NCG 461: Changes to the structure and content of Annual Reports

On November 12, the Commission for the Financial Market (CMF for its initials in Spanish) published General Regulation No. 461, which repeals regulations and modifies the structure and content of the annual reports of securities issuers.

In order to provide better visibility on transcendent matters,  this regulation incorporates the duty to inform about strategic compromises in matters of sustainability and corporate governance, risk management, relationship with stakeholders and supplier management, among others. Likewise, it requests to include sustainability indicators, regulatory compliance indicators, wage gap indicators, etc.

This changes -mandatory for banks, insurance companies, stockbrokers, public limited companies, special public limited companies registered in the Security Registry maintained by the CMF, or that according to NCG  N°431 or Circulars  N°991 must submit its Annual Memorial in accordance with the provisions of NCG N°30 – apply as of the years 2022, 2023 or 2024, depending on the legal nature of each entity, as well as its total amount of consolidated assets:

  • Public limited companies with total consolidated assets worth more than UF 20 million: from December 31, 2022.
  • Public limited companies with total consolidated assets worth more than UF 1 million, but not more than UF 20 million: from December 31, 2023. 
  • Other issuers of securities not contemplated in the previous literals: from December 31, 2024.

This does not prevent companies from voluntarily adapting to the new regulations in advance.

Among the new demands, we highlight:

  1. Profile:
  • It must include the mission, vision, purpose, values and principles, in addition indicate whether  it adheres or not to the Guiding Principles on Business and Human Rights issued by the United Nations, or another equivalent standard.
  1. Corporate Governance:
  • It should report the structure and operation of the corporate governance, including the definition of good practices, detection of behaviours affecting the free competition and the inclusion of the relationship with the “groups of interest”.
  • Likewise, it must inform on risk management, its impact on business development, strategy and financial planning.
  • Regarding the Board of Directors, it must indicate the number disabled directors.
  • In environmental and social matters, it must be described how the Board is informed about it and if this is incorporated in the strategic decisions of the entity.
  • In addition, it must contain the periodicity in which the Risk Management Committee meets with the risk management, internal audit and social responsibility units, their main topics and the periodicity of their reporting to the Board of Directors.
  • Include matters such as staff diversity, referring to the number of people by sex, nationality, disability, age range, among others. As well as matters of equity, reporting the annual range gap by sex, and policies that prevent workplace and sexual harrasment.
  1. Strategy:
  • Special mention is made on the strategy  related to environmental, climate change, social and Human Rights aspects; and the commitments among these topics.
  1. People:
  • The concept is broadened, and all people who provide services under an employment contract must be considered. Again, it should include, disability, equity and wage gap according to sex, policies to prevent workplace and sexual harrasment, reporting channels, workplace safesty policies, trainings, postnatal leave, and outsourcing, among others.
  1. Regulatory compliance indicators:
  • It must report on procedures to prevent and detect regulatory breaches related with the rights of customers and workers, practices that violate free competition, among others.
  1. Sustainability indicators:
  • Report metrics defined by the Sustainability Accounting Standards Board, according to the entity’s industrial sector, which is determined in accordance to the Sustainable Industry Classification System.

For more information, contact our corporate legal team.

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