public statement pacific exploration

8/18/2019 Public Statement Pacific Exploration

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STATEMENT OF JAIME ENRIQUE GRANADOS PEÑA

FOR PUBLIC OPINION

Administrator’s decisions of Pacific Exploration and Production Corp will leave his

shareholders without protection by the decisions of the administrators:

Super financier prejudges press release and one declares facilitating the alleged

fraudulent actions of administrators.

On Saturday, 9th of April of this year, the Financial Superintendence of Colombia-

(henceforth SFC). In a strange act was published a press release in which in

general terms he apologizes for the fulfillment of his legal obligations and leaves

exposed thousands of shareholders of Pacific Exploration and Production Corp.

(formerly Pacific Rubiales). Also, besides prejudging, for in a press release it seems

to be deciding on steps that to the date they are dealing to the interior of the

entity in front of Pacific Exploration and Production Corp- (henceforth Pacific). The

title traded on the stock exchange- the entity seems to be “oiling the market” so

that an adverse decision to the interests of the shareholders of Pacific is taken on

impunity. The previous thing constitutes a set of disciplinary lacks which it can havea set of consequences of legal type. As mentioned above in the following

paragraphs, as representatives of a very wide percentage of shareholders, we

demonstrate the inconsistencies and vagueness with which the SFC apologizes for

the compliance of their legal duties interpreting the law in favor of the

administrators of the company and not in favor of the interests of his shareholders.

First, says the SFC, that:

1. Foreign entities can register their securities in the RNVE, to make a public bid

in Colombia, or so that their securities be traded in a local business system.In the case of the Pacific, the actions required to negotiate in the secondary

market were registered, in order that the investors can buy and sell shares

that already were registered and issued in Canada. These operations does



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If an Colombian investor, professional or not, acquires at least tan action through

the securities market of Colombia, or through an intermediary of the securities

market of Colombia , that operation is covered to the Colombian legal regime andis a capture operation that occurs in the Colombian market. To affirm the opposite

is to lend a level of immunity definitely illegal to the issuers of titles abroad,

stimulating fraud and the illegal capture of funds and exhibiting to the Colombian

securities market and to the Colombians to damaging operations that can be

designed with ends of fraud. In this case, there is wordiness of the laxity of the SFC

opposite to the protection of the investors rights to those unprofessional investors

who come to the Colombian stock market and they acquire a title issued abroad,

listed in Colombia that, according to the demonstrated for the SFC, he does not

deserve any protection.

2. To the issuers of securities abroad it results applicable, among others,

associative regime of corporate, tributary and exchange government of the

country domicile and they are submitted to the judicial and administrative

authorities of the jurisdiction of origin with Independence to where they

develop their social object or where their securities are registered. In the

case of Pacific, the company is submitted to the administrative and socialregulation of that jurisdiction.

It is indisputable that to the issuers of securities domiciled abroad they turns out to

be applicable the association regime, of Corporate governance, tributary and

exchange government of the country of his domicile, regardless of the place

where they realize his operations, What turns out to be false is that it is considered

that a company domiciled abroad should end for this condition, unaffected to the

supervision and control of the national authorities that for the effect the Constitutionand the Law have entrusted the protection of the investors who come to the public

market securities.



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In effect, if a Colombian or foreign person decides to invest in a foreign company,

clearly his investment is submitted to the legal regime of the country where the

company is national in the one that he invested; but it is not admissible that theperson who does the above mentioned investment using intermediaries of the

public market of securities of Colombia, end submitted to coming to foreign

authorities to obtain protection on investments that were done on the Colombian

market.

Therefore, we remind the SFC what was arranged in the literal b.6 in the Article 1 of

Law 964 of 2005, in which one of the criteria‟s that must be taken into

consideration in the exercise of intervention in the securities market is “precedence

to the economic and finance sense, when determining if some right of

authorization or register and in general when norms focused on the protection of

the investors expires”. In the same way, it is the authority‟s function that “the

securities market is provided of exact and complete inf ormation”

It is not too late to remind the Supervisor that within Law 964 of 2005 are “activities

of the securities market a) the emission and offer of securities and i) the supply ofinformation to the market securities, including the collection and processing of the

same”. In the same manner according to the Law “only the entities constituted or

being constituted in Colombia can exercise activities of the market securities”

“except the one in literal a) and i) cases in which it is not necessary to constitute a

society in the country this include the ones who does emission and offer of

securities, and therefore, like it is indicated in paragraph 1 of article 3 of the

mentioned Law, “ the entities that exercise any of the activities mentioned in the

present Article will be put under State observation. In any of the norms the SFC has

been excused of having intervention in the operations and offers of the

companies incorporated abroad”



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It results even stranger that now SFC pretends its surveillance and control functions

have no jurisdiction to issuers incorporated overseas, especially over functions

aimed at „‟disclosure of information that must be supplied to the Superintendence[Financial], to the public, investors or shareholders, as well as those aimed at

preserving trade secrets and information of a similar nature ... ". Additionally, it

should be noted that under Article 4 of Law 964 of 2005, the authority must "instruct

entities subject to inspection and ongoing supervision or control on how the

provisions governing their activity must be met in the publicly traded market , set

the technical and legal criteria that facilitate compliance with such standards and

outline the procedures for its full implementation" as well as "Preemptively suspend

when there are well-founded fear that harm to investors or market may be

caused, a public offering in any of its forms; the negotiation of certain value, the

registration of securities, or issuers in the National Registry of Securities and Issuers ...

"

The SFC should not forget that in the exercise of their functions, in accordance with

Law 964 of 2005, can "impose the precautionary measures set out in the Code of

Civil Procedure and other preventive measures set out in this law and the rules that

develop it, supplement or amend it aimed at safeguarding securities, financialinstruments, managed resources and, in general, assets in the possession of

persons under investigation , when there are reasons that can reasonably be

inferred that those assets are at risk and may be affected the interest of investors . "

It is worrying that the SFC stops again to interpret the rules in favor of those who, in

accordance with the regulation, are the object of protection: investors.

Third. SFC says:

4. The registration of foreign issuers in Colombia covers the negotiation of

securities in the market but does not change the applicable regime to theissuer. The benefit obtain to the local investor is the one allow to be used

by Colombian intermediaries and that relations is ruled locally, the

advisory must be done by a local agent, all operations in local currency



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through the Colombian exchange and using the official language of our

country. The latter are significant advantages to whoever decides to

negotiate securities from a foreign issuer in the local market, alwaysremaining the possibilities to negotiate its securities directly on the original

market following the intermediation rules of that country.

SFC is not wrong in asserting that registration of foreign issuers in the public market

of Colombia expands markets trading, but errs in stating that does not change the

regime applicable to the issuer, because if anything is clear from the above cited

rules -Articles 1, 3 and 6 of Law 964 of 2005-, is that authority must regulate the

registration and supervision of such securities in the Colombian public market

Colombian and the issuer must report any change in the situation . This not only

protects investors, but allows intermediaries of public securities market properly

fulfill their advisory duties for local operations made locally in the official language.

Fourth. SFC also states that:

5. Considering the above the reach of the supervisory functions on an

foreign issuer are principally focused in watching the local market has

and adequate disclosure of information to the investors looking at thebehavior of the foreign market as a reference such as the case of Canada

for the issuer Pacific.

According to the SFC the main function of this entity is no other than what the

local market has adequate revelation of information to investors taking as

reference the market behavior. And in their functions with regard to the revelation

of the SFC information is not wrong, although it is clear from what was said above,

that is not its only function. But if it were, the entity must be clear about what

infor mation is „‟adequate” and, noticing the breach of these duties under the

exercise of this function, it can use all possible mechanisms to ensure that investors

and intermediaries in the public market are informed moreover when the press



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reveals information that must be public , such as, for example, the intension of

remunerating managers in exchange for the cancellation of shares of existing

investors.In conclusion, it cannot be acceptable for domestic and foreign investors that the

regulator of Colombian public market considers that securities listed and traded

on the public market are excluded from the monitoring, surveillance and control of

the entity to the detriment of the rights of investors. It is a continuous concern, to

say the least, that the authority, through a simple press release, excuses it selves to

intervene in a situation that will leave thousands of investors and creditors in the

domestic market, subject to the decisions of a body administrators with

questionable tools and strategies are putting their interests above the interests of

shareholders, avoiding at all costs to inform the market about its actions and using

as an instrument the silence and darkness of the night of a Sunday to make

decisions that will end with the interests of shareholders.

In this way, we will continue working on the defense of the shareholders whom we

represent and we hope that the SFC resolve the actions presented in accordance

with the principles of protecting investors governing its action and the provisions inthe regulations Colombian.

Cordially,

JAIME ENRIQUE GRANADOS PEÑA

public statement pacific exploration

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