Article 3 of the Minority Shareholder Protection Law 9392, 24th August 2016, has incorporated article 32 (c) into the Code of Commerce, requiring companies, legal persons and other legal figures regulated under this code to adopt corporate governance policies that have previously been approved by their Board of Directors or equivalent governing body.

The regulations for the above-mentioned article 3 were published in May 2017, setting out the general framework that Boards of Directors or their equivalents should take into consideration when issuing their corporate governance policies.

Governing bodies must adopt policies employing criteria that enable influence and conflicts of interest between individuals and companies to be identified; these policies must also make the dissemination of reports with annual results mandatory:

• Criteria for identifying relationships of influence and conflicts of interest between individuals and institutions

It defines a formula for identifying relationships of influence or patronage and potential conflicts of interest between individuals and institutions that affect that institution’s assets, with the institution concerned being required to make an assessment of the real nature of each potential relationship.

• Criteria for information dissemination by MSMEs and all entities are not listed on the securities markets

Transactions to purchase, sell, mortgage or pledge assets of all those companies, legal personalities and other legal figures subject to the Code of Commerce and classified as MSMEs by the Ministry for the Economy, Industry & Trade, as well as all others that are not listed on the securities market, for a sum equal to or exceeding ten percent (10%) of total assets at the end of the month before the transaction, must be reported to partners, shareholders or investors immediately, in a timely and regular fashion, accurately and effectively; they must also be published in the annual financial report.

Furthermore, the regulation provides definitions for a number of concepts such as: conflict of interest, control, joint control, corporate governance, material event and equivalent body.

The aim of the regulation is to encourage transparency and trust in markets and to protect investors.