Resolution No. JPRF-F-2022-027 — Reforming the Extraordinary Merger Process for Entities of the Popular and Solidarity Financial Sector

Resolution No. JPRF-F-2022-027 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That Article 226 of the Magna Carta collects the principle of legality relative to State institutions, their agencies, dependencies, public servants, and persons acting by virtue of a state power; That the aforementioned norm in its Article 308 prescribes that financial activities are a public order service, and may be exercised, with prior State authorization, in accordance with the law; in turn, it establishes that the State will promote access to financial services and the democratization of credit; That, through the Organic Law Reforming the Organic Code of Monetary and Financial Law for the Defense of Dollarization, published in the First Supplement of the Official Register No. 443 of May 3, 2021, the Organic Code of Monetary and Financial Law was reformed; That Article 13 of Book 1 of the Organic Code of Monetary and Financial Law, substituted by Article 8 of the Organic Law Reforming the Organic Code of Monetary and Financial Law for the Defense of Dollarization, published in the Supplement of the Official Register No. 443 of May 3, 2021, in its first clause provides: "The Financial Policy and Regulation Board is created, part of the Executive Branch, as a public law legal entity, with administrative, financial, and operational autonomy, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care service policy and regulation."; That the Twenty-Ninth General Provision of Book 1 of the aforementioned Code, added by literal c) of Article 105 of the Organic Law Reforming the Organic Code of Monetary and Financial Law for the Defense of Dollarization, provides: "In the current legislation that mentions the 'Monetary and Financial Policy and Regulation Board', replace it with 'Financial Policy and Regulation Board'."; That Article 171 of Book 1 of the aforementioned Code determines the classes of merger, defining extraordinary merger as that which occurs between an entity that is in a situation of technical equity deficiency and another entity that is not in such a situation; That Article 172 of the cited legal body establishes that the extraordinary merger process is exempt from ordinary merger procedures and will be regulated by the Financial Policy and Regulation Board; That Article 90 of the Organic Law Reforming the Organic Code of Monetary and Financial Law for the Defense of Dollarization eliminated Article 192 "Equity Deficiency"; and that Article 89 of said Reforming Organic Law substituted Article 190 "Solvency and Technical Equity", whose tenth and eleventh current clauses provide: "The technical equity deficiencies presented by entities of the national financial system, without prejudice to the corresponding sanctions, may be solved within the supervision processes implemented by the superintendencies, with increases in subscribed and paid-in capital and/or subordinated loans. The required technical equity deficiencies must be covered within a maximum period of three months, based on a schedule of the increases that must be made within the indicated period."

Resolution No. JPRF-F-2022-027 Page 2 of 3

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That, in Chapter V "On Mergers, Conversions, and Associations", of Title II "National Financial System", Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy and Regulation Board, currently the Financial Policy and Regulation Board, Section I contains the "Extraordinary Merger Process of Entities of the Popular and Solidarity Financial Sector", whose Article 2 "Conditions" establishes that an extraordinary merger process may be implemented when the Superintendence of the Popular and Solidarity Economy has determined that the financial entity to be absorbed is subject to any of the following circumstances: "2. Technical equity deficiency of the entity that is not solved in the terms provided by Article 192 of the Organic Code of Monetary and Financial Law;"; That, it is necessary to adapt numeral 2, of Article 2 "Conditions", of Section I "Extraordinary Merger Process of Entities of the Popular and Solidarity Financial Sector", of Chapter V "On Mergers, Conversions, and Associations", of, of Title II "National Financial System", of Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy and Regulation Board, currently the Financial Policy and Regulation Board, to accord with current legislation; That, the Superintendent of the Popular and Solidarity Economy, through letter No. SEPS-SGD-2021-32028-OF of December 23, 2021, submits for knowledge and approval of the Financial Policy and Regulation Board, the proposal for the reform of numeral 2, of Article 2 "Conditions", of Section I "Extraordinary Merger Process of Entities of the Popular and Solidarity Financial Sector", of Chapter V "On Mergers, Conversions, and Associations", of Title II "National Financial System", Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions; That, the Technical Secretariat of the Financial Policy and Regulation Board through memorandum No. JPRF-SETEC-2022-0036-M of April 21, 2022, submits to the President of the JPRF, the technical report "Substitute numeral 2, of Article 2 "Conditions", of Section I "Extraordinary Merger Process of Entities of the Popular and Solidarity Financial Sector", of Chapter V "On Mergers, Conversions, and Associations", of Title II "National Financial System", Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy and Regulation Board, currently the Financial Policy and Regulation Board" No. JPRF-CT-2022-0023 of April 20, 2022 and the legal report No. JPRF-CJ-2022-0020 of April 21, 2022, which issue a favorable criterion for the aforementioned reform; That, the Financial Policy and Regulation Board, in ordinary session held by technological means convened on April 21, 2022 and carried out through video conference on April 25, 2022, knew and resolved on memorandum No. JPRF-SETEC-2022-0036-M of April 21, 2022, issued by the Technical Secretariat and its annexes; and, In exercise of the attributions and duties conferred by Article 14.1 of the Organic Code of Monetary and Financial Law, the Financial Policy and Regulation Board,

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RESOLVES: Sole Article.- Substitute numeral 2, of Article 2 "Conditions", of Section I "Extraordinary Merger Process of Entities of the Popular and Solidarity Financial Sector", of Chapter V "On Mergers, Conversions, and Associations", of Title II "National Financial System", Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, issued by the former Monetary and Financial Policy and Regulation Board, currently the Financial Policy and Regulation Board, with the following: "2. Technical equity deficiency that has not been covered within the maximum period of three months, in accordance with what is established in Article 190 of the Organic Code of Monetary and Financial Law; GENERAL PROVISIONS First.- The Superintendence of the Popular and Solidarity Economy will communicate to controlled entities the content of this Resolution. Second.- In case of doubt about the content or scope of the provisions of this Resolution, it will correspond to the Financial Policy and Regulation Board to interpret them in an obligatory manner. FINAL PROVISION.- This Resolution will enter into force from the present date, without prejudice to its publication in the Official Register. Publish this Resolution on the website of the Financial Policy and Regulation Board, within a maximum term of two days from its issuance. COMMUNICATE.- Given in the Metropolitan District of Quito, on April 25, 2022. THE PRESIDENT, Mgs. María Paulina Vela Zambrano The aforementioned resolution was processed and signed by Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on April 25, 2022.- I CERTIFY. TECHNICAL SECRETARY Dr. Nelly Arias Zavala