In brief

The Office of the National Superintendence of Securities (SUNAVAL) issued regulations related to the Public Offering of Securities for Entrepreneurs ("Regulations"), which establish guidelines for the offering of financial instruments denominated valorem (FI) to raise funds for (i) entrepreneurs, (ii) microenterprises, (iii) small enterprises, (iv) individuals or legal entities subject to the control of the SUNAVAL and (vi) those who directly or indirectly participate in the issuance, placement, negotiation and liquidation of FI.

In all matters not provided for in the Regulations, the regulatory provisions governing the securities market shall be applied supplementarily. The Regulations came into effect on 7 March 2022.

The Regulations establish the characteristics, conditions, guarantees, authorizations of the public offering, and the liquidation of the FIs. The Regulations also include simplified digital forms for those interested in obtaining the authorization of the public offering where they can obtain forms, documents and the digital notice.

  1. Relevant definitions:
    1. Entrepreneur: An individual who identifies and analyzes an opportunity to develop an activity in a given market or sector, and based on criteria of risk, the non-existence of such activity or innovation thereof, challenges and profit expectations, decides to formulate and execute a project to mobilize and combine own or third-party resources (financial and non-financial), for the development of such activity.
    2. Small business: Any unit of production of goods and provision of services, which has an average annual payroll of up to 50 workers, or within the parameters established by the competent authorities to qualify companies within this category.
    3. Microenterprise: Any unit of production of goods and provision of services, which has an average annual payroll of up to 10 workers, or within the parameters established by the competent authorities to qualify companies within this category.
  2. Characteristics of FIs:
    1. Its term must be between 15 and 360 days.
    2. Market conditions will determine whether the interest rate is fixed or variable.
    3. The issuing entity must establish the payment of monthly, bimonthly and quarterly interest rates, or without interest rate (zero coupons).
    4. It is a negotiable instrument in the stock exchanges.
    5. The cancellation of coupons (interest) must be made in bolivars or in products and services agreed with the investors.
    6. The cancellation of the invested capital is in bolivars or in products and services agreed with the investors.
    7. For the issuance of the valorem, the presentation of audited financial statements is not required.
    8. The series that make up the issuance of the valorem will have a maturity of 30, 60 and 90 days, up to a maximum of 360 days.
  3. Relevant conditions for the issuance of FIs:
    1. The FI may be issued by an individual or legal entity that qualifies within any of the categories described in item one above.
    2. The maximum amount authorized for its issuance is the equivalent in bolivars of USD 10,000 at the average exchange rate of the banks' exchange bureaus, published by the Central Bank of Venezuela for the date of issuance. The SUNAVAL may modify this amount depending on market conditions.
    3. The issuance of the FI must be related to investment in (i) projects of diverse entrepreneurs; (ii) early stage projects; (iii) ventures that are about to start their activities; (iv) existing ventures that want to increase their size; and (v) small and microenterprises that require financing.
    4. The issuances may be made in one or several series, simultaneously or successively, calculating the maximum amount outstanding.
    5. The issuer must indicate the placement term of each series in the digital notice. This shall have a maximum of 30 continuous days, as of the placement start date, and may be adapted to market conditions.
    6. Entrepreneurs, micro and small companies that want to make a public offering of FIs must hire the services of a securities brokerage firm or brokerage house to handle the procedures related to the public offering and its consignment before the SUNAVAL.
  4. Guarantees
    1. Personal: granted by banks or institutions regulated by banking sector regulations, national guarantee companies, insurance companies, institutions and funds in charge of leveraging entrepreneurs or a third party. The SUNAVAL must approve the conditions of the public offering and each issuance.
    2. Collateral: constituted by movable or immovable assets and prior appraisal for each issuance by the SUNAVAL, taking into consideration the nature of the asset involved and the conditions of its maintenance and custody.
    3. Any other guarantee authorized by the SUNAVAL.
  5. The application for authorization of public offering must consist of (i) a formal request letter to SUNAVAL, (ii) attachments and (iii) documentation related to the public offering of the FI.
  6. Settlement: The liquidation of the capital invested in the FIs will be paid in bolivars. In case the liquidation of the FI is made with products and services, the same must be executed in accordance with the provisions of the informative bulletin and the digital notice.

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