Norm on Administration Companies and Securitization Funds

RESOLUTION NO. CD-SIBOIF-498-1-SEP5-2007
Dated September 5, 2007
NORM ON ADMINISTRATION COMPANIES AND SECURITIZATION FUNDS The Board of Directors of the Superintendency of Banks and Other Financial Institutions.

CONSIDERING
I
That according to Article 6, letters a) and b); Article 109 of Law No. 587, Capital Markets Law, published in La Gaceta No. 222, of November 15, 2006, it is the duty of the Board of Directors of the Superintendency of Banks and Other Financial Institutions (Board of Directors) to issue the rules that must be followed by Administration Companies of Securitization Funds and Securitization Funds in accordance with the procedures and requirements established in said Law and in this Norm. II That according to Article 208 of the aforementioned Law, it is the faculty of the Board of Directors to issue general norms aimed at regulating the functioning of the securities market. In exercise of its powers, HAS ISSUED The following, NORM ON ADMINISTRATION COMPANIES AND SECURITIZATION FUNDS RESOLUTION NO. CD-SIBOIF-498-1-SEP5-2007 TITLE I GENERAL PROVISIONS UNIQUE CHAPTER CONCEPTS, OBJECT, AND SCOPE
Article 1. Concepts.- For the purposes of this norm, the terms indicated in this article, both in uppercase and lowercase, singular or plural, shall have the following meanings:

a) 5% Shareholder: Natural or legal person who, individually or jointly with their related parties, holds a percentage equal to or greater than 5% of the company's capital. b) Shareholding Control: Shall be understood as the possession or control, through direct or indirect means, by a natural or legal person, of more than 50% of the shares and/or voting rights or their equivalent in any company. c) Administrative Control: Shall be understood as referring to the natural or legal person who exercises legal representation or the position of President of the Board of Directors, Chief Executive Officer, or General Manager, or their equivalents, in a company. d) Structuring Entity: Entity that provides the service of designing, preparing, elaborating, and financial structuring of the issuance and public offering, in accordance with the Capital Markets Law and applicable regulations. e) Originating Entity: Refers to banks, finance companies, and other entities authorized by the Superintendency, in accordance with what is established in this norm. f) Group of Economic Interest: Related parties, significant linkages, and indirect manifestations of the natural or legal persons indicated in the scope of this norm, to which Article 55 of Law 561, General Law of Banks, Non-Banking Financial Institutions and Financial Groups, and the regulations governing concentration limits refer. g) Institutional Investor: Banks, finance companies, insurance companies, stockbrokers, investment funds, pension funds, regional banks, international organizations, legal persons with assets equal to or greater than the equivalent in national currency of five million United States dollars, among others. h) Sophisticated Investor: Person who qualifies under any of the following circumstances:

1. Having net worth equal to or higher than the equivalent in national currency of one million United States dollars.

2. Having liquid assets or investments in financial instruments in an amount equal to or greater than the equivalent in national currency of five hundred thousand United States dollars.

3. Having gross annual income equal to or higher than the equivalent in national currency of two hundred thousand United States dollars, for each of the two previous years and with the expectation of generating equal or greater income for the current year.
   i) Capital Markets Law: Law No. 587, Capital Markets Law, published in La Gaceta, Official Journal, No. 222 of November 15, 2006. j) General Law of Banks: Law 561, General Law of Banks, Non-Banking Financial Institutions and Financial Groups, published in the Gaceta, Official Journal, number 232, of November 30, 2005. k) Administration Company: Administration Company of Securitization Funds. l) Superintendency: Superintendency of Banks and Other Financial Institutions. m) Superintendent: Superintendent of Banks and Other Financial Institutions.
   Article 2. Object.- This norm aims to establish the requirements for the constitution and functioning of administration companies of securitization funds; as well as the requirements and procedures for authorization for public offering of securitization funds.
   Scope 3. Scope.- The provisions of this norm are applicable to administration companies of securitization funds, intermediaries, and other participants in the placement of the securities of the securitization funds subject to public offering.
   TITLE II
   ADMINISTRATION COMPANIES OF SECURITIZATION FUNDS
   CHAPTER I
   CONSTITUTION AND FUNCTIONING REQUIREMENTS
   Article 4. Constitution Requirements.- Those interested in constituting an administration company of securitization funds must submit a formal request to the Superintendent, accompanied by the following documents:
   a) The draft deed of incorporation and its statutes. b) Have a minimum social capital of one million six hundred thousand córdobas (C$1,600,000.00) as established in Article 120 of the Capital Markets Law.

c) An economic-financial feasibility study, which includes, among other aspects, considerations on the market, the characteristics of the institution, the projected activity, and the conditions under which it will operate according to various contingency scenarios. d) Information regarding its shareholders.

1. For natural persons:
   i. Name, age, occupation, nationality, and domicile.
   ii. Curriculum vitae documented with the information required in Annex 1, which becomes an integral part of this norm.
   iii. Photocopy of the identity card on both sides for nationals, or of the residence card for resident foreigners or passport in the case of non-resident foreigners, notarized according to the law on the matter.
   iv. Number of the Single Taxpayer Registry (RUC). In the case of non-domiciled foreigners, they must present the equivalent used in the country where they pay taxes.
   v. Certificate of judicial and/or police records issued by the corresponding national instances in the case of persons domiciled in Nicaragua, and by the competent foreign organism, with the corresponding authentication, when dealing with persons not domiciled in Nicaragua or natural persons residing in Nicaragua who have been residents abroad in the last 15 years.
   vi. Notarial declaration by each proposed director stating that they are not subject to the impediments established in Article 9 of this norm.
2. For legal persons:
   i. Notarially reasoned copy of the testimony of the public deed of incorporation of the company, statutes, and their modifications, if any. In the case of foreign legal persons, the equivalent documents.
   ii. Names of the members of the board of directors, as well as the curriculum vitae of each of its members, which shall be presented in accordance with Annex 1 of this norm.
   iii. Certificate of judicial and/or police records of the legal representative and members of the board of directors of the company, issued by the corresponding national instances in the case of persons domiciled in Nicaragua, and by the competent foreign organism,

with the corresponding authentication, when dealing with persons not domiciled in Nicaragua or natural persons residing in Nicaragua who have been residents abroad in the last 15 years.
iv. List and percentage of participation of the 5% Shareholders, natural persons, ultimate owners of the shares in a chain of legal persons.
To determine if the natural persons indicated here are 5% Shareholders, the calculation methodology established in Annex 2 of this Norm must be followed, which is an integral part of it.
Natural persons who, according to the aforementioned calculation methodology, are 5% Shareholders must comply with the information requirements established in numeral 1), letter d), of this article. e) Scheme reflecting the shareholding structure of the 5% Shareholders, showing whether this percentage of participation is individual or jointly with their related parties, indicating the full names of the natural or legal persons contained in this organizational chart. f) For all shareholders, documentary evidence of the lawful origin of the wealth to be invested in the new institution. At 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 wealth (information on the activities from which the wealth comes, such as: businesses, inheritances, donations, among others) and evidence that the money comes from them.
   g) The name of the members who will make up the Board of Directors and the main management team, as well as the curriculum vitae of each of them, which shall be presented in accordance with Annex 1. h) Minutes denoting deposit in the current account of the Superintendency, for the value of one percent (1%) of the minimum capital amount, for the processing of the application. Once operations have begun, this deposit will be returned to the promoters. If the application is denied, ten percent (10%) of the deposit amount will go to the Treasury of the Republic; the balance will be returned to the interested parties. In case of withdrawal, 50% of the deposit will go to the Treasury.

i) Notarial declaration by each proposed director stating that they are not subject to the impediments established in Article 9 of this Norm.
Article 5. Exceptions.- The Superintendent may authorize exceptions to one, several, or all of the information requirements established in letter d), of Article 4 of this norm, in the following cases:
a) When the legal person partner is a public law institution. b) When the legal person partner is a bank or international or multilateral development organization, recognized internationally as such. c) When the legal person partner is an institution directly supervised by the Superintendency. d) When the legal person partner is a financial institution from abroad subject to supervision according to international practices. e) When the legal person partner lists its shares on a stock exchange or regulated market. When pertinent, supporting documents justifying the case must be presented.
Article 6.- Authorization of Constitution.- Upon presentation of the documents referred to in Article 4 of this norm, the Superintendent will analyze the information and submit the application to the consideration of the Board of Directors, who will grant or deny the corresponding authorization, all within a period not exceeding one hundred twenty (120) days, counted from the receipt of the complete documentation required in Article 4 above referenced.
In case of a positive resolution, the authorizing notary must mention the edition of "La Gaceta" in which the resolution of authorization to constitute itself as an administration company, issued by the Superintendency, was published, and insert entirely in the deed of incorporation the certification of said resolution. The registration in the Public Mercantile Register will be null if this requirement is not met.
Article 7. Requirements to Start Operations.- To start operations, administration companies constituted in accordance with this Norm must comply, at least, with the following requirements:
a) Have the minimum social capital, subscribed and paid in cash. Eighty percent (80%) of this amount in demand deposit at the Central Bank of Nicaragua, under the terms and conditions determined by its Board of Directors. b) Testimony of the social deed and its statutes with the corresponding reasons for registration in the Public Register. c) Opening Balance Sheet. d) Certification of the appointments of the directors for the first period, the manager or principal executive of the administration company, and the internal auditor. e) Present its internal regulations, as well as the manual of policies and procedures approved by the Board of Directors of the administration company. f) Contract models. If the request for authorization of operation with evidence of compliance with the aforementioned requirements is not presented within one hundred eighty (180) days from the resolution authorizing its constitution, it will become void, and the amount of the deposit referred to in letter h), of Article 4 of this norm, will go to the Treasury of the Republic.
Article 8. Authorization of Operation.- The Superintendent will verify if the applicants have fulfilled all the requirements demanded by the Capital Markets Law and by this norm for the functioning of an administration company, and if found compliant, will grant the authorization of operation within a maximum period of fifteen (15) days counted from the date of presentation of the application referred to in the preceding article; otherwise, it will communicate to the petitioners the deficiencies noted so that they fulfill the omitted requirements, and once the deficiency is remedied, it will grant the requested authorization within a term of five (5) days counted from the date of correction. The authorization must be published in "La Gaceta", Official Journal, at the expense of the authorized administration company and must be registered in the corresponding Public Mercantile Register, in Book Two of Companies of said Register, also at its expense.
The authorized administration companies must start operations within a maximum period of six (6) months counted from the notification of the respective resolution; otherwise, the Superintendent will revoke the authorization.
CHAPTER II
IMPEDIMENTS TO BE A DIRECTOR OF AN ADMINISTRATION COMPANY
Article 9. Impediments.- The following cannot be members of the Board of Directors of an administration company:

a) Persons who are direct and indirect delinquent debtors for more than 90 days or three times during a twelve-month period, to any bank or non-banking financial institution subject to the surveillance of the Superintendency, or who have been declared judicially insolvent, in bankruptcy proceedings, or bankrupt. b) Those who, with any other member of the board, are spouses or partners in a stable de facto union, or have a relationship of kinship within the second degree of consanguinity or second degree of affinity. This cause will not be incurred when the relationship exists between an owner director and their respective substitute. c) Managers, executive officials, and employees of the same administration company, with the exception of the principal executive. d) Those who directly or indirectly are holders, partners, or shareholders exercising shareholding or administrative control over companies that have overdue credits for more than ninety (90) days or three times during a twelve-month period, or are in judicial collection in institutions of the financial system. e) Persons who have been sanctioned in the fifteen (15) previous years for causing patrimonial damage to a bank, a non-banking financial institution, or public faith by altering its financial state. f) Those who have participated as directors, managers, deputy managers, or officials of equivalent rank of a bank or non-banking financial institution that has been subjected to intervention processes and declaration of forced liquidation status, to whom, by judicial or administrative resolution of the Superintendent, responsibilities, presumptions, or indications linking them to the aforementioned situations have been established or will be established. The foregoing admits contrary proof. g) Those who have been convicted of intentional crimes deserving penalties more than corrective ones. The impediments mentioned above will be applicable at all times, and the person subject to any of them will cease from their position starting from the notification by the Superintendent.
CHAPTER III
CHANGES IN ADMINISTRATION COMPANIES
Article 10. Change of Control and Merger of the Administration Company.- Changes in control and merger of an administration company must be previously authorized by the Superintendent. The authorization is subject to the presentation of the following documentation:

a) Request signed by the legal representative of the administration companies involved. b) Notarial certification of the minutes of the general shareholders' meeting of the administration companies involved, by which the change of control or merger was authorized. c) In the case of the prevailing company, the documentation required in Article 4 of this norm, except for letters b), c), and h). The same applies for cases of change of control in the administration company. d) Notarial certification of the minutes of the investors' assembly in which the change of control or merger of the administration company is accepted. As part of the assembly, investors must approve the mechanism that the prevailing administration company will use to provide liquidity to the participation securities in the secondary market, for investors who expressed disagreement with the change of control or merger during the assembly. The mechanism used must have a maximum term of six (6) months.
Article 11. Motivated Substitution of the Administration Company.- The Superintendent may agree on the substitution of an administration company, through a motivated resolution, when any of the following causes occur:
a) The cancellation of the authorization of the administration company to operate securitization funds or a specific fund. b) Suspension of payments, bankruptcy, or dissolution of the administration company. c) Intervention of the administration company. In the case provided for in the previous paragraph, when three months have elapsed since the event determining the substitution occurred and no new administration company willing to take charge of the management has been found, the Superintendent may entrust the management of said fund to a banking entity, which must be distinct from the originating entity. Otherwise, early liquidation of the fund and amortization of the securities issued against it will proceed, in accordance with what is provided in the public deed of constitution.
Article 12. Resignation.- The Administration Company may resign from its function of administration and legal representation of all or part of the funds it manages when it deems appropriate, requesting its substitution, through a written address to the Superintendent, in which it will record the designation of the substituting administration company. Attached to this letter will be that of the new managing company, in which it declares itself willing to accept such function and seeks the corresponding authorization.
The authorization of the substitution by the Superintendent will be conditioned upon compliance with the following minimum requirements:
a) The delivery to the new administration company of the accounting and computer records by the substituted managing society. b) In the case where the securities issued against the funds managed by the substituted administration company have been evaluated by some rating entity, the rating granted to the securities must not decrease as a consequence of the proposed substitution. Under no circumstances can the administration company resign from the exercise of its functions until all requirements and procedures have been met for its substitute to assume its functions. The expenses arising from the substitution will be at the cost of the resigning managing society, and under no circumstances can they be imputed to the fund or funds. The substitution must be published, within fifteen (15) days, through an announcement in two newspapers of national diffusion and in the Official Journal. La Gaceta.
CHAPTER IV
PRUDENTIAL REGULATION APPLICABLE TO ADMINISTRATION COMPANIES
Article 13. Determination of Own Resources.- Administration companies must maintain own resources in accordance with what is established in this Chapter. The own resources of administration companies are determined by the difference between the items specified in letter a) and the items specified in letter b):
a) Items that add up:
i. Equity (excludes items subject to distribution).
ii. Provisions reflected in accounting records.
b) Items that subtract:
i. 100% of the balance of intangible asset accounts.
ii. 50% of the balance of net fixed asset account less depreciation that are necessary for the realization of the corporate object.
iii. 100% of accounts receivable from partners and related parties.
iv. 100% other accounts receivable.

Items not subject to distribution must be backed by a shareholders' general assembly minutes, which will be available for consultation by the Superintendent.

Article 14. Limits on the investment of own resources.- Administrative companies must keep their own resources available in cash, in public offering securities of national or foreign issuers, and in fixed assets. The investment of such resources must respect sound principles of diversification, adequate risk management, and be valued in accordance with the respective accounting regulations.

The own resources of administrative companies may not at any time be less than the sum of the following elements:
a) The minimum social capital. b) The amount corresponding to the coverage of the risk generated by the administration of the funds: they must maintain resources in a proportion of one percent (1%) of the net asset value of the securitization funds they manage.

The own resource requirements are calculated at the end of the month, and the net asset base for the calculation is the average of the assets managed during the month.

Article 15. Limits on indebtedness.- Administrative companies may not exceed a debt level of twenty percent (20%) of their total assets. Liabilities that do not generate interest are not counted within these limits.

Article 16. Selection and Oversight Committee.- The administrative company must integrate an oversight committee for each securitization fund to ensure the quality of the management of the securitized assets. This committee must be composed of individuals with experience in the administration of assets similar to those subject to securitization, at least one of whom must be independent of the administrative company and its group of economic interest.

This committee must keep minutes of its meetings, which must be signed by the attending members and recorded in a book created for such purposes or in any other medium permitted by law, susceptible to subsequent verification and guaranteeing its authenticity, which must remain at the administrative company's headquarters and be available to the Superintendent at all times.

The committee must present a summary of its actions to the board of directors, with the frequency defined by the latter.

Article 17.- Prohibitions. Administrative companies may not carry out the following activities:

a) Conduct transactions between the resources belonging to the funds they manage and the own resources of the company and its group of economic interest. b) Purchase, for any of the managed funds, securities belonging to the company or its group of economic interest. c) Provide guarantees or carry out any other operation that encumbers in any way the goods or assets that make up the funds they manage. d) Carry out inequitable or discriminatory practices with the holders of securities derived from the securitization processes or with the funds they manage.

TITLE III
SECURITIZATION FUNDS

CHAPTER I
ASSETS SUBJECT TO SECURITIZATION

Article 18. Concept of securitization.- The issuance of public offering securities backed by asset securitization processes must be subject to the special conditions established in this Chapter.

Asset securitization is understood as the process by which one or more entities called originators remove from their balance sheet a set of loans, credits, or other assets reflected in the originator entity's balance sheet, capable of generating a continuous flow of liquid resources that are transferred to a fund called a securitization fund, constituted to receive them and authorized to issue, backed by such assets, new securities that will be placed, after credit rating in accordance with article 116 of the Capital Markets Law.

Article 19. Substitution of assets.- Securitization funds are closed in nature from the moment of their constitution, and neither their assets nor their liabilities may be modified. However, rules for the substitution and remediation of assets may be established when the assets grouped in the fund are prepaid.

Likewise, substitutions may be made to cover temporary mismatches between the schedule of principal and interest cash flows of the incorporated assets and that of the issued securities or received credits, to temporarily acquire assets of sufficient quality that do not deteriorate the credit quality of the fund's liabilities.

Article 20. Conditions of the asset portfolio to be securitized.- The asset portfolio to be securitized must meet the following minimum conditions:

a) Each portfolio must have a sufficient volume in relation to its total amount and the number of operations it comprises, which facilitates the statistical analysis of the credit risk of the whole. b) The assets composing the portfolio must have similar characteristics. In the case of credit portfolios, this implies similarity in terms of interest rate type conditions, destination of credits, payment and review of payment conditions, penalty for early cancellation, guarantees, execution, among others. In the case of lease contracts, the type of asset leased, the lessee's obligations in the contract, and those authorized by the Superintendent in each case. c) Generate periodic and predictable cash flows. The cash flow generated by the securitized goods or assets must be established mathematically or statistically. Such projection must be made for a term equal to the duration of the autonomous equity. d) Have been selected based on pre-established criteria by the originator entity or, in its case, the issuer structuring entity, which can also be subject to verification. e) Any other that, in the reasonable judgment of the Superintendent, is required.

Article 21. Securitization of future income. Requirements.- Without prejudice to what is established in the preceding articles and with prior authorization from the Superintendent, securitization processes may also be structured based on future income not reflected in the balance sheet that the originator entity expects to achieve through the practice of sustainable economic activities or by providing services of the same character to third parties, provided that such future income is statistically certain to materialize and its amount is technically determinable, but not the values nor the movable and immovable goods that generate such flows.

When the securitization corresponds to future income, the administrative company must present the following minimum information to the Superintendent:
a) The indicated in letters a), b), and f) of article 24 of this regulation. b) Future income that is mathematically, statistically, or actuarially projected to be generated by the assets or projects subject to securitization. c) Income deviation index.

d) Economic and technical studies on the generation of projected future income and the corresponding feasibility study, according to the specific characteristics of the assets or projects. e) Break-even point to initiate the securitization process. f) Any other that, in the reasonable judgment of the Superintendent, is required.

Article 22. Management Agent.- The administrative company will be responsible for the administration of the securitized assets or future income; however, it may hire the services of a management agent, understood as such, the one responsible for providing the administrative and judicial collection service of the aforementioned assets or income.

CHAPTER II
MODALITIES OF ISSUED SECURITIES

Article 23. Securities resulting from securitization.- Securities issued in a securitization process may adopt the following modalities:
a) Participation securities: Incorporate a proportional ownership right over the equity of the securitization fund. The investor does not acquire a fixed yield security but participates in the profits or losses generated by this equity. Participation securities may provide for their partial or total redemption, prior to the extinction of the investment fund, due to the liquidation of part of its assets. The minimum amount of participation securities will be determined by the administrative company. b) Credit content securities: Incorporate the right to receive the cancellation of capital and financial yields under the terms and conditions indicated in the security. The assets that make up the autonomous equity back the liability acquired with investors. The minimum amount of these securities will be determined by the administrative company.

The particular characteristics of the securities and modalities indicated in the above subsections must be clearly identified in the corresponding prospectus.

CHAPTER III
REGISTRATION REQUIREMENTS AND AUTHORIZATION PROCEDURE FOR SECURITIZATION FUNDS

Article 24. Requirements for the registration of securitization funds.- For the authorization of public offering of securitization funds, the administrative company must present the following minimum documentation:

a) Registration request, prospectus, risk rating, and financial, legal, administrative, and guarantee information, required in the regulation governing the matter on public offering of securities in the primary market for the registration of debt security issuances. b) Public Deed of constitution of the fund containing, as a minimum, in addition to the requirements established in the Capital Markets Law, those detailed below:

1. Rights and obligations of the contracting parties.
2. Remuneration to be received by the administrative company for its management, as well as the form and timing in which it will be settled and collected.
3. Rules for calling the investors' assembly, the number of investors necessary for the quorum, and the majority required for approval, in accordance with the provisions established in the Commercial Code regarding extraordinary general shareholders' meetings of joint-stock companies.
4. Costs and expenses borne by the fund.
5. The mechanisms to inform investors, in a detailed and thorough manner, about the fund's management, specifying the parameters, form, and frequency to which such report must be subject, as well as the documents supporting it.
6. Duration. The Term may not be less than the maturity of all securities issued by the fund as a result of the securitization process.

c) Criteria for selecting the asset portfolio. In the case of portfolios or packages of similar assets, this information requires identifying the characteristics of the standard asset, from which the variation parameter regarding the characteristics of the entire set of assets is established. This information must be part of the content of the prospectus. d) History of the asset portfolio. If the portfolio is less than two years old, the originator's portfolio history for the same period must be attached. In the case of other types of assets, the corresponding studies and historical information must be provided. In the case where there is no historical information, the issuance must be directed to institutional and sophisticated investors. Once the required historical information is available, general public offerings may be opted for new issuances.

e) Financial valuation of the contributed portfolio and estimation of the cash flow it will generate, indicating the assumptions and methodology used. Such valuation must attach the validation of an independent expert registered in the Registry of Appraisers (REPEV) of the Superintendent. f) Documentation detailing the credit enhancement mechanisms or guarantees provided, in accordance with what is established in this regulation. g) Notarial or registry certification demonstrating that the assignment has been carried out and, as appropriate, has been presented to the Public Registry, within the deadline defined by the Superintendent in the authorization resolution.

The requirements indicated in subsections b) and f) may be submitted in draft along with the registration request. However, once the authorization resolution is issued, the original must be presented.
This information must be presented as part of the public offering authorization procedure prior to the placement of the securities. The subsequent incorporation of asset packages will require the same prior authorization process from the Superintendent and must be included in the prospectus via an annex.

Article 25. Authorization procedure and placement mechanism.- Prior to the placement of the securities of the respective fund, the administrative company must present to the Superintendent certified copies of the contracts that were submitted in draft for the authorization process; the prospectus and its summary, in original and copy; the ISIN code; as well as any other requirements indicated by communication from the Superintendent. The requirements contained in this article must be satisfied within a maximum period of thirty (30) days, counted from the next business day following the aforementioned communication. This period may be extended by the Superintendent for a period equal to the original, provided that the administrative company requests the extension in a justified manner, prior to the expiration of the original period.

Once all requested requirements are satisfied, the Superintendent will issue the resolution for registration in the Securities Registry of the Superintendent, from which the administrative company may begin operations and place the securities of the respective fund.

The securities of the securitization funds must be placed through a stock exchange, through placement contracts on a best-efforts basis by a trading entity in accordance with the regulation governing the matter on public offering of securities in the primary market.

Once the securities of a securitization fund are placed, their negotiation in the secondary market will be governed by the regulation governing the matter on the negotiation of securities in the secondary market.

CHAPTER IV
PROSPECTUS

Article 26. Content of the prospectus.- The prospectus of a securitization fund must contain as a minimum the information established in Annex 1, "Minimum Content of the Prospectus," of the Norm on Public Offering of Securities in the Primary Market, adding information on the assets or future income that, as a minimum, must indicate the aspects contained in Annex 3 of this regulation, which is an integral part of it.

Article 27. Language.- The prospectus must be presented in Spanish. The company may publish the prospectus in other languages or tongues. These prospectuses must respect the minimum content established in the previous article. In all cases, it must be noted that the version in Spanish is the official document of the fund, prevailing over the other versions.

Article 28. Availability of the prospectus.- Prior to the placement of the fund's securities, the administrative company must deliver to the investor, in printed form and free of charge, the summary of the prospectus at its offices or at those of the financial intermediaries that place or sell the respective securities. The delivery of the prospectus summary is mandatory and prior to the investor's first investment. For this purpose, the administrative company and/or the respective intermediaries must record the delivery of the prospectus summary.

Additionally, the complete prospectus will be considered available when presented in any of the following forms:
a) For investor inquiries, the complete prospectus at its offices and at those of the trading entities that place or sell the securities. b) In electronic format on its Website and on the Website of the trading entities that place or sell the securities. c) By sending via electronic means to the investor's address.

The foregoing is without prejudice to the physical availability of the prospectus and its summary at the Superintendent's offices or on its Website.

Article 29. Update of information.- The administrative company is obligated to keep the prospectus of the funds it manages updated. This update may be made via an annex provided it does not hinder the understanding of its content. Such update must be carried out in accordance with what is established in the following article.

Article 30. Authorization of update.- Any update to the prospectus of a securitization fund must be authorized in advance by the Superintendent. The authorization is subject to the presentation of the following documentation:
a) Request signed by the legal representative of the administrative company or by the person authorized by the board of directors for the case. b) Notarial certification of the agreement to modify the securitization fund by the board of directors of the administrative company. c) Proposed reforms to the prospectus. d) Notarial certification of the minutes of the investors' assembly in which the modification to the fund's prospectus is accepted.

Any update to the prospectus takes effect five (5) business days from its communication to the investors.

CHAPTER V
CREDIT ENHANCEMENT

Article 31. Credit enhancement mechanisms.- In accordance with what is established in article 113 of the Capital Markets Law, any securitization process will require credit enhancement mechanisms with the purpose of improving the rating of the securities subject to securitization. These mechanisms may be internal or external as indicated in the following articles.

Article 32. Internal credit enhancement mechanisms.- Among the internal credit enhancement mechanisms, the following may be used alternatively or in combination:
a) Overcollateralization of the portfolio: Consists of the assignment to the securitization fund of a set of credits whose financial value exceeds the amount received as a consequence of the issuance of securities. b) Reserve accounts: Consists of the constitution of an account formed by the difference between the interest paid by the original borrowers and the yields paid to the holders of the securities.

c) Portfolio substitution: Implies the obligation to substitute the source of the flow that changes category during the process in such a way that the risk of its normal collection increases. d) Subordination: Implies that the fund participants who are holders of subordinate securities will only be paid if there is still distributable remainder remaining, after paying the holders of preferred securities. e) Others authorized by the Superintendent.

Article 33. External credit enhancement mechanisms.- Among the external credit enhancement mechanisms, the following may be used alternatively or in combination:
a) Credit opening contracts through which credit lines are made available in favor of the securitization vehicle to meet liquidity needs. b) Originator guarantee. c) Guarantees or sureties granted by financial institutions and insurers. d) Insurance policies. e) State guarantee. f) Deposits of money or securities. g) Others authorized by the Superintendent.

CHAPTER VI
RISK RATING

Article 34. Risk rating of securitization funds.- The risk rating of securitization funds will be governed in accordance with what is established in article 116 of the Capital Markets Law and the regulation governing the matter on the functioning of risk rating agencies, in those aspects that are not modified by the aforementioned article.

The disclosure of rating information must be carried out in accordance with what is established in the regulation governing the functioning of risk rating agencies.

TITLE IV
COMMERCIALIZATION OF SECURITIZATION FUNDS
SINGLE CHAPTER
AUTHORIZATION

Article 35. Commercializing entities.- Stock exchanges authorized by a stock exchange may commercialize securitization funds.
The fee for commercialization services, in the case of funds constituted under the Capital Markets Law, must be disclosed in the fund's prospectus.

Article 36. Responsibility of administrative companies.- The relationship between the administrative company and the commercializing entity is governed by the contracts they sign. Nevertheless, commercializing entities act in the name, on behalf of, and under the responsibility of the administrative company, for which the company must verify that the entities it hires meet the human and technical resources it deems necessary.

Article 37. Obligations of the commercializing entity.- Commercializing entities are subject to the following minimum obligations:
a) Respect the provisions regulating the advertising of securitization funds, as provided in Article 39 of this norm. b) Supply the Superintendent with the information he/she requires for the protection of investors. This information must be presented in Spanish.

Article 38. Conditions required for foreign securitization funds to be subject to public offering.- To be subject to a public offering, foreign securitization funds must comply with the requirements on the trading of foreign securities established in the regulations governing the matter on trading securities in the secondary market and present the following documents to the Superintendent:
a) Present to the Superintendent a request signed by the legal representative of the commercializing entity. b) Present to the Superintendent a notarial declaration made by the legal representative of the commercializing entity regarding compliance with the conditions indicated in the previous article and regarding the validity and effectiveness of the prospectus.

c) Present to the Superintendent two copies of the prospectus or information brochure of the fund. d) Present to the Superintendent a summary of the main characteristics of the prospectus, existing commissions, payment mechanisms, and differences between the legislation in force in Nicaragua and the legislation under which the fund to be commercialized was constituted. e) Present to the Superintendent a copy of the fund's last annual report presented to the regulatory body of the country of origin.

The information required in letters c), d), and e) must be presented in Spanish.

TITLE V
ADVERTISING OF ADMINISTRATIVE COMPANIES AND SECURITIZATION FUNDS SINGLE CHAPTER GENERAL PRINCIPLE AND BASIC LEGENDS

Article 39. General principle.- Advertising regarding administrative companies, commercializing entities, and securitization funds must be truthful and not mislead investors.
Administrative companies and commercializing entities must keep available in their offices a copy of all advertising carried out in the last two (2) years.

Article 40. Basic legends.- All advertising carried out regarding any securitization fund, regardless of the medium (radio, television, written press, websites, among others), must incorporate the legends referred to in the minimum content of the prospectus established in the regulations governing the matter on public offering of securities in the primary market.

TITLE VI
FINAL PROVISIONS
SINGLE CHAPTER
VARIOUS PROVISIONS

Article 41. Originating entities.- The Superintendent will submit to the Board of Directors the request to authorize as originating entities, entities other than those expressly mentioned in Article 110 of the Capital Markets Law. To this effect, interested entities must present the corresponding request attaching the technical criterion that supports that the assets or future income to be securitized meet the conditions established in said Law and in this norm.

Article 42. Custody of documents.- Administrative companies and commercializing entities must keep the documentation of the funds they administer or commercialize for a minimum period of five (5) years. This documentation or information may be kept at the headquarters of the administrative company or at the deposit location deemed appropriate, but this does not exempt the company or entity from its responsibility for custody and consequently, its obligation to ensure the integrity and security thereof.

In any case, the information must be available when the Superintendent requests it at the main headquarters of the administrative company or commercializing entity, within a maximum period of one (1) business day.

Article 43. Modification of annexes.- The Superintendent is authorized to make the necessary modifications to the annexes of this norm, which are an integral part thereof.

Article 44. Effectiveness.- This Norm shall enter into force upon its publication in La Gaceta, Official Diary.

ANNEX 1
CURRICULUM VITAE OF SHAREHOLDERS, DIRECTORS AND MANAGEMENT TEAM Strictly confidential information

INSTITUTION: ______________________________________________

GENERAL DATA
Full name: ___________________________________________ Nationality: _______________________________________________ Profession or trade: ____________________________________________ Place and date of birth:
___________________________________________________________ Identity Card Number (nationals):
___________________________________________________________ Residence Card (in the case of foreigners residing in the country):
___________________________________________________________ Passport Number (in the case of foreigners not residing in the country):
___________________________________________________________ RUC No. (or its equivalent, as applicable):
___________________________________________________________ Position held in the institution:
___________________________________________________________ In the case of being a foreigner, your migratory status:
___________________________________________________________ Do you have authorization to work in the country? (only for foreign shareholders holding administrative positions or on the Board of Directors) YES ( ) NO ( ) Authorization number: ______________________________________ Date of authorization: ________________________________________ Validity of authorization: ____________________________________

KNOWLEDGE AND EXPERIENCE
Knowledge and experience in the stock and financial activity:
Entity Position Period from ... to...
Main Functions

Positions held or currently held in other entities:
Entity Position Period from ... to...
Main Functions

Studies and training completed:
Establishment
Title or course name
Period from
... to...
Observations

OTHER INFORMATION
Have you been declared bankrupt? YES ( ) NO ( ) If affirmative, indicate the reasons and state if you have been rehabilitated:
____________________________________________________________ ____________________________________________________________ Have you ever been subject to judicial proceedings? YES ( ) NO ( ) If affirmative, indicate:
Reason Type of process
Date Final
Result

Have you been administratively sanctioned or judicially prosecuted for money laundering or other assets? YES ( ) NO ( ) If affirmative, indicate the sanction or process.
Are you a partner of any entity? YES ( ) NO ( ) If affirmative, provide the following information:
Name of the
Entity Country
RUC No. or its equivalent
% participation
Amount in
C$

I declare that the data above are true, subjecting myself to the sanctions determined by law for any inaccuracy thereof.
Place and date:
_____________________________________________________________ f) __________________ Name: ______________

ANNEX 2
CALCULATION METHODOLOGY FOR SHAREHOLDING PARTICIPATION OF 5% SHAREHOLDERS

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

Where k.o. 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.

ANNEX 3
INFORMATION THAT MUST BE ADDED TO THE PROSPECTUS OF SECURITIZATION FUNDS IN CASES OF PUBLIC OFFERING

Add a section to the Prospectus referred to in Annex 1, “Minimum Content of the Prospectus”, established in the Norm on Public Offering of Securities in the Primary Market, with information on the assets to be securitized that, as a minimum, must indicate the following (the other sections of the prospectus must comprise the information appropriate for this type of mechanism):
a) Description of the assets being securitized and the criteria for their selection. b) Number of assets grouped. c) Origin of the assets grouped and transferred and criteria for the assignment of credits by the originator. d) Administration of the grouped assets. e) Valuation of the grouped assets and subject to securitization. f) Credit enhancement mechanisms. g) Processes or mechanisms applied for the execution of credit enhancement mechanisms.

In the case of securitization of future income, the prospectus must contain, where applicable, the aforementioned information and, additionally, the mathematical, statistical, or actuarial projection of the future income that will be generated by the assets or projects subject to securitization; the deviation index of said income and the break-even point with which the securitization process will begin.

The issuer must exhaustively reveal the characteristics of the assets or future income subject to securitization.

(f) Antenor Rosales B. (f) V. Urcuyo V. (f) Gabriel Pasos Lacayo (f) Roberto Solórzano Ch. (f) A. Cuadra G. (f) U. Cerna B.
URIEL CERNA BARQUERO
Secretary of the Board of Directors SIBOIF