following shall be understood as:

• 1)

  Abandonment: Dissolution of the operation due to breach of one of the parties, which is materialized through the communication directed by the stock exchange house that fulfilled its obligation to the centralized custody depository or to the one exercising said function;

• 2)

  Portfolio Administration: Portfolio Administration is understood as the acts of organization of the securities portfolio, purchase and sale of securities, as well as the receipt of dividends and interest that stock exchange houses carry out on behalf and at the order of their clients;

• 3)

  Automatic Matching: Coincidence of buy and sell bids in accordance with the criteria and trading system approved by the Stock Exchange Board, resulting in an operation;

• 4)

  Direct Matching: Action that implies simultaneous conformity of buy and sell bids by the proposing stock exchange houses, resulting in an operation;

• 5)

  Authorization: It is the act by virtue of which the Central Bank of Honduras or the Commission, through administrative resolution, authorizes the functioning or operation of certain participants in the securities market or the issuance and public offering of securities, as the case may be;

• 6)

  Class: A set of securities of the same nature, issued in one or more successive acts, that originate from the same issuer and possess similar conditions and characteristics of issuance;

• 7)

  C.N.B.S. or Commission: National Commission of Banks and Insurance;

• 8)

  Financial Conglomerate: A financial conglomerate shall be understood as the grouping of two or more legal entities that carry out activities of a financial nature, among which there is common control through relationships of ownership, administration, or use of corporate image;

• 9)

  Board: Board of Directors of the Securities Exchange;

• 10)

  Order Correction: Order correction shall be understood as the remedying of errors attributable to stock exchange houses that could have originated in the process of receipt, operation, and assignment of their clients' orders;

• 11)

  Quotation of a Security: The price of the last spot operation carried out for a certain quantity of securities or an amount equal to or greater than the minimum established by the exchange. It is also considered that the last operations carried out in a Trading Session consecutively establish quotation, with respect to the same security, at the same price, and provided that the sum of their quantities or amounts exceeds the established minimum;

• 12)

  Days: Unless expressly stated otherwise, any reference to days in this Regulation shall be understood to refer to business days;

• 13)

  Director: Director of the Trading Session;

• 14)

  Issuance: It is the set of securities of the same issuer, included in the same public offering, duly authorized and registered in the Registry. Each issuance may incorporate classes and series of securities, according to the decision of the issuer;

• 15)

  Placement Company: A company authorized and empowered to carry out the placement of public offering securities in the primary market;

• 16)

  Offering Structuring Company: Stock exchange house that provides the service of design, preparation, development, and financial structuring of the public offering made in accordance with what is established in this Regulation;

• 17)

  Cutoff Date: Last trading day with the right to subscribe for new securities or any other right or benefit;

• 18)

  Placement Guarantor or Underwriter: A company authorized to guarantee the effective placement of the securities issuance in the primary market;

• 19)

  Default: The total or partial, late or defective failure, within the established periods, of delivery of securities or resources for the settlement of operations or for the constitution or replacement of the guarantee margin, to the Stock Exchange or to the Centralized Custody, Clearing and Settlement Depository of Securities;

• 20)

  Registration: It is the act by virtue of which the Commission, through resolution, in compliance and in accordance with this Regulation, registers persons, issuances, securities, or others in the Registry;

• 21)

  Automatic Registration: That which is made of institutions belonging to the public sector, understood to include the Central Government and the Central Bank of Honduras and securities issued by them;

• 22)

  Institutional Investor: A company that jointly administers resources originating from various different natural and/or legal entities, in accordance with the legal norms that regulate them and are applicable to them. Insurance Institutions, Pension Fund Administrators, Investment Fund and Mutual Fund Management Companies, Social Security Institutes, foreign companies that develop similar activities, and other persons that the Commission qualifies as such shall be considered institutional investors;

• 23)

  Law: Securities Market Law;

• 24)

  Guarantee Margin: Money, securities, or other assets constituted as collateral for the fulfillment of certain stock exchange or non-exchange operations, duly authorized by the Law;

• 25)

  Market Margin: The maximum daily fluctuation of the proposed prices of a security fixed by the Stock Exchange;

• 26)

  Order Modification: Express instruction of the client that aims to cancel or vary an order formulated previously;

• 27)

  Offeror: The natural or legal person who, being legally authorized and empowered, carries out public offering of securities;

• 28)

  Public Offering of Securities: Any express or implied offering that proposes to issue, place, trade, or commercialize securities and is transmitted to the public by any means;

• 29)

  Public Offering of Sale: It is a type of Secondary Public Offering directed to the general public that, optionally, one or more natural or legal entities decide to carry out through a stock exchange or other authorized trading mechanisms, with the purpose of transferring in the secondary market a significant quantity of previously issued and acquired securities that correspond to the same issuance. The sale of securities offered individually through a stock exchange or other authorized trading mechanisms is not a Public Offering of Sale and consequently is not subject to the provisions established for that purpose;

• 30)

  International Public Offering: It is one that can be primary or sale, carried out abroad, in accordance with what is provided by this Regulation and other applicable provisions;

• 31)

  Operation: A transaction with securities resulting from the acceptance of a buy proposal and a sell proposal;

• 32)

  Forward Operation: It is one that must be effected within the maximum period set by the stock exchange, counted from the day following the date of formalization of the operation;

• 33)

  Spot Operation: One that results from the automatic matching of buy or sell bids for a quantity of securities at a determined price, to be settled no later than the next business day following the date of the operation;

• 34)

  Repo Operation: It is one by virtue of which the repo seller acquires for a sum of money the ownership of securities, and undertakes to transfer to the repo buyer the ownership of an equal number of securities of the same class within the agreed period and against reimbursement of the same price plus a premium;

• 35)

  Optional Buy or Sell Operations: Those in which the buyer or seller may fulfill or abandon the operation within the agreed period, which shall not exceed that established by the stock exchange. In any case, the commission must be paid in advance and in cash;

• 36)

  Profile or Registration Card: Physical document and/or electronic file that will contain in condensed form the information maintained in the Registry, as provided by this Regulation;

• 37)

  Bid: It is a binding and irrevocable offer to buy or sell, which must indicate the type of security, quantity, and price proposed by a stock exchange house to the market through the stock exchange trading systems;

• 38)

  Premium: It is the fixed sum of money that the beneficiary of the option must pay to the one who has granted it, to have the right to abandon the operation within the period comprised between the date on which it was agreed and the date on which it should be settled;

• 39)

  Securities Issuance Program: The plan that contains the multiple issuances of securities of the same issuer for a determined period of time, in accordance with the characteristics and limits established by the instance of the issuer authorized to approve it. The issuance program shall always comprise securities of the same nature, and may include different classes or series within the same, as the issuer decides;

• 40)

  Prospectus: It is the explanatory document of the characteristics and conditions of a public securities offering. Said document must contain information on the main legal, administrative, economic, and financial aspects of the issuer; the securities object of the offering, the conditions of the public offering, and the destination of the resources, so that investors or the public to whom the offering is directed can make the best decisions. Its presentation may also be as: a. Framework Prospectus: It refers to the conditions and characteristics of issuance programs. b. Supplementary Prospectus: It is prepared for the presentation of each securities issuance. 41. Registrar: Official of the Superintendency of Securities and Other Institutions, responsible for the administration of information existing in the Registry, the custody and safekeeping of archived documentation and other functions that may be assigned to him; 42. Registry: Public Registry of the Securities Market; 43. Series: A set of fungible securities within the same class, which maintain among themselves the condition of homogeneity in the rights they grant and that are subject to the same transmission regime. Series differ from each other by certain characteristics that do not alter the essence of the type of rights conferred; 44. Trading Session: Period of the day in which securities are traded in the Stock Exchange Trading Session or in other authorized trading mechanisms; 45. Order Registry and Operation Assignment System: Set of procedures by which the stock exchange house maintains the chronological control of the orders it receives, their execution, assignment, or subsequent rejection; 46. Auction: Mechanism for the placement of securities to the highest bidder, and price formation based on competitive bids proposed by Stock Exchange Houses; 47. Stock Exchange House Branch: Office of the stock exchange house that functions in a place different from the location of the main office; and, 48. Securities Superintendency: Specialized Technical Body of the Commission, in charge of the supervision of the Securities Market, also known as Superintendency of Securities and Other Institutions.

The risk classification of a debt representative security is a substantiated opinion, expressed in categories, regarding the possibility and relative risk of the capacity and ability of an issuer to comply with the obligations, including the payment obligation, assumed under the conditions and periods agreed upon in the issuance contract. The risk classification does not constitute a suggestion or recommendation to buy, sell, or hold a determined security, nor a guarantee of an issuance or its issuer; but rather the opinion of a private specialist as a complementary factor for investment decision-making.

Classification methodologies are the set of qualitative and quantitative principles and criteria that a rating company uses in its risk classification processes, in accordance with the type of classification it performs. The risk classification of securities shall be carried out in accordance with the methodologies that the Rating Company puts at the disposal of the public in the Registry for such purpose.

In the case of debt representative securities issued by commercial companies through public offering, in series, and with terms exceeding one (1) year, classification is mandatory, as long as the redemption, maturity, or conversion of all issued securities has not occurred. Issuers of debt representative securities through public offering, in series, and with terms exceeding one (1) year, must contract, at their cost, permanent classification with at least one risk rating agency duly authorized by the Commission and registered in the Registry. For purposes of this Regulation, institutions of the financial system shall be understood as issuers of debt representative securities, and consequently, shall have a risk classification as an issuer.

The following shall be considered within the complementary activities of Rating Companies, in accordance with Article 173 of the Law: the classification of legal entities in sectors different from those established in the Law, the permanent dissemination of their activity, and the publication of the classifications they grant with their respective basis. They may also classify:

• 1)

  Financial Institutions;

• 2)

  Issuers; and, 3. Securities: Which includes, among others: - Investment fund participation units in securities; - Direct investment fund participation units and funds; - Short-Term and Long-Term Deposits; - Structured Financing; - Short-Term Instruments; - Long-Term Instruments of Financial Institutions; - Medium-Term Instruments of Financial Institutions; - Endorsed Promissory Notes of Financial Institutions; - Common Stock; - Labor Stock; - Convertible Bonds into Common Stock; - Corporate Bonds; - Financial Leasing Bonds; - Mortgage Bonds; - Mortgage Notes; and, - Subordinated Bonds of Financial Institutions.

To obtain authorization for the organization and functioning of a Rating Company, a request must be presented to the Commission accompanied by at least the following information and documentation:

• 1)

  In the case that the interested partners are natural persons: Full name, nationality, profession or occupation, address, copy of their identity card; percentage of participation in the future risk rating company; name of the spouse and relatives within the fourth degree of consanguinity and second degree of affinity; and detail of the companies where they have social or stock participation or management position, indicating the percentage that the social or stock participation represents in the capital of the company and the position or office they hold in the same;

• 2)

  In the case that the interested partners are legal entities: Corporate name or denomination, corporate purpose, legal address, name and power of the legal representatives, articles of incorporation, and percentage of participation in the future risk rating company;

• 3)

  Curriculum Vitae of each of the subscribers and of the legal representatives, in the case of legal entities as detailed as possible;

• 4)

  Curriculum Vitae as detailed as possible of those who will hold positions on the Board of Directors, Administration, and Classification Committee of the Risk Rating Company;

• 5)

  Draft Articles of Incorporation and Bylaws;

• 6)

  Code of Ethics of the Rating Company and its Members, which shall establish, among other things, the rules that will be applied in matters of incompatibilities and impediments to ensure the impartiality and independence of its opinions, and the non-disclosure of information that must remain confidential;

• 7)

  Classification Methodologies, or a document that extensively explains each one of them, which will be made available to the public in the Registry, if authorization is granted;

• 8)

  Manual of processes for assigning classifications and processes for monitoring and updating the same;

• 9)

  Document that explains the organization and functioning of its Classification Committee;

• 10)

  Sworn Declaration that the partners are not included in Category III, IV, and V of Portfolio Classification;

• 11)

  Sworn Declaration of each of the members of the Rating Company, that they are not included in the impediments indicated in Article 177 of the Securities Market Law; and, 12. The members of the Board of Directors and the principal executives of the Risk Rating Company must have at least five (5) years of experience in economic and/or financial matters. Likewise, the members designated to form the Classification Committee must accredit a minimum of five (5) years of experience in related matters.

It is within the authority of the Commission to grant, deny, or revoke, at its discretion, authorization to exercise the risk classification activity. In the case of a new authorization request, the Commission, at its discretion, shall grant or deny it within a period of thirty (30) days, counted from the presentation of the complete file. If forty days have elapsed without the request being resolved, the affirmative presumption shall be understood to operate, and the petitioner must comply with what is established in the Administrative Simplification Law. However, if during the course of the evaluation of the file, information, documentation, or amplifying or supplementary interviews are needed, the Commission shall request them, granting a period for their presentation. The initial period referred to in the preceding paragraph is suspended while the company is remedying the observations made to the satisfaction of the Commission and when additional information is requested. Authorization for organization and functioning shall be granted through Resolution of the Commission. If the Commission grants the requested authorization, it shall extend certification of what was resolved so that the respective notary may copy it in its entirety and without any modifications in the public instrument of incorporation or amendments. The Commission shall set a period of 15 business days for the granting of the public deed of incorporation or amendments, as the case may be. Only the deed of incorporation or amendments of a risk rating company that meets the requirements of this article shall be registered in the Registry of Real and Mercantile Property.

The Rating Company shall begin its activities after its registration in the Registry, for which it must meet the requirements established in the Regulation and the Norms of the Public Registry of the Securities Market.

Any modification to the articles of incorporation and bylaws in the stock ownership composition of the Rating Company and in the Bylaws must be previously approved by the Commission through Resolution. In these cases, the provisions of the preceding Article 8 shall apply. In the case of modifications in the social composition, the sworn declaration referred to in numeral 10) of Article 7 of this Regulation must be attached. The same procedure must be followed when dealing with the incorporation of new legal representatives, directors, managers, officials, and members of the Classification Committee.

Without prejudice to what is established in the preceding Title, Risk Rating Companies established abroad may provide the risk classification service in the country, with prior authorization of functioning and registration in the Registry, those Risk Rating Companies constituted abroad, recognized by the Securities and Exchange Commission of the United States of America (SEC), called Nationally Recognized Statistical and Rating Organizations (NRSRO).

For the Risk Rating Companies described in the preceding article to be able to function in the country, they must meet the following requirements:

• 1)

  Prove that it is legally established in accordance with the laws in force in the country of origin, and that it has the corresponding authorization to provide risk classification services;

• 2)

  Appoint a permanent legal representative in the Republic of Honduras, granting him power with broad faculties to perform all acts that will be carried out to provide the risk classification service in the country;

• 3)

  Sworn Declaration signed by the person authorized to do so, in which it is established that the Rating Company expressly submits to the laws, courts, and authorities of the Republic of Honduras, in relation to the acts it carries out and contracts it subscribes in national territory, or that will have effect in the country;

• 4)

  Present Classification Methodologies or a document that extensively explains each one of them;

• 5)

  Present a document that explains the organization and functioning of its Classification Committee;

• 6)

  Present Manual of processes for assigning classifications and processes for monitoring and updating the same; and, 7. Present Code of Ethics of the Risk Rating Company. Notwithstanding the above, the foreign rating company must comply with what is established in Article 308 of the Commercial Code.

For purposes of risk classification in the country, Risk Rating Companies established abroad shall use their own norms regarding the functioning of their Classification Committee.

All communication, notification, and coordination with Risk Rating Companies established abroad shall be carried out through their legal representative. Said Rating Companies may not claim ignorance of the information sent or received by their legal representative.

Risk Rating Companies established abroad that operate in the country shall be subject to what is provided in the Law, this Title, and everything that is applicable to them from this Regulation.

CLASSIFICATION COMMITTEE: Risk Classificatory Societies constituted in Honduras must have a Classification Committee in operation. Without prejudice to the responsibility of the Risk Classificatory Society, said Committee shall have the non-delegable function of reviewing reports, precedents and respective supporting documents and adopting risk classification agreements. Committee members must possess suitability for the function and demonstrate experience in risk classification activities or related matters, as well as not be included in any of the cases established in Article 177 of the Law.

MINUTES: The agreements of the Classification Committee shall be binding on the society and must be recorded in a minute book. The respective minutes must include the corresponding deliberations and be signed by all attendees of the session, and shall be deemed approved from the moment of their signature. The minute book must be paginated and each page shall be previously sealed by the Superintendence. Said book may be required by the Superintendence at any time.

PERFORMANCE: Committee members must employ in the exercise of their functions the professionalism, care and diligence of a merchant in their own business.

MODIFICATION: The Classification Committee must approve modifications introduced to the procedures, methodologies or classification criteria. For their application, these modifications must be communicated to the Superintendence. TITLE VI OF METHODOLOGIES AND THE CLASSIFICATION PROCESS

CLASSIFICATION METHODOLOGIES: Risk Classificatory Societies shall conduct their classification processes in accordance with their own Classification Methodologies and in accordance with international practices in classification matters. The document explaining each of the Classification Methodologies shall be available to the public in the Registry.

CONTENT: The explanatory document of each Classification Methodology must set forth in sufficient detail all the important elements used therein, in such a way that any investor may know with reasonable depth the basic conceptual foundations of the classifications granted. The aforementioned document shall contain an explanation of the Methodology, its approach and principal foundations. Likewise, the explanatory document must specify all types of factors that are considered in granting the classification, identifying within each factor the principal variables that are subject to analysis and the reasons that justify their use. Finally, the situations must be specified in which said variables would be considered as a positive or negative component for risk classification.

PUBLICATION: The assigned risk classification shall be published at least once in a newspaper of national circulation within five calendar days following the date it is granted. Notwithstanding the foregoing, the risk classificatory societies shall publish a list of all their public classifications in a newspaper of national circulation at least four times per year, in the last five (5) business days of the months of March, June, September and December. The Risk Classificatory Society shall be responsible for the publication and for its cost. The publication must contain at least the following information:

• a)

  Name of the Risk Classificatory Society;

• b)

  Date on which the classification was granted;

• c)

  Identification of each issuer, issuance or other entity subject to classification;

• d)

  Identification of the security, if applicable;

• e)

  Assigned risk classification; and, f. Explanation of the assigned risk category. Likewise, the publication must include the following paragraph: "The risk classification does not constitute a suggestion or recommendation to buy, sell or hold a security, nor is it an endorsement or guarantee of an issuance or its issuer; rather, it is a complementary factor for making investment decisions."

UPDATE: Classificatory Societies must review on a quarterly basis the risk classifications assigned to securities and entities subject to the classification process, leaving a record of the agreements adopted in the respective minutes. The information considered for this purpose must not be older than ninety (90) days. In the event that a modification is necessary, the classification must be updated in accordance with the procedures established in this Regulation. Notwithstanding what is established in the preceding paragraph, Risk Classificatory Societies are obligated to permanently monitor the classifications granted. In the event that Classificatory Societies become aware of facts that by their nature could alter or do alter the risk classification made, they must act with the necessary timeliness and diligence to update the corresponding classification and ensure that it is brought to the knowledge of the market.

SUBMISSION: The classifications granted and their subsequent updates must be submitted by the Classificatory Society to the Superintendence and to the securities exchanges, when applicable, at the time the publication provided for in Article 22 of this Regulation is made. Classifications granted to financial intermediary societies as well as those classifications relating to their securities issuances must also be brought to the attention of the Commission within the deadlines indicated above. Notwithstanding the foregoing, Classificatory Societies must, within five (5) business days following the classification, submit to the Superintendence the classification report in accordance with what is established in Article 26 of this Regulation.

EXCHANGE OBLIGATION: Securities exchanges are obligated to permanently include in their daily information bulletin the classifications of securities that are traded therein, and must publish modifications on the next business day after receiving the information, clearly identifying the Classificatory Society that made the corresponding classification.

REPORT: The Report sent to the Superintendence for purposes of its registration in the Registry shall contain at least the following: 1. General Information a. Executive Summary describing the main conclusions of the Final Classification Report, the principal reasons for the statement and the assigned classification; b. Name of the Risk Classificatory Society; and, c. Date on which the classification was assigned. 2. Classification Information a. General description of the information used in the process; b. General description of the analyses conducted: analysis of principal financial indicators, analysis of the environment: including economic risk, industry risk, short-term perspectives, strengths and opportunities, weaknesses and threats and market position; and, c. Risk classification. The risk classification information granted must contain at minimum the following: Name and identification of the issuer, issuance or other entity subject to classification; Number and date of authorization and registration in the Registry, if applicable; Date of the financial records used; Classification and its foundations; Comments or additional observations that the Classificatory Society considers relevant; and, In the case of classification of an issuance, the series of the corresponding security must be indicated. When classifications refer to financial intermediary societies or to securities issuances made by these, said reports must also be sent to the Superintendence, which must forward them to the respective Superintendence. Receipt of said reports in the Registry and the respective Superintendence does not imply approval or pronouncement regarding the content thereof.

DISSEMINATION OF THE RISK CLASSIFICATION REPORT: When it concerns issuances intended to be traded through the Securities Exchange, Classificatory Societies must submit to the Superintendence, on the same date that registration with the Exchange is requested, the report on the risk classification assigned to said issuances, accompanied by their respective foundations; the latter being understood as the analysis conducted by the classificatory society in accordance with the methodology presented to the Registry. In addition to the foregoing, the classificatory society must also submit to the Exchange, at the same time, the report on the corresponding risk classification. When risk classification of entities and issuers is mandatory, the report on risk classification must be disclosed. When risk classification is voluntary and it is desired to disclose the assigned classification, what this article specifies shall be followed.

CLASSIFICATION CATEGORIES AND SYMBOLS: Each Classificatory Society shall establish, in accordance with international principles and norms, its own risk categories, their characteristics and symbols including the respective definitions, which must be approved by the Commission. These categories and symbols may not be used for other purposes and shall be exclusively referred to legal entities constituted in Honduras and/or securities that are to be registered in the Registry. TITLE VII CONFLICTS OF INTEREST AND INDEPENDENCE

IMPEDIMENTS: The following cannot be partners, administrators or members of the Classification Committee of a Classificatory Society, nor control through other persons any percentage of a Classificatory Society:

• 1)

  Those who are included within the impediments established by Article 177 of the Securities Market Law;

• 2)

  Banks and Financial Societies, Securities Exchanges, Brokerage Houses, Investment Fund Management Societies, Pension Fund Management Societies and all those legal entities that have an exclusive purpose in accordance with what is provided by the Securities Market Law or other legal norms in the financial sphere; as well as their administrators. For purposes of this Regulation, administrators shall be understood as directors, principal executives and, as applicable, persons who have decision-making power and general administrative faculties;

• 3)

  Persons who own, directly or indirectly, ten percent (10%) or more of the capital stock of the legal entities mentioned in the preceding subsection; and, 4. Officials and employees of the National Banking and Insurance Commission, the Central Bank of Honduras, and any other public supervisory agency in matters of economic or financial regulation.

PROHIBITIONS: The Classificatory Society may not rate the issuer or its securities when this entity or any of its members are considered persons with interest in a determined issuer.

PERSONS WITH INTEREST: Persons with interest in a particular issuer or issuance shall be understood to be:

• 1)

  Those persons who have any link of subordination or dependence with the issuer or with companies affiliated with it;

• 2)

  Those persons who have a contract for the provision of professional services with the issuer or with its affiliated companies, with the company that guarantees the issuer or the issuance subject to rating, or with any shareholder owning more than ten percent (10%) of the capital stock of these;

• 3)

  Those persons who directly or indirectly own ten percent (10%) or more of the capital stock of the issuer;

• 4)

  Those persons who have provided or provided within the twelve (12) months prior to the rating, financial advisory services, consulting or auditing of the financial statements of the issuer or its affiliated companies. The partners and administrators of the aforementioned persons as well as those who sign the audit reports and opinions shall also be considered persons with interest;

• 5)

  Those persons who have intervened directly or indirectly in the design, analysis, authorization and placement of the issuance subject to rating, if such persons are direct or indirect holders of securities issued by the issuer or have received as collateral securities issued by the same;

• 6)

  Those persons who are direct or indirect holders of securities issued by the issuer or have received as collateral securities issued by the same;

• 7)

  Those persons who, in consideration of the links they have with the issuer or its issuance, could be significantly compromised in their capacity to express an independent and impartial opinion; and, 8. Spouses and relatives up to the fourth degree of consanguinity or second degree of affinity who find themselves in any of the situations provided in the preceding subsections of this article.

POWERS OF THE COMMISSION: In addition to what is provided in the preceding article, it is within the power of the Commission to evaluate and determine the situations in which the independence and impartiality of the Rating Agency is affected, either ex officio or at the request of an interested party. Likewise, the Commission has the power to evaluate the risk rating work performed by a rating agency and determine whether it complies with what is established by the Law and this Regulation.

PROHIBITION ON ACQUIRING SECURITIES: Rating Agencies and their members may not, under any circumstances, directly or indirectly acquire securities that have been rated by them.

ROTATION: Persons who contract the services of rating agencies may only receive services from it for a maximum period of twelve (12) months.

SUSPENSION OF REGISTRATION: Without prejudice to civil and criminal liability, the Commission, after conducting the administrative proceedings that guarantee the right of defense, may suspend or revoke the Operating Authorization and/or suspend or cancel the Registration in the Registry of a Rating Agency when it deviates from the suitability, independence and impartiality required to provide the risk rating service, or when it fails to comply with the obligations incumbent upon it, established in this Regulation. The exclusion from the Registry shall be effective from the moment the Commission determines its cancellation from the Registry. TITLE VIII INFORMATION DISCLOSURE OBLIGATIONS

PRESENTATION OF FINANCIAL INFORMATION AND ANNUAL REPORTS: Rating Agencies shall submit their financial statements on a quarterly basis to the Commission, in accordance with what is provided by the Regulation and Registry Standards. They shall likewise submit annual audited financial statements by an external auditing firm registered in the Registry. Furthermore, Rating Agencies are subject to the obligation of delivery and updating of their information, in accordance with what is established for this purpose by the Regulation and Registry Standards.

INSPECTIONS: The Commission may conduct inspections of Rating Agencies, and they shall be obliged to present the documents and other information that may be required of them. Likewise, the Rating Agency shall provide any other information it deems appropriate for the purposes of the inspection. TITLE IX FINAL PROVISIONS

RESPONSIBILITY OF THE COMMISSION: The authorization and registration obtained by a Rating Agency does not imply any responsibility on the part of the Commission, with respect to the quality of its work in the securities market or the information presented by it in the process of authorization and registration; aspects that pertain to its own responsibility exclusively.

EFFECTIVE DATE: This Regulation shall enter into force on the day of its publication in the Official Gazette La Gaceta. 2. To authorize the Secretariat to send to the Official Gazette La Gaceta this Resolution for its publication. 3. This Resolution is of immediate execution.