Norm for the Distribution of Profits of Financial Institutions of the Securities Market

Page 1 of 3 Resolution No. CD-SIBOIF-1105-1-ABR2-2019 Dated April 2, 2019

NORM FOR THE DISTRIBUTION OF PROFITS OF FINANCIAL INSTITUTIONS OF THE SECURITIES MARKET

The Board of Directors of the Superintendence of Banks and Other Financial Institutions,

CONSIDERING

I

That the Capital Markets Law, Law No. 587, published in La Gaceta, Official Gazette No. 222, of November 15, 2006, contained in Law No. 974, Law of the Nicaraguan Legal Digest on Banking and Finance Matters, published in La Gaceta, Official Gazette No. 164, of August 27, 2018, and its reforms (Legal Digest Law); in its article 211 establishes that: "The provisions of Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions..." shall be applicable supplementarily insofar as they are not expressly regulated."

II

That Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, published in La Gaceta, Official Gazette No. 196, of October 14, 1999, and its reforms, in its article 10, numeral 7, establishes that: "It corresponds to the Board of Directors of the Superintendence: (...) 7. Approve (...) the conditions for the distribution of profits..."

III

That according to the considerations stated above and based on the authority granted by article 10, numerals 1, 2, and 7 of Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, published in La Gaceta, Official Gazette No. 196, of October 14 1999, and its reforms; contained in the Legal Digest Law.

In exercise of its powers,

RESOLVES

CD-SIBOIF-1105-1-ABR2-2019

To issue the following:

NORM FOR THE DISTRIBUTION OF PROFITS OF FINANCIAL INSTITUTIONS OF THE SECURITIES MARKET

CHAPTER I GENERAL PROVISIONS

Article 1. Concepts.- For the purposes of this norm, the terms indicated in this article, both in uppercase and lowercase, singular or plural, shall have the following meanings:

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a) Institution or Financial Institutions: Institutions of the securities market subject to the supervision of the Superintendence of Banks and Other Financial Institutions, in accordance with Law No. 587, Capital Markets Law.

b) Capital Markets Law: Law No. 587, Capital Markets Law, published in La Gaceta, Official Gazette, No. 222 of November 15, 2006; contained in the Legal Digest Law.

c) Superintendence: Superintendence of Banks and Other Financial Institutions.

d) Superintendent: Superintendent of Banks and Other Financial Institutions.

Article 2. Object and Scope.- This norm aims to establish the guidelines to be complied with by the Financial Institutions of the Securities Market, to obtain the authorization for the distribution of profits from the Superintendent.

CHAPTER II CONDITIONS FOR THE DISTRIBUTION OF PROFITS

Article 3. Conditions.- For the authorization of profit distribution, Financial Institutions must submit an authorization request to the Superintendent and comply with the following:

a) Minimum required social capital.

b) Not have pending mandatory reserves to be constituted, as established in the Capital Markets Law and norms issued by the Board of Directors.

c) Have contracted and valid the bonds or guarantees required for institutions that are applicable, as established in the Capital Markets Law and norms issued by the Board of Directors.

d) Not have pending adjustments ordered by the Superintendence, or determined by themselves and/or by external audit, regardless of the nature of the balances to be recorded.

e) That the opinion of external auditors regarding the audit performed at the end of the period does not include qualifications or be subject to a disclaimer of opinion that could affect the financial situation of the Institution.

f) The result of the exercise subject to the request for distribution of profits does not present losses.

g) There are no pending processes for reclassification or correction of account balances, or records of unaccounted values derived from inspections or audits.

h) Have implemented in a timely manner the instructions derived from the supervision processes, both on-site or off-site.

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i) Have the minimum amount of own resources that guarantees coverage for the management risk, as established in the regulations governing the matters on administrating companies and Investment Funds, and securitization.

j) Other situations that in the judgment of the Superintendent of Banks warrant restricting the Distribution of Profits, when in the opinion of said official and as a prudential measure, such distribution could harm the stability or solidity of the Institution.

The Superintendent may exempt, through a reasoned resolution, the compliance with some of the conditions provided in this article, based on the particular financial conditions of the respective financial institution.

Article 4. No Objection.- Financial Institutions that agree to the distribution of profits shall not make such distribution effective under any modality, until they have obtained in writing the express non-objection of the Superintendent.

CHAPTER III FINAL PROVISIONS

Article 5. Validity.- This norm shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Gazette. (S) S. Rosales C. (S) M. Díaz O. (S) Fausto Reyes B. (S) Illegible (Silvio Moisés Casco Marenco) (S) Illegible (Rafael Ángel Avellán Rivas)

RAFAEL ÁNGEL AVELLÁN RIVAS Secretary of the Board of Directors SIBOIF