Resolution JPRF-F-2023-091 Amending Section XVII on Authorization of New Activities for Popular and Solidarity Financial Sector Entities

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Governmental Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | Resolution No. JPRF-F-2023-091 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That Article 82 of the Constitution of the Republic of Ecuador enshrines the right to legal security based on respect for the Constitution and the existence of prior, clear, public laws and regulations applied by competent authorities; That Article 84 of the Fundamental Norm mandates that every body with regulatory authority shall have the obligation to formally and materially adapt laws and other legal norms to the rights provided therein; That Article 226 of the Constitution of the Republic of Ecuador provides that State institutions, their agencies, dependencies, public servants, and persons acting by virtue of state authority shall exercise only the competencies and powers attributed to them in the Constitution and the law; That Article 308 of the Supreme Norm establishes that financial activities are a matter of public order and may be exercised, with prior authorization from the State, in accordance with the law; That Article 309 of the Fundamental Charter determines that the national financial system is composed of the public, private, and popular and solidarity sectors, which intermediates public resources. Each of these sectors shall have specific and differentiated regulatory and control entities responsible for preserving their security, stability, transparency, and solidity. These entities shall be autonomous; That Article 13 of the Organic Monetary and Financial Code, Book I, creates the Financial Policy and Regulation Board as part of the Executive Function, responsible for formulating credit, financial, securities, insurance, and prepaid comprehensive health care services policy and regulation; That Article 14.1, number 14, letter b), of the aforementioned Code grants the Financial Policy and Regulation Board the function of authorizing financial, securities, insurance, and prepaid comprehensive health care services entities to carry out new activities or operations that, while not prohibited, are necessary for the fulfillment of the objectives of financial, credit, securities, insurance, and prepaid comprehensive health care services policy, in accordance with the regulations issued for this purpose; That the penultimate paragraph of Article 14.1, supra, states that, among other institutions, the Superintendency of the Popular and Solidarity Economy may propose regulatory projects for consideration by the Financial Policy and Regulation Board, backed by respective technical reports; That Article 150 of the aforementioned Organic Code determines that the issued regulation must recognize the nature and particular characteristics of each of the sectors of the national financial system; That Article 444 of the aforementioned Organic Code establishes that popular and solidarity financial entities are subject to the regulation of the Monetary and Financial Policy and Regulation Board and to the control of the Superintendency of the Popular and Solidarity Economy, who, in the policies they issue, shall take into account the nature and characteristics specific to the solidarity financial sector;

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Governmental Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | That Article 445 thereof provides that savings and credit cooperatives are distinguished as open or closed, understanding that closed ones are those whose members share a common bond uniting them as a profession, employment relationship, guild, or family. Closed savings and credit cooperatives shall not carry out any type of financial intermediation activity with clients or third parties. The Financial Policy and Regulation Board shall regulate matters concerning open or closed savings and credit cooperatives; That General Provision Twenty-Ninth of the aforementioned Organic Code, Book I, provides that in current legislation where reference is made to the "Monetary and Financial Policy and Regulation Board," it shall be replaced by "Financial Policy and Regulation Board"; That Transitory Provision Fifty-Fourth thereof, Book I, provides that resolutions contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and norms issued by control bodies shall remain in effect until the Monetary and Financial Policy and Regulation Board and the Financial Policy and Regulation Board resolve what is appropriate, within the scope of their competencies; That Article 21 of the Organic Law of the Popular and Solidarity Economy considers the cooperative sector as the set of cooperatives understood as associations of persons who have voluntarily united to satisfy their common economic, social, and cultural needs, through a jointly owned enterprise and democratic management, with private law legal personality, non-profit, and of social interest; That Article 144 of the aforementioned Law establishes that the regulation of the Popular and Solidarity Economy and the Popular and Solidarity Financial Sector is the prerogative of the Executive Function. The regulation of the Popular and Solidarity Financial Sector shall be the responsibility of the Monetary and Financial Policy and Regulation Board, created in the Organic Monetary and Financial Code; That through Resolution No. 393-2017-F of September 8, 2017, the Monetary and Financial Policy and Regulation Board, then in function, resolved to incorporate as Section XVII "Authorization of New Activities for Entities of the Popular and Solidarity Financial Sector" of Chapter XXXVI "Popular and Solidarity Financial Sector," Title II "National Financial System" of Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions; That, through numerous technical reports dated February 25, 2022, March 10, 2023, and Official Letter No. SEPS-SGD-2022-07884-OF of March 16, 2022 addressed to the Financial Policy and Regulation Board, the Head of the Superintendency of the Popular and Solidarity Economy attached the Draft Resolution that modifies Section XVII "Authorization of New Activities for Entities of the Popular and Solidarity Financial Sector" of Chapter XXXVI "Popular and Solidarity Financial Sector," Title II "National Financial System" of Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions; That the Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2023-109-M of December 13, 2023, forwards to the President of the Board the following:

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Governmental Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | a. Technical Report No. JPRF-CTSF-2023-021 of December 12, 2023, which indicates the need to regulate the financial intermediation activities of entities of savings and credit cooperatives with clients or third parties, a power determined by the COMYF for the JPRF; and further determines that the proposal submitted by the control body would fulfill this purpose, which consists of including as an additional permitted operation for entities of the SFPS, with prior authorization of the SEPS, that open savings and credit cooperatives receive demand and time deposits from clients or third parties, considering also that social interest and collective well-being are inherent in the nature of this type of entity, and that the current legal framework determines that the profits obtained must feed their entire legal undistributable fund. b. Legal Opinion No. JPRF-CJF-2023-070 of December 13, 2023, which states: "(...) The Financial Policy and Regulation Board has the competence to issue regulation concerning the popular and solidarity financial sector, as indicated by Article 445 of the COMYF and 150 of the Organic Law of the Popular and Solidarity Economy, specifically regarding the activities that can be carried out within the national financial system. (...) The current legal framework provides that closed savings and credit cooperatives shall not carry out any type of financial intermediation activity with clients or third parties, while open savings and credit cooperatives shall be subject to the regulations issued for this purpose by the Financial Policy and Regulation Board. (...) The Reform Proposal contained in Technical Report No. JPRF-CTSF-2023-021 falls within the current legal framework, so its issuance is legally viable according to the competencies and powers attributed to the Financial Policy and Regulation Board."; That the Financial Policy and Regulation Board, in an extraordinary session held via technological means, convened on December 20, 2023, and carried out through video conference on December 21, 2023, reviewed Official Letter No. SEPS-SGD-2022-07884-OF of March 16, 2022, sent by the Superintendent of the Popular and Solidarity Economy, Memorandum No. JPRF-ST-2023-109-M of December 13, 2023, issued by the Technical Secretary of the Board, as well as the aforementioned reports from the Technical Coordination of Policy and Regulation of the Financial Sector and the Legal Coordination of Policy and Financial Norms, in addition to the corresponding draft resolution; That the Financial Policy and Regulation Board, in an extraordinary session held via technological means, convened on December 20, 2023, and carried out through video conference on December 21, 2023, reviewed and approved the following Resolution; and, In exercise of its functions, RESOLVES: ARTICLE ONE.- In Article 320 of Section XVII "Authorization of New Activities for Entities of the Popular and Solidarity Financial Sector" of Chapter XXXVI "Popular and Solidarity Financial Sector," Title II "National Financial System" of Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, incorporate the following text immediately after number four (4):

"5. Receive demand and time deposits from clients or third parties in open savings and credit cooperatives."

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Governmental Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | ARTICLE TWO.- In the Single General Provision of Section XVII "Authorization of New Activities for Entities of the Popular and Solidarity Financial Sector" of Chapter XXXVI "Popular and Solidarity Financial Sector," Title II "National Financial System" of Book I "Monetary and Financial System" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, replace the word "resolution" with "section". SINGLE GENERAL PROVISION.- The Superintendency of the Popular and Solidarity Economy shall notify the content of this Resolution to its controlled entities. FINAL PROVISION.- This Resolution shall enter into force from its publication in the Official Register, and shall be published on the institutional website of the Financial Policy and Regulation Board within a maximum term of two days from its issuance. NOTIFY.- Given in the Metropolitan District of Quito, on December 21, 2023. 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 December 21, 2023.- I CERTIFY. TECHNICAL SECRETARY Mgs. Nelly Arias Zavala