CHANGES TO PORTFOLIO INVESTMENTS IN COLOMBIA

Prepared By Ricardo Fandino and Paula Samper

The Superintendency of Securities issued Resolution 0505 of August 5, 1998, by means of which it modified the applicable legal regime for the foreign capital investment funds by way of expanding the frame of investments permitted to such funds. Resolution 0505/98 authorized foreign capital investment funds to invest in securities issued as a result of a securitization process and at the same time to invest in securities issued by investment funds, and by funds administered by management investment entities, securities funds managed by broker dealers, and funds managed by trust companies, provided such securities are registered before the National registry of Securities and Intermediaries and are transacted through the stock exchange.

Notwithstanding the authorizations granted by Resolution 0505/98, the Superintendency established that said investments cannot be undertaken when the underlying assets of the securities issued as a result of a securitization process are conformed in whole or in part by securities issued or guaranteed by the Central Bank with the purpose of developing open market operations.

Finally, it is important to bear in mind that when the underlying asset of the securities issued as a result of a securitization process is conformed by fixed income securities with a maturity term of less than three years, those investments will be used to calculate the limit established in section c) of article 53 of Resolution 51 of 1991 issued by the CONPES, which provides that investments of foreign capital investment funds in fixed income securities with a maturity term of less than three years, cannot exceed 20% of the registered investments of the respective fund.

The content of this article is intended to provide a general guide but specialist advice should be sought about your specific circumstances.

GOMEZ PINZON & ASOCIADOS
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Santafe de Bogota, Colombia

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