Paraguay: New Compliance Rules For The Securities Market

Last Updated: 28 September 2017
Article by Federico Silva

Aiming to protect investors and to maintain a fair, organized and efficient securities market, on July 18, 2017, Law 5,810/17 was enacted to replace Law 1,284/98 "On the Securities Market" (Del Mercado de Valores) and, among other things, to effectively prevent and punish wrong conducts in the securities market by establishing administrative and criminal sanctions.

A. Administrative Sanctions

They can be classified in low, severe and very severe. The affected companies along with their directors, administrators, corporate comptrollers, risk raters and securities operators have to answer for the same (art. 183). In this trend, the National Securities Commission (Comisión Nacional de Valores or "CNV") is able to apply sanctions such as: reprimands, fines of up to 200 minimum salaries (approximately PYG 400 million or USD 70,000); suspension or ban to perform as administrator or comptroller of supervised entities; prohibition to publicly offer securities for up to two years or definitively; and cancelation of the license to participate in the securities market (art. 195).

(i) General Misconducts (Art. 184)

The following are considered general misconducts in the securities market: a) Mishandling information and records; b) Lacking reports of independent external auditors; c) Obstructing inspections and supervisions of the CNV; d) Breaching rules regarding privileged or confidential information or the duty of secrecy; e) Carrying out activities outside a company's exclusive purpose; f) Carrying out activities supervised by the CNV without a license; g) Not submitting on time information required by the CNV; h) Failing to comply with CNV's observations or warnings; and i) Failing to report essential facts to the CNV.

(ii) Specific Misconducts

On its side, articles 185 to 192 set forth specific misconducts within the securities market.

In this way, the following are misconducts for securities issuers: a) Distorting free price formation or not transferring property of negotiated securities; b) Not submitting on time information required by the CNV; c) Not submitting to CNV the contract with its external auditors; d) Lacking continuous risk rating reports or enough reserves; e) Providing CNV with incorrect, incomplete or inconsistent information; f) Not submitting CNV relevant information on situations that may affect the prices of securities issued; and g) Failing to communicate to their shareholders and corporate comptrollers sanctions of CNV when this was ordered.

Moreover, the following are misconducts of stock exchange markets: a) Negotiating unregistered securities or suspending or excluding their negotiation without cause; b) Internal audit failures; c) Having assets below the minimum requirements for at least six months; d) Distributing Dividends; e) Failing to properly register operations; f) Calling-off tradings without a cause; and g) Lacking the required guarantees.

Besides, the following are misconducts for intermediaries, such as representatives, financial advisors and other dependents of stock brokerage houses: a) Buying or selling securities on their own account; b) Operating outside the legal limits; c) Performing operations and services incompatible with legal limits; d) Failing to deliver securities issued securities or to pay securities bought; e) Negotiating non-registered securities; f) Having assets below the minimum requirements for at least six months; g) Failing to properly register operations and clients; h) Lacking the required guarantees; i) Exceeding operational margins and limits; and j) Issuing false or incorrect certificates.

Also, the following are misconducts for external auditors: a) Failing to properly perform audits; b) Issuing reports contradicting the obtained data; c) Accepting audits work beyond their capacity; d) Lacking documents to support audits performed; and e) Issuing incorrect records or documents.

Additionally, the following are misconducts for risk rating agencies: a) Failing to perform ratings properly and on time; b) Working with conflicts of interests; c) Issuing reports that contradict the obtained data or without evidentiary support; d) Failing to comply with obligations under Law 3,899/09 "On Risk Rating Agencies"; e) Failing to supply data required by CNV; and f) Issuing incorrect records or documents.

Equally, the following are misconducts for clearing houses: a) Not complying with contractual obligations; b) Lacking the required guarantees; c) Failing to perform functions imposed by law; d) Having assets below the minimum requirements for at least six months; e) Not complying with operational rules established by regulations or by their own bylaws.

Moreover, the following are misconducts for fund management companies: a) Performing activities outside the scope of their exclusive corporate purpose; b) Executing prohibited acts or operations, or without the pertinent authorization or without considering the applicable requirements; c) Not communication information regarding their directors or shareholders to the competent authorities; and d) Having administrative, accounting or internal control deficiencies.

Besides, the following are misconducts for representatives of securities holders: a) Not complying with legal obligations; b) Not communicating relevant facts to the CNV; c) Accepting the appointment as representative with conflicts of interests; d) Not complying with rules and proceedings of the stock market; and e) Omitting due care and diligence.

Finally, the following are misconducts for depositary entities: a) Breaching contractual obligations; b) Failing to properly record operations; c) Issuing incorrect documents or certificates; d) Failing to perform their functions or carrying out prohibited acts; e) Having assets below the minimum requirements for at least six month; f) Lacking care and diligence when clearing and liquidating operations; g) Infringing operative norms; h) Lacking the required guarantees and insurances; and i) Security failures in their installations and systems.

B. Criminal Penalties

Under article 226, the following conducts are punished with up to three years of imprisonment or fine: a) publicly offering unregistered securities; b) acting as stock exchange market, intermediary, external auditor or risk rater without registration; or c) violating obligations regarding privileged or confidential information.

Furthermore, the following conducts are sanctioned with up to five years of imprisonment or fine: a) Providing false information to the CNV, to a stock exchange market or to the public under regulations of the securities market; b) The issuance of false certificates of transactions by administrators or representatives of stock exchange markets; c) The issuance of false certificates regarding transactions by representatives of securities brokers or registration of transactions without transfer of securities by the same; d) The issuance of false reports or data by auditors to obtain a license to publicly offer securities, a license to issue securities or tax incentives; e) Performing securities transactions to stabilize, set or artificially modify prices; f) False declarations regarding issuances of securities made by directors, administrators or managers of securities issuers; and g) spreading false information. Additionally, the person found liable can be banned for five to 10 years from becoming director, manager, administrator, auditor, rater-adviser or liquidator of a corporation or any other legal entity.

Finally, if the bankruptcy of a securities' intermediary due to fraud prevents its commissioning party from performing operations, the person can be punished with two years of imprisonment or a fine (art. 229).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.