Volume 6, Number 2, Page 6

Uruguay: Placement of Private Foreign Securities

By Jonás Bergstein

The Central Bank of Uruguay (BCU) recently issued a circular on the flow of private securities into Uruguay containting a compilation of relevant laws from other sources. Outlined below are the most significant requirements included in Circular # 1.624 of December 15, 1998, which summarizes the specific requirements for the private distribution or placement of foreign securities.

Under the Circular, private placement of foreign securities must meet the following requirements:

Comply with the conditions previously set forth in Art.2.2 of Law No. 16,749 of May 30 1996. Those conditions are: (i) the offering (placement of securities) must expressly state its “private” nature; (ii) the offering must be directly placed with specefic individuals or legal entities (whether or not involving securities’ intermediaries); (iii) the securities may not be quoted in the stock exchange; (iv) the placement or distribution of such securities may not be publicized; and (v) such offerings may not be previously registered with the BCU.

Documentation to be provided to the investor must indicate that the securities offered have not been issued under the provisions of Uruguay’s Investment Funds Act (Law No. 16.774, of September 27, 1996) nor registered with the BCU.

The investor must verify receipt of the documentation listed above; (i) listing documents received, and (ii) specifically verifying that the investor has received documentation affirming that (a) the securities offered were not issued under the Investment Funds Act and (b) not registered with the BCU.

The circular is in line with the provisions of preceding circular, # 1603 of July 29, 1998, which states that financial intermediaries offering securities by means of a private placement shall be required to furnish the BCU with information about their operations. Information to be submitted to BCU shall include: a) a copy of the security offered; b) evidence that the security is being directly placed with certain or concrete individuals or entities (i.e., not indiscriminately); c) evidence showing that it has been made clear to the clients that the offering has not been registered with the BCU.

Jonás Bergstein is a partner with Estudio Bergstein in Montevideo, Uruguay