Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 4

Each market must have clear rules assuring investor protection by safeguarding participants from the financial risks of failed settlement and ensuring that listed companies are required to follow sound policies on corporate governance, transfer of economic benefits and shareholder rights.

1.	Does the depository or the market have securities lending and borrowing schemes in place, and are these open to all market participants and their settlement agents?	No, the market does not have securities lending and borrowing schemes of any kind in place.
2.	Does the settlement system mark fail trades to market and collect margin from the failing counterparty to protect the innocent counterpart's interest?	The settlement system marks fail trades to market but does not have any mechanism to collect margin from the failing counterparty to protect the innocent counterpart's interest, as fails are regulated in the Venezuelan market There are no established procedures to penalise the failing party. There are written norms on how to proceed in the event of a fail, which are based on a gentlemen's agreement between brokers. Basically the settlement can be extended, call for a buy-in or cancelled.
3.	Does the market operate a guarantee fund or have an equivalent procedure to protect against the cost of failed transactions; and which sectors of the market does it cover?	No, the market does not operate a guarantee fund. Currently the Stock exchange lends money to its broker members, if necessary, to prevent fails. This is done by the Exchange on a best effort basis as it is not regulated, and it may depend on the trade size and volumes. In addition, Caracas Stock Exchange members are obliged to maintain a bond equivalent to 50.000 tax Units, each tax unit equivalent is Bs.13.200, (VEB 13,200) Approx. US$800.000. These assets are used as a warrant to protect investors in case the brokerage house goes out of business. It protects the end beneficiary of the assets. The National Securities Commission (NSC) and the Caracas Stock Exchange decide on when to use the fund. As a separate measure, the NSC monitors brokerage houses' financial health through the examination of monthly reports submitted by the brokers.
4.	Are the stock transfer agents (share registrars) linked electronically to the depository?	No, they are not linked electronically to the depository.
5.	Is there a legal maximum time period to complete ownership transfers in the books of the issuer? If so, does market practice adhere to the deadline?	Transfer Agents have up to two days to register ownership in the shareholders books. The Central Depository Law allows automatic registration upon settlement.
6.	Are investors entitled to all benefits arising on a security from the point of purchase; and how are any rules enforced?	Yes, they are. Claims are processed through the buying broker, who in turns goes into the counterparty broker/final client. The claim process works upon gentlemen's agreement. There is no specific supervisor for this activity.
7.	Is proxy voting permissible in the market and can such proxies be lodged by post or other remote delivery method?	Proxy voting is permissible in the market, personal presence is required in the assemblies in order to exercise voting rights. Proxies cannot be lodged by post or other remote delivery methods, unless a sub-custodian or representative is empowered for this purpose.
8.	Are there binding rules in the market stating the minimum and maximum lapsed time between the announcement and completion of key events, including registration, the calling of shareholder meetings, the payment of dividends or interest, rights issues, tender offers and other voluntary corporate actions?	National Securities Commission Resolution No. 159-96 dated July 30, 1996 states the following: Share dividend and/or cash dividend should be announced at least five days before ex date. The ex-dividend period (ex-date to record date) maximum nine working days. Most of the time payment is done 2 to 5 days after record date.
9.	Are all voluntary corporate actions advised through a central mechanism assuring consistent information to all investors?	Voluntary Corporate actions are advised through the Exchange Bulletin and Public Press. Nevertheless, there could be non-published event changes.
10.	Is information on corporate actions available electronically, and is the minimum lapsed time for responding to such actions sufficient to enable all domestic and foreign investors to respond in a timely and considered fashion?	No, corporate actions information is not available electronically, however it could be found in the Bolsa de Valores de Caracas' web site. Minimum time to respond is not regulated. Market practice is that ex Date and record date may both be on one same date. There is no rigorous and consistent interpretation of announcements regulation however in practice most actions are posted 15 days to a month before the response date.