Norm on Honorable Conduct and Competence Requirements for Directors, General Manager and/or Chief Executive Officer, and Internal Auditor

Resolution No. CD-SIBOIF-531-1-ABR30-2008
Date: April 30, 2008

NORM ON HONORABLE CONDUCT AND COMPETENCE REQUIREMENTS FOR DIRECTORS, GENERAL MANAGER AND/OR CHIEF EXECUTIVE OFFICER, AND INTERNAL AUDITOR

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

CONSIDERING

I

That Article 28 of Law 561, the General Law of Banks, Non-Bank Financial Institutions, and Financial Groups (General Law of Banks), requires that members of the boards of directors of financial institutions be persons "of recognized honorability and professional competence";

II

That Article 37 of the General Law of Banks establishes that the Superintendent of Banks and Other Non-Bank Financial Institutions may annul any election or appointment to the positions of director, general manager and/or chief executive officer, and internal auditor that do not meet the requirements of "suitability and competence for said positions, in accordance with the general rules issued for this purpose by the Board of Directors of the Superintendence of Banks and Other Non-Bank Financial Institutions";

III

That Articles 37 letter e); 63 letter e); 75 letter d) and 122 of Law 587, the Capital Markets Law (CML), establish respectively that stock exchanges, stock market places, investment fund management companies, and securitization fund management companies must have executives, managers, and principal officials who are of recognized moral solvency, broad capacity, and experience; and must present certification of their appointment, attaching the detailed curriculum vitae of each of them;

IV

That Articles 139 and 154, letter a) regarding securities depositories and clearing and settlement entities, respectively, state that for their constitution, the provisions established by the General Law of Banks for banking entities shall be followed insofar as applicable;

V

That Article 208 of the CML states that the Superintendence is expressly authorized to issue all general rules and other executive provisions that are necessary to adequately comply with the provisions of said Law;

VI

That in accordance with what is established by Articles 131 and 133 of the General Law of Banks, the provisions of Chapter I of Title II of the same legal framework are applicable to insurance companies and general warehouses;

VII

That in accordance with what is established by Article 148 of the General Law of Banks, the provisions of Articles 38 and 40 are also applicable to special regime financial companies;

In exercise of its powers,

HAS ISSUED

The following:

NORM ON HONORABLE CONDUCT AND COMPETENCE REQUIREMENTS FOR DIRECTORS, GENERAL MANAGER AND/OR CHIEF EXECUTIVE OFFICER, AND INTERNAL AUDITOR

Resolution No. CD-SIBOIF-531-1-ABR30-2008

CHAPTER I

CONCEPTS, OBJECT, AND SCOPE

Art. 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. Board of Directors: Board of Directors of the Superintendence of Banks and Other Non-Bank Financial Institutions. b. Official: Board of Directors Director, General Manager and/or Chief Executive Officer, and Internal Auditor.
c. Institution or financial institution: Banks, financial companies, insurance companies, general warehouses, stock exchanges, stock market places, investment fund management companies, securitization fund management companies, securities depository, clearing and settlement companies, and special regime financial companies subject to the supervision of the Superintendence.
d. General Law of Banks: Law 561, General Law of Banks, Non-Bank Financial Institutions, and Financial Groups. e. Superintendence: Superintendence of Banks and Other Non-Bank Financial Institutions. f. Superintendent: Superintendent of Banks and Other Non-Bank Financial Institutions.

Art. 2. Object.- This norm aims to establish the general criteria and information requirements that allow for the assessment of the honorability and competence of officials required by law to exercise the position; as well as the deadlines for the submission of such information. The foregoing so that the Superintendent may annul any election or appointment that does not meet the aforementioned requirements, in accordance with the powers conferred by law.

Art. 3. Scope.- This norm is applicable to financial institutions supervised by the Superintendence.

The provisions of this norm do not exempt any of the Officials from complying with specific legal or regulatory provisions regarding the position or function they perform within the institution, such as the case of the internal auditor.

CHAPTER II

EVALUATION CRITERIA, INFORMATION REQUIREMENTS, AND DEADLINES

Art. 4. Evaluation Criteria.- For the purposes of the evaluation of the honorability and competence of officials, the following criteria shall be considered respectively:

a. For honorability: Positive reputation for honesty and integrity, to be verified by the information required by this norm. b. For competence:
1) Results of their management in other commercial activities, and especially in those of a banking or financial nature. In the event that the commercial or financial companies in which the official participated had negative results that led to bankruptcy, intervention, or liquidation, the Superintendent may only annul the appointment when the official has been attributed responsibilities regarding the same by judicial or administrative resolution of a competent authority.
If the official had been removed from their position, the Superintendent may annul the appointment when the removal was due to manifest negligence on the part of the official in the performance of their duties.
2) Relevant experience of at least five years at an adequate level of magnitude and complexity of the responsibility to be performed.
3) Relevant knowledge in finance, administration, law, accounting, and/or careers related to the position held or to be held.

Art. 5. Information and requirements to be presented.- For the evaluation of the aforementioned article, the following information must be presented:

a. Curriculum vitae documented with the information required in Annex 1, which becomes an integral part of this norm. Photocopies of higher education degrees, post-graduates, master's degrees, and doctorates, notarized by a public notary, must be attached to said curriculum. In the event that the person proposed for the position of Internal Auditor is an accountant, they must also present a valid certificate of their registration as an Authorized Public Accountant with the Ministry of Education, Culture and Sports and with the College of Public Accountants of Nicaragua. b. 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 by a public notary in accordance with the law on the matter.
c. 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.
d. When the Superintendent deems it necessary, 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, when it concerns persons not domiciled in Nicaragua or natural persons residing in Nicaragua who have been residents abroad in the last 15 years. e. A minimum of 2 personal references issued by persons of recognized honorability and prestige, related to the profession. A minimum of 2 recent bank or commercial references as of the date of the request. (national or foreign). If they have worked in public institutions, a certificate from the corresponding control organism of being solvent with the law is required. f. Declaration before a public notary of not being subject to the impediments of Article 29 of the General Law of Banks, in accordance with the format established by Annex 2, which becomes an integral part of the norm. g. Detailed list of related natural and legal persons, 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.

Officials must issue written authorization to the Superintendence so that it may request information from the corresponding natural and legal persons to verify their honorability and competence for the position.
The Superintendent of Banks is authorized to exempt from the presentation of the requirements contained in letters a, d, and e, when they are officials with recognized track record in the National or International Financial System; or from any other letter when the information, having been requested by other norms, is updated in this Superintendence.

Officials must keep the information referred to in this article updated whenever there are material changes.

Art. 6. Deadline and procedure.- Any election of officials must be communicated immediately by the President of the Board of Directors or the Secretary thereof to the Superintendent, who will send them certification of the minutes of the session in which the appointment was made within the subsequent 72 hours of the signing of the minutes. The information required by the previous article must be sent to the Superintendent within a period of thirty (30) calendar days counted from the immediate communication of the appointment or election referred to above; extendable by an equal period by the Superintendent when there is a reasoned request by the institution.

Based on the information presented, the Superintendent, within the term of thirty (30) calendar days, will issue, if applicable, through a reasoned resolution, the objection to any of the appointments or elections of officials referred to in this norm.

CHAPTER III

FINAL PROVISIONS

Art. 7. 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 from 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. 8. Obligation to inform.- The financial institution must inform the Superintendent within a period of 72 hours, in cases where any of the officials incur in any of the impediments established in Article 29 of the General Law of Banks. This will also apply to officials who were exercising their positions upon the entry into force of this norm.

Art. 9. Annexes.- The Superintendent is authorized to make modifications to the Annexes to this norm when the case so requires.

Art. 10. Repeal.- The Norm on Requirements on Suitability and Code of Conduct, For Shareholders, Directors, Auditors, Managers, Auditors, and Employees of Financial Institutions, Resolution CD-SIBOIF-217-1-AGOS30-2002, is repealed, except for the provisions of Chapter VI, regarding the Code of Conduct for Directors, Managers, Internal and External Auditors, Employees, and Agents.

Article 11. Validity.- This Norm shall enter into force from its publication in La Gaceta, Official Diary.

ANNEX 1

OFFICIALS' CURRICULUM VITAE

Strictly Confidential Information

INSTITUTION:

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I. GENERAL DATA

a. Full name:______________________________________ b. Nationality:__________________________________________
c. Profession or trade: ______________________________________
d. Place and date of birth: _____________________________ e. Identity Card Number: __________________________ f. Residence Card (in the case of resident foreigners in the country) :_______________________________________________ g. Passport Number (in the case of non-resident foreigners):
______________________________________________ h. RUC No. (or its equivalent, as appropriate): _________________
i. Position held or to be held in the Institution: _______
j. Address:_____________________________________________ k. Migratory status: ___________________________________
l. Do you have authorization to work in the country? (only for foreigners holding administrative positions or on the board)
YES ( ) NO ( )

1. Authorization Number: __________________________
2. Authorization Date: ___________________________
3. Validity of Authorization: _______________________

II. KNOWLEDGE AND EXPERIENCE

a. Knowledge and experience in banking, stock market, financial activities, and financial risk management:

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

b. Positions held or currently held in other entities:

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

c. Studies and training completed:

Establishment Title or Course Name Period from ... to Observations A/

A/ It is required to expand in a separate document all information related to the functions and activities carried out in these entities, which allows evaluating their knowledge, skills, and aptitudes to solve problems autonomously and flexibly, and supports their suitability for the position they hold or are proposed for.

d. Are you a partner/member of any entity? YES ( ) NO ( ) In the affirmative, provide the following information:

Name of 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 inaccuracies thereof.

Place and date: _____________________________________________________ f) __________________ Full Name: ______________

ANNEX 2

To the Superintendent of Banks and Other Non-Bank Financial Institutions Present.

I, [Name], of [Age] years of age, of profession or trade [Profession], of nationality [Nationality], domiciled at [Address], with Identity Card No. [Number], in view of having been proposed as an official of the institution [Institution Name], declare that:

a. I am not in a situation of bankruptcy or insolvency and have never been judicially qualified as responsible for fraudulent or negligent bankruptcy. b. I am not a delinquent debtor of credits in the financial system.
c. For a better analysis of my debtor situation, I detail below the credits I currently have in the financial system:

Credit No. Amount Granted Bank (or financial institution)

d. In order to verify compliance with what is indicated by No. 5 of Article 29 of the General Law of Banks, I also declare that I am a shareholder of the entities detailed below (detail entities):

e. I have never been sanctioned for causing patrimonial damage to a bank or to public faith by altering its financial statements, during the last 15 years. f. I have never participated as a director, manager, deputy manager, or official of equivalent rank of an institution that has been subjected to intervention processes and declaration of forced liquidation status; or that by judicial or administrative resolution, responsibilities, presumptions, or indications linking me to the aforementioned situations have been established. g. I have never been convicted of intentional crimes that have had a penalty greater than corrective.

(f) Antenor Rosales B. (f) V. Urcuyo V. (F) Roberto Solórzano Ch. (f) Gabriel Pasos Lacayo (f) A. Cuadra García (f) Antonio Morgan Pérez. Ad Hoc Secretary

URIEL CERNA BARQUERO
Secretary of the Board of Directors SIBOIF