Norm for the Transfer, Assignment or Acquisition of Shares of Supervised Financial Institutions

NORM FOR THE TRANSFER, ASSIGNMENT OR ACQUISITION OF SHARES OF SUPERVISED FINANCIAL INSTITUTIONS Resolution No. CD-SIBOIF-476-1-ABR25-2007 of April 25, 2007

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

CONSIDERS

I

That Article 16, numeral 4 of Law 561, General Law of Banks, Non-Bank Financial Institutions and Financial Groups (General Law of Banks) establishes that persons interested in acquiring shares of authorized financial institutions, in percentages equal to or greater than 5% of their capital, must obtain authorization from the Superintendent of Banks and Other Financial Institutions;

II

That in order to obtain such authorization, the interested parties must comply with the information requirements indicated in numeral 4 and the solvency and integrity requirements referred to in numeral 6, both of Article 4 of the General Law of Banks; with the Board of Directors of the Superintendence of Banks and Other Financial Institutions being empowered, as indicated in said numerales, to issue general application norms indicating the information and documents that must be presented to prove compliance with what is stated therein.

In exercise of its powers,

HAS ISSUED

The following:

NORM FOR THE TRANSFER, ASSIGNMENT OR ACQUISITION OF SHARES OF SUPERVISED FINANCIAL INSTITUTIONS Resolution No. CD-SIBOIF-476-1-ABR25-2007

CHAPTER I
CONCEPTS, OBJECT AND SCOPE

Art. 1. Concepts.- For the purposes of this norm, the following are understood:

a. 5% Shareholder(s): Natural or legal person who, either individually or together with their related parties, intends to participate in the social capital of a supervised financial institution in a percentage equal to or greater than 5% of said social capital.

b. General Law of Banks: Law 561, General Law of Banks, Non-Bank Financial Institutions and Financial Groups, published in the Official Gazette No. 232 of November 30, 2005.

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

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

Art. 2. Object.- The object of this norm is to establish the requirements and procedures that persons interested in obtaining authorization to acquire shares of supervised financial institutions, in percentages equal to or greater than five percent (5%) of their social capital, must comply with.

For the purposes of this norm, transfer, assignment or acquisition of shares shall be understood as any situation in which the owners thereof intend to dispose of them for any reason in favor of third parties.

Art. 3. Scope.- The provisions of this norm are applicable to all financial institutions supervised by the Superintendence of Banks and Other Financial Institutions.

CHAPTER II
AUTHORIZATION TO TRANSFER SHARES, ENJOYMENT OF SOCIAL RIGHTS AND INFORMATION REQUIREMENTS

Art. 4. Authorization to transfer shares.- To acquire directly or through third parties, shares of a supervised financial institution, which alone or added to those already owned, or together with those of their related parties, represent an amount equal to or greater than five percent (5%) of the social capital of this, the authorization of the Superintendent will be required.

Art. 5. Enjoyment of social rights.- The person will not enjoy social rights until they obtain the authorization of the Superintendent imposed by the preceding article.

Art. 6. Information requirements to obtain authorization.-1 To obtain the authorization referred to in Article 4 of this norm, the interested party or parties must comply with the information requirements indicated in numeral 4 and the solvency and integrity requirements referred to in numeral 6, both of Article 4 of the General Law of Banks; for these purposes, they must present the following information and documentation:

a. For natural persons:

1. Name, age, occupation, nationality and domicile.

2. Documented curriculum vitae with the information required in Annex 1, which becomes an integral part of this norm.

3. Patrimonial statements and relationship of income and expenses, with the information required in Annex 2, which becomes an integral part of this norm, signed by the interested party. The figures must be expressed in book value in accordance with accounting standards. In cases where the Superintendent requires it, these must be presented duly certified by an authorized public accountant or equivalent professional in the country where it is issued.

4. Photocopy of the identity card on both sides for nationals, or of the identity card for residents or of the passport in the case of foreigners, notarized in accordance with the law on the matter.

5. Number of the Single Taxpayer Registry (RUC). In the case of foreigners not domiciled in the country, they must present the equivalent used in the country where they pay taxes.

6. Certificate of police records, issued by the corresponding national instances in the case of persons domiciled in Nicaragua, and by the competent foreign organism, when it concerns persons not domiciled in Nicaragua or natural persons residing in Nicaragua who have been residents abroad in the last 15 years.

7. A minimum of 5 personal, banking or commercial references recent to the date of the application (national or foreign).

1 Art. 6, amended on April 16, 2008 - Resolution CD-SIBOIF-530-2-ABR16-2008.
In force from its publication in La Gaceta, Official Gazette No. 105 of June 04, 2008.

8. Notarized reasoned declaration of not being involved in any of the situations contemplated in numerales 1, 5, 6, 7 and 8 of Article 29 of the General Law of Banks.

9. Detailed detail of the natural and legal persons related as well as those that make up their unit of interest, based on the criteria established in Article 55 of the General Law of Banks and the corresponding norm.

b. For legal persons:

1. Notarized copy of the testimony of the public deed of constitution of the society, statutes and their modifications, if any. In the case of foreign legal persons, the equivalent documents.

2. A minimum of 5 recent banking or commercial references to the date of the application.

3. Names of the members of the Board of Directors, as well as the curriculum vitae of each of its members, which will be presented in accordance with Annex 1.

4. Certification of the minutes in which the authorization granted by the corresponding corporate instance to participate as a shareholder of the financial institution and the amount of the investment destined for that object is recorded.

5. Copy of the report of the independent auditors on the audited financial statements, corresponding to the two accounting exercises prior to the date of the application, as the case may be.

6. List and percentage of participation of the 5% Shareholders natural persons, ultimate owners of the shares in a succession of legal persons. In order to determine if the natural persons indicated here are 5% Shareholders, the calculation methodology established in Annex 3, which is an integral part of this norm, must be followed.

The natural persons who, according to the aforementioned calculation methodology, are 5% Shareholders must comply with the information requirements established in letter a. of this article.

The Superintendent is empowered to request the information he considers necessary regarding the legal persons in which the 5% Shareholders natural persons participate, such as members of boards of directors, activity to which they are dedicated, data of constitution and registration, among others.

Likewise, a scheme must be presented that shows the shareholding structure of the 5% Shareholders, in which it is reflected whether this percentage of participation is individually or together with their related parties, indicating the full names of the natural or legal persons contained in this scheme.

c. Documentary evidence, to the satisfaction of the Superintendent, of the lawful origin of the patrimony. As a minimum, such documentation must include:

1. Information on the bank accounts from which the money comes.

2. Information on the origin of the money deposited in said accounts.

3. Information on the origin of the patrimony (information on the activities from which the patrimony comes such as businesses, inheritances, donations, etc.) and evidence that the money comes from them.

Art. 7. Criteria for denying the application.- The authorization application will be denied in any of the following cases:

a. The required information is not presented complete.

b. False or misleading information is presented.

c. The information presented demonstrates or reasonably allows to presume, in the judgment of the Superintendent, important deficiencies in the qualities of the applicants.

Art. 8. Number of copies.- The application and documents presented to the Superintendent must be delivered in original and two simple photocopies.

Art. 9. Presentation of information and authorization.- The Superintendent will have a period of 30 business days counted from the date on which the information referred to in Article 6 of this norm has been supplied complete to authorize the transfer. If there is no response within the aforementioned period, the transaction will be understood as authorized.

Art. 10. Modifications.- Any change that the interested parties wish to make during the time the application is being processed or prior to the start of operations must be informed in writing to the Superintendent complying with the same requirements of the original application, insofar as applicable.

Art. 11. Exceptions.- 2
The Superintendent may authorize exceptions to one, several or all of the information requirements established in Article 6 of this norm in the following cases:

2 Art. 11, amended on April 16, 2008 - Resolution CD-SIBOIF-530-2-ABR16-2008.
In force from its publication in La Gaceta, Official Gazette No. 105 of June 04, 2008.

a. When the interested legal person is a public law institution with capacity for such effect.

b. When the partner(s) legal person(s) are bilateral or multilateral international organisms or organisms and/or non-profit institutions dedicated internationally to development.

c. When share transfers are due to the adaptation of the shareholding structure of the institutions that make up the financial group to comply with the provisions of the regulations on the matter, in cases where the shareholders are known to the Superintendence.

d. When it concerns share transfers between shareholders of an institution supervised by the Superintendence or of the institutions of a financial group recognized by the Superintendence as such.

e. When the interested party or parties are financial institutions with first-rate international rating performed by a risk rating agency or supervised by bodies with which this Superintendence has signed agreements for the exchange of information or cooperation.

f. When the interested party is already a 5% Shareholder.

When pertinent, the documents justifying the case must be presented.

Likewise, the Superintendent may authorize exceptions to the presentation of some or all of the aforementioned information requirements, when this, having been requested by other prudential norms, is found updated in the files of this Superintendence.

Art. 12. Legalization of documents from abroad and their language.- All information and/or documentation required by this norm that is in a language other than Spanish, must be presented with its corresponding translation, which must comply with what is stipulated in the national laws on the matter or with the laws of the country where the translation is carried out.

Documents from abroad that are required of natural or legal persons in this norm must comply with the requirements established by the laws on the matter so that they can produce legal effects in the country.

Art. 13. Annexes.- The Superintendent is authorized to make modifications to the annexes attached to this norm when the case so requires. Such modifications will be published in La Gaceta, Official Gazette.

Art. 14. Obligation to inform. Current owners of supervised financial institutions must deliver to persons interested in acquiring shares of these a copy of this norm.

Transfers, assignments or acquisitions in percentages lower than that indicated in Article 4 of this norm must be notified to the Superintendent within a period not exceeding thirty days counted from the date on which said transfer, assignment or acquisition occurred.

Art. 15.- Repeal.- The Norm for the Transfer, Assignment or Acquisition of Shares of Supervised Financial Institutions, Resolution No. CD-SIBOIF-430-1-JUL4-2006, of July 4, 2006, is repealed.

Art. 16.- Validity.- This Norm will enter into force from its publication in La Gaceta, Official Gazette.

ANNEX 1
CURRICULUM VITAE
Strictly confidential information

INSTITUTION:

---

GENERAL DATA

Full Name:

---

Nationality:

---

Profession or trade:

---

Place and date of birth:

---

Identity card number (in the case of nationals):

---

Residence card (in the case of foreigners residing in the country) ____________________________________________________

RUC No. (or its equivalent, as the case may be):

---

Position to be held in the Institution:

---

Passport number in case of being foreign: ---------------------------------

Migration status:

---

Do you have authorization to work in the country? (only for foreign shareholders holding administrative positions or on the board) YES ( ) NO ( )

Authorization number:

---

Date of authorization:

---

Validity of the authorization:

---

KNOWLEDGE AND EXPERIENCE

Knowledge and experience in the banking, stock market, financial and financial risk management activity:

Entity Position Period from ... to...
Main
Functions

Positions held or held in other entities:

Entity Position Period from ... to...
Main
Functions

Studies and training carried out:

Establishment
Title or course name
Period from... to...
Observations

OTHER INFORMATION

Have you been declared bankrupt or insolvent? YES ( ) NO ( )

In the affirmative, indicate the reasons and indicate if you have been rehabilitated:

---

Have you ever been subject to judicial process? YES ( ) NO ( )

In the affirmative, indicate:

Reason Class of process
Date Final
Result

Have you been administratively sanctioned or judicially processed for money laundering or other assets? YES ( ) NO ( )

In the affirmative, indicate the sanction or process.

I declare that the data above are true, subjecting myself to the sanctions that the law determines for any inaccuracy thereof.

Place and date: ___________________________________________________

(f) __________________

Name: ______________

ANNEX 2
PATRIMONIAL STATEMENT AND RELATIONSHIP OF INCOME AND EXPENSES OF SHAREHOLDERS NOTARIAL DECLARATION

(Strictly confidential information)

INSTITUTION:___________________________________

NAME:_______________________________________________________

Referred to day ___________________________________________________

ASSETS (In thousands of
C$)*
Cash in box
Bank deposits (total)
Account of ______________ No. ____________ Bank ___________ Account of ______________ No. ____________ Bank ___________ Account of ______________ No. ____________ Bank ___________ Account of ______________ No. ____________ Bank ___________ Shares (detail in table 3) Bonds, promissory notes and other securities (detail in table 3) Accounts receivable (only those that are duly documented, Detail in table 4) Inventories (cost value, detail in table 5) Household goods Machinery and furniture and equipment Tools Vehicles (detail in table 6) Real estate (detail in table 7) Other assets (specify)

TOTAL ASSETS

LIABILITIES
(In thousands of C$)*
Short-term credits (one year or less, include overdrafts, detail in table 9) Long-term credits (more than one year, detail in table 9) Accounts payable Suppliers Other liabilities (specify)

TOTAL LIABILITIES

NET EQUITY (Assets minus liabilities) __________________________ CONTINGENCIES (Detail in table 10) _________________________

• When it comes to foreign currency, indicate its equivalent in national
  currency, at the official exchange rate of the date of the patrimonial statement.

• Figures must be presented at book value in accordance with the
  accounting standard.

INCOME (1)
(Figures in thousands of C$)

CONCEPTS MONTHLY ANNUAL
Salaries
Dividends and interest
Commissions
Rentals
Others (specify)
TOTAL INCOME

EXPENSES (2)
(Figures in thousands of C$)

CONCEPTS MONTHLY ANNUAL
Personal expenses
Amortization of credits
Interest on credits
Other expenses (specify)
TOTAL EXPENSES

INVESTMENTS IN SECURITIES (3)

ENTITY
ISSUER
CLASS OF
INVESTMENT
(shares, bonds, promissory notes, etc.)
COST VALUE SHAREHOLDER
PARTICIPATION
(%)
BOOK VALUE

ACCOUNTS RECEIVABLE (4)

CLASS OF DOCUMENT
(Promissory notes, bills of exchange, etc.) ORIGINAL AMOUNT CURRENT BALANCE

INVENTORIES (5)

DESCRIPTION OF
INVENTORY
QUANTITY IN
EXISTENCE BOOK VALUE

VEHICLE DETAIL (6)

BRAND
YEAR ACQUISITION VALUE BOOK VALUE

REAL ESTATE DETAIL (7)

DESCRIPTION
OF
REAL ESTATE
HOUSE, FARM,
LOT,
BUILDING
ADDRESS
BOOK
VALUE
AREA
SQM. REG.
NO.
VOLUME,
PAGE AND
ENTRY BOOK
No.
OF THE
DEPT.
OF

DETAIL OF ENCUMBRANCES ON THE REAL ESTATE PREVIOUSLY IDENTIFIED (8)

NAME OF THE
CREDITOR
DATA OF THE
REAL ESTATE BALANCE DUE DATE

BANKING OBLIGATIONS SHORT AND LONG TERM (9)

BANK AND
COUNTRY
CREDIT
NO. BALANCE TYPE OF
GUARANTEE
DATE OF
CONCESSION
DATE OF
MATURITY

CONTINGENT OBLIGATIONS (10)

GUARANTOR,
CO-DEBTOR OR
SURETY
NAME OF THE
CREDITOR ORIGINAL AMOUNT BALANCE

INSURANCES CONTRACTED (11)

INSURANCE
COMPANY
POLICY
NO.
TYPE OF
INSURANCE
INSURED
AMOUNT DATE OF VALIDITY

Note: Any other information or additional documentation may be added that is deemed convenient.

OBSERVATIONS:

---

I DECLARE that the above information is true and I submit myself to the corresponding legal sanctions for any falsehood or inaccuracy that may be proven.

Place and date______________________________________________________

(f) ___________________________________________

Name_______________________________________

ANNEX 3
CALCULATION METHODOLOGY TO ESTABLISH
5% SHAREHOLDERS

The ownership of 5% of a natural person individually or together with their related parties through, one or more legal persons until reaching the institution, is determined as follows:

PN1 ----------> PJ2 ----------> PJS ---------- PJ(n-1)% ----------> PJ(n) P1% P2% P(n-1)%

Where K% is the percentage of participation of PN1 in PJ(n)

Conditions:

1. If P1% ≤ 50%:
   K% = P1% * P2% * ----- * P(n-1)%

2. If P1% > 50%, P1% is considered = 100%:

a) Where P2% ≤ 50%:

K% = 100% * P2% * ----- * P(n-1)% and so on.

b) Where P2% > 50%:

K% = 100% * 100% * P3% * ----- * P(n-1)% and so on.

Abbreviations:

PN: Natural Person
PJ: Legal Person
Pi%: Percentage of participation of natural person “ i ” in the capital of legal person “i+1”. For i = 1, 2, 3, …., n-1.

(f) Antenor Rosales B. (f) V. Urcuyo V. (f) Roberto Solórzano Ch. (f) Gabriel Pasos Lacayo (f) A. Cuadra G. (f) U. Cerna B.

URIEL CERNA BARQUERO
Secretary of the Board of Directors SIBOIF