LEGISLATIVE DECREE N 757 APPROVING THE FRAMEWORK LAW FOR PRIVATE INVESTMENT GROWTH

LEGISLATIVE DECREE N 757 APPROVING THE FRAMEWORK LAW FOR PRIVATE INVESTMENT GROWTH Legislative Decree published on November 13, 1999. Amended by Law N 25541 published on June 11, 1992, Law Decree N 25596 published on July 4, 1992, Law N 26092 published on December 28, 1992, Law N 26245 published on November 20, 1993, Law N 26724 published on December 29, 1996, Law N 26734 published on December 31, 1996 and Law N 26786 published on May 13, 1997. THE PRESIDENT OF THE REPUBLIC WHEREAS: By Law N 25327, the Congress of the Republic, pursuant to the provisions of Article 188 of the Political Constitution of Peru, delegated to the Executive Power, among others, the power to enact Legislative Decrees aimed at creating the necessary conditions for private investment in the different productive sectors by Law N 25327; It is necessary to consolidate the Economic Structural Reforms Program initiated by the Government, due to which it is pertinent to enact a Framework Law which includes the provisions required for the growth of private investment in all sectors of the economy; In order to comply with such goal, it is essential to eliminate all obstacles, as well as legal and administrative bias which delay the development of the economic activities and restrict the free private initiative, reducing the competitiveness of private companies, which is essential for a successful insertion in the international market; Likewise, it is necessary to give provisions granting juridical security to investors and stimulate a development model which harmonizes productive investment with environmental conservation; Pursuant to the provisions of section 10 of Article 211 of the Political Constitution of Peru; and, With the approving vote of the Council of Ministers; The following Legislative Decree has been enacted: FRAMEWORK LAW FOR PRIVATE INVESTMENT GROWTH TITLE I SCOPE Article 1.- The purpose hereof is to guarantee free initiative and private investment made or to be made in economic activity sectors and in any other business or contractual forms allowed by Constitution and the Laws. It establishes rights, guaranties and obligations applicable to all individuals and companies, local or foreign, which are holders of investments in the country. Its regulations should be mandatory

observed by all State organizations, either from the Central Government or from Regional or Local Governments at all levels. TITLE II JURIDICAL STABILITY FOR THE ECONOMIC SYSTEM Article 2.- The State guaranties free private initiative. The Social Market Economy is developed based on free competition and access to economic activity. Article 3.- Free private initiative is the right that any individual or company has to engage in the economic activity they prefer, which comprises the production or marketing of goods or rendering of services in agreement with the Constitution, international treaties executed by Peru and the Laws. Article 4.- Free competition implies that the prices in the economy result from supply and demand forces as provided for by the Constitution and the Laws. The only prices that can be set administratively are the utility services tariffs as expressly provided for by law enacted by the Congress of the Republic. Article 5.- The State guaranties economic pluralism. Any company has the right to organize itself under any business form according to national legislation. The direct or indirect access of investors or companies in which they participate cannot be restricted to specific economic activities based on the business form adopted thereby. An exception to this provision is the financial system pursuant to its regulatory law and the exceptions to be established by law enacted by the Congress. Any legal provision opposing this Article is hereby derogated. In the cases in which the Law establishes that the exploitation of natural resources or the rendering of utility services should be performed by concessions or other forms to individuals, the provisions hereof will be observed provided that they do not oppose the sector s legislation. Article 6.- Any reservation in favor of the State, be it partial or total, is hereby derogated for the performance of economic activities or exploitation of natural resources, and with the exception of those referred to protected natural areas. Such reservations will only proceed because of social interest or national security reasons and will be expressly provided for by law enacted by the Congress of the Republic or pursuant to the provisions of Article 54 hereof. Pursuant to Article 285 of the Political Constitution, the manufacture of weapons may be carried out by private companies only under agreements executed by the State with such purpose. Article 7.- When one same economic activity is carried out by the State and private companies, the same conditions should be applicable to both. In no case State-owned companies will be granted imperium attributions or powers inherent to the Public Administration with the exception of the powers delegated by the State for the coactive collection of taxes. Article 8.- The State guaranties private property rights which are only subject to the limitations established by the Political Constitution.

Pursuant to Article 131 of the Political Constitution which acknowledges the right to engage in economic activities, and pursuant to the provisions established in this chapter, the State will not expropriate companies, stocks or interest shares therein, except in the case of national interest duly supported by a law enacted by the Congress of the Republic. Article 9.- Pursuant to the provisions of Articles 130 and 131 of the Political Constitution, all companies have the right to organize and develop their activities as deemed convenient thereby. Any legal provision setting forms of production or productivity indexes, which prohibit or compel to the utilization of inputs or technological processes and, in general, any legal provision intervening in the productive processes of companies based on the type of economic activity developed thereby and the installed capacity thereof, or any other similar economic factor, except for those legal provisions referred to hygiene and industrial security, environmental conservation and health, are hereby derogated. Article 10.- The State guaranties the right of companies, regardless of the business form adopted thereby, to freely agree on the distribution of the total profits or dividends thereof, and the right of investors to receive all profits or dividends they are entitled to, including those referred to the current fiscal period pursuant to periodic balance sheets, without prejudice of the obligations concerning the workers shareholding, the legal reserve and the appropriate responsibilities pursuant to the General Business Corporations Law, provided that they comply with the pertinent tax obligations. The financial system companies profit distribution is governed by the Law of the matter. Article 11.- The State guaranties the supply of basic utility services by promoting the participation of the private sector in order to improve the quality of such services. Article 12.- The State does not establish neither discriminatory nor differentiated treatments in currency exchange, prices, tariffs or non-tariff fees among investors and the companies in which they participate or based on the sectors, the type of economic activity, or the geographical location of companies. Neither may the State establish such treatments among local or foreign individuals. No Central, Regional or Local Government authority, official or employee at any level, or Stateowned companies may establish or apply neither discriminatory nor differentiated treatments pursuant to the provisions of this Article under responsibility. Article 13.- Pursuant to the provisions of the last Paragraph of Article 126 of the Political Constitution, the national need for private investment, local and foreign, in productive activities carried out or to be carried out in the country s frontier areas is hereby declared. Consequently, foreign individuals and companies may acquire concessions and rights on mines, lands, forests, water, fuel, energy sources and other resources required for the development of their productive activities within fifty kilometers of the country s frontiers, prior authorization granted by Supreme Resolution countersigned by the President of the Council of Ministers and the Minister of the appropriate sector. Such Supreme Resolution may establish the conditions to which the acquisition or exploitation will be subject. Competent sector authorities will grant concessions and other forms of authorizations for the exploitation of natural resources located within fifty kilometers of the country s frontiers in favor of foreign individuals or companies that request so, prior compliance with the applicable legal

provisions and upon verifying that the Supreme Resolution referred to in the foregoing paragraph has been issued. TITLE III JURIDICAL SECURITY OF INVESTMENTS IN TAX MATTERS Article 14.- The constitutional lawfulness principle in tax matters implies that the creation, modification and suppression of taxes, the granting of exemptions and other tax benefits, as well as the determination of the tax base, taxpayers, perceivers and withholders of the appropriate aliquots and tax base, should be regulated by law enacted by the Congress of the Republic pursuant to the provisions of this Article. This principle is applied in the following cases: a) When Legislative Decrees are enacted under the limitations established by a law delegating legislative powers, which should expressly determine the tax matter to be regulated, the scope of power delegation and the term during which such power will be exercised; b) When Regional Governments create, modify and suppress taxes, or create exemptions in compliance with the powers delegated thereto by law enacted by the Congress of the Republic and provided that the power delegation Law complies with the following requirements: 1. That the specific matter to which the delegation refers is determined, as well as its scope and term during which such power will be exercised; and, 2. In the case of tax creation, it should expressly establish the tax base, the tax-generating event, the taxpayers, the exemptions and the appropriate aliquots, as well as the effective period of the tax which is authorized to be created and, if applicable, the perceivers or withholders. The same requirements are demanded for tax modification when applicable. When using the tax powers referred to in this section, the taxes created by Regional Governments should not contravene the national legislation provisions. Regional Governments cannot create taxes, the tax base of which is subject to national taxation. c) When Local Governments create, modify or suppress contributions, municipal taxes or fees, or create exemptions under the powers delegated by law enacted by the Congress of the Republic, provided that the power delegation law complies with the following requirements: 1. That the specific subject-matter of the delegation, its scope and term during which such power will be exercised are determined; and, 2. When contributions, municipal taxes or fees are created, it should expressly establish the tax base, the tax-generating event, the taxpayers, as well as the effective period of the tax which is authorized to be created and, if applicable, the perceivers or withholders. The same requirements are demanded for the modification of contributions, municipal taxes and fees, when applicable. Contributions, municipal taxes and fees are approved by Municipal Decree pursuant to the provisions established in this section and within the following limitations:

2.1. Improvement contributions are mandatory payments to be carried out by taxpayers to Municipalities for verifiable individual benefits obtained from the execution of public works. The contribution return will only be aimed at the recovery of the investment carried out in such public works or at financing the maintenance thereof, 2.2. Municipal taxes are the charges to be mandatory paid to the Municipality based on a utility service supplied thereby. The amount collected for such concept should not exceed the total cost of the utility service supply and its return will only be aimed at the financing thereof; 2.3. Fees are charges to be mandatory paid by the taxpayer to the Municipality based on an administrative service supplied thereby. The amount charged for this concept should not exceed the total cost of the supply of the administrative service and its return will only be applied to the financing thereof. By applying the tax powers referred to in this section, the contributions, municipal taxes and fees created by Local Governments may not be imposed on the entrance, exit or transit of goods, merchandise, products and animals. Highway or bridge tolls established by Local Governments may only be imposed on the vehicle use of the public roads or bridges built by the Municipality or maintained thereby, provided that those roads are not part of the national road network: d) When tariffs are regulated by Supreme Decree; and, e) When the amount of taxes known as charges are modified by Supreme Decree. Article 15.- The publicity principle in tax matters implies that all tax regulations should be published in the official gazette at least five (5) calendar days before the expiration date for the exigibility of formal or material tax obligations, in order to allow for the compliance therewith by taxpayers. In the case of Legislative Decrees, these should be published within the term established for the exercise of the delegated powers and with the anticipation indicated in the previous paragraph. Article 16.- The companies and the investments thereof may have the right to file objections before the Tax or Customs Court, when applicable, on matters related to taxes, contributions, charges, municipal taxes, registration fees, tariffs, rates and other fees charged for administrative proceedings, being subject to the procedures established by Law. The Tax or Customs Court, accordingly, represent the last administrative instance.

TITLE IV JURIDICAL SECURITY GRANTED TO INVESTMENTS IN ADMINISTRATIVE MATTERS 1 Article 17.- The provisions of this Title are applicable to all the administrative procedures and proceedings brought by companies and investments before State authorities. Such proceedings should grant certainty as to the progress of the applications. All proceedings and their appropriate requirements will be characterized by simplicity and transparency. Article 18.- In order to relieve companies and investors from charges and obligations imposed thereon with regard to the Public Administration and initiate an effective debureaucratization process in the country, administrative proceedings or requirements may only be established by Supreme Decree, Regional Executive Decree or Municipal Ordinance given by the Central, Regional, and Local Governments, respectively. Article 19.- Supreme Decree N 006-67-SC the Administrative Proceedings General Regulations and Law N 25035, Administrative Simplification Law, will be in force provided that they do not oppose the provisions in this Title. CHAPTER II ELIMINATION OF ADMINISTRATIVE RESTRICTIONS TO INVESTMENT Article 20.- The Ministries, public institutions and organizations, as well as other Public Administration entities of any nature, whether they are dependent upon the Central Government, Regional Governments or Local Governments, are obliged to approve legal regulations aimed at drastically unifying, reducing and simplifying all administrative proceedings and procedures brought before the appropriate entity, pursuant to the provisions of this Title. Article 21.- The entities referred to in the foregoing Article should approve their appropriate Single Text of Administrative Proceedings (TUPA), which will mandatory include the following information: a) All administrative proceedings carried out before the entity; b) A clear and detailed description of the requirements to carry out each administrative proceeding; c) Qualification of each proceeding depending on the following: a. Whether it is an automatic approval proceeding, pursuant to the provisions of Article 24 of this Legislative Decree; 2. Whether it requires a prior evaluation from the Public Administration; in this case, the following should also be determined: 1 By Supreme Decree Nº 094-92-PCM, published on January 2, 1993, the legal rules related to juridical security and administrative matters foreseen in Title IV of Legislative Decree N 757, were regulated.

2.1 If the corresponding term has expired, the administrative silence, positive or negative, is applicable, pursuant to the provisions of Articles 25 and 26 hereof; or, 2.2 If neither the term nor the administrative silence is applicable, in the case of administrative proceedings referred to in Article 27 of this Legislative Decree: d) The cases in which the payment of fees is applicable and the amount thereof; e) The agency before which applications should be filed; f) The competent authority for the approval of each proceeding; and, g) The competent authorities or entities which decide on appeals. Article 22.- The TUPA referred to in the foregoing Article will be approved by Supreme Decree given by the appropriate sector in the case of entities depending on the Central Government; if the entities depend on Regional Governments, such TUPA will be approved by Regional Executive Decree, and if they depend on Local Governments by Municipal Ordinance. The legal regulations referred to in the first paragraph of this Article should be approved and published in the official gazette before June 30, 1992, under responsibility of the Head of the pertinent sector or entity. Upon the expiration of such term, all administrative proceedings, their requirements and the payment of the appropriate fees not included in the TUPA may not be exigible to the interested parties to carry out economic activities. Any modification regarding administrative proceedings before the entities referred to in Article 20 hereof implying the creation of new proceedings, their previous evaluation, the legal basis for negative administrative silence or the increase of requirements, should be referred to the appropriate TUPA and will require to be approved by Supreme Decree, Regional Executive Decree and Municipal Ordinance, given by Central, Regional or Local Government entities, respectively Notwithstanding the provisions of the foregoing paragraph, the provisions regarding the elimination of proceedings and requirements may be approved by Ministerial Resolution, Regional Executive Resolution or Municipal Agreement, given by Central, Regional or Local Government entities, respectively. They may also refer to the appropriate TUPA. The TUPA should be updated on an annual basis and published on the official gazette no later than June 30 of each year, under responsibility of the Head of the sector or entity, unless the effective TUPA has not been amended, which should be made known to the interested parties by notice published on the official gazette. Otherwise, the provisions of the second paragraph of this Article will be applicable. Article 23.- The interested parties may only be required to comply with the administrative proceedings. No other information, documentation or payment not regulated therein may be required, under the responsibility of the official demanding so. Article 24.- The applications filed before the different Public Administration entities referred to in Article 20 of this Legislative Decree will be considered automatically approved on the same filing date of the appropriate appeal or format, provided that the requirements are complied with and that the complete documentation required by the TUPA is enclosed for each case.

For the purposes of the provisions of the foregoing paragraph, a copy of the appeal or format filed by the interested party including the official receipt seal will suffice as a record of the application s automatic approval. Article 25.- In exceptional cases, it may established that the administrative proceedings will require a prior evaluation to be established in the TUPA. In these cases, the pertinent entity will have a maximum term of thirty (30) calendar days to issue the appropriate decision, calculated as from the filing date of the application or format. If such term has elapsed without a final decision, the proceeding will be considered approved. Article 26.- Only in duly qualified cases will it be possible to establish whether the application or format will be considered rejected once the term referred to in the foregoing Article has elapsed, in order for the interested party to file the pertinent administrative appeals, which should be established in the TUPA. Article 27.- The provisions established in Articles 24, 25, 26, 28 and 32 of this Legislative Decree are not mandatory applicable to tax proceedings, administrative contentious proceedings between two or more parties, transfer or acquisition procedures of goods and services by or for the State and to proceedings referred to the granting of concessions for infrastructure public works. Article 28.- The applications or formats to carry out administrative proceedings filed before the different Public Administration entities, without complying with the appropriate requirements, should be received under the condition of rectifying the defect or omission within a term of 48 hours, indicating such circumstance in the deed and copy thereof. Once the referred term has elapsed without having rectified the defect or omission, the document will be considered as not filed and will be returned to the interested party. Article 29.- Any document, application or information filed before the entities referred to in Article 22 of this Legislative Decree to carry out the administrative proceedings will be considered as an affidavit and should be countersigned by the interested party or representative thereof, who will be liable for the authenticity of the information and documents filed, under penalty of incurring in crimes involving public documents specified in Title XIX of the Criminal Code, accordingly, and notwithstanding the subsequent administrative control. Article 30.- The entities referred to in Article 22 hereof may only collect the fees mentioned in the TUPA for the execution of administrative proceedings. The collection of such fees will only be applicable when such proceedings are initiated ex-parte, and provided that the appropriate proceeding implies that the entity will supply a service inherent to such proceeding. The amount of the fees may not exceed the service s real cost supported by the competent entity s administrative office, under responsibility. When the TUPA requires the filing of forms or formats, the Public Administration will accept the filing of simple copies of the appropriate formats instead of the original ones unless the latter are distributed free of charge and made available to the interested parties Article 31.- The entities referred to in Article 20 hereof may request neither copies of the documents issued by the same entity, nor documentation previously filed by the interested party before such entity, which has not become invalid or ineffective as established in the same document.

Article 32.- The copies of the documents, certified or not by public notaries, officials or civil servants in the exercise of their functions, will have the same value as the originals to comply with the requirements referred to the administrative proceedings brought before any Public Administration entity referred to in Article 20 hereof. Such entities will not require the filing of official translations. A simple translation will suffice under the joint responsibility of the translator and the interested party. Article 33.- The filing of documents or appeals, the withdrawal of notices, certificates, decisions or discounts, the information required by the interested party, as well as any other administrative proceeding, should be carried out during working hours. For no reason, the Public Administration entities will split their assistance schedule to dedicate one part of their time to assist only certain issues. Article 34.- The Public Administration entities referred to in Article 20 of this Legislative Decree, should establish one single document processing office, through which the interested parties will carry out all formalities and obtain the information required to carry out any administrative proceeding. CHAPTER III TRANSPARENCY IN THE PROCESSING OF ADMINISTRATIVE PROCEEDINGS Article 35.- The documents, records, studies, opinions, statistical data and any other information in the possession of the public sector entities, should be supplied to the individuals who require so. In case copies are required, the interested parties should assume the appropriate cost. Exceptions to this provision are the documentation and information likely to affect national security and foreign affairs, as well as those limited exclusively to Public Administration internal circulation and use. The confidential documentation and information belonging to individuals pursuant to the legal provisions in force or referred to business and technological secrets are also exceptions to such provision. Article 36.- The public officials and civil servants who fail to comply with the provisions established in Article 24 hereof will incur in a disciplinary fault worthy of sanction pursuant to the provisions of Article 26 of Legislative Decree N 276. The interested parties may file individually or jointly the remedy of complaint referred to in Article 108 of Supreme Decree N 006-67-SC, address the internal control body of the appropriate entity or file the remedy of complaint before the Attorney General as referred to in Article 67 of Legislative Decree N 52 without prejudice of the civil or criminal actions that may be initiated. Article 37.- Individuals who have been requested gifts, promises or undue benefits to favor, execute or omit a proceeding by public officials or civil servants, in compliance or violation of their functions, may file a formal accusation against such events, individually or jointly, before the internal control body of the appropriate entity or the Attorney General s Office pursuant to the provisions of Articles 11, 12 and 13 of Legislative Decree N 52, without prejudice of the civil or criminal actions that may be initiated.

TITLE V JURIDICAL STABILITY OF INVESTMENTS CHAPTER ONE JURIDICAL STABILITY AGREEMENTS Article 38.- This chapter grants local investors and the companies in which they participate, a treatment equal to the one established in Title II of Legislative Decree N 662, in order to apply the foregoing provisions and those included in this chapter to the same extent to local and foreign investors and the companies in which they participate. Article 39.- The juridical stability agreements are executed pursuant to the provisions of Article 1357 of the Civil Code and have force of law. Thus, they cannot be unilaterally amended or terminated by the State. Such contracts have a civil and non-administrative nature and may only be amended or cancelled by agreement between the parties. Article 40.- The agreements executed under Article 12 of Legislative Decree N 662 may also be intended to guarantee the stability of the tax system applicable to investment-receiving companies exclusively with regard to the taxes which tax base is represented by the companies income, provided that the total amount of the new investments received by the company exceeds 50% of the capital and reserve thereof, and is applied to the extension of their production capacity or technological improvement. Likewise, such agreements may be executed when more than 50% of the stock of the companies comprised within the State s business activity is transferred. Article 41.- The Stability Agreements to be executed under the provisions of Title II of Legislative Decree N 662 may be also intended to guarantee the stability of a tax system applicable to leasing contracts, provided that the value of the goods subject-matter of the contract is no less than US$ 2,000,000; or being lower, that it should not be less than US$ 500,000, and that the acquisition of goods should generate directly or indirectly more than 20 permanent work benches or no less than US$ 2,000,000 of foreign currency income derived from exports during the three years following the execution of the agreement, without being obliged to capital contribution or minimum terms. Article 42.- The State may approve the assignment of rights and obligations carried out by an investor in favor of another investor regarding the juridical stability agreement executed. Article 43.- All procedures and proceedings related to juridical stability agreements brought by local investors will be carried out before the agency appointed by the appropriate Minister of the Sector. Article 44.- Regional and Local Governments may execute juridical stability agreements with investors making investments in their respective jurisdictions, and with companies established or to be established therein exclusively with regard to matters of their competence. Article 45.- The rights, guaranties and securities regulated in this chapter do not restrict in any manner whatsoever the investors or companies power to also benefit from the systems foreseen in other legal provisions.

CHAPTER TWO INSURANCE FOR PRIVATE INVESTMENTS Article 46.- Any investor is empowered to take out, locally or abroad, insurance covering their investments against commercial and non-commercial risks. Article 47.- The State provides the investors with the coverage of their investments through the Multilateral Investment Guarantee Agency (MIGA) of the World Bank or other similar entities which Peru is a member of. Consequently, the State will take actions and file the required documents for such purpose in the case of foreign investors. The State consents to the coverage requested by investors. CHAPTER THREE SETTLEMENT OF CONTROVERSIES RELATED TO INVESTMENT Article 48.- In its relations with individuals, the State, its agencies, the Central Government, as well as Regional and Municipal Governments and other public law companies, in addition to those companies included in the State s business activity, may submit to national or international arbitration, pursuant to the national and international legislation, of which Peru is a party, any controversy referred to their assets and obligations, provided that they are derived from a private law or contractual financial juridical relation. TITLE VI JURIDICAL SECURITY IN ENVIRONMENTAL CONSERVATION Article 49.- The State promotes the rational balance between social and economic development, environmental conservation and sustainable use of natural resources by guaranteeing juridical security to investors by means of clear regulations for environment protection. Consequently, the State promotes the participation of companies or private institutions in activities aimed at environmental protection and the reduction of environmental pollution. Article 50.- The competent sector authorities hearing matters related to the application of the provisions of the Environment and Natural Resources Code are the Ministries or controlling agencies, as applicable, from sectors to which the activities developed by the companies belong, notwithstanding the powers of Regional and Local Governments pursuant to the provisions of the Political Constitution. (Paragraph amended by the Ninth Supplementary Provision of Law N 26734) In case the company develops two or more activities included within the competence of different sectors, the competent sector authority will be the one belonging to the activity of the company generating the higher annual gross income. Article 51.- The Competent Sector Authority will report the National Environment Council CONAM, on the activities to be developed in its sector, which as a result of environmental risks may exceed the permissible environmental pollution or deterioration levels or standards, and which should mandatorily file environmental impact studies prior to the execution thereof, as well as studies on the maximum permissible limits of accumulated environmental impact.

Likewise, the following will be proposed to the National Environmental Council - CONAM: a) The requirements for the preparation of Environmental Impact Studies and Environmental Management Adaptation Programs; b) The procedures for the approval of such studies, as well as the appropriate control; and, c) Other regulations referred to Environmental Impact. With CONAM s favorable opinion, the activities and the maximum permissible limits of accumulated Environmental Impact, as well as the proposals mentioned in the foregoing paragraph will be approved by Supreme Decree given by the Council of Ministers. The Environmental Impact Studies and Environmental Management Adaptation Programs will be carried out by companies or institutions duly qualified and registered at the registry to be created by the Competent Sector Authority for such purpose. (Article amended by Article 1 of Law N 26786) Article 52.- In cases of serious or imminent danger for the environment, the Competent Sector Authority may, prior notice to CONAM, provide for the adoption of one of the following security measures by the Head of the activity. (Paragraph amended by Article 2 of Law N 26786) a) Procedures which eliminate the risk or reduce it to permissible levels, establishing for such purpose appropriate terms based on the seriousness or imminence thereof; or, b) Measures which restrict the development of activities generating serious or imminent danger for the environment. In case that the development of activities could cause an irreversible damage seriously endangering the environment and the population s life or health, the Competent Sector Authority may suspend permits, licenses or authorizations previously granted for such purposes. Article 53.- The companies supplying drinking water supply and sewage system services should have the appropriate certification that they comply with the physical-chemical and bacteriologic quality standards for drinking water, and with the treatment conditions for final sewage disposal. In case these companies do not have quality certificates with the periodicity required by the Ministry of Health, the directors of such companies will incur in the crime provided for by in Article 305 of the Criminal Code. The quality control of water for human consumption is under the charge of public or private companies or institutions specialized in environmental sanitation, which should be duly qualified and registered at a Special Registry to be created by the Ministry of Health for such purpose. The Ministry of Health will establish the requirements to be complied with for such purpose and will supervise the activities of such companies or institutions. Article 54.- The quality of protected natural areas may only be granted by Supreme Decree given with the approving vote of the Council of Ministers. The protected natural areas may be national, regional or local, according to the Government in charge of the management thereof, to be determined in the Decree creating those areas. The management policies of such areas will be set by the Central Government.

The establishment of protected natural areas has neither retroactive effects nor does it affect the rights acquired prior to the creation thereof. Article 55.- It is hereby prohibited to enter residues or waste products into the national territory, regardless of their origin or material state, which due to their nature, use or purposes, could be dangerous or radioactive. The list of those goods will be established by Supreme Decree given with the approving vote of the Council of Ministers. The admission of any other type of residues or waste products will only be intended for recycling, reutilization or transformation. Article 56.- The State may award land for ecotourism purposes to individuals, in property or use, prior filing of the appropriate application. SUPPLEMENTARY PROVISIONS ONE.- The exceptional measures of national interest which should be adopted for business reconversion purposes to adapt the situation of companies to the world changes and the actions leading to achieving competitiveness of the national productive sectors versus international products, and particularly, as a result of international agreements in the Latin American region, and the ones executed by member countries of the Andean Pact, are governed by the following principles: - The foundations of the Republic s economic system foreseen in Article 110 of the Political Constitution; - The compliance with Treaties, particularly those related to integration referred to in Articles 100, 101 and 106 of the Political Constitution; and, - The duty of all Peruvians to contribute to common welfare. TWO.- Price and tariff increases or salary improvements will be subject to the following regulations: a) The prices and tariffs, set by administrative authorities pursuant to law will be readjusted considering the economic factors and non-automatic readjustment systems, or methods based on price variation indexes; and, b) The covenants and collective bargaining agreements neither will contain automatic salary readjustment systems set according to price variation indexes, nor will they be agreed upon or referred to in foreign currency. The workers of the private activity system governed totally or partially by related regulations, agreements or clauses are entitled to the right to request the readjustment of their salaries and improvement of the working conditions through collective bargaining procedures, as in the case of workers under the private activity common system, considering, among other factors, the increase of production and productivity. (Paragraph substituted by Article 2 of Law N 25541). THREE.- In order to promote private investments in collective fund management systems and guarantee the appropriate performance, the Personal Property Registry for Collective Fund Management Systems is hereby created, which will be under the charge of the National Supervisory Commission of Companies and Securities.

By virtue of Supreme Decree countersigned by the Minister of Economy and Finance, the Regulations of the Registry referred to in the foregoing paragraph should be approved within a term which may not exceed sixty (60) calendar days. In order to calculate the fees referred to in Article 4 of Law Decree N 23186, the capital installments of the collective fund management companies will not be considered since they do not represent effective income thereof. FOUR.- In the case of civil associations, the registration of board of directors members in the pertinent registry will only require the filing of a copy of the minutes of the General Members Meeting in which such agreement is recorded. Likewise, in the case of managers and other attorneys-in-fact, the filing of a copy of the minutes from the competent body will suffice. These provisions govern all records as from the effective date hereof, even though the agreements or appointments may have taken place previously. FIVE.- Foreign entities may carry out business in the country through attorneys-in-fact with special or general powers, for which they can hire personnel and obtain labor and other kind of registrations required for the development of their activities. The appointment of attorneys-in-fact by such entities should be registered at the Companies Registry, for which special items will be opened in each case. SIX.- Any reference to monthly minimum wage made in Articles 1623, 1624 and 1625 of the Civil Code, will be understood as referred to Tax Units (UIT). SEVEN.- Section 3) of Article 359 of the General Business Corporations Law, which single uniform text has been approved by Supreme Decree N 003-85-JUS, will be substituted by the following paragraph: "3. Losses which at the closing of the corporate period reduce the company s shareholders equity to an amount lower than one third of the capital, unless it is reintegrated or reduced, or the shareholders, directly or through third parties, furnish guarantee in the benefit of the corporation s creditors which is accepted thereby, for an amount equivalent to the reduction of the company s shareholders equity. EIGHT.- The following paragraph is added to Article 8 of Law N 23323: In no case the amount to be paid to the Mutual Fund for an agreement should exceed 5 Tax Units (UIT). (Provision derogated by section a of Article 2 of Law Decree N 26092). NINE.- Any reference to authorities, competent authority or environmental authority made in Legislative Decree N 613, - Environment and Natural Resources Code- will be understood as referred to the competent sector authority, that is, the Ministry of the Sector to which the activity developed belongs. Likewise, any prohibition set in such legal regulation as to environmental pollution, will be understood as referred to the one exceeding the permissible pollution levels established for each effluent by the competent sector authority, considering accumulative degradation. TEN.- Article 137 of Legislative Decree N 613 will be substituted by the following Article:

"Article 137.- The actions filed to protect the environment or those mainly intended for such purpose, are exercised before the judge of the jurisdiction in which the right was affected or the defendant s domicile is located. ELEVEN.- The party who initiates an action before the Judicial Power under the provisions of the second paragraph of Article 3 of the Preliminary Title of Legislative Decree N 613, which is not admitted will be responsible for the damages that may have been caused. TWELVE.- The legal regulations, by which the excise tax imposed on fuel is set, are hereby exempted from the term provided for in Article 15 hereof. THIRTEEN.- Advertisements produced or prepared abroad which is broadcast by any mass media in the country should previously comply with the payment of the appropriate taxes. In order to appreciate or apply tariffs, such advertising will be receive the same treatment as motion pictures to be shown in Peru, as applicable. The mass media broadcasting advertisements produced or prepared abroad will require evidence of the payment of the appropriate taxes. TRANSITORY PROVISIONS ONE.- Provision derogated by the Second Final Provision of Law Decree N 25596. TWO.- The provisions of the last paragraph of Article 169, the second paragraph of Article 222 and section 3 of Article 359 of the Single Uniform Text of the Business Corporations Law, approved by Supreme Decree N 003-85-JUS are suspended until December 31, 1997 (Amended by Article 1 of Law N 26724) THREE.- The provisions contained in the laws and legislative decrees establishing or regulating systems for the setting of public tariffs in force as of the effective date hereof, will subsist until they conform to the provisions of the first paragraph of Article 4 of this legal regulation by virtue of a Supreme Decree. FOUR.- While the appropriate TUPA referred to in Chapter II of Title IV of this Legislative Decree is not approved, the Public Administration agencies from the Central, Regional or Local Governments, may not raise the fees for the execution of administrative proceedings, in force as of the effective date hereof. FIVE It is hereby stipulated that the provisions contained in Articles 5 and 29 of Legislative Decree N 662 imply that the administrative fees, charges or tariffs charged to foreign investors should be reduced to the level of those charged to local investors as from the effective date of Legislative Decree N 662.

FINAL PROVISIONS ONE.- The following legal provisions are hereby derogated: a) Article V of the Preliminary Title, Articles 8, 17, 18, 56, 57, 58, 89, 107, and 115, as well as Chapters XXI and XXII of Legislative Decree N 613. b) Law N 25200, Article 19 of Law N 25185 and Supreme Decree N 014-89-PE. c) Section 1 of Article 1599 and section 2 of Article 1913 of the Civil Code. d) Supreme Decrees N 020-90-TR, 021-90-TR and section c) of Article 1 of Supreme Decree N 034-90-TR. e) Supreme Decrees N 399-86-EF, 400-86-EF, 226-90-EF, 254-90-EF and other supplementary, amending and regulatory provisions; and, f) Any other legal regulation opposing the provisions of this Legislative Decree. TWO.- The provisions of the Fifteenth Supplementary Provision of Legislative Decree N 653 will remain in force. The provisions of Article 12 of this Legislative Decree do not comprise the provisions in force for the defense of farmers, including specific fees, surcharges and protection clauses. THREE.- This Legislative Decree will become effective thirty (30) days following its publication in El Peruano Official Gazette.