On 6 February 2019, as part of its work on promoting good practice in corporate governance, the Securities Market Authority (SMV) published its bill to amend the existing regulations on the organization of institutions requiring authorization from the SMV (hereinafter "the bill") which, once passed, will be mandatory for institutions to which the SMV has issued organization and operating authorization*. The SMV wants to highlight the important role played by these companies in Peru's securities market and fund management system.

Independent directors

The bill aims primarily to establish a set of basic corporate governance regulations that will be mandatory for regulated companies and that, using objective parameters, require these firms to have at least one independent director on their board.

Thus, it is including in the current regulation clause III "On the implementation of Good Corporate Governance Practice in Companies", making it obligatory to have a Board of Directors (even in those institutions incorporated as closed limited companies) and for this Board to have at least one independent director, depending on the total number of board members. If the institution's Board is made up of five or less members, it should appoint at least one independent director. If it has more than five board members, at least a third of directors must be independent.

Roles of the Board of Directors

In the light of the above, the draft bill also regulates the roles of the Board of Directors, the duties and rights of its members, expressly emphasizing that the positions of Chief Executive Officer and Chair of the Board must be held by different people. In addition, it highlights the obligation to have a set of Board regulations containing the policies and guidelines necessary for compliance with its functions and operations.

Public consultation

Lastly, the bill has been put out for public consultation for 3 months, counting from the day after it was published, with that period coming to an end on Tuesday 7 May 2019. If it is approved, this amendment will come into force on 1 January 2020, giving the regulated entities varying periods of adaptation that depend on the requirement to be met.