On October 9 2001 Venezuela's Securities Commission issued a resolution ordering the controlling shareholder of Compañía Anónima Nacional Teléfonos de Venezuela (CANTV) to participate in a repurchase plan.

The order was given in connection with a tender offer for a controlling interest in CANTV by the AES Corporation. Upon reviewing the tender offer the commission decided that CANTV's controlling shareholder must participate in the repurchase plan on a pro-rata basis.

According to the resolution the controlling shareholder must re-sell a portion of its shares to CANTV in order to avoid an increase of its participation in the company. Once this has been done, the controlling shareholder must maintain the same participation that it had in CANTV prior to the plan.

The resolution underlines the fact that a controlling shareholder cannot increase its participation in a public company unless it complies with Venezuelan tender offer rules. According to the rules a controlling shareholder must launch a tender offer for at least 75% of the company stock (or for all the outstanding shares if it already controls 75% of the company) in order to increase its participation in a public company.

For further information on this topic please contact Inés Parra or Gustavo Reyna at D'Empaire Reyna Bermudez Abogados by telephone (+58 212 264 6244) or by fax (+58 212 264 7543) or by email ([email protected] or [email protected]).