Compilation of Insurance and Reinsurance Regulations - Normative Modifications to Improve the Authorization Process

Montevideo, December 21, 2023
Ref: COMPILATION OF INSURANCE AND REINSURANCE REGULATIONS - Normative Modifications to Improve the Authorization Process

The market is informed that the Superintendent of Financial Services adopted, on December 7, 2023, the following resolution:

1. SUBSTITUTE in Section I - AUTHORIZATION TO OPERATE, of Chapter II - AUTHORIZATION AND QUALIFICATION TO OPERATE, of Title I - INSURANCE AND REINSURANCE COMPANIES of Book I - AUTHORIZATIONS AND REGISTERS, Articles 4.1 and 6 with the following:

ARTICLE 4.1 (MINIMUM REQUIRED INFORMATION)
For the purpose of issuing an opinion by the Central Bank of Uruguay, the application for authorization to operate as an insurance or reinsurance company must be accompanied by the following information and documentation:
a. Company name, indicating legal name and trade name if applicable, real and registered address, telephone, email address and website, tax registration number with the General Tax Directorate and with the corresponding social security body. b. Certified copy of the bylaws or draft bylaws submitted to the Internal Audit of the Nation for approval, in accordance with Article 5.
c. Identification data of the legal representatives of the company (full name, nationality, ID document and address).

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d. List of shareholders, capital to be contributed and percentage of participation, accompanied by the information requested in Article 6. e. List of senior management according to the definition established in Article 145.2 accompanied by the information required in Article 7. f. List of members of the economic group to which the company belongs, according to the definition established in Article 271 of the Compilation of Regulations and Control of the Financial System, including description of activities developed by them, operational and commercial links with the insurance or reinsurance company, as well as details of their websites, if any. g. Projected organizational structure and staffing. Estimated costs of organization, incorporation and installation specifying, if applicable, rental and/or fitting costs and investments. h. Lines of business in which it will operate.
i. Business plan including an economic-financial feasibility study, which must include a budget of activities for the first 3 (three) years of operation.
j. Insurance plans with the minimum contents of Article 16. k. Reinsurance policies.
l. Documentation accrediting compliance with items 1 to 10 of Article 4, as applicable.
m. Receipt of the deposit referred to in Article 5 of Decree No. 354/94 of August 17, 1994. n. Description of services to be outsourced that are essential for the company to enter operation. When services are provided by third parties located outside the country or in the country, but the service is provided wholly or partially in or from abroad, the information and documentation set forth in Article 16.1.1 must be presented.

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If deemed necessary, the Superintendent of Financial Services may request additional information beyond that indicated above.

ARTICLE 6 (INFORMATION ON SHAREHOLDERS).
When applying for authorization to operate, insurance and reinsurance companies must inform the name of their direct shareholders and the persons who exercise effective control of the company, attaching the following information and documentation:
I. Natural persons: the information required by Article 7.
II. Legal persons:
a. Certified copy of the social contract or bylaws. b. When they are foreign institutions:
b.1. Sworn declaration of the foreign institution, with notarized certification of signature and representation, explicitly stating the control and supervision bodies of the country of origin that have jurisdiction over the shareholder company. b.2. Certificate issued by the competent authority of the country of origin or notarial certificate accrediting that the shareholder company is legally constituted and that, in accordance with the legislation of said country, there are no restrictions or prohibitions for such companies to participate as partners, founders or shareholders of other companies constituted or to be constituted in the country or abroad.
c. Memorandum and financial statements corresponding to the last 3 (three) closed economic years, with external auditor's report.
d. Risk rating granted by a rating agency, if any. e. List of shareholders, accompanied by sworn declaration of the legitimate origin of the capital contributed in the terms of Article 149, detailing the shareholder chain up to identifying the legal entity that exercises effective control of the group and indicating the identification document number of each shareholder. It will not be admitted that in that chain there are companies whose shares are bearer shares and transferable by simple delivery.

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If deemed necessary, the Superintendent of Financial Services may request additional information beyond that indicated above.

2. SUBSTITUTE in Chapter V - ISSUANCE AND TRANSFER OF SHARES, of Title I - INSURANCE AND REINSURANCE COMPANIES of Book I - AUTHORIZATIONS AND REGISTERS, Articles 14 and 15 with the following:

ARTICLE 14 (AUTHORIZATION TO ISSUE AND TRANSFER SHARES OR PROVISIONAL CERTIFICATES).
Insurance and reinsurance companies must request prior authorization from the Superintendent of Financial Services to issue or transfer shares or provisional certificates.
Both shares and provisional certificates must be registered.
In analyzing these requests, the resolutions of the aforementioned Superintendent will be based on reasons of legality, timeliness and convenience, considering for the authorization of the transfer of social control what is provided in Article 4. The request must be submitted providing the following information:

1. Certified copy of the resolution adopted by the Shareholders' Meeting by which it is resolved to issue shares or provisional certificates.
2. When it concerns an issuance or transfer to a new shareholder:
   a. Amount of capital to be contributed or paid by the new shareholder. b. The information corresponding to that provided in Article 6.
   c. The sworn declaration of the legitimate origin of the capital, in the terms of Article 149.
3. When it concerns an issuance or transfer to someone who already holds the status of shareholder:
   a. Amount of capital to be contributed or paid by the shareholder. b. The sworn declaration of the legitimate origin of the capital, in the terms of Article 149.
   If the authorized issuance or transfer of shares is not effected within 90 (ninety) calendar days, counted from the date of notification, the corresponding authorization will automatically expire.

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Those issuances of shares or provisional certificates that do not modify the participation of each of the shareholders in the company's capital are authorized, and must be reported in the terms provided by Articles 137.1 or 149, as applicable to a capitalization of equity items or to new contributions by shareholders, respectively. Items whose final destination is a result that cannot yet be recognized in application of the corresponding accounting standards cannot be capitalized. In cases where the shareholder obtains in total a participation of less than 15% (fifteen percent) of the share capital and provided that control or significant influence is not configured, as provided in the appropriate accounting standards for commercial companies, prior notice to the Superintendent of Financial Services will be sufficient, understanding that authorization is conferred if no objections are raised within 10 (ten) business days following. In the aforementioned notice, the information required in this article must be supplied. In all cases, the effectuation of the respective issuances or transfers must be reported to the Superintendent of Financial Services within 10 (ten) business days following the date of occurrence. In the event of the death of a shareholder, such fact must be reported and, within 30 (thirty) days following the date of occurrence, the following documentation must be presented:
a. Transcript of the death certificate. b. Notarial certificate detailing the persons with hereditary rights.
For the purpose of granting non-objection, the Superintendent of Financial Services will evaluate whether the new shareholder(s) meet the required standards.
In this regard, the initiation of the succession process must be accredited and the information of the presumed heirs required by the regulations for shareholders must be presented, within a period of 90 (ninety) days following the date of the death. Once the succession process is finalized, a certified copy of the Certificate of Results of the Succession Proceedings must be presented within a period of 10 (ten) business days, and if there are variations regarding the persons with hereditary rights previously reported, the corresponding information must be presented.

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ARTICLE 15 (MODIFICATIONS OF CAPITAL OF INSURANCE COMPANIES).
Any modification of the capital of insurance companies that is subject to submission to the Internal Audit of the Nation for its approval or knowledge, must be communicated to the Superintendent of Financial Services within 5 (five) business days of the respective procedure being initiated. To this effect, a certified copy of the Minutes of the Extraordinary Shareholders' Meeting or of the administrative body, as the case may be, and proof of submission to the Internal Audit of the Nation will be presented. For capital modifications that are subject to authorization, once the corresponding procedure is completed, the approving resolution and registration in the National Registry of Commerce must be presented, attaching photocopies of the publications.

3. SUBSTITUTE in Chapter VII - VOLUNTARY WITHDRAWAL OF INSURANCE COMPANIES, of Title I - INSURANCE AND REINSURANCE COMPANIES of Book I - AUTHORIZATIONS AND REGISTERS, Article 17 with the following:

ARTICLE 17 (PRIVATE INSURANCE COMPANIES - APPLICABLE REGIME FOR VOLUNTARY WITHDRAWAL).
Private institutions that develop insurance or reinsurance activities that propose to cease their activities by proceeding to their dissolution and liquidation, will be subject to the following:

1. Voluntary dissolution may only be applied to solvent institutions. To this effect, the interested institution must demonstrate that it has a surplus in the technical relations of accreditation of minimum capital and coverage of non-pension, pension and minimum capital obligations.
2. The intention to dissolve the company must be communicated according to the period fixed in Article 159, attaching a certified copy of the document from which such intention arises, with a notice of no less than 90 (ninety) calendar days prior to the date of adoption of the definitive resolution.
3. From the date of communication, the special regime established in Article 150 must be complied with.

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4. The liquidator must be indicated, attaching all information that allows evaluating their competence for the performance of the position, based on what is established in Article 7.
5. The place and person responsible for the conservation of the books and corporate documents must be indicated.
6. The Superintendent of Financial Services will require in all cases the constitution of sufficient guarantees to attend to contingencies that may arise until the completion of the institution's liquidation procedure.
   The constituted guarantees will be released once said procedure is finalized.
7. A liquidation plan must be presented, in which the deadlines and procedures to be followed for the cancellation of obligations assumed by the subscription of insurance or reinsurance contracts are detailed, through their assignment to another insurance company, early cancellation or other alternative procedure that has sufficient guarantees. The Central Bank of Uruguay, through the Superintendent of Financial Services, will evaluate the liquidation plan, and may issue the instructions it deems appropriate.
   Having met the previously established requirements, and once the early dissolution of the insurance company is resolved, a certified copy of the definitive dissolution resolution must be presented, and the Superintendent of Financial Services will proceed to issue the corresponding act of disqualification. From the act of disqualification, the basic capital will not be considered for the calculation of the minimum capital referred to in Articles 19, 20, 21 and 22. The dissolution of the companies and the consequent state of liquidation will be governed by the general principles and precepts of the legislation in force on the liquidation of companies, without prejudice to the obligation of the liquidator to:
8. Comply with what is provided in item 3 above.
9. Report monthly on the evolution of the liquidation in relation to what is established in the liquidation plan presented in due course.
   In the event of a change of liquidator, prior authorization from the Superintendent of Financial Services must be obtained, attaching all

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information that allows evaluating their competence for the performance of the position, based on what is established in Article 7.

4. SUBSTITUTE in Chapter I - ACCOUNTING AND FINANCIAL STATEMENTS, of Title II - INFORMATION REGIME of Book VI - INFORMATION AND DOCUMENTATION, Articles 137.1 and 137.2 with the following:

ARTICLE 137.1 (INFORMATION ON CAPITALIZATION OF EQUITY ITEMS).
Insurance and reinsurance companies must inform the Superintendent of Financial Services of the capitalization of equity items - arising both from the application of legal norms and from resolutions of the shareholders' assembly - within 5 (five) business days following its occurrence, supplying the following documentation:
a. Certified copy of the resolution adopted by the shareholders' assembly. b. Accountant's certified report on the corresponding accounting registration.
c. The necessary information for the update of the Register of Shareholders referred to in Article 148.

ARTICLE 137.2 (INFORMATION ON NON-CAPITALIZED CONTRIBUTIONS).
Insurance and reinsurance companies must inform the Superintendent of Financial Services, within a period of 5 (five) business days following each imputation of the "Contributions to Capitalize" account, the amount of resources irrevocably affected for the purpose of capitalization and the date on which said resources became available to them, attaching a certified copy of the shareholders' meeting minutes from which the decision to increase capital arises.

5. SUBSTITUTE in Chapter IV - SENIOR MANAGEMENT AND SHAREHOLDERS, of Title II - INFORMATION REGIME of Book VI - INFORMATION AND DOCUMENTATION, Articles 147.1 and 148 with the following:

ARTICLE 147.1 (REGISTER OF SHAREHOLDERS).
The Central Bank of Uruguay will keep a Register of Shareholders of insurance and reinsurance companies, which will be public.

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With respect to direct shareholders, what is provided in Articles 14 and 137.1 will apply.
With regard to indirect shareholders, changes must be reported to the Superintendent of Financial Services within 10 (ten) business days following their occurrence, accompanied by:

1. In the case of changes in the shareholder chain: information required by item e. of numeral II) of Article 6.
2. In the case of change of the controlling group or legal entity that exercises effective control: the information required by item l) of Article 4.1 and by Article 6.
   If deemed necessary, the Superintendent of Financial Services may request additional information beyond that indicated above.

ARTICLE 148 (FINANCIAL INFORMATION AND SIGNIFICANT FACTS REGARDING SHAREHOLDERS).
Insurance and reinsurance companies must present the following information about their direct shareholders who hold a participation equal to or greater than 15% (fifteen percent) of the capital and the legal entity that exercises effective control:

1. Annually:
   a.1 Natural persons: sworn declaration regarding their financial situation with indication of assets, rights and bank and non-bank debts, and the existence of encumbrances on them. The date of the sworn declaration cannot be older than 3 (three) months. This declaration must be accompanied by a notarial certification of the holder's signature. a.2 Legal persons: financial statements corresponding to the last closed economic year with external auditor's report, provided they do not belong to the public sector, nor are they institutions supervised by the Central Bank of Uruguay. The aforementioned information must be presented within a period of 5 (five) months counted from December 31 of each year. In the case of legal persons, it will refer to the last closed financial statement during the calendar year prior to the date of presentation.
2. Within a period of 2 (two) business days following the occurrence or knowledge thereof: any significant change that could negatively affect the financial situation or suitability of the shareholder or the legal entity that exercises effective control,

Diagonal Fabini 777 - C.P. 11100 - Tel.: (598 2) 1967 - Montevideo, Uruguay - www.bcu.gub.uy CIRCULAR N°2444

provided they do not belong to the public sector, nor are they institutions supervised by the Central Bank of Uruguay.

CRISTINA RIVERO
Intendant of Financial Supervision
2023-50-1-02066

Diagonal Fabini 777 - C.P. 11100 - Tel.: (598 2) 1967 - Montevideo, Uruguay - www.bcu.gub.uy CIRCULAR N°2444