Norm for the Voluntary Transfer of Financial Institution to Microfinance Institution

Resolution No. CD-SIBOIF-1164-1-MAR31-2020
Dated March 31, 2020

NORM FOR THE VOLUNTARY TRANSFER OF FINANCIAL INSTITUTION TO MICROFINANCE INSTITUTION

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

CONSIDERING

I

That in accordance with Article 2, paragraph 4, of Law No. 316, "Law of the Superintendence of Banks and Other Financial Institutions" (Superintendence Law), published in La Gaceta, Official Gazette No. 196, on October 14, 1999, and its reforms, contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters," published in La Gaceta, Official Gazette No. 164, on August 27, 2018, and its updates, it corresponds to the Superintendence of Banks and Other Financial Institutions to authorize, supervise, monitor, and audit Non-Bank Financial Institutions whose operation is regulated by special laws, such as the case of Financial Societies created by Decree No. 15-L, "Special Law on Financial, Investment and Other Societies," published in La Gaceta, Official Gazette No. 77, on April 10, 1970.

II

That according to Article 3, item 13), of the Superintendence Law, the Superintendence may issue norms and provisions necessary for the fulfillment of its legal object, and in concordance, item 16) of the same article adds that said entity may carry out all activities compatible with its nature and any other that the laws provide.

III

That in accordance with Article 10, final part, of the Superintendence Law, the Board of Directors of the Superintendence enjoys general regulatory authority, provided it is compatible with the object of said law.

IV

That the National Commission of Microfinance (CONAMI) is the regulatory and supervisory body of Microfinance Institutions, under the terms of Law No. 769, "Law of Promotion and Regulation of Microfinance," published in La Gaceta, Official Gazette No. 128, on July 11, 2011, corresponding to it to establish the requirements that Financial Societies granting microcredits must fulfill when voluntarily transitioning to be supervised and regulated by CONAMI as Microfinance Institutions (IMF), thereby leaving the scope of supervision and regulation of the Superintendence of Banks and Other Financial Institutions.

In exercise of its powers,

HAS ISSUED

The following,

Resolution No. CD-SIBOIF-1164-1-MAR31-2020
NORM FOR THE VOLUNTARY TRANSFER OF FINANCIAL INSTITUTION TO MICROFINANCE INSTITUTION

CHAPTER I
GENERAL PROVISIONS

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

a) CONAMI: National Commission of Microfinance, constituted by Law No. 769, Law of Promotion and Regulation of Microfinance, as the regulatory and supervisory body of Microfinance Institutions.

b) Board of Directors: Board of Directors of the Superintendence of Banks and Other Financial Institutions.

c) Financial Institution or Financial Society: Non-bank financial institution dedicated to granting credit and that does not necessarily capture deposits, subject to the authorization, regulation, and supervision of the Superintendence of Banks and Other Financial Institutions.

d) IFIM: Microfinance Intermediary Financial Institutions referred to in Law No. 769, Law of Promotion and Regulation of Microfinance.

e) IMF: Microfinance Institution referred to in Law No. 769, Law of Promotion and Regulation of Microfinance.

f) Superintendence Law: Law No. 316, "Law of the Superintendence of Banks and Other Financial Institutions," published in La Gaceta, Official Gazette No. 196, on October 14, 1999, and its reforms, contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters," published in La Gaceta, Official Gazette No. 164, on August 27, 2018, and its updates.

g) Microfinance Law: Law No. 769, "Law of Promotion and Regulation of Microfinance," published in La Gaceta, Official Gazette No. 128, on July 11, 2011, contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters," published in La Gaceta, Official Gazette No. 164, on August 27, 2018, and its updates.

h) General Banking Law: Law No. 561, "General Law of Banks, Non-Bank Financial Institutions and Financial Groups," published in La Gaceta, Official Gazette No. 232, on November 30, 2005, contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters," published in La Gaceta, Official Gazette No. 164, on August 27, 2018, and its updates.

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

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

Article 2. Object and Scope. - This norm aims to establish the requirements to be fulfilled by those financial societies that, operating as a going concern, decide to voluntarily request the revocation of their license as an entity regulated and supervised by the Superintendence, in order to continue providing credit services as an IMF, under the regime of the Microfinance Law.

CHAPTER II
REQUIREMENTS AND PROCEDURE FOR THE REVOCATION OF THE LICENSE

Article 3. Requirements. - Financial societies that voluntarily decide to request the revocation of their license must present the following documents to the Superintendence:

1) Explanatory letter of the reasons motivating the request.

2) Certification of the Minutes of the General Shareholders' Meeting, in which at least the shareholders representing 75% of the share capital agree to request the Superintendence to revoke the license to operate as a financial institution.

3) Written authorization from all fund providers of the financial institution, expressing that they have full knowledge of such decision and therefore grant the financial institution authorization to proceed with the procedures to obtain the revocation of the license as a financial institution regulated by the Superintendence.

4) Certification of Internal Audit confirming that in the most recent financial statements of the financial institution, there are no resources captured from the public; likewise, a report with a cutoff date of the month immediately preceding the request must be presented regarding pending points of the financial institution on the findings of External Audit, Internal Audit, and the Superintendence, and pending adjustments to be made against results or equity, if any.

5) Draft modification to the partnership agreement in which references to the license granted by the Superintendence and the term "financial" in its corporate name and trade name are suppressed.

6) Payment of the total annual fee of SIBOIF, for which evidence thereof must be attached.

7) Certification of authorization of registration in the National Registry of Microfinance Intermediary Financial Institutions (IFIM), issued by the Board of Directors of CONAMI, within the framework of what is established in the Microfinance Law, when applicable.

8) Document evidencing presentation before CONAMI of a request to be authorized as an IMF.

Article 4. Analysis. - The Superintendence will analyze the documentation presented and, if it deems it necessary, may request expansions or clarifications it considers convenient, potentially requiring special audits or inspections to verify any aspect it considers relevant.

Article 5. Revocation of License. - Once the documentation has been reviewed and/or the activities referred to in the previous articles have been fulfilled, the Superintendent will present said request to the Board of Directors so that it, based on what is established in this norm, can issue the resolution revoking the license to operate as a financial society, which must be published in "La Gaceta," Official Gazette, at the expense of the entity and must be registered in the corresponding Public Mercantile Registry in Book Second, Societies, of said Registry also at its expense, along with the reforms to the partnership agreement and statutes in which references to the license granted by the Superintendence and the term "financial" in its corporate name and trade name are suppressed.

Article 6. Publication. - The Superintendent will require the petitioners to publish for three consecutive days in a newspaper of wide national circulation and on their Web page, a notice informing their clientele and the general public that, from the date of the resolution mentioned in the previous article, by disposition of the Shareholders' Meeting and due to the non-objection of its funders, the entity is no longer under the supervision of the Superintendence on a voluntary basis, for which said resolution must be attached.

CHAPTER III
FINAL PROVISIONS

Article 7. Validity. - This norm shall enter into force upon its approval, without prejudice to its publication in La Gaceta, Official Gazette. (F) S. Rosales C. (F) Illegible (Luis Ángel Montenegro E.) (F) Fausto Reyes B. (F) Illegible (Silvio Moisés Casco Marenco) (F) Illegible (Ervin Antonio Vargas Pérez) (F) Marvin Saúl Castellón Torrez. Ad Hoc Secretary.

MARVIN SAÚL CASTELLÓN TORREZ
Ad Hoc Secretary SIBOIF Board of Directors