Amendments to the Concept of Independent Director of Issuers and Markets

Effective as from April 16, 2018, the Argentine Securities and Exchange Commission (the “CNV” after its acronym in Spanish) published General Resolution No. 730/2018 (“Resolution No. 730”) in the Official Gazette, which seeks to strengthen corporate governance practices in companies supervised by the CNV through the amendment of the concept of independent director set forth in the CNV’s Regulations (New Text 2013, as supplemented) (the “Regulations (N.T. 2013 and mod.)”).

This capacity arises from Section 109 of Argentine Securities Law No. 26,931 (the “Securities Market Law”), which requires that an auditing committee be constituted in public companies composed in their majority by independent directors, according to standards determined by the CNV.

To fulfill its mission, the CNV mainly considered the recommendations set forth by the International Organization of Securities and Exchange Commissions (IOSCO), among other sources, and received the current perspective of the board of directors as a collegiate body guided by the social interest in which each of its members are subject to the same obligations and responsibilities as prescribed by applicable regulations.

The redefinition of the independence criteria affects the regulation applicable to managers of Issuers and Markets, as defined in the Securities Market Law.

Regarding Issuers, Section 11 of Chapter III of Title II of the Regulations (N.T. 2013 and mod.) stipulates that a director should be considered independent when his/her main material relationship with the Issuer is his/her position as manager. The person will be appointed taking into account the professional career, suitability, qualified knowledge, economic independence as well as independence of criteria and interests, considering also that he/she can perform his/her functions in an objective and impartial way.

Furthermore, it modifies and extends the assumptions that exclude directors from independent status, incorporating to the list: (i) the performance as part of the management body of non-profit organizations that have received funds from the company or its economic group greater than the stipulated amounts (subsection f); (ii) the receipt of any payment, including the participation in plans or schemes of stock options, by the company or its group, with exceptions (subsection g); (iii) the performance as director in the Issuer or another company belonging to the same economic group for more than 10 years (subsection h), among others.

In connection with Markets, Section 24 of Chapter I of Title VI of the Regulations (N.T. 2013 and mod.) incorporated the following situations to the list of exclusions mentioned in the previous paragraph: (i) being a member of the management and supervisory bodies, or a worker under a contract of employment, of one or more Trading Agents (“AN” or “Agentes de Negociación”), Settlement Agents (“ALyC” or “Agentes de Liquidación y Compensación”) and/or Brokerage Agents (“ACVN” or “Agentes de Corretaje de Valores Negociables”) that are members of the respective Market (subsection a); or (ii) having a significant participation in one or more ANs, ALyCs or ACVNs that are members of the respective Market (subsection b).

Finally, Resolution No. 730 sets forth that the status of independence must be established in the list of members of the management body to be published in the CNV’s website (Autopista de Información Financiera) and that the obligated companies must adapt the composition of this body in the first ordinary shareholders’ meetings to be held after December 31, 2018.