DOING BUSINESSIN PERU

www.estudiorodrigo.com

www.rree.gob.pe

2013

DOING BUSINESSIN PERU

I. INTRODUCTION

II. ESTABLISHING A BUSINESS PRESENCE A.PermanentStructures

i. SuitableCorporateForms ii. Branches iii. JointVentures iv. Investmentsin/MergerswithExistingEntities

B.Agency/Reseller/Franchising/DistributionNetworks C.RepresentativeOfficesandOther“Non-permanent”Establishments D.ApprovalsandRegistrations E.SensitiveEconomicSectors/RestrictionsonForeignOwnership F.PoliticalRiskandRelatedIssues

III. INVESTMENT ISSUES AND TAX INCENTIVES A.LegalTreatmentofForeignInvestment B.TreatiesonForeignInvestmentProtection

IV. OPERATIONAL LEGAL ENVIRONMENT A.ForeignExchange B.ImmigrationandVisaRequirements C.CustomsIssues D.TaxationofBusinessandCross-BorderTransactions E.LaborandEmployment F. AntitrustandCompetitionIssues G.EnvironmentalIssues H.ConsumerProtectionandProductsLiability I. LandUseandRealEstate J. IntellectualProperty K.InternetRegulations/eCommerce L. FinancingIssues/Payments M.SecuritiesLawIssues N.SecuredTransactions O.Litigation/DisputeResolutionSystems

V. CONTRACTS AND DOCUMENTS – FORMS AND ENFORCEMENT

VI. ENDING/RESTRUCTURING A BUSINESS PRESENCE A.Dissolution/Liquidation B.Insolvency/Bankruptcy/Restructuring

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I. INTRODUCTION

Since1990,Peruisundertakingacomprehensiveeconomicgrowthfollowedbyamodernizationprocess,whichincludesthe establishment of a reliable legal framework geared towardsmaintaining the stability required for boosting privatebusinessactivityandinvestment.Thispermanentgrowingprocesshasbeenthebestincentivetoattractsubstantialcapitalinvestmentindiverseeconomicsectors.

The development of the agribusiness, fishing, mining, as well as the completion of major infrastructure projectsprimarilyinthefieldsofenergy,gas,andtransportation,haveallcontributedtoincreasethedomesticconsumptionandexpandtheinternationaltrade,therebymakingPeruoneofSouthAmerica’smostattractivecountriesforinvestmentopportunitiesandrisingstaroftheregion,accordingtotheIMF.Inthiscontext,PerucontinuestonegotiateandenterintofreetradeagreementswhilestrengtheningitscommercialtieswithnationsthroughoutthePacificBasin,includingtheUnitedStatesandChina.

ThisdocumentbrieflydescribesthelegalframeworkthatappliestoanypersonorentityinterestedindoingbusinessinPeru.Thereaderofthispaperwillfindregulationsregardingforeigninvestment,alternativecorporatestructures,generaltaxtreatment,andotherrelevantprovisionsinDoingBusinessinPeru.Itgoeswithoutsayingthat,themostfavorablestructureforanybusinessmustbedeterminedonacase-by-casebasisand,therefore,thisdocumentdoesnotaimtosubstituteappropriatelegaladvice.

II. ESTABLISHING A BUSINESS PRESENCE

A. Permanent Structures

Ingeneral,Peruvianregulationsregardingcorporationsaresimilartothosefoundinotherjurisdictions.

ThecorporationisacapitalstockcompanywhosecapitalisrepresentedbyshareswhichgrantitsshareholderstherightssetforthintheGeneralLawofCompaniesandintherespectivecompany’sby-laws.Differentkindsofstockmayexist.Thedifferencemaybefoundintherightsgrantedtoshareholders,theobligationsincurredbyowners,orbothatthesametime.Allsharesofasingleclassofstockenjoythesamerightsandaresubjecttothesameobligations.

Thecorporationmayissuenon-votingstock,whichshallprovidefortherighttoreceivepreferreddividendsasperthetermsestablishedintheby-laws.Iftherearedistributableprofits,thecorporationisrequiredtopaythedividendstonon-votingstockshareholdersonapreferredbasis

(1) Incorporation

Corporationsrequireatleasttwo(2)foundingshareholderstofileapublicdocumentthatmustincludethearticlesofincorporationandby-lawsstating,amongotherthings,thenamesoftheshareholders,theiraddresses,thecorporation’s legalname, itscorporatepurpose,capitalstock,corporateform,andappointmentoftheinitialdirectors.

ThenotarizedincorporationdocumentsmustbefiledwiththeRegisterofCompanieswherethecorporationislocated.

(2) Shareholder liability

Regardless of the type of corporation chosen, shareholder liability for corporate debts is limited to the amount of theshareholders’contributions.

(3) Capital

Asageneral rule, theGeneral LawofCompaniesdoesnot require aminimumamountof capital for incorporation. Insomecases,however,thelawdoesrequirethatcorporationsbeformedwithaminimumamountofcapitalbasedonthe

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natureoftheiractivities(forexample,companiesinthenationalfinancialsystem,companiesmanagingpensionfunds,andemploymentoutsourcingcompanies).

Inallcases,sharesmakingupacorporation’sstockmustbefullysubscribedforandatleast25%ofthevalueofeachsharemustbepaidin.

Increasesand reductionsofcapital stockand thecorrespondingamendments tocorporateby-lawsmustbeadoptedbyamajorityofthevotingmembersatageneralshareholders’meeting.TheseresolutionsmustbesetforthinapublicdocumentandfiledwiththeRegisterofCompanies.

(4) Governance and administration

Thebodiesgoverningcorporationsarethegeneralshareholdersmeeting,theboardofdirectors,andthemanagement.

Thegeneralshareholder’smeetingisthecorporation’shighestgoverningbody.Thelawstatestheformalnoticerequirementsforsuchmeeting,theminimumquorum,andthemattersthataresolelyunderthejurisdictionofthatgeneralmeeting,whicharedecidedbymajorityvotesimpleorqualified(asestablishedbylawandbythecorporateby-laws).Theremustbeatleastonegeneralshareholdersmeetingperyear,whichshouldbeheldwithinthreemonthsoftheendofthefiscalyear(December31st),inordertoassessthecorporation’smanagement,itseconomicperformanceduringthepreviousfiscalyear,andtheapplicationofprofits(ifany),amongothermatters.

Acorporationismanagedbyaboardofdirectors,whichiselectedbytheshareholders.Inthecaseofclosedcorporations,theexistenceofaboardofdirectorsasthegoverningbodyisoptional.Aboardofdirectorsmusthaveaminimumofthreedirectors.Themembersof theboardofdirectorsmaybePeruviansor foreigners,domiciledornon-domiciled. It isnotnecessarytobeashareholderinordertoserveasaboardmember,unlesssostatedintheby-laws.Directorsmayberemovedatanytime.

Theboardofdirectorsmustprovideshareholdersandthepublicwith information that is timely, reliableandsufficient,asdeterminedbylaw,regardingthecompany’slegal,operationalandfinancialconditions.Theboardofdirectorsisresponsibleforcarryingoutresolutionspassedbythegeneralshareholdersmeeting,unlessthelatterdecidesotherwise.

Acorporationisalsomanagedbyoneormoremanagers.Ifaclosedcorporationhasnoboardofdirectors,thegeneralmanagerwillberesponsibleformanagingandlegallyrepresentingthecorporation.Themanagermayberemovedatanytimebytheshareholdersorbytheboardofdirectors,dependingonthebodymakingtheappointment.

Unlessotherwisestatedintheby-lawsorbyaspecialresolutionoftheshareholdersmeeting,itispresumedthatthegeneralmanagerhas,interalia,thepowertoenterintoandexecuteordinaryactsandcontractsrelatedtothecorporatepurpose,andtorepresentthecorporation.

(5) Distribution of profits

Profitsaredistributedtotheshareholdersinproportiontotheircapitalcontributions,unlessotherwisestatedinthearticlesofincorporationorby-laws.

Corporationsarerequiredtosetasideaminimumof10%oftheirafter-taxprofitsduringeachfiscalyearforthecreationorincreaseofareservefund,untilanamountisreachedthatisequaltoone-fifthofthecapitalstock.Thereservefundisusedtocompensateforlossesinagivenfiscalyeariftherearenootherreservesoraccumulatedprofits.

Dividendsmustbepaidincashuptoanamountequaltoone-halfofthedistributableprofitsduringeachfiscalyear,aftersubtractingtheamountthatmustbesetasideforthereservefund,ifsorequestedbyshareholdersrepresentingat least twenty percent of the total voting stock. This request may only be made with respect to profits for theimmediatelyprecedingfiscalyear.

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(6) Financial statements

Theboardofdirectorsor,initsabsence,thegeneralmanager,mustpreparetheannualreport,financialstatementsandproposalforuseofprofits(ifany),attheendofeachfiscalyear inordertosubmitthemforconsiderationattheannualshareholdersmeeting.

Financial statements areprepared and submitted in accordancewith the lawandwith generally-acceptedaccountingprinciples(IFRS).

Publiccorporationsarerequiredby lawtohaveannual independentauditsperformedbyauditors listed in theNationalRegisterofAuditors’AssociationsandtosubmitquarterlyfinancialstatementstotheSuperintendenceofCapitalMarkets(Superintendencia de Mercado de Valores - SMV).

ClosedcorporationsorentitiesotherthanthosethatareunderthesupervisionoftheSMV,whoseannualincomefromthesaleofgoodsorservicesortotalassetsareequalorexceedthreethousand(3,000)TaxUnits(UIT1),mustsubmittotheSMVfinancialstatementsauditedbyauditfirmsauthorizedbyaSchoolofPublicAccountants,accordingtointernationalfinancialreportingstandardsandsubjecttotheprovisionsandtermsestablishedbytheSMV.ThefinancialstatementsfiledtotheSMVareofpublicaccess.

(7) Transfer of stock

Shareholdersmaytransfer,mortgageorfreelyencumbertheirstock,unlessthelaw,company’sby-laws,orashareholders’agreementduly registeredwith thecompany limitssuch transfer,mortgageorencumbrance.This limitationmaynotbeunderstoodasanabsoluteprohibitiononalltransfers,mortgagesorencumbrancesofcorporatestock.Atemporarybanontransfers,mortgagesorothermeansofencumberingstockisvalidwhensoestablishedbytheby-lawsorarticlesofincorporation,soagreedtobythebearerofthecorrespondingsharesofstock,orsoresolvedbythegeneralshareholdersmeeting.Thebanmustbeforacertainperiodandmaynotexceedtenyears.Itmaybeextendedbeforeitexpires,forperiodsnolongerthanten(10)years.

Inordinarycorporations,thetransferofstockislimitedbytheothershareholdersrightoffirstrefusal,solelywhenthatrightisexpresslysetforthintheby-laws.Inthecaseofclosedcorporations,thegeneralruleisthatshareholdershavetherightoffirstrefusalunlesstheby-lawsstateotherwise.Additionally,itmaybeestablishedintheby-lawsofclosedcorporationsthatthetransferofstockmustbeapprovedbythecorporationand/orthattheshareholdersmayactassubstituteheirsintheacquisitionmortiscausaofthedeceasedshareholder’sstock.

Thefollowingarenotpermittedinpubliccorporations:limitationsonthefreetransferofcapitalstock;anytypeofrestrictiononthenegotiationofshares;orpreferentialshareholderrightsintheeventofstocktransfers.

(8) Minority shareholders

The General Law of Companies establishes different measures for protecting minority shareholders. For example,shareholdersrepresentingat least20%ofthevotingstockhavetherighttorequestthattheboardofdirectorsconveneageneralshareholdersmeeting.Ifameetingisnotconvened,suchshareholdersmayrequestajudgetoissueajudicialsummonforthemeeting.Inanopencorporation,shareholdersrepresenting5%ofthevotingstockhavethisright.

Incertaincases,theGeneralLawofCompaniesgrantstherightofwithdrawaltothoseshareholderswhohavemadetheiroppositionknownatageneralmeeting,toabsentshareholders,tothosewhomayhavebeenillegallydeprivedoftheirvote,ortoownersofnon-votingshares.Exercisingtherightofwithdrawalobligatesthecorporationtoreimbursewhoevermaywithdrawforthevalueofhisstock.

AlthoughtherearedifferenttypesofcompanystructuresthatmaybeusedtoperformbusinessinPeru,investorsgenerallychoosethosetypesthatlimitshareholders’liability.

1 1UIT=S/.3,700.00,whichapproximatelyisRMB9119.00,SGD1799.00,US$1,451.00

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i. SuitableCorporateForms

Thecorporationandthelimitedliabilitycompanyarethemostimportantandmostfrequently-usedtypesofcompaniesregulatedbytheGeneralLawofCompanies,whichwasissuedJanuary1,1998.ForeigninvestorsmayalsoestablishabranchofficeinPeru.

Ourlegislationrecognizesandregulatesthreetypesofcorporations:(i)ordinarycorporations;(ii)closedcorporations;and(iii)opencorporations.Allthree(3)typeshavetheessential featuresofanycorporation,meaningthattheyissuecapitalstock,theirownershipisdividedintosharesofstock,andtheyenjoylimitedliability.

Specificregulationsdealingwithclosedcorporationsrecognizetheiressentialnatureasacapitalstockcorporationandalsoprovideasuitablecorporatestructureforalimitednumberofshareholderswhoareusuallyinvolvedinmanagingthecompany.Theclosedcorporationcannothavemorethantwenty(20)shareholders,andgiventheimportanceofpersonalfactorsinowningandmanagingcapital,itssharesmaynotbelistedontheLimaStockExchangeorpubliclytradedonthesecuritiesmarket.Ontheotherhand, theopencorporationsatisfiesoneormoreof the followingconditions: (i) ithasmadean initialpublicofferingofstockorofcorporateobligationsconvertible intostock; (ii) ithasover750shareholders; (iii)over35%ofitscapitalstockisheldbyonehundredandseventyfive(175)ormoreshareholders;(iv)itisincorporatedassuch;or(v)allvotingshareholdersunanimouslyapprovethemotiontoadoptsuchasystem.Theopencorporationmustpubliclyregister itsstockinthePublicRegistryofSecuritiesandlistedintheLimaStockExchange,meaningthatitsstockmaynotbelimitedregardingitsfreetransferandnegotiation.ThistypeofcorporationissubjecttothesupervisionoftheSMV.

Agreementsbetweenshareholdersorbetweenshareholdersand thirdpartiesarevalid inall typesofcorporations,and are enforceable in all matters concerning the corporation, from the moment they are duly recorded with thecompany.Ifanydiscrepancyexistsbetweenanystipulationintheshareholdersagreementsandthecompany’sarticlesofincorporationorby-laws,thelattershallprevailwithoutprejudicetotherelationshipestablishedbytheagreementbetweenthepartiesthereto.

Regulationapplicabletothelimitedliabilitycompany(alsoknownas“SRL”)issimilartothatoftheclosedcorporation,giventhe importanceofpersonal factors involved in this typeofcompanyandwhichtheGeneralLawofCompanies tries topreserve.Thisisacompanywhosecapitalisrepresentedbynon-stockshares(participaciones).Alimitedliabilitycompanymaynothavemorethantwentypartners.

Thefollowingaregeneralfeaturesofthelimitedliabilitycompany:

(1) Incorporation

Limitedliabilitycompaniesareincorporatedbyaminimumoftwofoundingpartnersbyfilingapublicdocumentcontainingthearticlesofincorporationandtheby-laws,whichmustincludethenamesofthepartners,theiridentificationdocumentandtheiraddresses,thelegalnameofthecorporation,thecorporatepurpose,themailingaddressofthecorporation,andtheappointmentofthemanagementofficers,amongotherthings.

ThenotarizedincorporationdocumentmustbefiledwiththeCorporateRegisterwherethecorporationhasitsdomicile.

(2) Liability

Partnersarenotpersonallyliableforthecompany’sobligations.

(3) Capital

Atthetimeofincorporation,partners’contributionsmustbesubscribedinfullandatleast25%ofeachsharemustbepaidin.Asisthecasewithcorporations,nominimumamountofcapitalisrequiredforincorporation.

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Thecorporateby-lawsmustcontainrulesregarding formalitiesthatmustbeobservedfor increasinganddecreasingcapitalstock,includingpartners’rightoffirstrefusal,andthosecasesinwhichstockmaybeofferedtonon-partnersifthepartnersrefuse.

(4) Governance and administration

Thegeneralpartners’meetingisthelimitedliabilitycompany’shighestgoverningbody.Itsactionsaresubjecttothenormsthatapplytothegeneralpartners’meetingasregardscompliancewiththeGeneralLawofCompanies.

Thecompanyismanagedbyoneormoremanagers,whorepresentitinallmattersrelatedtoitscorporatepurpose.Managersmaynotparticipatepersonallyorthroughathirdpartyinanylineofbusinessthatfallsunderthecompany’spurpose.

(5) Distribution of profits

Profitsaredistributedtopartnersinproportiontotheamountofsharesowned,unlessotherwisestatedintheby-laws.

(6) Financial statements

Rulesregardingthepreparationandapprovaloffinancialstatementsmustbeincludedinthecorporateby-laws.Financialstatementsarepreparedandsubmittedinaccordancewiththelawandwithgenerally-acceptedaccountingprinciples.

(7) Transfer of stock

Whoeverislistedastheownerofoneormoresharesintherecordsofthecompanyshallbeconsideredassuch.Transfersarecarriedoutonthebasisofapublicdeedsignedbythetransferringpartyandthepurchasingparty.

Intheeventofatransferofsharestonon-partners,theotherpartnersshallhavetherightoffirstrefusal.Theby-lawsmayestablishagreementsandconditionsforthetransferofsharesandcriteriaforevaluatingtheirvalueinsuchcases,butinnocasemayresolutionstotallyprohibittransfers.

(8) Minority partners

Ageneralmeetingmustbeheldwhenrequestedbypartnersrepresentingatleast20%ofthecapitalstock.

ii. Branches

Foreign entities can establishbranches inPeru,which aredeemed to havepermanent legal representation andenjoyproceduralautonomyinthesphereofactivitiesassignedtothembytheparentcompany,inaccordancewiththepowersgrantedtotheirrepresentatives.

(1) Establishment

BranchesofforeigncorporationsareestablishedthroughapublicdeedpreparedbyaPeruviannotarypublic, inwhichthe following information (amongother items)must beprovided: (i) the capital assigned to thebranch for its activitiesundertaken in thecountry; (ii) theactivitiesof thebranchandadeclarationstatingthatsuchactivitiesareapartof theparentcompany’scorporatepurpose; (iii) thebranchaddress;and(iv) theappointmentofat leastonepermanent legalrepresentativeinthecountry.

Inaddition,thefollowingmustbeinsertedintopublicdeed:(i)acertificateofgoodstandingfortheparentcompanyinitscountryoforigin,certifyingthatneither itsarticlesof incorporationnorby-lawsprohibittheestablishmentofforeignbranches; (ii) a copy of the articles of incorporation andby-laws of the parent company and of any other equivalentinstruments in itscountryoforigin;and (iii) the resolution issuedby theparentcompany’sgoverningbody inorder toestablishthebranchinPeru.

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TheaforementionedoriginaldocumentsandcopiesmustbeapostilledorlegalizedbythePeruvianconsulateinthecountryinwhichtheparentcompanyislocated.

(2) Liability

Theparentcompanyisliableforallobligationsincurredbythebranch,anyagreementexemptingresponsibilityisconsiderasnullandvoid.

(3) Capital

Thetotalamountofassetsassignedbytheparentcompanytoundertakethebranch’sactivitiesisknownas“assignedcapital”.

(4) Administration

BranchesarerequiredtohaveapermanentlegalrepresentativeinPeruwhoshallbeauthorizedtoenterintocontractsonbehalfoftheparentcompany.

(5) Remittance of profits

Therearenolimitationsontheremittanceofprofitsbyabranchtoitsparentcompany.

iii. JointVentures

PeruvianLawestablishestwodifferenttypesofjointventures:Theconsortiumandtheparticipationassociationcontract.Thisisnotaclosedlist,sootherassociativecontractssuchaspartnerships,sharedriskorjointventuresarealsopermittedunderPeruvianlaw,albeitnospecificregulationexistsinrespectthereof.

TheConsortiumisdefinedasacontractinwhichtwoindividualsorentitiesjointogetherinordertoparticipateinacertainbusinesstoshareprofitsandreducetheirtransactioncosts.Consortiadonotgenerateaseparateindependententityfromitspartners.

TheGeneralLawofCompaniesdefinestheparticipationcontractasanagreementinwhichanindividualorcompanygrantstoapersonorpersons(whetherindividualsorentities)aparticipationintheprofitsofthebusinessthatitcarriesoutwiththirdparties.Inexchange,theparticipatedpartnerusuallyprovidessomekindofcontributiontoventure.Inthistypeofcontract,theparticipatedpartyremainshiddeninfrontofthirdpartieswithwhomitspartnermayundertakebusinessactivities.

iv. Investmentsin/MergerswithExistingEntities

TherearenorestrictionsforinvestmentsmadebyforeigncompaniesinPeruviancompanies.ForeigninvestmentisawardedequaltreatmentthanlocalPeruvianinvestments.

MergerbetweencompaniesispermittedandmustcomplywiththeapplicablerequisitesandformalitiesprovidedforintheGeneralCompaniesLaw.

B. Agency/Reseller/Franchising/Distribution Networks

Peruvianlawdoesnothaveanyspecificprovisionsabouttheestablishment,requisites,orthetreatmentofagency,reseller,franchisingordistributionnetworks.Likewise,noagentordistributorprotectionregulationsexist.Accordingly,anyagency,reseller,franchisingordistributionundertakenwithPeruvianentitiesshallberuledbytheprovisionsofanycontractenteredintobetweentheparties.

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FranchisingagreementscanberegisteredbeforetheInstitutefortheDefenseoftheCompetitionandtheProtectionoftheIntellectualProperty-INDECOPI(Peruviancompetentauthorityinchargeoftheregistrationoftrademarks),inordertousethemarksinvolvedinsuchagreement.

C. Representative Offices and other “Non-Permanent” Establishments

Foreigncorporationsmayestablishofficesand“non-permanent”establishmentswithoutneedinganyregisterorapproval,exceptincertainregulatedindustriessuchasbanksandinsurancecompanies.Asarequirement,thistypeofestablishmentsmustbevestedwithsufficientpowersofrepresentationwhichallowsthattheagreementssignedbytheseestablishmentsareenforceableaccordingtothePeruvianlaw.

D. Approvals and Registrations

The undertaking of certain business activities requires prior approval from applicable authorities. This is the case, forinstance, of banking and financial activities, insurance activities, and telecom, among others. Likewise, any activitiesinvolvingnaturalresources,renewableornonrenewable,requirethepriorobtainingofanauthorizationorconcession.

E. Sensitive Economic Sectors/ Restrictions on Foreign Ownership

Ingeneralterms,PeruvianlawdoesnotproviderestrictionstoundertakeanybusinessactivityorownpropertyinPeru,exceptforthelimitationsonshareholdingownershipbyforeignersoflocalcompaniesofcertainsectorssuchasaviation,andtheownershipoflandreferredtoinliteralIofSectionIVbelow.

F. Political Risk and Related Issues

Peruhasofferedastablelegalandbusinessenvironmentforthepasttwenty(20)years.Asaresultthereof,thecountryhasbeenrecentlyconsideredinvestmentgradebymajorriskassessmententities.Providedtheycomplywithcertainminimumrequirements,foreigninvestorsareentitledtoenterintothesocalledLegalStabilityAgreementsreferredtoinliteralBofSectionIIIbelow.

III. INVESTMENT ISSUES AND TAX INCENTIVES

A. Legal Treatment of Foreign Investment

Peruhasagenerallegalregimewhichpromotesandprovidesguaranteesforforeigninvestments.Inaddition,specificlawsregardingmining,hydrocarbons,telecommunications,agricultureandfishing(amongotherareas)furtherregulateforeigninvestmentinthosesectors.

Themostimportantprinciplesgoverningforeigninvestmentarethefollowing:

(1) Foreigninvestmentisentitledtothesametreatmentasdomesticinvestments;

(2) Foreigninvestorsmayinvestinanysectoroftheeconomy;

(3) According to the law, foreign investment isany investment fromoutsideof thecountry inactivities thatgenerateincome,underanyofthefollowingmodalities:

- Contributions to thecapitalstockofaneworexistingcompany incorporatedunderanyof themodalitiesprovidedforintheGeneralCorporateLaw,whetherasfreelyconvertiblecurrencyorintheformoftangibleassets.Thecapitalizationofsharepremiumsisalsoconsideredasamodalityofforeigninvestment

- InvestmentsmadeinPeruviancurrencyresultingfromresourcesthatmayberemittedabroad;

- Conversionintosharesofprivateobligationsinfavorofnon-domiciledpersonsorentities;

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- Reinvestments;

- InvestmentsinassetslocatedinPeru;

- Intangible technological contributions, such as trademarks, industrial models, technical assistance, andpatentedorunpatentedtechnicalknowledgewhichmaybepresentedintheformoftangibleassets,technicaldocumentsorinstructions(know-how);

- Investmentsusedtopurchasesecurities,financialdocuments,andcommercialpapertradingonthestockexchange,orbankcertificatesofdeposit,eitherinPeruvianorforeigncurrency;

- Resourcesassignedtosilentpartnershipagreementsorsimilarcontracts;and

- AnyothertypeofforeigninvestmentcontributingtoPeru’sdevelopment.

(4) Thegovernment’spriorexpressauthorizationisnotrequiredforforeigninvestments.

(5) Therearenoexchangecontrolsandtheuse,convertibilityandremittanceofforeigncurrencyisfree.

B. Treaties on Foreign Investment Protection.

InvestorshavetherighttobenefitfromPeru’slegalstabilityregimebyenteringintoLegalStabilityAgreements(hereinafter,“LSAs”;knowninSpanishasconvenios de estabilidad jurídica),pursuanttowhichtheGovernmentguaranteesthestabilityofcertainlegalregimesandgrantstheholdercertainguaranteesforaspecificterm:

Thepartiestoaconcessionagreementrelatedtoinfrastructureprojectsand/orpublicutilities(executedunderSupremeDecreeNo.059-96-PCM),andtheir investors,mayenter intoLSAsforatermmatchingthatoftherelevantconcessionagreement.

Article62oftheConstitutionofPerusetsforththattheGovernmentisentitledtoenterintolaw-contracts,whichhavetheforceofalawbetweenthepartiesthereto.Thismeansthatthepartiesthereto(includingthegovernment)mustabidebythemandcannotamendthemonanunilateralbasis. Inparticular,theGovernmentmaynotunilaterallymodifythembypassingalaworotherwiseleavethemwithouteffect.

LSAsmaybeenteredintoatanytime,providedthelegalrequirementsaremet.Notwithstanding,ifaninvestmentintheformofacontributiontoalocalcompany’scapitalstockhasbeenmadebeforetheexecutionofaLSA,suchinvestmentmaybeconsideredforfulfillingtheinvestmentcommitmentinboththeinvestorandthelocalcompany’sLSA,onlyifsuchagreementsareentered intowithin twelve (12)monthsafter thecapitalstock increasehasbeen registered in the localcompany’saccountingrecords.

(1) Requirements for foreign investors

Investorsmustcomplywithanyofthefollowingrequirementsinordertoreceivetheaforementionedbenefitsunderthelegalstabilityregime:

- Makecontributionstothecapitalstockofalocalcompany,withinatermoftwo(2)years,inanamountequaltoorexceedingUSD10,000,000.00, incaseofminingorhydrocarbonactivities,orUSD5,000,000.00, incaseofanyothersector.

- Carryoutriskinvestmentsalongwiththirdparties(forexample,jointventures),fortheamountsandcomplyingwiththetermsandconditionsmentionedintheprevioussubparagraph.

- AcquiresharesfromcompaniesthataredirectlyorindirectlyownedbytheGovernment(throughaprivatization

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process),providedthattheacquisitioninvolvesmorethan50%ofthesharesanditinvolvestheamountsandcomplieswiththetermsandconditionsmentionedinthefirstsubparagraph.

- TheportionofsharespremiumsthatiscapitalizedandoriginatesincontributionsmadebyforeigninvestorsmayalsobeguaranteedthroughLSAs,ifitinvolvestheamountsanditcomplieswiththetermsandconditionsmentionedinthefirstsubparagraph.

- Thecapitalizationofprivateobligationstoforeignpersonsorentities(loancapitalization)maybeconsideredasforeigninvestmentcapableofbeingguaranteedthroughaLSA,providedthatitinvolvestheamountsandcomplieswiththetermsmentionedinthefirstsubparagraph.

Intheaforementionedcases,investorsmustchanneltheirinvestmentthroughanentityofthePeruvianfinancialsystem.

(2) Requirements for companies receiving investments

CompaniesreceivinginvestmentsmayalsoenterintoaLSAwiththePeruvianGovernmentiftheyreceiveinvestmentsfromatleastoneinvestormeetingtherequirementssetforthinthepreviousparagraphabove.

Companiesfulfillingthisrequirementmaybenefitfromthestabilityoftheemploymentandexportpromotionregimes.Inaddition,theycanbenefitfromthestabilityoftheIncomeTaxregimes,providedtheymeetanyofthefollowingrequirements:

- Thenewinvestmentsexceeds50%ofthecompany’scapitalstockandreservesaccountsandisusedtoincreaseproductivecapacityor improve technology,meaning thatsuch investmentsmustbecarriedoutthroughacapitalincrease;or

- Thenewinvestmentsentailtheacquisitionofmorethan50%ofthesharesofacompanythatisdirectlyorindirectlyownedbytheGovernment(asisthecaseinstate-ownedcompaniesthatareprivatized).

(3) Rights guaranteed under agreements

- Forinvestors:

LSAsguaranteeforeigninvestors,fortheentiretermoftheagreement,legalstabilityofthelawsgoverningthefollowingregimesandrights:

o Incometaxregime:Dividendsandanyotherformofprofit-sharingtowhichforeigninvestorsareentitledwillnotbeaffectedbyanytaxresultinginagreatertaxburdenthanthatwhichwasineffectasofthedateonwhichtheagreementwasenteredinto;

o Therighttofreeavailabilityofforeigncurrency;

o The right to freely remit abroad funds, profits, dividends and royalties, without any limitations orrestrictions;

o Therighttousethebestexchangerateavailableonthemarket;

o Therighttonon-discrimination.

- Companiesreceivinginvestments

LSAsguaranteecompaniesreceivinginvestments,fortheentiretermoftheagreement,legalstabilityofthelawsgoverningthefollowingregimesandrights:

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o IncomeTaxregime:AslongastheLSAremainsineffect,theamendmentstotheIncomeTaxregimewillnotbeapplicabletothelocalcompany.Similarly,taxableincomeshallbecalculatedbasedonthesamerates,deductionsandscalesetforthinthelegislationineffectatthetimeofenteringintotheagreement.Thisprotectionexistsregardlessofwhethersuchmodificationsprovefavorableornottothecompany;

o Asmentionedpreviously,onlythosecompaniesmeetingthecriteriasetforthinthesecondpointabovequalifyforsuchprotection;

o Employmentregime;

o Exportpromotionregime;

(4) Characteristics and term of LSAs

Themaincharacteristicsoftheseagreementsarethefollowing:

- Theyarelegallybindingonthepartiesandmaynotbeunilaterallymodified.

- TheyaregovernedbytheprovisionsoftheCivilCodeandnotbyadministrativelaw.

- Theyhaveamaximumtermoften(10)yearsstartingonthedateofexecution,exceptinthecaseofLSAsenteredintobyconcessionairesengagedininfrastructureandpublicutilitiesprojectsunderSupremeDecreeNo.059-96-PCM,aswellasbytheirinvestors,casesinwhichthetermoftheLSAisextendedtomatchthatoftheConcessionAgreement.

- Theymaybewaivedbyinvestorsandcompaniesreceivinginvestments,inwhichcasecommonlegislationwillapplyfromthedateonwhichthewaiverissubmitted.

- Theinvestormayassignhiscontractualrightstoanotherinvestor,subjecttoauthorizationbythecompetententity.Althoughassignmentisprohibitedinthecaseofcompaniesreceivinginvestments,thelawallowsthat,inthecaseofcorporatereorganizations(mergersorspin-offs),guaranteesgrantedthroughtheLSAsmaybeassignedtooneofthepartiesparticipatingintherelevantreorganization,providedthecompetententityexpresslyauthorizesitafterhavingreceivedanopinionfromthePeruviantaxauthority.

- Anyamendmentsagreeduponbythepartiesmaynotrefertotheterm,theextensionofthetwo-yearperiodforcarryingouttheinvestment,nortothereductionoftheinvestmentcommitmenttoanamountbelowthelimitsestablishedbylaw(asmentionedbefore,USD10,000,000intheminingandhydrocarbonsectors,orUSD5,000,000inothersectors).Iftheamendmentprovidesforanincreaseintheamountoftheinvestmentcommitment,suchincreasemayalsobeincludedinthelegalstabilityregimebyreceivingauthorizationfromthecompetententity.

- Agreementsmaybeterminatedinthefollowingcases:(i)failurebyinvestorsorcompaniestomakeorreceivethecontributionsorpurchasestowhichtheyhaverespectivelycommitted,withinthetermsetforthforsuchpurposes;and(ii) failurebyinvestorstoobtainpriorauthorizationforassigningtheircontractualrightsandobligations.

(5) Investments subject to the legal stability regime

Capitalstockincreasesresultingfromthecapitalizationoftherevaluationsurplusorinflationadjustmentmaybeincludedinthelegalstabilityregime,providedthatnoticeofsuchcapitalizationisgiventoPROINVERSIONwithinthethirtydaysfollowingsuchcapitalization.

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(6) National entity entering into the LSAs on behalf of the government

PROINVERSIONisthenationalentityresponsible foractingonbehalfof theGovernment intheexecutionofLSAswithforeigninvestors.

LSAsenteredintobycompaniesreceivingforeigninvestmentareexecutedjointlybyPROINVERSIONandbytheMinistryofthesectorinwhichtheinvestmentwillbemade.IfPeruvianandforeigninvestorsareinvestinginthesamecompanyandwishtosubmittheirapplicationsjointly,therelevantLSAshallbeexecutedbyPROINVERSION.

IV. Operational Legal Environment

A. Foreign Exchange

Peruvianlawdoesnothaveanyrestrictionsorlimitationsconcerningforeignexchange.Therearenoforeignexchangecontrols,registrations,approvalsorothersimilarrestrictionsregardingtheremittanceofforeigncurrencytoorfromPeru.Thereisnoneed tohaveanapproval toundertake foreignexchange transactionsor tocarry foreigncurrency.AnycurrencycanbeexchangedforPeruvianNuevosSolesandmaybeusedineverytransactioninPeruprovidedthatthepartiesagreetodoso.

BankaccountsofanykindcanbeopenedinUSDollarsandothercurrencies.Also,creditfacilitiesmaybeagreedinUSDollarsorothercurrencieswithoutanyspecialconditions.

B. Immigration and Visa Requirements.

(1) Business visa

UnderthePeruvianimmigrationlaw,businessvisasareissuedtopersonswhoenterthecountrywithouttheintentofresidency.WhilesuchpersonsmaynotreceiveincomefromaPeruviansource,theymaysigncontractsandengageintransactions.

A business visa does not confer the right to render services (either as an employee or independent contractor) toentitiesdomiciled inPeru,evenwhensuchservicesareperformedonbehalfofanon-residententity.Thisruleonlyallowstwoexceptions:(i)feesasDirectorofdomiciledcompanies(ii)orfeesaslecturersorinternationalconsultantsbyvirtueofaservicesagreementnotexceedingthirty(30)continuouscalendardaysoraccumulatedwithinanygivenperiodoftwelve(12)months.

(2) Foreign worker from a non-resident company

SuchimmigrationstatusisgrantedtothoseforeignworkerswhoaresenttoPerubytheirnon-residentemployerinordertorendercontractualservicesontheemployer’sbehalf.

BothcompaniesmustenterintoaserviceagreementbasedonwhichthecompanydomiciledabroadagreestoprovideacertaintypeofservicestothecompanydomiciledinPeru.Uponexecutingthisservicecontract,thecompanydomiciledabroadtransferssomeofitsworkerstoPeru.

Aforeigncitizenwhoobtainsthisimmigrationstatusshallhavetherighttoworklegallyforthree(3)monthsthatcouldbeextendeduptoone(1)year.Afterthefirstyearelapses,anewvisamustbeobtained.

(3) Worker immigration status

ForeignworkerswhoseektoworkandresideinPeruarerequiredtoobtainresidentworkerimmigrationstatus.

Inordertodoso,theymustenterintoaforeignemploymentcontractwhichisapprovedbythePeruvianAdministrativeWorkAuthorityonceitisconfirmed(basedonthedocumentssubmitted)thatalllegalrequirementsaremetandthatforeignworkerpercentagequotasarecompliedwith.

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Subsequently,arequestmustbesubmittedtothePeruvianImmigrationOffice,whichthenissuesanidentificationcardfortheforeignerallowinghimtoworkforanemployerinthecountry.

C. Customs Issues

TheCustomsGeneralLawapprovedbyLegislativeDecreeNo.1053regulatesthegeneralbasistotheentryandexitofgoodstoandfromPeru.

(1) Import

Themostimportantcustomsregimeistheimportofforeigngoodsfortheirdefinitiveuseorconsumptioninthecountry.Onlydomiciledentitiesorindividualscanactasimporters.

Asageneralrule,therearenorestrictionstotheimportofgoods,althoughsomerestrictionsbasedonspecificregulations(regardingmatterslikesanity,security,environment,etc)maybeapplied.Insuchcases,theimportisconditionedtotheobtainingofspecificauthorizationsissuedbythecorrespondingentities.

Importdutiesandtaxesappliedintheimportationofgoodsareadvalorem,additionalvariableduty,ISC,VAT,andadvanceVATpayments.

Theapplicableadvaloremratesare0%,6%,or11%,dependingonthetariffsubheadingoftheimportedmerchandise.Morethan55%ofthemerchandisecontainedinthecurrentcustomstariffissubjecttoa0%advaloremrate.

Additionalvariabledutiesapplyonlytocertainagriculturalproducts.Therateshalldependonthetypeofmerchandiseandthereferencepriceestablishedatthetimeofimportation.

ISCappliesonlytoacertaingroupofproducts:petrol(gasoline),gas-oil(diesel),spirits,cigars,tobaccoandcertainvehicles.Therateoramountwilldependonthetypeofproductinvolved(asdiscussedinthesectionon“Taxation”)

VATappliestomostimportedgoods.Thereisonlyalimitedgroupofproductsthatistaxexempted,accordingtothetypeofmerchandiseortheplacetowherethegoodsareimported(e.g.importbenefitsinthejunglearea).Theapplicablerateis18%.

AdvanceVATpaymentisaprepaymentofthetaxthatwillbeleviedonfuturetransactions.Thereisasmallgroupofproductswhicharenotsubjecttothispaymentatthetimeofimportation.Theapplicableratesare10%onthefirstimportation;5%ontheimportationofsecondhandgoods;and3.5%forallothercases.VATandVATAdvancedPaymentRegimepaidontheimportofgoodscanbeusedascreditagainsttheVATobligation.

Thetaxbaseforcalculationofadvaloremiscost,insuranceandfreight(CIF)value.ThisvalueisdeterminedaccordingtotheRelativeAgreementonImplementationofArticleVIIoftheGeneralAgreementonCustomsTariffsandTrade(GATT)of1994(ValuationAgreement)oftheWorldTradeOrganization(WTO).

Ingeneralterms,customsdutiesandinternaltaxesmustbepaidbeforetakingoutthemerchandisefromtheCustomsWarehouse.However,importerscanapplythepreviousguaranteesystem,whichallowswithdrawinggoodsfromcustomswithinfortyeight(48)hoursoncetheunloadingoperationiscompleted.

Fortheeffectiveuseofthismechanismitisnecessarytofulfilltwo(2)requirementspriortothearrivalofthecarrier:(i)thecustomsimportdeclarationshouldhavebeennumberedand(ii)thespecificimportauthorizationforrestrictedgoodsmusthavebeenobtained.

(2) Temporary imports

Temporaryentriesofgoodsarealsoallowed.Suchentriescanbeoftwo(2)types:(i)forinternaluseandsubsequentre-export(applicabletoequipmentsandmachineryincludedinaclosedlistofgoodsapprovedforthispurpose);and

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(ii)fortransformingandsubsequentexportofthefinalproductobtained(applicabletorawmaterials).Inbothcasesthepaymentofcustomsdutiesand import taxes is suspendedbysubmittingaguaranteecovering theamountof suchdutiesandtaxes.

(3) Export

Exportoperationsaretaxfree.Asageneralrule,therearenorestrictionsfortheexportofgoods.Howevertheexportofgoodssuchasendangeredanimals,vegetablespecies,andarcheologicalfindings,amongothers,isprohibitedorrestricted.

Onlydomiciledentitiesorindividualscanactasexporters.

Temporaryexportsofgoodsarealsoallowedandcanbeoftwo(2)types:(i)forbeingusedabroadandreturninginthesameconditionsaswhentheywereexported;and(ii)forgoodsthatwillbetransformed,repairedorreplacedabroad.Inthesecases,there-importofthegoodsissubjecttospecialtaxregulations.

(4) Drawback

Peruvianregulationsallowtherefundofdutiesuponexportofimportedgoodsthatwererequiredfortheirproduction.Thisrefundisafixrateof5%oftheFOBexportvalueuptoacapof50%ofitsproductionvalue.

Onlycompanies thatmanufactureorproducegoods in thecountry (by themselvesorbyhiring thirdparties),byusingimported raw materials, can obtain this benefit after that such goods have been exported. Specific conditions andrequirementsmustbefulfilledtoobtainarefundofduties.

(5) Replenishment of merchandise with customs exemption

Thisregimeallowsimportofgoodswithanautomaticexemptionofcustomsdutiesandimporttaxes.Theexemptionisinthesameamountasthevalueofequivalentmerchandisethatwaspreviouslyimported(withoutanyexemption)andwastransformedtoobtaingoodsthatwereexported.

Bymeansofthisregimetheexportersareabletoreplenish,freeofdutiesandimporttaxes,therawmaterialsandinputsusedinthemanufactureprocessofgoodsforsupplyingtotheirforeignclients.

(6) Other customs procedures

- EntryintoorwithdrawalfromPeru,ofmerchandisecontainedinparcelscarriedbyinternationalcargocarriers,expressmail,orcourierservice.

- Adutyfreesystemthatpermitsthedutyfreestorageandsaletoinboundoroutboundpassengersofdomesticorforeignmerchandiseinauthorizedestablishmentsinsideinternationalportsorairports.

- EntryintoandexitfromPeruofsamplesforexhibitionpurposes.

- EntryintoandexitfromPeruofbaggageandhouseholditems.

(7) International trade agreements

Peru has signed a number of trade agreements to allow the free trade of goodswith countries in Asia, the PacificBasin,EuropeandSouthAmerica.TheagreementscurrentlyinforceincludethosesignedwiththeAndeanCommunity(Colombia, Ecuador and Bolivia); Latin American Integration Association and Mercosur (Argentina, Brazil, Uruguay,Paraguay, Mexico and Cuba); United States; Canada; Mexico; Cuba; Panama; Chile; EFTA (European Free TradeAssociationwhichincludesNorway,Switzerland,IslandandLiechtenstein);thePopularRepublicofChina;Singapore;Japan;SouthKoreaandThailand.

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Agreementsthathavebeenalreadysignedandwillbeinforceinthenearfutureare,EuropeanUnion,CostaRica,GuatemalaandVenezuela.

Theseagreementsallow the reductionofcustomsduties thatmustbepaid for the importofgoods.For thispurpose,originatingrulesofeachagreementmustbefulfilled.

(8) Antidumping duties and countervailing duties

InaccordancewiththeWTOgeneralrulesonantidumpingandcountervailingmeasures,Peruhasadoptedrulestopreventandcorrectdistortionsofcompetitioninthemarketcausedbydumpingandsubsidies.Peruvianprovisionstrytopreventunfairtradepracticesresultingfromsalepricesthatarelessthantheproductioncostofexportedproductsorfromgrantingsubventions.

AnantidumpingdutyisleviedoncertaingoodswhosedumpingpricescauseorthreatentocausematerialinjurytothePeruvian domestic industry. A countervailing duty is levied to counteract subsidies directly or indirectly granted in thecountryoforiginwhentheycauseorthreatentocausematerialinjurytothePeruviandomesticindustry.TheantidumpingandcountervailingdutiesareimposedbytheNationalInstitutefortheDefenseofCompetitionandProtectionofIntellectualProperty (InstitutoNacionaldeDefensade laCompetenciayde laProtecciónde laPropiedad Intelectual, INDECOPI).Customsauthorityisinchargeoftheircollection.

Thesedutieswillbeinforcewhilepersistthecausesthatoriginatedthem.Theymustbeterminatedafterfive(5)years,unlesstheterminationwouldbelikelytoleadtothecontinuationorrecurrenceofdumpingorsubsidizationanddamageofthedomesticindustry.

D. Taxation of Business and Cross-Border Transactions

The Peruvian Constitution establishes that taxes are created, modified, or discharged exclusively by law passed byCongress,andexceptionallybylegislativedecreeincasecertainattributionsaregrantedbyCongresstotheExecutive.Thesamepremiseappliestoexemptions.

ThePeruviantaxregime isregulatedbyseveralnorms.TheTaxCode isthemain legislativebodythatgovernsthetaxprinciples,natureoftaxes,taxobligationsandauthorityoftheTaxAdministration,theTaxCourt, taxproceedings,andimpositionoftaxpenalties.TheTaxCodedoesnotcontainrulesapplicabletospecifictaxes.ItguidestheapplicationofothertaxlawssuchastheIncomeTaxLaw,theGeneralSalesTaxLaw,theMunicipalTaxLaw,andCustomsAct.

(1) Tax administration

TheNationalSuperintendenceofTaxAdministration(SUNAT)isanagencyoftheeconomyandfinancebranch.Itcollectsand administrates the internal taxes, custom duties and other foreign trade borne chargeswhich constitute Peruviantreasuryrevenue(exceptionally,SUNATcollectsothertaxesandcontributionssetforthinthelaw).SUNATalsoenforcestheTaxCodeandisinvolvedinissuingrulingsregardingmattersofrevenue.

(2) Tax procedures

TheoutstandingtaxbillissuedbytheTaxAdministrationafteranaudit,andthepenaltiesimposedcanbeclaimedbythetaxpayerbeforesuchentity.Itisnotnecessarytopayanoutstandingbilltofileaclaimifthisissubmittedwithintheperiodstatedbytheapplicablelaw.IftheclaimisrejectedthetaxpayercanfileanappealbeforetheTaxCourt.ThetaxprocedureinitsadministrativephaseendswiththeTaxCourt.AgainstthejudgmentoftheTaxCourt,anadministrativesuitcanbefiledbeforetheJudiciary,startingthejudicialphase.

(3) Taxpayer identification - RUC

Every individual,corporation,undividedestate,partnershiporanyentity,whetherPeruvianor foreign,regardless itstax

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domicile,mustberegisteredintheTaxpayerIdentificationRecord–(“RUC”)-uponacquiringtaxpayerstatusorbecomingresponsiblefortaxesadministratedorcollectedbySUNAT.Thesamerequirementappliestoataxwithholdingagent.ThetaxpayerortaxwithholdingagentisidentifiedbytheSUNATassigned11digitnumberwhichisusedtocomplywithbothitsformalandsubstantivetaxobligations(the“RUC”).TherearenotrequiredtoberegisteredintheRUC,individualemployees(whoearnearningfifthcategoryincome),andnon-domiciledsubjecttowithholdinginthecountryofincomesource.

(4) Peruvian tax system- Legal framework

TheLegislativeDecree771istheFrameworkLawofthePeruvianNationalSystem,whichcomprisestheCentralGovernmentandtheLocalGovernmenttaxesandcertainnon-taxcontributions.TaxesattributedtotheCentralGovernmentaretheIncomeTax,GeneralSalesorValueAddedTax(VAT),ExciseTax,TemporaryAssetsTax,FinancialTransactionsTax,taxoncasino,gamblingandslotmachines,SpecialMiningTax,CustomDuties,theSingleSimplifiedRegimenTax,andFeesforPublicServices.TheLocalGovernmentTaxesaretheRealEstateTax,theRealEstateTransferTax,theVehiclePropertyTax,theTaxonNon-SportingEvents,theGamblingTax,theBettingTax,MunicipalPromotionTax,RoadTax,TaxesonRecreationalVehicles,MunicipalContributionsandMunicipalFees.

Therearealsocertainnon-taxmandatorycontributionssuchastheSocialSecurityContribution,ContributiontotheNationalServiceforTechnicalIndustrialTraining(“SENATI”),andContributiontotheNationalTrainingServicefortheConstructionIndustry(“SENCICO”).

The following isadescriptionof the taxeswith thebroaderapplication inPeruat the timeof the issuanceof this report(February2013).Thisreportalsoincludesadescriptionofcertaintaxissuesrelevanttotheminingactivities.

(5) Income tax

- Scopeofapplication

IncomeTaxisleviedonincomeobtainedfromcapital,workandfromthejointapplicationofbothfactors;capitalgains;revenues resulting from operationswith third parties as expressly stated in the Income Tax Law (“LIR”); and imputedincome,asexpresslystatedintheLIR.

- Taxjurisdiction

PeruvianresidentsaresubjecttotheIncomeTaxontheirworldwideincome.Non-residentsorpermanentestablishmentsinPeruofforeigncorporationsaretaxedonlyontheirPeruviansourceincome.

- Peruvianresidents

ThereareconsideredresidentsinPeru,amongothers,(i)PeruvianindividualswhoresideinPeru;(ii)foreignindividualswhohaveresidedorremainedinthecountrymorethan183calendardaysinatwelvemonthperiod;(iii)legalentitiesincorporatedinthecountry;(iv)branches,agenciesorotherpermanentestablishmentsinPeruofnon-domiciled,caseinwhichthestatusofresidentappliestothebranch,agencyorotherpermanentestablishmentastothePeruviansourceincome.

- Peruviansourceincome

Theterm“incomefromPeruviansources”includes,amongotherthings,thatwhichisgeneratedand/orproducedbyrealestate,loans,capitalinvestments,technicalassistanceusedforeconomicgaininsidethecountry,royaltiesandpropertylocatedinorusedforeconomicbenefitinsidethecountry,personalworkundertakeninsidethecountryaswellasthatwhichisderivedfromcivil,commercial,businessorotheractivitiesconductedinPeruvianterritory.

- Businessincometaxregime

Businessentitiesaresubjecttothebusinessincometaxregime.Thedefinitionofbusinessentitiescoverscorporations,

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partnershipsandanyotherformusedtoconductbusiness.Thetaxtreatmentfordomiciledpartnerships,limitedliabilitycompanies,taxablefoundationsandassociationsaswellasjointventures,thatkeepindependentaccountingfromthatoftheventures,isthesameasthatfordomiciledcorporations.BusinessentitiesaresubjecttoIncomeTax–atcorporatelevel– leviedatarateof30%.Inaddition,dividenddistributionsmadetoindividuals(eitherresidentornon-resident inPeru)ornon-residentcorporationsarefurthersubjecttoanadditionalincometaxleviedatarateof4.1%onthevalueofsuchdistributions.

- Determinationoftaxableincome

Generalrule

Asageneralrule,thebusinessincometaxregimeappliesonthetaxpayer´snetincome.Thenetincomeoverwhichtheincometaxiscalculatedistheresultofdeductingtheexpensesincurredtoproducetheincomeandmaintainitssource.

Non-residents

Incaseofnon-residentlegalentities,thenetbusinesstaxableincomewillgenerallybethetotalamountpaidorcreditedontheirbehalf.However,incaseofincomeobtainedfromthesaleofgoodsorrightsorfromtheexploitationofdepreciableassets,thenetincomewillbetheamountresultingfromdeductingthecostoftheassetsfromthegrossincome.SuchcostmightbedeductedprovidedthatithasbeenpreviouslycertifiedbySUNAT.

Moreover,therearecertainbusinessactivitiessubjecttopresumptiveincometaxrules,suchasinsurance,shipandairplaneleasing;transportationfromortoPeru;internationaltelecommunicationsservices;servicesprovidedbyinternationalnewsagencies;distributionofmovies;andcargoshipsleasing,amongothers.

- Deductions–lossescarriedforward

Residentcorporationsareentitledtoclaimdepreciationdeductionsinrespectofcapitalassetsusedinthecourseofcarryingonbusiness,providedtheydonotexceedthemaximumratessetforthintheLIRandareregisteredintheaccountingbooks.Depreciationtermvariesdependingonthenatureoftheasset.Themaximumannualdepreciationratesare20%forvehicles;25%forhardware;20%inthecaseofequipmentandmachineryusedinmining,oil,gasandconstructionactivities;5%inthecaseofbuildings;and,10%inthecaseofotherfixedassets.Theamortizationofintangiblesisalsodeductibleiftheintangibleassetisdeemedasalimitedusefullifeintangible,suchassoftware,patentsandauthorcopyrights.Theamortizationratemightbe100%inthefirstyearor10%during(ten)10years,accordingtothetaxpayerdecision.

Peruvianresidentcompaniesaregenerallyentitledtocarryforwardatleastaportionofanytaxlossessustainedinpreviousfiscalyearstooffsettaxableincomeearnedinsubsequentfiscalyears.Forsuchpurposes,taxpayersmayelectbetweenoneoftwosystems:(i)thefirstallowstaxlossestobecarriedforwardforfour(4)yearsfromtheyearinwhichtheyareincurred;and,(ii)thesecondallowstaxlossestobecarriedforwardindefinitelybutonlytooffset50%ofthenetincomeearnedduringtherelevantfiscalyear.Peruviantaxsystemdoesnotpermitlosscarrybacks.

Capitallossesarisingfromthesaleofsecuritiesarenotdeductibleeitherwhen,inaperiodnotexceedingthe30calendardayspriortothesale,atthetimeofthesaleor30calendardaysfollowingthesuchsale,thetaxpayeracquiressecuritiesofthesametypeasthosetransferredorapurchasesanoptiontobuybackthosesecurities.

- Monthlypayments

ResidentcompaniesmustprepayIncomeTaxmonthly,basedonrevenuesaccruedduringtherelevantmonth,accordingtooneofthemethodssetforthintheIncomeTaxlaw.

AccordingtotheamendmentsintroducedtoIncomeTaxLawbyLegislativeDecreeN°1120publishedonJuly18th,2012,monthlyprepaymentsaredeterminedasfollows:

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Ifthetaxpayerdidnothavetaxableincomethepreviousyearorstartedactivitiesduringtheyear,themonthlypaymentswillbe1.5%ofthetaxpayer´smonthlynetincome.

Otherwise,theamountoftheIncomeTaxmonthlyprepaymentwillbegivenbythehigheramountbetween:(a)theresultofapplyingafactortothenetincome;or(b)theresultofapplyinga1.5%ratetosuchincome.

TaxpayersmightmodifythemethodfordeterminingtheirmonthlyprepaymentsasofeveryMay,basedonthefinancialstatementstoApril30th(iftheprepaymentsarebeingcalculatedbyapplyingthe1.5%)andasofAugust,basedonthefinancialstatementstoJuly31.

- Withholding

Therearerequiredtowithholdthosewhopayorcredit incomecharacterizedas“secondcategory” (incomeearnedbyindividualsarisingoutfromcapitalordividends)and“fifthcategory”(incomefromemployment);thepersons,companiesandentities thatare required tokeep fullaccounting recordsof incomeandexpenseswhen theypayorcredit “fourthcategory”income(independentpersonalservices);theentitiesthatpayorcreditincomeorobligationstoabearerorothersecuritiestoabearer;securitiesclearing,settlemententities,investmentfundsortrustadministratorsinthecasesstatedinthelaw;aswellasanyotherpersonsasdeterminedbySUNAT.

In case of payments of Peruvian source income to non-domiciled beneficiaries, the personmaking such paymentsmustwithhold andpay toSUNAT the amount resulting from the application of the net rates established in the law.Generallyspeaking,paymentsofPeruviansourceincomesbydomiciledtaxpayerstononresidententitiesaresubjecttoIncomeTaxwithholdingsleviedatarateof30%(a15%rateappliesinthecaseoftechnicalassistanceprovidedcertainconditionsaremet).

Inthespecificcaseofinterest,undercertaincircumstances,areducedwithholdingrateof4.99%mayapplywhereinterestpaymentsaremadetonon-residentunrelatedlenders.

Inaddition,reducedwithholdingtaxratesmayalsoapplywherethere isaDoubleTaxTreaty in force(Peruhassignedtreatiesofthistype–whicharecurrentlyinforce–withBolivia,Brazil,Canada,Chile,ColombiaandEcuador).

- Taxreturnfilingandpayment

Annual income tax returns from companies (and entities subject to the business income tax treatment)must be filedaroundApril,onthedatedeterminedbySUNAT,ofthefollowingyearoftheyearsubjecttothetaxreturn,whichclosesonDecember31st.Therearenotavailableanyotherfiscalyearclosingdates.

- Individualincometaxrules

Forindividualsconsideredasresidentfortaxpurposes,incomefromcapitalissubjecttoataxrateof5%onthenetincome,while income fromemployment is subject to aprogressive scaleon the income resulting after deductingseven(7)taxunits(approximatelyUS$10,157)2.

The progressive tax rates applicable to resident individuals are 15% up to a salary equivalent to 27 tax units(approximatelyUS$37,881);21%totheexcessover27taxunitsupto54taxunitsapproximatelyUS$39,176);21%totheexcessover27taxunitsupto54taxunits(approximatelybetweenUS$39,176andUS$78,353),and30%totheexcessover54taxunits(approximatelymorethanUS$78,353).

Fornon-residentindividualsaflat30%rateshallbeappliedoverthetotalgrossincome,withoutdeductingthementionedseven(7)taxunits.

- Taxationofminingactivities

2 USDExchangerateequivalenttoS/.2.55.

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- Specialdeductionrules

Pursuant to theprovisions set forth in theMiningAct, the acquisition valueofmining concessions shall be amortisedsincethefiscalyearinwhichaccordingtomininglaw,theminimumproductionlevelsmustbeaccomplishedinthetermdeterminedbytheminingconcession’sholderatthattime.Suchtermwouldbedeterminedbasedontheprobablelifeofthedeposit,computedtakingintoaccounttheprovenandprobablereservesandtheminimumproductionobligation.

Iftheminingconcessionisabandonedorbecomesextinctbeforecomplyingwiththeminimumproductionlevelsestablishedbylaw,theacquisitionvaluemightbetotallyamortisedinthefiscalperiodinwhichanyoftheaforesaidoccurs.Inaddition,explorationexpenses incurredafter theminingconcession started theminimummandatoryproduction stage,maybetotallydeductedintherespectivefiscalperiodoramortisedsincethattime.

Developmentandpreparationexpensesallowingtheexploitationofthesiteformorethanoneyearcanbewhollydeductedinthefiscalperiodinwhichtheyareincurred,oramortisedwithinsuchtermandtwoadditionalyears(i.e.anoverallthree(3)yearamortisationperiod).

- Miningcompaniestaxbenefitsfrompublicinfrastructureinvestments

AccordingtotheMiningLaw,investmentsbyminingcompaniesonpublicinfrastructurecouldbedeductibleexpensesforIncomeTaxpurposes.Inordertobesubjecttothisbenefittheinvestmentsmustbemadeinroads;seaports;airports;environmentalsanitationworks;energy,telecommunication,education,andhealthinfrastructures;andinpublicfacilitiesforrecreationandotherpublicinfrastructureprojects.

The investments must be approved by the competent authority (i.e., in case of roads, the Ministry of Transport andCommunication).TheamountoftheinvestmentsthatmightbeIncomeTaxdeductibleexpenseswouldbeonlytheamountrelatedtotheportionoftheworkcharacterizedaspublicinfrastructure.Moreover,therearenotdeductibletheexpensesrelatedtomaintenance,acquisitionofland,orpre-investmentandinvestmentstudies(unlessthetaxpayerprovesthattheyarenecessarytoobtainthetaxableincomeormaintainitssource).

- SpecialMiningTax

SinceOctober1st2011,miningcompanies inexploitationandproductionstagearesubject to theSpecialMiningTax.CompanieswithstabilityagreementsinforceundertheGeneralMiningActareleviedwiththecalledSpecialContribution(thatisvoluntarilyagreedwiththeGovernment).

TheSpecialMiningTaxisleviedonthecompanyquarterlyoperatingprofitsfromthesaleofmineralresources,determinedaccording to the applicable accounting rules. TheSpecialMining Tax effective rate ranges from2% to 8.40%; and isdeterminedaccordingtothecompany´squarterlyprofitssubjecttothetax.ThereisnominimumSpecialMiningTax.ThetaxeffectivelypaidisadeductibleexpensefortheIncomeTaxoftheyearinwhichitispaid.

- Miningroyalty

InSeptember2011thePeruvianCongressenactedlegislationmodifyingtheMiningRoyalty,whichisinforcesinceJune2005.TheMiningRoyaltyisaroyaltychargetobepaidbyminingcompaniesinfavoroftheregionalandlocalgovernmentswhereminingresourcesarelocated.

The legislation enacted in September 2011, in force since October 1st 2011, has modified the Mining Royalty rules.Accordingly,theMiningRoyaltyisnowapercentageofthequarterlyoperatingprofits;theeffectiveratesrangefrom1%to12%;anditcanbeadeductibleexpenseforpurposesoftheannualIncomeTaxintheyearinwhichitispaid.IncasetheMiningRoyaltyamountcalculatedbyapplyingtheformulastatedinthelawislowerthan1%oftherespectivequarterlysalesrevenue,thelatterwouldbedeemedastheroyaltytobepaidbythecompany.Finally,underthenewlawtherearealsosubjecttotheMiningRoyaltyrulestheassigneesofminingconcessions.

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- Transferpricing

Inthecaseofsalesandotherpropertytransfersaswellasintheprovisionofservices,notwithstandingtheconsiderationagreed upon between the parties, for tax purposes the relevant transaction shall always be deemed asmade at itscorresponding “fairmarket” value. If the value determined by the parties differs from the “fairmarket” value, the taxauthoritieswillmakethenecessaryadjustmentsforboththepurchaserandseller.

In the case of transactions entered into between “related” parties or with entities resident in tax haven jurisdictions, thecorresponding“fairmarket”valueshallbedeemedequivalenttotheconsiderationthatwouldhavebeenagreedwithorbetweenindependentpartiesincomparabletransactions,inidenticalorsimilarconditions,followinglocal“transfer-pricing”rules.

Theoperationsand/or the taxwillonlybeadjusted if thepayable tax in thecountry is less (a fiscaldamage),or if theadjustmentresultsintheapplicationofahighertaxtotransactionsenteredintobetweenthetaxpayeranditsrelatedparties.

PeruviantransferpricingrulesarebasedontheOECDArm´slengthprinciple.ThePeruviantaxauthorityisallowedtoadjustthepricesof transactionsbetweenrelatedpartieswhentheyarenotconsistent tothetransferpricingrules. Generallyspeaking,forpurposesoftheapplicationofthetransferpricingrules,relatedpartiesmust(i)haveatechnicaltransferpricestudy;(ii)keepallthetransferpricingstudysupportinginformationanddocuments;and(iii)fileanannualtaxtransferpricingreturn.Ifanyoftheserequirementsisnotobserved,thecompanywouldbesubjecttoafineasstatedbylaw.

- Internationaltaxregime

Under the International Tax Regime (ITR), in force since January 1st, 2013, Peruvian shareholders of certain foreigncorporationsaresubjecttotaxontheundistributed“passive”incomeearnedbysuchcompaniesabroad.

TheITRappliesonlytoshareholdersof“controlledforeigncorporations”whicharei)entitiesincorporatedordomiciledintaxheavens,orii)thosewhosepassiveincomeisnotsubjecttotaxorwhichissubjecttoataxratelowerthan75%ofthePeruvianIncomeTaxrate.Moreover,theshareholderssubjecttotheITRarethosewhoownmorethan50%ofthestock,theeconomicbenefits,orthevotingpoweroftheforeignentity.

Forthispurpose,itisconsidered“passiveincome”,incomefromdividends,interest,royalties,capitalgainsfromthesaleofrights,realpropertyandstock,aswellasfromrentalactivities.Exceptincertaincases,“passiveincome”fromPeruviansourceincome(suchasdividendspaidbyPeruviancompanies)isnotsubjecttotheITR.

The“passive”incomeobtainedbythecontrolledforeignentitywillbeattributedtotheshareholderattheendofthefiscalyear,whowilladdthemtoitsPeruviansourceincome.Suchincomewillbesubjecttotaxinthefiscalyearinwhichitisattributedtotheshareholder,regardlessitsactualpayment.

(6) Value added tax

- Scopeofapplication

ValueAddedTax (VAT) isaconsumptiontaxthatappliestothefollowingtransactions: (i)saleofmovablegoodswithinPeru;(ii)servicesprovidedorusedwithinPeru;(iii)constructioncontracts;(iv)firstsaleofrealestatebyconstructors;and,(v)importofgoods.

Therewillbea taxablesale incaseofa transferofmovablegoods foraprice, regardless thedesignationgiven to thetransactioninthecontractsornegotiationsthatoriginatedsuchtransferandtheconditionsagreeduponbytheparties.Thetransferofmovablegoodsofacompanyforfreeisalsoconsideredasaleunlesscertainconditionsaremet.

AccordingtothechangestotheVATlawbyLegislativeDecreeN°1112publishedonJuly18th,2012,thesaleof“futuregoods”andsaletransactionssubjecttoa“suspensivecondition”(wherebythepaymentismadepriortotheexistenceofthegood)havebeenincludedastransactionssubjecttoVAT.Likewise,earnest,depositsandguaranteesthatare

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deliveredtotheproviderasaconsequenceofasale,serviceorconstructionagreement,willalsobesubjecttoVATifthoseexceed3%ofthepurchasepriceagreedbythepartiesintheparticulartransaction.AservicewouldbeprovidedinthecountrywhentheserviceproviderisaPeruvianresidentsubjecttotheBusinessIncomeTaxregime,regardlesstheplaceofexecutionofthecontractorpaymentofthecompensation.Serviceswouldbeconsideredtobeusedinthecountrywhentheserviceproviderisanon-residentforIncomeTaxpurposesandtheserviceisconsumedorusedinPeru.TherearealsowithintheVATscopebutforcertainexceptions,thetransferofbusinessassetsfreeofchargebetweenrelatedcompanies.

- PersonssubjecttoVAT

VATtaxpayersareallindividuals,companies,legalentities,irregularpartnerships,associations,trusts,mutualandinvestmentfundsthatperformanyofthetransactionssubjecttotheVAT.Also,theremightbesubjecttotheVATrulesasresponsiblepartiesthepurchaserofthegoods,whenthesellerisnotaPeruvianresident;individuals,companiesorentitiesofanytypedesignatedassuchbyLaworregulation;thetrusteeincaseofasecuritizationtrustfortheoperationsthatthesecuritizedpropertycarriesoutaccordingtoitspurpose,amongothers.

IndividualsandanytypesofentitiesthatdonotcarryoutbusinessactivitiesmaybeundertheVATrulesiftheyusuallyimportgoodsorcarryouttheactivitiessubjecttotheVAT.Likewise,therewouldbeVATtaxpayersthejointventures,consortiumsandother formsof business cooperation contracts that keep independent accounting from that of theinvestorsorventures.

- VATcalculation

Asageneralrule,theVATtaxablebase isthesalepricepaidforthegoodsorservices,whichmaybeadjustedbytheTaxAdministrationconsideringtheirfairmarketvalue.IncaseofconstructioncontractstheVATtaxbasewouldbetheconstructionvalue;inthefirstsaleofrealestateitwouldbetheincomereceived(excludingthe50%correspondingtothelandvalue);andincaseofimportsitwouldbethecustomsvalueplusrightsandtaxesaffectingtheimportofgoodsexceptfortheVAT.

TheVATtaxrateis16%.Itmustbeaddeda2%ratecorrespondingtotheMunicipalPromotionTaxwhichisgovernedbytheprovisionsapplicabletotheVAT,resultinginatotaltaxrateof18%.

- Fiscalcredit

VATisassessedandcollectedonthevalueofgoodsandservicesthathavebeenprovidedeverytimethereisatransactionsubject to the VAT. It applies to every stage of the production anddistribution cycle, and has no cumulative effects.Generally,eachsellerofgoodsorservicesinthechainofsupplychargesVATonitssalesandisentitledtodeductfromthisamounttheVATpaidonitspurchases(the“FiscalCredit”).UndertheVATrules,inordertogiverisetoFiscalCreditthepurchaseofgoodsorservicesmustconstituteoperatingcostsorexpensestothetaxpayeraccordingtotheIncomeTaxrules,evenifthetaxpayerisnotsubjecttosuchtax,andmusttobeusedinVATtaxabletransactions.Also,thetaxmustbeseparatelystatedonthepurchaseinvoice;andthesupportinginvoicemusthavebeenissuedaccordingtothestatutoryrequirements,amongotherconditions.

NotwithstandingthatexportoperationsarenotsubjecttoVAT,subjecttothefulfillmentofcertainrequirements,exporterscanrecovertheirFiscalCreditwithamaximumlimitequivalentto18%oftheFOBvalueoftheexportsmadeduringthecorrespondingmonth.

- Declarationandpayment

Thetaxtobepaidisdeterminedonamonthlybasis,deductingtheFiscalCreditfromtheVATofthecorrespondingperiod.IfinanygivenperiodtheFiscalCreditexceedsthepayableVAT,theexcesswillconstituteacreditonthetaxpayer´sbehalf.ThisexcesswillbeappliedasFiscalCreditinthefollowingmonthsuntilitisexhausted.

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- VATearlyrecoveryregimeforminingactivities-Law27623

ByLaw27623thePeruvianCongressapprovedaspecificVATearly recovery regimeapplicable tominingactivities (the“miningearlyrecoveryregime”).Theregimeallowsholdersofminingconcessionsperformingminingexplorationactivities,whicharestillinapre-productivestage,torecovertheVATpaidupontheimportsorlocalpurchasesofcertaingoods,andintheacquisitionofcertainservicesandconstructioncontractsrelatedtosuchexplorationactivities.

InordertobecoveredbytheminingearlyrecoveryregimetheinvestormustenterintoanExplorationInvestmentContractwiththePeruviangovernment–withthecompetentauthority(i.e.theMinistryofEnergyandMines)–statingitscommitmenttomakeaninvestmentofatleastUS$500,000.00.

Ifnotextended,theminingrecoveryregimewillelapseonDecember31st,2015.

(7) Net assets tax

Thistax,so-called“ITAN”,leviesthenetassets’valueofcompaniesasreflectedontheircorrespondingBalanceSheetsasofDecember31stofthepreviousyear.

ITANmustbepaidonlybycompaniesthatarealreadyinaproductivestageasofDecember31stofthecorrespondingprevious year. A companywill be deemed as already in a “productive” stagewhenever it has transferred an asset orprovidedaservicerelatedtoitscorporatebusinesspurpose.

ITANisdeterminedbyapplyinga0.4%ratetoanetasset´svalueexceedingfromS/.1,000,000.NetassetswithalowervaluearenotsubjecttoITAN.Thetaxcanbepaidinoneinstallmentorinnine(9)equalmonthlyinstallmentsbetweenthemonthsofAprilandDecember.

Inprinciple,taxpayershavethepossibilitytoconsiderITANpayments:(i)asadeductibleexpense;or,(ii)asacredittooffsetthecorrespondingIncomeTaxmonthlyprepaymentsandtheirannualIncomeTax.IfattheendofafiscalyeartheITANpaidexceedstheannualIncomeTaxdue,taxpayershavethepossibilitytorequesttherefundofsuchexcess.Therefundmustbegrantedwithinamaximumperiodofsixty(60)workingdayssincethedateonwhichthecorrespondingapplicationisfiled.

(8) Financial transactions tax

The Financial Transactions Tax (ITF) applies, amongothers, to any transfer,movement, debit or creditmadeonbankaccountsheldbyindividualsandcompaniesinthePeruvianbankingsystem.Italsoappliestotheacquisitionofcashier’schecks,bankcertificatesandsimilarinstrumentswithoutusingfundsheldinalocalbankaccount.

Thetaxrateis0.005%andthetaxmustbewithheldbythecorrespondinglocalbank.

(9) Selective consumption tax

TheSelectiveConsumption tax levies the importationand localsaleofcertainso-called“luxurygoods”,suchascars,cigars,cigarettes,liquor,beer,fuelandothers.

Dependingontherelevantgood’snature,thetaxisdeterminedbasedonthreedifferentsystems:(i)basedonthegood’svalue(e.g.30%inthecaseofusedvehiclesforpublictransportation);(ii)basedonaspecificbasis(e.g.S/.1.50perliterof“pisco”–Peruvianliquor);and,(iii)basedonthepricetothepublic(e.g.27.8%inthecaseofbeer).

(10) Banking regulations

Since2004,companiesdomiciledinPeruarerequiredtomeetcertainformalitieswhenfulfillingpaymentobligationstothirdparties.OneformalitythusestablishedrequiresthatpaymentsbemadethroughthePeruvianbankingsystemwhensuchamountsaregreaterthan3,500PEN(PeruvianNewSoles)or1,000USD(dependingonthecurrencyin

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whichtheobligationwascontracted),inordertodocumentexpenses,costsand/ortaxcreditsfortaxeffects.

(11) Tax incentives

- Taxbenefitsfrompublicinfrastructureinvestments–Law29230

UnderLaw29230,companies ingeneralmayenter intoagreementswithregionaland localgovernments tofinanceorcarryoutpublicinvestmentprojectslistedonthePROINVERSIONpriorityprojectslist.Oncefinalizedtheworksmustbetransferredtotheregionalandlocalgovernments.TheinvestorswouldbepaidbytheCentralGovernmentwithcertaincertificates–theRegionalandLocalPublicInvestmentCertificates(CIPRL).Thesecertificatesmightbeusedbythecompanytooffsetitsmonthlyandannualincometaxpaymentsoftherelevantyearuptoanamountequivalentto50%oftheincometaxofthepreviousfiscalyear.Ifthecertificatesarenotusedontherespectivefiscalyearduetothe50%limitation,theCentralGovernmentwouldissuenewcertificatesaddingacreditof2%totheamountstatedonthepreviousones.Ifthecertificatesarenotusedwithinaperiodoftenyears,thecompanymightrequestareimbursementfromSUNAT.

Inordertobeabletosubscribesuchagreements,thecompaniesmustbeselectedbytheregionalandlocalgovernmentsaccording to certain statutory rules.Moreover, the companies should be registered in the registry of companies thatundertakepublicinfrastructureprojects.

- Stabilityagreements

PleaseseeliteralBaboveofthissectionIII.

E. Labor and Employment

(1) Labor contracts

- Individual labor agreements

- Indefinitetermlaborcontract

Laborlawsprovidethatallemployeesmustbehiredforanindefiniteperiod.Contractsforafixedtermareonlyavailableincertaincasesprovidedtheymeettherequirementsestablishedbylaw.

- Specifictypesoflaborcontractsorfixed-termcontracts

Themost importantcasesinwhichthelawallowsforaworkertobehiredforafixedtermareasfollows:(i)startingorincreasingoperations(contractarisingfromtheinitiationofanewbusinessactivity);(ii)marketneeds(contractenteredintoinordertomeetbusinessproductionincreases);(iii)substitution(contractenteredintoinordertotemporarilysubstituteforapermanentemployeeofthecompany);and(iv)acertainprojectorspecificservice(contractwithapreviously-establishedpurposeandaspecificduration).

Each term-based labor contract has amaximumperiodbasedon its type.However, nonemayexceed five (5) years.ContractsmustbeenteredintoinwritingandtheLaborAuthority(AutoridadAdministrativadeTrabajo)mustbenotifiedforthecorrespondingregistrationthereof.

Fixedtermcontractsarealsoavailableforspecialsectors,i.e.nontraditionalexports,construction.

- Collective agreements

Collectiveagreementsareenteredintobyoneormoreemployersandoneormoreunionsorworkers’representativesinordertoregulatetherightsofworkersandtheirrelationshipwiththeiremployer,aswellasanymattersaffectingsuchrelationship.

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In Peru, the law establishes the procedure thatmust be followed by workers and employers when signing collectiveagreements.Ifthepartiesdonotreachanagreement,thelawprovidesforvariousmeansofresolvingconflicts,suchasconciliation,mediation,andarbitration.TheConstitutionalsorecognizestherightoftheworkerstostrike.

- Special agreements

Given the special characteristicsof activities involved in rendering services, special regimesexist for contracting laborregardingmining,agriculture,civilconstruction,foreignemployees,microandsmallbusinessemployees,amongothers.Eachregimeisgovernedbyspeciallegislationestablishingitscharacteristicsandspecifications.

- Non-labor agreements

- Traineecontracts

Traineecontractsdonotqualifyaslaborrelationsastheirpurposeistotraintheworkforce(ideallyyoungpeople)whohavenotyetjoinedthelabormarket.Thetypesofcontractsregardingtrainingincludeapprenticeshipcontracts,internshipcontracts,youthtraineecontracts,clerkships,andlaborre-insertion.

Personsrenderingsuchtypesofservicesarenotentitledtolegalbenefitsarisingfromworkcontracts,buttospecialonesestablishedforsuchservices.

- Independentservicescontracts

Thesecontractsmaybeusedonlyinthecaseofindependentservices,wherethepartyrenderingtheserviceisundernotypeofsubordinationorcontrolexercisedonthepartofwhoeverbenefitsfromsuchwork.Personscontractedunderthesesystemsarenotentitledtobenefitsthatareroutinelyapartofworkcontracts.

- Worker age

The Child and Adolescent Codeprovidesforspecificminimumagesinorderforalegalminortobeauthorizedtoperformajobunderaworkcontract.Theminimumagedependsontheactivityperformed,althoughgenerallyitmustnotbebelowtheageoffourteen(14).

Ontheotherhand,retirementageintheprivatepensionsystemissixty-five(65),atwhichageworkersmaychoosetoapplyforaretirementpension.However,itispossibletofixanearlierretirementageforthosegroupsofworkerswhichperformactivitiesthatrepresentriskfortheirlifeorhealth,butalwaysincompliancewiththelegalrequirementsoncontributions.

Similarly,ourlawsprovideforcompulsoryandautomaticworkerretirementatageseventeen(70),aslongastheworkerisentitledtoaretirementpension,althoughthepartiesmayreachanagreementtothecontrary.

- Worker nationality

The Foreign Worker Hiring Law providesthatPeruvianorforeigncompaniesmayhireforeignworkers,aslongasthelatterdonotexceed20%ofthetotalnumberoftheirworkers.Similarly,itprovidesthattotalpaymentstoforeignworkersmaynotexceed30%ofthevalueofthetotalpayroll.

Notwithstandingtheforegoing,therearecasesinwhichtheaforementionedpercentagelimitsdonotapply,asinthecaseofaforeignerwhosespouseisPeruvianoraforeignerwithanimmigrantvisa.Similarly,therearecasesofforeignworkers who are exempt from such percentages because they perform work involving specialized, managerial orleadershiptasks.

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- Work shift

Theordinaryworkdayiseight(8)hours,oramaximumofforty-eight(48)hoursperweek.Workperformedaftertheendoftheworkdaymustbetreatedasovertime.Overtimeworkisvoluntaryonthepartoftheworker.Overtimepayforthefirsttwohoursmaynotbelessthan25%perhour,basedonthepayreceivedbytheworker.Apercentageof35%isappliedtoanyadditionalhours.

Employersmustkeepan“attendanceregister”inordertokeeptheinformationoftheentranceandthedepartureoftheworkers,traineesandthirdpartyservicesfromtheworkplace.

- Paid leaves

- Weeklydayoff

Workersareentitledtoatwenty-four(24)hourweeklyrestperiod.ThisdayofrestshouldpreferablybetakenonSunday.However,becauseofthenatureofthecompanyactivities,itmaybetakenonotherday.

- Vacations

Workersareentitledtothirty(30)calendardaysofpaidvacationforeachfullyearofservice.Vacationperiodmustbetakenintheyearfollowingtheyearinwhichitwasaccrued.Failuretoconcedetherestingperiodduringtheapplicableyearleadstotheemployerbeingliableforoneextramonthlywageasanindemnification,ontopofthevacationremunerationandthewagesalreadycollectedbytheworker.Generalmanagerandsomeotherhighlevelemployeesmaynotbeentitledtoreceivesuchindemnification.

- Holidays

Employeeshavetherighttopaidrestduringthefollowingholidays:January1(NewYear’sDay),Easter(HolyThursdayandGoodFriday),May1(LaborDay),June29(St.PeterandSt.Paul),July28and29(IndependenceDay),August30(St.RosaofLima),October8(BattleofAngamos),November1(AllSaints),December8(ImmaculateConception)andDecember25(ChristmasDay).

- Maternityleaveandbenefits

Femaleworkersareentitledtoforty-five(45)daysofprenatalleaveandforty-five(45)daysofpostnatalleave.Theprenatalleavecanbeaccumulatedwith thepostnatal,atworker’schoice. In theeventofmultiplebirthsorbirthofachildwithdisability,thereshallbeanadditionalthirty(30)daysofpostnatal leave.Similarly,attheendofthepostnatalperiod,themotherisentitledtoadailyone-hournursingleaveuntilthechildisoneyearold.

- Remuneration

Ourlegislationconsidersremunerationtobethetotalamountreceivedbyworkersfortheirservices,whetherincashorinkind,provideditmaybeusedfreelybyworkers.However,other legalconceptsexistsuchasspecialbonuses,profitsharing,andvalueofworkconditions,amongothers.

Theforminwhichpaymentismadeisestablishedbymutualagreementbetweentheworkerandtheemployer.Itisalsopossibleforemployerstoestablishatotalannualpaymentwiththoseworkerswhoreceivemonthlypaymentsgreaterthan two (2)UIT.Thisamount includesall legalandconventionalbenefits towhich thecompany issubject,with theexceptionofprofit-sharing.

Workersareentitledtothefollowingbenefits,amongothers:

- Minimumlivingwage

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WorkersshallreceiveaminimummonthlyincomeofapproximatelyUSD293.00.

- Profit-sharing

LegislativeDecrees677and892establishasystemofprofit-sharingforpersonnelatprivatecompanies.Theworkers’shareisnotbasedonemployerearnings,butratheronannualincomecalculatedinaccordancewithincometaxregulations.Thepercentagewhichmustbedistributedbytheemployertohisworkersdependsontheemployer’sactivity,andvariesfrom5%to10%oftaxableprofits.

- Senioritypayseverance

Allworkersareentitledtosenioritypay(CTS),aslongastheyworkaminimumof4hoursaday.Thisbenefitisdepositedsemi-annuallyinthebankingorfinancialinstitutionoftheworker’schoice.

Theamountofeachdepositisequaltoone-twelfthofthecomputedmonthlypayforthemonthsworked.Computedpayisthetotalamountthattheworkerregularlyreceivesascompensationforhiswork,whetherincashorinkind.Thisamountmustbedepositinthebankthattheworkerchooses.

- Legalbonuses

Workersareentitledtotwobonusesayear,oneinJuly(IndependenceDay)andanotherinDecember(Christmas).Theamountofeachbonusisequaltoonemonth’spay.

- Lifeinsurance

Workers have the right to a life insurance tobepaidby the employer after completing four (4) yearsofworkwith theemployer.Thelawregulatesthecharacteristicsofthisinsurance.Thepremiumispaidbytheemployeranditsamountisnegotiatedwitheachinsurancecompany.

- Social security health insurance

The social security health system offers its beneficiaries the following benefits: prevention, awareness, recovery andsubsidiesforhealthcare,socialwelfare,workandprofessionalillness.ThissystemisadministeredbyapublicentityknownastheSocialSecurityHealthInstitute(SeguroSocialdeSalud,orESSALUD)andissupplementedbyhealthplansandprogramsprovidedby employers in their owncontractsor contracted throughprivatehealthcareproviders (EntidadesPrestadorasdeSalud,orEPS),whichincertaincircumstancesmayactintheplaceofESSALUD.

- Termination of work relations

- Individualdismissal

Ifaworkerisdismissedforaseriousbreachofcontract,andtheemployerfollowstheprocedureestablishedbylaw,theworkerisnotentitledtoanyseverancepaywhatsoever.

Iftheemployerdismissesapermanentworkerwithoutcause,heisentitledtooneandahalfmonths’payforeveryfullyearofservice,withacapoftwelvemonths’payasseverancepay.Ifhedoesnotcashsaidseverancepay,hecanfilealawsuittobereinstated.Thesameapplieswhentheemployerfalsifiestheworker’sseriousbreachofcontract.

Finally, iftheemployerdismissesaworkerbecauseofabannedreason,suchasbeingaunionmember,pregnancy,ordiscrimination, theworkercandemandtobereinstatedandtobecompensatedfor thepayhestoppedreceivingasaresultofthedismissal.Attheendofthecorrespondingproceeding,theworkercanchoosetoreceivetheseverancepaydescribedaboveandnotbereinstated.

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- Collectivedismissal

Therearethree(3)possiblescenariosinwhichanemployermaydismissworkerscollectively.

Thefirstscenarioisthereductionofpersonnel.Inthiscase,theemployermayreducepersonnelforeconomic,technological,organizationalorsimilarreasons,aslongastheterminationofworkcontractsbasedonsuchcausespertainstoanumberofworkersnotgreater than10%of thecompany’s totalpersonnel. Tothisend,anadministrativeproceduremustbecarriedoutbeforetheadministrativeworkauthority. Insuchcase,workersarenotentitledtoseekanyseverancepaywhatsoeverforbeinglaidoff.

Thesecondscenarioarisesfromthedissolutionandliquidationoftheemployer.Employersmayagreetotheirdissolutionorliquidationatanytime,withouttheneedforpriorauthorizationoranycauseorreasontojustifytheirdecision.DissolutionofacorporationinPerudoesnotresultinanytypeofemployerliabilitytowardsworkers.Upondissolutionofthecorporationbasedonaresolutionpassedatthegeneralshareholders’meeting,theliquidatorisauthorizedtoterminatelaborrelationswiththeworkers.Insuchcase,workersarenotentitledtoseekanytypeofseverancepaywhatsoeverfortheterminationoftheirworkrelationships.

Inthethirdandfinalscenariocontractsmaybeterminatedwhenthecompanyfacesforcemajeure,ifitlingersforatleastthree(3)months.

- Labor intermediation and outsourcing

- Laborintermediation

Laborintermediationisonlypermittedwhenthereisaneedfortemporary,supplementaryorspecializedservices.Thelawclearlystatesthattransferredworkershiredunderthisschememaynotrenderservicesthatentailtheongoingperformanceoftheemployer’smainactivity.

Thelawestablishesthatthenumberofworkersthatmaybetransferredtoauserfirmmaynotexceed20%oftheuserfirm’stotalworkforce.Thispercentagewillnotbeappliedtosupplementaryorspecializedservices,aslongastheserviceproviderassumesfulltechnicalautonomyandresponsibilityforcarryingoutitsactivities.

- Outsourcingservices

Outsourcingservicesimplythehiringofcompaniesofservicestodevelopspecializedactivities,aslongastheycarryoutthecontractedassignmentsontheirbehalfandattheirownrisk;havetheirownfinancial,technicalandmaterialresources;andhaveworkerswhoareunder theirexclusivecontrol.Theusingof these typesofcontractsdoesn’trestricttheindividualandcollectiverightsoftheworkers.

Our legislationhasestablished that the followingdoconstituteoutplacementservices:managementcontracts;projectcontracts;contractsforthepurposeofplacingathirdpartyinchargeofanintegralpartofacompany’sproduction;andservicesrenderedbycontractingandsub-contractingfirms,aslongastheycarryoutthecontractedassignmentsontheirbehalfandattheirrisk;havetheirownfinancial,technicalandmaterialresources;andhaveworkerswhoareundertheirexclusivecontrol.

Thecompanythathirestheservicescompanyisjointlyliablewiththelatterforworkerspaymentandstatutorybenefits.

(2) Unions

Themainfunctionofunionsistorepresentworkersinaparticularindustryinconflictsorcomplainsofacollectivenature,andtoenterintocollectiveagreementswiththeiremployers.

Formationofauniondependson the industryor the levelonwhichworkers intendtonegotiatewith theiremployeror

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employers.Iftheworkersaregoingtonegotiatesolelyonacompanylevel,theywillneedtoformacompanyunion,forwhichaminimumoftwentypersonsisneeded.Ontheotherhand,iftheyintendtonegotiatewithseveralemployers,theywillhavetoformatradeunion,forwhichaminimumoffiftyworkersmustjointogether.

Morethanoneunionmaycoexistinacompany.However,onlyaunionwithamajorityofaffiliatedworkersmaynegotiateonsuchalevel.Unionaffiliationisfreeandvoluntaryforworkersandisofferedbasedontheunion’sby-laws.

(3) Pension systems

InPeru,therearetwopensionsystems.However,inbothcasestheworkermustbeatleastsixty-five(65)yearsoldinordertoapplyforretirementpension,andmusthavecontributedfortheminimumnumberofyears.Inspecialcases,boththeretirementageandthelongevityrequirementmaybereducedasaresultofhigh-riskactivitiesperformedbyworkers,whomaythenreceivetheirretirementpensionatanearlierage.

- NationalPensionSystem

TheNationalPensionSystem isasystemadministeredbytheGovernment throughtheOfficeofPensions.Allworkerssubject to laborregulations in theprivatesectormustadheretosuchsystem,unlesstheyareaffiliatedwiththeprivatepensionsystem.

- PrivatePensionSystem

Workers subject to labor regulations in theprivate sectormay choose tobe affiliatedwith theprivatepension systemadministeredbyprivatepensionfundmanagers.

(4) Taxes on compensation

Themaintaxesoncompensationreceivedbyworkersareasfollows:

- Socialsecurityhealthinsurance

Ninepercentofmonthlysalaryispaidintosocialsecurityhealthinsuranceandischargedtotheemployer.

- NationalandPrivatePensionSystem

Inthecaseofthenationalpensionsystemthecontributionamountsto13%ofcompensation.Inthecaseoftheprivatepensionsystem,thecontributionvariesbetween12and13%.Inbothcases,theworkerisresponsibleforpayment,butmustbewithheldandpaidbytheemployer.

- Incometax

Thistaxisleviedonallwork-relatedincome.Itischargedtotheworker,butmustbewithheldandpaidbytheemployer.

Forresidentworkersinthecountry,thetaxisbasedonaprogressivescaleappliedtonetincome(totalpaymentsreceivedintheyearminus7UITs).Fornon-residentworkersinthecountry,ageneralrateof30%isappliedtototalgrossincomewithoutanydeductionsbeingmade.

F. Antitrust and Competition Issues

Peruvian legislationpromotesandprotects freecompetition.Conductsagainst the freecompetitionare forbiddenandsanctionedbytheRepressionofAnticompetitiveLaw(Ley de Represión de Conductas Anticompetitivas,LRCA).SanctionsaredeterminedandexecutedbyINDECOPIregardingeachcasethatispresentedbeforeit.

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Three(3)maintypesofconductsaresanctionedbythecompetitionregulations:abuseofdominantposition;horizontalcollusivepractices;andverticalcollusivepractices.

(1) Abuse of dominant position

AccordingtotheLRCA,aneconomicagentenjoysadominantpositioninarelevantmarketwhenithasthepossibilityofsubstantiallyrestraining,affectingordistortingthesupplyordemandconditionsinsuchmarket,withoutitscompetitors,suppliersorcustomersbeingabletocounteractit.

Adominantpositioninamarketgenerallyoccursasaresultoffactorssuchas:

- Asignificantparticipationintherelevantmarket.

- Thecharacteristicsofthesupplyanddemandofgoodsorservices.

- Thetechnologicaldevelopmentorservicesinvolved.

- Thecompetitors’accesstofinancingandsupplysources,aswellastodistributionnetworks.

- Theexistenceofaccessbarriersofalegal,economicorstrategictype.

- Theexistenceofsuppliers,customersorcompetitorsandtheirpowerofnegotiation.

Holdingadominantposition,withorwithoutaffectingrealorpotentialcompetitors,doesnotconstituteanillegalconduct.Monopolyordominantpositionisnotrejectedperse,onlytheabusiveuseofsuchapositionisconsideredanticompetitivebehavior.

TheLRCAprovidesthatanabuseofdominantpositionisverifiedwhenaneconomicagentthatholdsadominantpositionintherelevantmarketusesthispositiontoundulyrestraincompetition,obtainingbenefitsandharmingothercompetitors,whichwouldnothavebeenpossibleifsuchpositionhadnotbeenheld.

ThemainconductsconsideredtobeabusivebytheLRCAare:

- Unjustifiedrefusaltoenterintoacontract.

- Discriminationamongcompetitors(doesnotincludegenerallyaccepteddiscountsorpractices).

- Tie-inclauses.

- Theunjustifiedhindranceofaccesstoorpermanenceinanintermediationassociationororganization.

- Theestablishmentofexclusivedistributionorsalesagreements,nocompetitionorsimilarclauses,withoutjustification.

- The abusive and reiterateduseof judicial or administrativeproceedings, the effect ofwhich is to restrictcompetition.

- Incitingthirdpartiesnottoprovidegoodsorservices,ornotacceptthem.

- In general, all those conducts that prevent or hinder the access or permanence or current or potentialcompetitorsinthemarketduetoreasonsotherthanagreatereconomicefficiency.

Such practices are sanctioned even when the dominant position arises from a legal rule or instrument, contract or

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administrativeregulation.Notably,allconductentailingabuseofdominantpositiongivesrisetocorrespondingprohibitions.

(2) Horizontal collusive practices

Horizontal collusive practices imply the joint action of several competitors as if they were one. The reason for this isthat sometimescompanies find that cooperatingwithother competitors ismorebeneficial thancompetingwith them.Collaborationenablescompaniestoreducetheirvolumeofproduction,raisetheirprices,andincreasebenefitsforeachcompany.

AccordingtotheLRCA,suchpracticesmayconsistofconcertedagreements,decisions,recommendationsorpracticesamongcompetitorswiththeaimoreffectofrestraining,preventingordistortingcompetition.Thelawisnotlimitedtothoseagreements thatare legallyenforceable,butalso includescooperationactivities,decisionsor recommendationsmadethroughbusinesspartnershipsandevenanunderstandingbetweenparties.

Withinthesanctionedpracticeswemayfindthefollowing:

- Directorindirectconcertedpricingorestablishmentofotherbusinessorserviceconditions.

- Concertedlimitationorcontrolofproduction,sales,technicaldevelopmentorinvestments.

- Concerteddistributionofclients,suppliersorgeographicalareas.

- Concertedactiontofixthequalityofproducts,whentheydonotconformtotechnicalstandardsandnegativelyaffecttheconsumer.

- Concertedapplicationofdiscriminatingpracticesamongcompetitors.

- Unjustifiedconcertedtie-inclauses.

- Concertedandunjustifiedrefusaltoenterintocontracts.

- Concertedandunjustifiedhindranceofaccessorpermanenceofacompetitorinamarket,associationorintermediationorganization.

- Concertedorcoordinatedoffers,positionsorproposalsorrefrainingfromtheminpublicorprivatebiddingsprocesses or tenders or other forms of public contracting or procurement contemplated in the currentlegislation,aswellasinpublicauctions.

- Otherpracticeswithanequivalenteffectaimedatobtainingbenefitsforreasonsotherthanagreatereconomicefficiency.

Collusivepracticesareregulatedbyabsoluteprohibitionsorrelativeprohibitions.Absoluteprohibitionsrelatetopracticesthatare illegalperse,while relativeprohibitions relate topractices that requireexamination toverifywhether theyhaveanticompetitiveeffects.

Absoluteprohibitionsarethosehorizontalagreementsbetweencompetitorsthatarenotsupplementaryoraccessorytootherlicitagreements,whichpurposeis:

- Fixingpricesorotherbusinessorserviceconditions;

- Restrictingproductionorsales,particularlythroughquotas;

- Distributionofcustomers,suppliersorgeographicalareas,or

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- Establishingpositionsorabstentions inpublicorprivatebiddingsprocessesor tendersorother formsofpubliccontractingorprocurementcontemplatedinthecurrentlegislation,aswellasinpublicauctions.

Thosepracticeswhichdonotfallundertheaforesaid,areconsideredrelativeprohibitions.

(3) Vertical collusive practices

AccordingtotheLRCA,thesearecollusivepracticesamongeconomicagentsoperatingatdifferentlevelsoftheproduction,distributionormarketingchain,aimedatrestricting,preventingorforgingfreecompetition.Thesetypesofpracticesrequireatleastoneofthepartiestohaveadominantpositionintherelevantmarketpriortoengagingtherein.

Illegalverticalpracticesmayconsistofthosepracticesconsideredillicitbothduetothecasesofabuseofdominantpositionandduetothecasesofhorizontalcollusivepracticesdetailedabove.

Allverticalcollusivepracticesconstituterelativeprohibitions.Insuchcases,thecompetitionagencymustdemonstrateinallcasesthatthepracticehasormayhaveanegativeimpactonthecompetition.

(4) Proving collusive practices

Giventhatcollusivepracticesaredifficulttoprove,thecompetitionagencymayresorttosignsandpresumptionsinorderto verifywhether a similar behavior exists among competitors, and that the similarity is not naturally explainedby thecompetitiveoperationofthemarket,suchassimultaneouspricefluctuations,similarqualityoftheproductoffered,andcomparableindications.

Inthissense,thecompetitionagencymustmakeacarefulanalysisoftheallegeduncompetitivepractice.Forexample,itmustmakesure that theanticompetitivepractice is clearly identifiedbasedon indiciawhich reveal theexistenceofananticompetitiveconduct,whichmaynotbeotherwiseexplainedunderanalternativerationalconductwhich isabsolutelylicit.

(5) Sanctions and corrective measures

AnticompetitivepracticesmaybesanctionedbytheINDECOPIthroughtheimpositionoffines,which,dependingontheseriousness,mayreachupto12%ofthegrosssalesorrevenuesearnedbyinfringingcompanies.

Ontheotherhand,theINDECOPIisempoweredtoordercorrectiveactionsaimedatreestablishingthecompetitiveprocessandareadditionaltothesanctionthatmaybeimposedforinfringingtheprovisionscontainedintheLRCA.Thesemaybe:

- Cessationorperformanceofactivities.

- Obligationtoenterintocontracts.

- Non-enforcementofanticompetitiveclausesorprovisionsoflegalinstruments.

- Theaccesstoanintermediationassociationororganization.

Likewise,theINDECOPIhastheattributiontosanctiontheindividualswhointerveneintakingthedecisionreferredtotheanticompetitiveconduct.

It isworth noting that, currently, the anticompetitive practices are not considered a criminal offence, contrary towhatoccurredinthepriorlegislation.

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(6) Mergers control

InPeru,untilnowmergercontrolhasonlybeencontemplatedfortheelectricsector.However,someinitiativeshavebeenpresentedtotheCongresswithaviewtoincludemergercontrolinthegeneralsystemgoverningfreecompetition.

TheAntimonopolyandAntioligopolyLawfortheelectricitysector(LAASE)providesthatverticalorhorizontalconcentrationsthatmayariseinelectricpowergenerationand/ortransmissionand/ordistributionwillbesubjecttoaprocedureofpriorauthorization to be issuedby theCommission on FreeCompetition of the INDECOPI, in order to avoid concentrationpracticesresultinginadecrease,damageorpreventionofcompetitionandfreepresenceintheenergymarket.

To thisend,LAASEprovides thatconcentration isunderstood tobe theperformanceof the followingactions:merger;incorporationof acompany incommon; thedirector indirect acquisitionof controloverothercompanies through thepurchase of shares, a participating interest, or through any other contract or legal form that confers direct or indirectcontrolinacompany,includingenteringintojointventureagreements,unincorporatedpartnerships,oranyothersimilarbusinesscooperationagreements.Also includedistheacquisitionofproductiveassetsofanycompanythatperformsactivitiesinthesector;oranyotheract,contractorlegalformincludinglegacies,byvirtueofwhichsocieties,associations,shares,corporateparties,trustsorassetsingeneralareconcentrated,performedbetweencompetitors,suppliers,clients,shareholdersoranyothereconomicagents.

It is importanttoclarifythat includedwithinthescopeoftheLAASEarethoseconcentrationactsthat inspiteofbeingperformedinaforeigncountry,directlyorindirectlyinvolvecompaniesengagedinelectricpowergeneration,transmissionand/ordistributionactivitieswithinthenationalterritory.

Concentration acts that require prior authorization from the INDECOPI are those acts that directly or indirectly involvecompaniesengagedinelectricpowergenerationand/ortransmissionand/ordistributionactivitiesthathold,beforeoraftertheactthatgaverisetotheauthorizationapplication,eitherjointlyorseparately,apercentageequaltoorgreaterthan15%ofthemarketinhorizontalconcentrationacts,andapercentageequaltoorgreaterthan5%ofanyofthemarketsinvolvedinthecaseofverticalconcentrationacts.

Withoutprejudice to the impositionofapplicablesanctions, the failure toobtainpriorauthorization fromthe INDECOPIempowersthisentitytobringthenecessarylegalactionsforthepurposeofinvalidatingtheconcentrationperformed,suchas:orderingthesaleofproductiveassets,thesaleofshares,declaringthenullityoftheact,amongothers.

G. Environmental Issues

TheenactmentoftheEnvironmentalandNaturalResourcesCode(Código del Medio Ambiente y de los Recursos Naturales,orCMARN)in1990,isthefirstattemptatsystematizingPeruvianenvironmentallegislation.The1993PeruvianConstitutionalsoestablishedaseriesofgoverningprinciplesintheareaofenvironmentalpolicy,suchasthegovernment’sroleinsettingnationalenvironmentalpolicyanditsroleinpromotingthesustainableuseofnaturalresources.

Furthermore,LegislativeDecree757,LawforthePromotionofPrivate Investment (Ley Marco para el Crecimiento de la Inversión Privada)modifiedtheCMARNandestablishedthecompetentenvironmentalauthority.

Inthisrespect,Peruvianenvironmentallegislationhasundergonesignificantdevelopmentaimedat(amongotherobjectives)creating a less bureaucratic environment in which companies undertaking diverse economic activities with potentialenvironmental impactmayconductbusinesswithout facingadministrativeobstacles,unnecessarycosts,andpossiblesocialconflicts.

Accordingly,variousenvironmentallegalnormshavebeenimplementedovertherecentyearsinordertoprovideforefficientandcoordinatedactionsbyeachstateentity,therebyestablishingtheprinciplesforenvironmentallegislationandlayingthegroundworkfornationalenvironmentalpolicywhile(mostimportantly)settingguidelinesfortheeliminationofoverlappingauthorities.

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Similarly, the Environmental General Law (Ley General del Ambiente, or LGA) which repealed the CMARN, seeks toharmonizetheconductofgovernmentaloperationsandbusinessactivityinordertoachievesustainabledevelopmentinthecountry.Italsoestablishesrulesforeconomicdevelopmentandintroducesmechanismsforpromotingeconomicactivities.Aclearexampleoftheattempttofosterthecreationof“cleanpolicies”thatgohandinhandwiththeproperdevelopmentofeconomicactivityistheestablishmentofthegroundworkforgrantingtaxincentives.Oneoftheseinnovativechangesisthenewconceptof“environmentalresponsibility,”whichaimsatprovidingcompensationforpossibledamagegeneratedbynegativeenvironmentalimpact;and,finally,creatingasystemforassigningenvironmentalresponsibility.

Furthermore,theLawontheNationalEnvironmentalImpactAssessmentSystemisprobablyoneofthemostimportantenvironmentallawsenactedinthepastyears.Aimedatregulatingtheenvironmentalcertificationforinvestmentprojectsthatmaycausenegativeenvironmentalimpacts,itestablishesthecriterionforclassifyinginvestmentprojectsaccordingtothelevelofenvironmentalimpactthateachprojectmaycause,aswellasanastandardizedprocedurethatallcompetentenvironmentalauthoritieshavetofulfillinordertograntanenvironmentalcertificationtoanyinvestmentproject.

H. Consumer Protection and Products Liability

ConsumerProtectionandProductLiabilityisregulatedbytheCodeofProtectionandDefenseoftheConsumer(Código de Protección y Defensa del Consumidor).TheCodeguaranteesconsumersaccesstosuitableproductsandservicesandtoalleffectivemechanismstoprotecttheirrights,establishingseveralcriteriatoreducetheinformationasymmetryin favorofconsumers.Thus, theCodeestablishes theobligationsofsuppliersaswell the rightsofconsumersandincludes rules regarding the information thatmust be provided to consumers, suitability of products and services,advertisingrequirements,healthandsafetyofconsumers,contractswithconsumers,andprovisionsregardingspecificproductsorservices.

The Consumer Protection Commission (Comisión de Protección al Consumidor) is in charge of reviewing claims forinfringementofanyofthecode’sregulations.

TheCodeofProtectionandDefenseof theConsumer isapplicable toallconsumer relations thatareentered into thePeruvianterritoryorwhentheconsumerrelationshaveeffectstherein.

I. Land Use and Real Estate

Peruvian lawoffers rules that guarantee the acquisition, transfer, andprotection of real estate. The specificmeasuresadoptedbythegovernmenthaveathreefoldthrust.First,theprotectionoftherighttoacquirepropertyisattheconstitutionallevel,ensuringthefreeexerciseofthisrightandenshriningitasinviolable.Second,theConstitutionalsoestablishesthatforeigners(whethernaturalindividualsorlegalentities)havethesamestatusasPeruvianswithrespecttotheacquisitionofproperty,withaspecificexceptionsetforthfornationalsecurityreasonsregardinglandslocatedwithinfifty(50)kmfromtheborderzone.Third,severallegalmechanismshavebeendevelopedtoensurethesafetyoftransactionsrelatedtotheacquisition,transfer,anduseofproperty.Thelimittotherightofforeignerstoownlandinfrontierzonesisnotanabsoluteprohibition,sincethiscanbeallowedduetopublicnecessityandsubjecttoasupremedecree.

(1) Private and public real estate

InvestorsinterestedinacquiringpropertyinPerushouldfirstbeawareofthedistinctionbetweenprivaterealestateandpublicrealestate.

The transfer of private property is governed by ordinary rules regulated by the Civil Code. According to these rules,transactionsbetweenindividualsenjoywidecontractualpossibilities,evenallowingthecreationofnewtypesofcontracts,called‘atypicalcontracts’thatarenotstipulatedinthecurrentlegislation.Withintheregulatedlegalconceptsaretherealrightsofproperty:surfacerights,easements,ownership,andusufruct,amongothers.Formalownershipisalsoacquiredthroughactualpossessionofanassetforten(10)years,whichisknownasacquisitiveprescription.

Peruvian regulationsalsoallowtheparties toenter intopreliminaryagreements intended for thepossibleacquisitionof

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realestate.Thisisthecaseofacommitmenttoexecuteanagreement,bymeansofwhichthepartiesagreetoenterintoafuturecontract;thepartythatrefusestoexecutethepreliminaryagreementmayevenhavetopayapenalty.Therealsoistheoptionagreement,bymeansofwhichoneofthepartiesagreestoperformthesalewithinastipulatedterm,withtheotherpartyhavingthepowertodecidewhetherornottoexecutetheagreement.

Withtheexceptionofdonationsandmortgages,whichareinvestedwithcertainformalities,agreementsrelatedtorealestatemaygenerallybeexecutedbysimplemutualconsent.Thepracticeandtheneedtoprotectpropertyrights,encouragestoabidebytheformalitiesthatevidencetheexecutionofanagreement,eitherbywrittenevidenceoftheagreement,byformalizingtheagreementinapublicdeed,orbyrecordingitinthePublicRegistry.

In relation to private real estate, there is a special type of property thatmayonly be transferredby observing specialformalities.Thesearepropertiesownedbynativeandpeasantcommunities,inwhichcasethesaleofpropertymustbeapprovedbythecorrespondingcommunitymeetings.Accordingtotheresolutionadoptedatthismeeting,apersonwhohasbeenexpresslychosentoactonbehalfofthecommunitymustexecutetheagreement.

Publicpropertycouldbetheprivatepropertyofthegovernmentorcouldbelongtothepublicdomain.Inbothcases,thereisaveryspecializedregulationwhichstipulatesanumberofformalitiesthatmustbemetfortheuseofsuchpropertybyanyindividual.Aprivateentitymaypurchasestate-ownedproperty,executeagreementsonexchange,easement,surfacerights,orusufruct,orleasethepropertyforaspecificpurposeofpublicrelevance.Inthesecases,itwillbenecessarytofollowadministrativeproceduresrelevanttotheentityowningthepublicproperty;tocomplywiththerequirementslegallysetforthforeachtypeofoperation;and,dependingonthecase,totakepartinauctionsorpublicbids,competingwithotherbiddersfortheacquisitionoftheintendedright.Stateownedpropertiesarenotacquiredbyprescription.

(2) Urban and rural land

Anotherrelevantdistinctiontobetakenintoaccountisthenatureoftheland,whichmaybeurbanorrural.Thisdistinctionappliestobothstate-ownedpropertyandprivaterealstate.

Urban landsare locatedwithin thecities, including landsonwhichcommercial, industrial, residential, public serviceactivities and, other activities typical of development in urban area take place.When urban land is intended to beacquired foraspecificpurpose, it isvery important tofirstobtain thenecessarycertification fromthecorrespondinglocalauthority,eithera‘landdevelopmentandbuildingparameters’certificateora‘zoningandroads’certificate.Thesecertificates, which have a three year validity, detail (among other information) the use and building parameters thatmustbeobserved.Notably,whilethecertificatesarevalid,thepersonwhohasrequestedthemmayputintoeffecttheinformationcontainedinthem,despitethefactthatwithinthethree-yearperiodnormativechangesmayarise,modifyingtheusesandparametersoftheland.

Rurallandsarethoselocatedoutsideurbanarea,intendedforagriculturaluse,livestock,andruralactivitiesingeneral.Inmostcases,itispossibletomodifythedesignationoflandfromruraltourban,followingafairlycomplexprocedurebeforethecompetentlocalauthority.

(3) Registry system

TheNationalSuperintendecyofthePublicRegistry(Superintendencia Nacional de los Registros Publicos-SUNARP)istheentitythatgovernstherealestateregistrationsystem.ItisthroughtheSUNARPthatanypersonmayobtainapropertyregistrycertificate(Certificado Registral Inmobiliario-CRI).Thisdocumentenablesthepurchasertoverifytheexistenceandattributes/descriptionoftheproperty(landandconstruction),theidentityoftheowner,andtocheckwhetherthetitleisfreefromattachments,mortgages,oranyencumbrancesofajudicialorextrajudicialnature.

Theeffectivenessoftherealestateregistryisguaranteedbylegalorder.Alltheinformationpublishedandcontainedintherecordsispresumedknownbyall,withoutadmittingevidencetothecontrary.Personsthatappearasownersinthissystemaredulyempoweredtosellthepropertiesofwhichtheyaretitleholders.

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(4) Expropriation

Propertyrightsareverywellprotectedandawardedwithguaranteesfortheirdefense,butarenotabsolute.Article70ofthePeruvianConstitutionsetsforththatapersonmaybeonlybedeprivedofhis/herproperty(expropriated)incaseofnationalsecurityorpublicnecessitydeclaredassuchbyalawenactedbyCongressandpriorpaymentincashofanindemnityforthevalueofthepropertyandtheprofitloss.ThevictimmaydiscusstheamountoftheindemnitybeforetheJudiciaryorinanarbitralproceeding.TheexpropriationisalwaysinfavoroftheRepublicofPeru.

Theexperience in the recentyears reveals that theRepublicofPeru resorts invery fewoccasions to thisfigureand itbasically does it for territorial security and in order to performpublic infrastructureworks. Each and every oneof thegovernantsinofficesincethecurrentConstitution,haveunderstoodthatexpropriatingdiscouragesinvestment,therefore,thisisthelastmechanismappliedifapropertyisrequired.

J. Intellectual Property

(1) Trademarks

Decision486issuedbytheAndeanCommunityandLegislativeDecreeNo.1075ruledistinctivesignsprotectioninPeru.

InPeru the right to theexclusiveuseofamark isacquiredby registering thesamebefore theDistinctiveSignsOffice(TrademarkOffice)attheINDECOPI.Anysignwhichcanbesubjecttographicrepresentationtodistinguishproductsorservicesinthemarketcanberegisteredasatrademark.

Amulti-classapplicationcanbefiled forproductsand forservices. If the registrationapplication isfiled incompliancewithallformalitiesrequiredbylawandnooppositionsarefiled,theprocedurewilltakeapproximatelyfour(4)months.Ifoppositionsarefiled,theproceduretakesapproximatelyoneandahalfyears.

Theregistrationwillbeinforcefortenyearsfromthedateofitsgrantingandmayberenewedforsuccessiveperiodsoftenyears.

Oncetheapplicationisfiled,theTrademarkOfficewillexaminewithinthefollowing15workingdaysif itmeetsthelegalrequirementsestablishedbylaw;whicharemainlyifthelistofproductsandservicescorrespondstotheclassandifthecorrespondingpowerofattorneyhasbeenfiled.

If fromtheexamination it isfoundthata legalrequirementhasbeenomitted,theapplicantwillbegrantedatermofsixtyworkingdaysfromthedatethenotificationisservedtocorrectsuchomission.Ifattheexpiryofsuchtermtheapplicantdoesnotcompletesaidrequirements,theapplicationwillbeconsideredabandonedandwill loose itspriority. If theregistrationapplicationmeetstheformalrequirements,theTrademarkOfficewillorderitspublication.

Withinthetermofthirtyworkingdaysfromthedateofpublication,anypersonhavingalegitimateinterestmayfileanoppositionagainsttheregistrationofthemark.Ifanoppositionisfiled,theTrademarkOfficewillnotifytheapplicantto-withinthefollowingthirtyworkingdays-asserthisargumentsandfileevidence,ifhedeemsitconvenient.Oncesuchtermhasexpired,orifoppositionshavenotbeenfiled,theTrademarkOfficeconductsaregistrabilityexamination.Ifoppositionshavebeenfiled,theTrademarkOfficetakesadecisiononthegrantingorrejectionoftheregistrationofthetrademark.

Therenewaloftheregistrationofatrademarkhastobeappliedforwithinthesixmonthsbeforeoraftertheexpiryoftheregistration.Fortherenewalapplicationuseofthetrademarkshouldnotbeproved.

Theregistrationofatrademarkmaybecancelledattherequestofanyinterestedperson,ifithasnotbeenusedinanyofthecountriesmemberoftheAndeanCommunity(Bolivia,Colombia,EcuadororPeru)duringthethreeyearsprecedingthefilingdateofthecancellationapplication.

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Commercialslogans,tradenames,collectivemarks,certificationmarksanddenominationsoforiginarealsoconsidereddistinctivesignssubjecttoregistration.

Trade name is the only distinctive sign that is protected by its actual use in themarket being the registrationmerelydeclarative.

Assignments,amendmentsandotheractsaffectingregisteredrightsshallberegisteredbeforetheTrademarkOfficetohaveeffectagainstthirdparties.Licenseagreementsmayberegistered.

(2) Patents and industrial designs

Decision486issuedbytheAndeanCommunityandLegislativeDecreeNo.1075rulenewcreationsprotectioninPeru.

InPeru, patents for inventions aregranted,whether they are for product or for procedures, in all fieldsof technology,providedthattheyarenew,involveaninventivelevelandaresusceptibleofindustrialapplication.Usesandsecondusescannotbepatented.

Ifthepatentapplicationisfiledincompliancewithallformalitiesrequiredbylawandnooppositionsarefiled,procedureswilltakeapproximatelyfour(4)years.Ifoppositionsarefiled,procedureswilltakeaboutfive(5)tosix(6)years.

Theregistrationlaststwentyyearsfromthedatetheapplicationisfiled.

Oncesuchapplicationisfiled,theOfficeofInventionsandNewTechnologies(PatentOffice)examineswithinthefollowingthirty (30)workingdays if itmeetsall legal requirementsestablishedby law; that is if specifications, claims, summary,drawings,powerofattorneyand theassignmentdocumenthavebeenfiled,whereapplicable,duly legalizedup to thePeruvianConsulateorbyApostille.

If fromtheexamination it isverifiedthata legalrequirementhasbeenomitted,theapplicant isgrantedaperiodoftwo(2)months,extendablefortwo(2)moremonthsafterthedateofserving,tocorrecttheomission.Ifattheexpiryofsuchtermtheapplicantdoesnotcompletesuchrequirements,theapplicationshallbeconsideredabandonedandshallloseitspriority.Iftheregistrationapplicationmeetsall legalrequirements,aftereighteenmonthsfromthedateoffilingoftheapplicationor,whereapplicable,fromtheprioritydateclaimed,thePatentOfficewillorderitspublication.

Within the termofsixty (60)workingdays fromthedateofpublication,anypersonhavinga legitimate interestmayfileanoppositionagainstthepatentofinvention.Ifanoppositionhasbeenfiled,thePatentOfficewillnotifytheapplicanttowithinthenextsixtyworkingdaysasserthisargumentsandsubmitevidenceifhedeemsitconvenient.Withinthetermofthirty(30)workingdayscountedfromthepublicationoftheapplication,regardlessofwhetheroppositionshavebeenfiled,theapplicantmustrequestthetechnicalexaminationoftheinvention.Ifsuchperiodelapseswithouttheapplicanthavingrequestedsuchexamtobemade,theapplicationshallfallintoabandonment.

If the PatentOffice finds that the invention is not patentable or that it does not complywith any of the requirementsestablishedforthegrantingofthepatent,itshallnotifytheapplicant.Theapplicantshallanswertosuchnotificationwithinthetermofsixtyworkingdaysfromthedateofthenotificationisserved.Suchtermmaybeextendedonceforaperiodofthirtyadditionalworkingdays.Iftheapplicantfailstorespondtothenotificationwithintheprescribedperiod,orifinspiteoftheresponsetherearestillobstaclestograntthepatent,thePatentOfficeshalldenythepatent.

If thefinalexamination is favorable, thepatentwillbegranted. If it ispartially favorable, thepatentwillbegrantedonlyregardingthepatentableclaimsaccepted.

Tomaintainthepatentinforceor,whereappropriate,thepatentapplicationinprocess,annualfeesmustbepaid.

Utilitymodels,industrialdesignsandlayout-designsofintegratedcircuitscanalsobeprotected.Theregistrationofthesecreationslasttenyearsfromthedatetheapplicationisfiledandcannotberenewed.

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Transfers,licenses,amendmentsandotheractsaffectingregisteredrightsmustberegisteredbeforethePatentOfficetohaveeffectagainstthirdparties.

PeruismemberofthePatentCooperationTreaty(PCT)asofJune6,2009.ThereforeallPCTapplicationsfiledafterthatdatecouldentertonationalphaseinPeru.

(3) Copyrights

Decision 351 issued by the AndeanCommunity and LegislativeDecreeNo. 822 govern copyright protection in Peru.Copyright protection falls on any original intellectual creation of artistic, scientific or literary character susceptible ofdisclosureorreproductioninanyform.

Unlikeindustrialpropertyrights,theseworksareprotectedwithouthavingtoberegistered.Registrationismerelydeclarative.Theauthorofaworkhasbythemerefactofitscreation,theoriginalownershipofanexclusiveright,opposableagainstthirdparties,whichincludesmoralandeconomicrights.

K. Internet Regulations/ e Commerce

Currently,regulationonthismatterisonlyfoundintheprovisionsoftheCodeofProtectionandDefenseoftheConsumer,whichsetsforththat incaseswherethesupplierprovidesadditional informationof itsproductsorservicesthroughtheinternet,theinformationmustbeclear,understandable,accurateandeasilyaccessible.

Peruvian legislation does not include any other rules about internet transactions and e-commerce. Accordingly, anysuchrelationshipwillbegovernedbythetermsagreedbythepartiesinconnectionwithtransactionsperformedthroughelectronicmeans.

L. Financing Issues/ Payments

TheexecutionoffinancingagreementswithforeignfinancialentitiesisnotsubjecttoanyrestrictionanddoesnotrequireanypriorauthorizationorregistrationwiththeCentralBankofPeruoranyotherauthority.Paymentofdebtabroadundersuchagreementsisequallyfreeofauthorizationsorrestrictions,providedthatapplicableincometaxwithholdingsonanyinterestpaidaremade.

FinancialleasingactivitiesarerestrictedtoPeruvianauthorizedentities.

M. Securities Law Issues

Securities aremainly regulatedby theSecuritiesMarket Law (“SML”). This lawapplies to securities that aremassivelyissued,freelynegotiable,andgivetheirholderscredit,equityorsimilarrightsofeconomicnature.Securitiesmaybeofferedpubliclyorprivately.

(1) Offerings involving securities

AllsecuritiespubliclyofferedmustbepreviouslyregisteredwiththeSecuritiesMarketPublicRegistry(“SMPR”),managedbytheSuperintendencyofSecuritiesMarket(“SMV”).

TheSML,alongwithotherregulationsissuedbytheSMV,establishescertainstandardssuchastransparencyandtimelydisclosureofmaterialinformation.AllinformationdisclosedtothemarketthroughtheSMPR´ssystemsforthedisseminationofinformationmustbetrue,clear,sufficientandtimely.TheinformationcontainedintheSMPRisfreelyaccessibleunlessitisdeclaredconfidentialundercertaincircumstancesprovidedinthelegislation.

SecuritiesMarket legislationmainlyregulatesthefollowingdifferenttypesofpublicofferings: (i)publicofferingfortheprimaryplacementorsaleofsecurities, (ii) tenderoffer (oferta pública de adquisición – OPA),and (iii)purchaseoffer(oferta pública de compra de valores por exclusión del RPMV- OPC).

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- Primarypublicofferingorsaleofsecurities

Our legislationregardsaspublicofferingofsecuritiesanyofferthat isdirectedtothegeneralpublicortoadeterminedsegmentofnon-institutionalinvestorsforthe,saleorplacementofsecurities.Everyofferispresumedpublicifitisaddressedtomorethanonehundred(100)prospectiveinvestors.However,Peruvianlegislationprovidesforcertainsafeharbors,anddeemsasprivateoffers(i.e.notapublicoffering)thosethataredirectedtoinstitutionalinvestorsorthoseinwhichthelowestunitaryvalueoftheofferedsecuritiesequalsorexceedsadeterminedamountthatisadjustedinaccordancewiththefigureindexedtoinflation(currentlyequivalenttoapproximatelyS/.450,000.00for2013,oUS$175,000.00).

SecuritiesthataresubjecttothiskindofoffershallberegisteredintheSMPR,forwhich,anInformationMemorandum,financial statements from the latest two (2) fiscal years andcertainotherdocuments and informationdescribed in theapplicableregulationshallbefiledwiththeSMV.Theregistrationofsecuritiesmaybedoneindividuallyorthroughsecuritiesissuanceprograms.

TheInformationMemorandumshallcontaininformationsuchasthecharacteristicsofthesecuritiesbeingoffered,rightsandobligationstobegrantedtoinvestors,relevantriskfactors,issuer´sfinancialstatements,informationaboutthestructuringentity and the placement agent, the placement procedure and other information considered material for the potentialinvestors.TheSMVmaydetermineanyadditionalinformationthatshallbemadeavailable.

The sale of securities under this kind of offermay bemadewithin the eighteen (18)months that follow the date ofregistrationofthesecurities.

Peruvianlegislationsincludespecialprovisionsincaseofsecuritiespubliclyofferedinexchangeforothersecuritiesandinthecaseofinternationalpublicofferings.

Peruvian lawprovides for simplified registrationmechanisms forofferingsexclusively launched toaccredited investors,ofsecuritiesofcertainmultilateral institutions,and internationalofferingsofsecurities launchedunderRule144Aof theSecuritiesandExchangeCommission,withalocaltranche.

- Tenderoffer(Oferta pública de adquisición – OPA)

AccordingwiththerulesfortheOPA,ifapersonorcompanyintendtoacquireorincrease,directlyorindirectly,asignificantparticipation(definedasanyacquisitionofshareswhichreachesorexceeds25%,50%or60%ofthevotingcapital,theacquisitionbyanymeansofthecapacityofvotingrightsequivalentto25%ofthevotingcapital,ortheabilitytoelectthemajorityoftheissuer´sboardofdirectorsortoamendtheissuer´sby-laws)incompanywhichsharesarelistedinaPeruvianstockexchange,suchacquisitionwouldrequirethelaunchingofatenderoffer,unlessapplicableexceptions.

If theacquisitionofsignificantparticipation is intendedtobemade innomorethan fouracts inaperiodof threeyears,theOPAshallbelaunchedwithinacertainperiodaftertheacquisitionofthesignificantparticipation,byapercentageofsecuritiesprovidedunderthelegislationandataminimumpricesetbyacompanydesignatedbytheSMV.Theofferingshallbeaddressedtotheholdersofshareswithvotingrightsandsecuritiesthatgiverighttoitsholderstoacquiresuchshareswithinaspecifiedperiod,whichdidnotparticipateinthepreviousacquisition.

Inothercases,theacquisitionofsignificantparticipationmustbemadethroughaprevioustenderoffer(priorOPA).Inthiscase,thepercentageofacquisitionandthepricearefixedbytheofferor,havingtherighttoparticipateallholdersofshareswithvotingrightsandholdersofsecuritiesthatgiverighttoitsholderstoacquiresuchshareswithinaspecifiedperiod,applyingtheruleofprorrataacquisitionincaseitisnecessary.

- Purchaseoffer(Oferta pública de compra de valores por exclusión del RPMV - OPC)

Rulesof theOPCprovides that if the issuerofsecurities registeredwith theSMPR requests thecancelationofsaidregistration,orapprovesatransactionwithasimilareffect(e.g.asplitwherebyinvestorsendupholdingunregisteredsecurities),apurchaseoffershallbelaunched,unlessanexemptionisavailable.

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TheOPCshallbeaddressedtoallinvestorsthatdidnotparticipateinthecancelationortheapprovalofthetransactionataminimumpricefixedbyavaluationentity,appointedbytheSMV.

(2 Investments in securities by local institutional investors

Theacquisitionofdomesticor foreignsecuritiesby institutional investors issubjecttocertainregulationsthatmayapplytothem.Forexample, inthecaseof investmentsofpensionfundsor insurancecompanies,theyshouldfollowtherulesapprovedbytheSuperintendencyofBanking,Insurance,andPrivatePensionFundAdministrators.Ontheotherhand,ifitisaninvestmentofalocalmutualfund,itshallfollowtherulesestablishedbytheSMV.

(3) Stock exchanges – the Lima Stock Exchange

Stockexchangesare entities thatmanagecentralized tradingmechanisms,which simultaneously connectbuyers andsellerswillingtoengageinsecuritiestransactions.TheLimaStockExchange(Bolsa de Valores de Lima-“BVL”)iscurrentlytheonlystockexchangeinPeru.

TheBVLhasmechanismsfortheregularprocedureforlistingofsharesandothersecuritiesofforeignissuances,butalsohassimplifiedlistingmechanismsincaseofsecuritiesthatarealreadylistedinsomeothermarkets(duallisting).TheBVLhasalsoimplementedaspecialsegmentforthelistingofjuniorminingcompanies.

Additionally,theBVLispart,jointlywiththeSantiagoStockExchangeandtheColombiaStockExchange,oftheIntegratedLatinAmericanMarket(MILA),inordertofacilitatethetradingofsecuritiesofsuchstockexchangesamonginvestorsintheirrespectivecountries

(4) Stock exchange intermediaries

StockexchangebrokeragehousesareinchargeofalltransactionsundertakenontheLimaStockExchange.

SaidentitiesarerequiredtoobtainalicensefromtheSMVandaresubjecttoitscontrolandsupervision.

ForoperationswithintheMILA,localintermediariescancarryoutoperationsinotherstockexchangesthroughthebroker´splatformsoftherespectivestockexchange.

(5) Institutions for the clearance and settlement of securities - CAVALI

CAVALIistheentityinchargeoftheclearingandsettlementofalltransactionsundertakenontheLimaStockExchange,forwhichithaspreviouslyobtainedalicensefromtheSMV.CAVALIisalsosubjecttothecontrolandsupervisionofthislattergovernmentalentity.

For purposes of the negotiations under theMILA, CAVALI has agreements with the relevant clearing and settlementinstitutionsinColombiaandChile.

CAVALIalsohasagreementswithotherclearingandsettlementinstitutionsfromothercountriesforthepurposeoftradingwithsecuritiessimultaneouslyattheBVLandothermarkets(duallisting).

(6) Tax matters

Capitalgainsfromthesaleofsecuritiesbyanon-domiciledentityaresubjecttoa5%preferentialIncometaxrateprovidedthatthesecuritiesareinfacttradedintheBVL(otherwisea30%rateapplies).

N. Secured Transactions

TherearenorestrictionsfortheholdingofsecurityinterestsinPerubyforeignindividualsorentities.

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ThemostvastlyusedtypesofguaranteesunderPeruvianlawarethemortgageandthesecurityinterest(garantía mobiliaria).

(1) Mortgage

Realestateandanyimmovableassetscanbemortgaged.Inordertocreatesecurityunderamortgagethefollowingessentialrequisitesshouldbecompliedwith:

- Expressedconsentoftheowneroritslegalrepresentative.

- Securecomplianceofanalreadydeterminedobligationoranobligationwhichcanbedetermined.

- Securedamountmustbedeterminedorabletobedetermined.

- RegistrationofthepublicdeedcontainingthemortgageagreementintheRegistryofRealEstateProperty.

Oncethemortgageisregisteredintheabovementionedregistry,itisconsideredaslegallyvalidandeffective.

(2) Security interest (garantía mobiliaria)

Thesecurityinterest(garantía mobiliaria)createsasecurityinterestonanypersonalgoodsorassetsaslongasthereiswrittenevidencethereof.Registrationofthesecurityinterestthuscreatedwillallowitsenforceabilityagainstthirdparties.

Enforcementofthesecurityinterest(garantía mobiliaria)canbemadedirectlybycreditorwithouthavingtoresorttocourtsifsoagreedinthecorrespondingsecurityagreement.

O. Litigation/ Dispute Resolution Systems

Peruvianlawallowsfortheresolutionofdisputeseitherthroughcourtsorarbitration.Foreignersaresubjecttothesamerightsandlegalguarantiesthatapplytonationals.Dueprocessandeffective jurisdictionalprotectionarerecognizedasconstitutionalrights.

(1) Judicial system

ThePeruvianjudicialsystemisintegratedbydifferentcourtstypesthatarespecializedindifferentareasoflawandhaveadeterminedjurisdictiondefinedbymattersoflaw,location,amountsinvolvedinthedispute,amongotherfactors.Civilcourtsare inchargeofcivil, commercial andconstitutionaldisputes,whilecriminalcourtsdealwithanymatter that isconsideredasacrimeunderourCriminalCodeorotherapplicablelaws.

ProceduralmatterspertainingtocivilandcommercialmattersarecontainedintheCodeofCivilProcedure(Código Procesal Civil),whilecriminalproceduresaredealtwithby theCodeofCriminalProcedure (Código de Procedimentos Penales).PleasenotethattheaforementionedCodeisbeingreplacedbyanewCode(Código Procesal Penal).ThisalreadyappliesinsomeprovincesofPeruanditisprogrammedtobeapplicablenationallyonDecember,2013.Inturn,certainconstitutionalproceduralmattersaredealtwithbytheCodeofConstitutionalProcedure.

TheJudiciaryisorganizedinthirty-one(31)judicialdistrictsaroundthecountry.Firstinstancecourtsincludebothciviland criminal judges. In each judicial district, aSuperiorCourt acts as second instance court of appeals. There arespecificproceedingsonconstitutional,criminalandcivilmatters inwhichtheSuperiorCourtactsasfirst instance.InthoseproceedingstheSupremeCourtactsascourtofappeals.TheSupremeCourtisthehighestcourtandusuallyhasthefinalreviewofthecasesonlyinmattersoflaw.Inthecaseofprotectionofconstitutionalrightssuchaslife,health,non-discrimination,employment,dueprocess,property,reunion,secrecyofcommunicationsandprivatedocuments,banksecrecy,amongothers,thefinalreviewofthecomplaint

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correspondsto theConstitutionalTribunal (Tribunal Constitucional).TheConstitutionalTribunal isan independentcourtwhichisnotpartoftheJudiciary.

(2) Enforcement of foreign judgments

PeruvianlawrecognizestoforeignjudgmentsthesameeffectsgiventoPeruvianjudgments.Forsaidpurpose,theforeignjudgmentsneedtoberecognizedthroughajudicialprocedure(exequatur).

EnforcementofforeignjudgmentsinPeruissubjecttocompliancewiththefollowingrequirements:(i)thejudgmenttobeenforceddoesnotresolvemattersundertheexclusivejurisdictionofPeruviancourts;(ii)thecourtrenderingsuchjudgmenthad jurisdictionunder itsownconflictof laws rulesandunder international ruleson jurisdiction; (iii) thedefendantwasservedwithprocessinaccordancewiththelawoftheplacewheresuchcourtsits,wasgrantedareasonableopportunitytoappearbeforesuchforeigncourtsandwasguaranteeddueprocessrights;(iv)thejudgmenthasthestatusofresjudicatainthejurisdictionofthecourtrenderingsuchjudgment;(v)thereisnopendinglitigationintheRepublicofPerubetweenthesamepartiesforthesamedispute,whichshallhavebeeninitiatedbeforethecommencementoftheproceedingthatconcludedwiththeforeignjudgment;(vi)suchjudgmentisnotincompatiblewithanotherenforceablejudgmentinPeru,unlesssuchforeignjudgmentwasrenderedfirst;(vii)suchjudgmentisnotcontrarytothepublicorderorgoodmoralsoftheRepublicofPeru;and(viii)thereisatreatybetweentheRepublicofPeruandthecountryinwhichsuchjudgmenthasbeenrendered,andtheprovisionsofsuchtreatyshallapply.Intheabsenceofatreaty,thereciprocityruleisapplicable(suchreciprocitybeingpresumed),underwhichajudgmentgivenbyaforeigncompetentcourtwillbeadmissibleinthePeruviancourtsandwillbeenforceablethereby,exceptifaccordingtosuchforeignlaw(a)judgmentsissuedbyPeruviancourtsarenotadmissibleinsuchforeigncountry,or(b)judgmentsissuedbyPeruviancourtsaresubjecttore-examinationbysuchcompetentcourtoftheissuesdealtwiththerein.Asofthisdate,thereisnotreatybetweentheRepublicofPeruandtheUnitedStatesofAmericaontheenforcementofforeignjudicialresolutions.

(3) Arbitration

Anycivilorcommercialdisputecanbesubmittedtoarbitrationifthepartiestheretoagreetodoso.

Whenarbitrationtakesplace,anymattersnotexpresslyprovidedforbythepartiesshallberuledbytheArbitrationLaw,whichcontainsprovisionsregulatingbothdomesticandinternationalarbitrationcarriedoutinPeru.

ForeignarbitrationawardswillberecognizedandenforcedinPeru,accordingtothefollowinginstrumentseveniftheyarebasedonaforeignlaw:

- ConventionofReconnaissanceandExecutionofArbitralDecisions,approved inNewYorkonJune,10th,1958;or

- InteramericanConventionofInternationalCommercialArbitration,approvedinPanamaonJanuary,30th,1975;

V. CONTRACTS AND DOCUMENTS – FORMS AND ENFORCEMENT

Contractsareregulated in theCivilCode,whichsets forth thegeneral rulesapplicabletocontract ingeneral,andtoanumberofspecificlegalrelationshipswithaneconomiccontent.Pursuanttotheserules,partiestoacontractcanfreelydeterminethecontentsofacontractas longas itdoesnotcontraveneanypublicorderprovisionorgoodmoralsandprovidedthattherelevantformalities(whereapplicable)arecompliedwith.TheCivilCodeestablishesexpresslythatcontractcontentsetforthbytheparties isconsideredaslawandcompletelyenforceablebetweenthecontractingparties,unlessanimperative lawindicatesthecontrary.Thecontentmust includeallobligationsthatthepartiesmustfulfill includingobligationstogive,doornotdo.Contractsareterminatedbymutualconsentfromallpartiesorwhenallobligationsarecompletelyfulfilled.

The Civil Code also contains general provisions applicable to any breach of contract, liability arising therefrom and

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termination,allofwhichapplyasasupplementtotheagreementsofthepartiescontainedinthecontract.

VI. ENDING/RESTRUCTURING A BUSINESS PRESENCE

A. Dissolution/Liquidation

TheGeneralLawofCorporationssets forth thecausesandprocedures fordissolutionand liquidationofcorporationsandcompaniesingeneral.However,therearesomeentitieswhichbasedontheirparticularactivityhavetofollowspecificliquidationregimes,suchasfinancialentities.

(1) Dissolution

Thedissolutionofcompaniesappliesinanyofthefollowingscenarios:

- Expirationofthetermprovidedforintheby-lawsofacompanyforitsexistence.

- Conclusionofitscorporatepurposeornotfulfillingitforaprolongedperiodoftimeorevidentimpossibilitytoaccomplishit.

- Continuedinactivityofthegeneralshareholder’smeeting.

- Incurinlossesthatreducethenetassetsvaluetolessthanonethirdofthecompany’spaid-incapital,unlesssuchcapitalisdulyincreasedorreduced.

- Agreementapprovedbycreditorsincaseofbankruptcyorinsolvency,accordingtotheproceduredeterminedbylaw.

- Lackofpluralityofshareholdersforaperiodlongerthansix(6)months.

- JudicialresolutionadoptedbytheSupremeCourt.

- Agreementapprovedbytheshareholders.

- Anyothercauseestablishedinthecorporateby-lawsorinashareholder´sagreementdulyregisteredbeforethecompany.

Whena corporation falls into an event of dissolution, theboardof directors or anyother shareholdermust callwithinthirty (30)days toaGeneralShareholder’sMeetingso thecorporationdecidestoapprovethedissolutionor toadoptallnecessarymeasuresthatallowittoovercomesuchdissolutioncause.Itshallbenotedthatalthoughcorporationsarerunbytheshareholdersanditsgovernmentbodies,thePeruviangovernmentmayforcethecontinuationofacompany’sactivitiesduetodomesticsecurityorpublicnecessityreasons.

Onceadecisionismadetodissolveacompany,allrepresentationandresponsibilitiesofdirectors,administrators,managersandothers representativescease,andare transferred to theappointed liquidators.However,said formerofficersmustprovideinformationorassistanceinordertofacilitatetheliquidationofthecompany.

(2) Liquidation

Theliquidationprocessisinitiatedwiththeadoptionofthedecisiontodissolvethecompany,whichmaintainsitscorporateexistenceuntiltheliquidationprocessisdulyfinishedanditsextinctionisrecordedbeforetheCompaniesRegistry.

Theliquidationprocessisconductedbyoneormoreliquidators,whosemaintasksincludetheelaborationoffinancialstatementsuponinitiationoftheliquidation,thekeepingofproperaccounting,payingalloutstandingdebts,enforcingand

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collectingallcreditstoshareholdersandthirdparties,andpreparingthefinalfinancialstatementsuponcompletionoftheliquidation.Liquidatorscannotdistributeanyremainingamountstotheshareholdersbeforethecorporatecreditorsarecompletelypaid.

Liquidatorsmustkeeptheshareholdersinformedoverthefinancialstatementsandtheprogressoftheliquidation.Shareholdersthatrepresentatleast10%ofthecapitalmayrequiretheliquidatorstoinformregularlyontheliquidationprocess.

AccordingtotheCorporationsGeneralLaw,oncetheremainingamountshavebeendistributed,theliquidatorsshallrequesttheextinctionofthecompanybeforetheCompaniesRegistry.Iftherearependingdebtstocorporatecreditorsaftertheextinction,thosecreditorscanenforcetheirpaymenttotheshareholdersbutonlyuptotheremainingamountsdistributedthereto in the liquidationprocess. Ifunpaidobligationsexistonce the realizationofallassetshasbeencompleted, thecompanyfallsintobankruptcy.

B. Insolvency/Bankruptcy/Restructuring

Peruvian Law establishes that all insolvency, bankruptcy and restructuring process involving companies or individualswho are Peruvian residents and perform business, shall be ruled by the Law of Insolvency System (Ley General delSistemaConcursal). INDECOPI isthegovernmentagency inchargeof,andwithexclusiveandmandatorycompetenceover insolvency matters. Banks, insurance companies and governmental institutions (Ministries, Tax Authority, LocalGovernments(Municipalities))andthelike,arenotsubjecttothisLaw.Insolvencymaybeinitiatedattherequestofdebtorwhenithaslossesinexcessof1/3ofitspaid-incapitalorpastdueobligationsinexcessof1/3ofthetotaldebtor’sliabilities.Insolvencycanalsobeinitiatedbythecreditorswhentheircreditsexceedfromfifty(50)TaxUnits,andarepastdueformorethanthirty(30)days.Theinsolvencyproceedingseekstoprovideanorderlyscenariosoastoallowcreditorstodecidewhethertorestructureorliquidatethedebtor.

AcreditorsmeetingisformedbyallcreditorswhoholdclaimsagainstthedebtorprovidedthatsuchcreditsareacknowledgedbytheINDECOPI.Inthemostcommoninsolvencyproceeding,whichismostlyused,thecreditorsmeetingdecidesontheoutcomeofdebtortakingintoaccountthefollowingalternatives:

- A debt restructuring plan which consists in the continuing of the debtor activities with changes in itsadministration,establishingapaymentschedule.

- Thedissolutionandliquidationofthedebtorestate.

Unlike other insolvency legal frameworks, there is no intervention of a court or the INDECOPI in the soundness,reasonabilityor feasibilityof thecreditorsmeetingdecisionsand, therefore, thePeruvian insolvencysystem ishighly“privatized”initscore.

Thecreditorsmeeting’sagreementsanddecisionscanonlybechallengedbythedebtororbycreditorsrepresentingatleast10%ofthetotalcreditsallowedintheproceeding,basedonthebreachofinsolvencyregulations,formalitiesorincaseofabuseofrights.

Inaddition,preferentialpaymentsorfraudulentconveyances,apartfromeventualcriminalsanctions,canbecivillypursuedthroughaspecificjudicialactionwhen:(i)thoseactswerecommittedwithinone(1)yearpriortothecommencementoftheinsolvencyproceeding;and(ii)theactsnegativelyaffectedthedebtor’sestate.

Inliquidation,paymentofallowedcreditswillfollowthefollowingpreferenceorder:

- First:Salariesandlaborbenefitsowedtoworkers,aswellascontributionstoPensionFunds.

- Second:Alimonycredits(onlyapplicabletotheinsolvencyofindividuals).

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- Third:Credits securedbymortgage,mobiliary guarantees, pledges,warrantsor precautionarymeasuresoverthedebtorpatrimonyaslongassuchguaranteesorliensweredulyregisteredandtheprecautionarymeasureswereattachedbeforethecommencementoftheinsolvencyprocess.

- Fourth:Taxdebtsincludingtaxes,fees,rates,contributions,interestsandfines.

- Fifth:Allremainingunsecuredcreditsthatwerenotconsideredintheprecedentorders.

Ifthedissolutionandliquidationprocessendswiththeliquidationoftheentiredebtor’sestate,andcreditsremainunpaid,thenthedebtorshallbejudiciallydeclaredinbankruptcy.

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