Norm Reforming Articles 2, 3, 7, 8, 14, 74, and 78 of the Operational and Financial Standard for General Warehouses

Resolution No. CD-SIBOIF-1088-1-DIC6-2018
Dated December 6, 2018

NORM REFORMING ARTICLES 2, 3, 7, 8, 14, 74, AND 78 OF THE OPERATIONAL AND FINANCIAL STANDARD FOR GENERAL WAREHOUSES

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

CONSIDERING

I
That on July 4, 2014, the Operational and Financial Standard for General Warehouses, contained in Resolution No. CD-SIBOIF-841-1-JUL4-2014, was approved, published in La Gaceta, Official Gazette, No. 143 of July 31, 2014.

II
That it is necessary to adapt the provisions contained in the aforementioned standard, in accordance with the new Accounting Framework applicable to General Warehouses, which is based on a combination of International Financial Reporting Standards (IFRS) and prudential regulations issued by this Superintendence.

III
That based on the authority conferred by Articles 2 and 139 of Law 734, General Warehouse Law; and Article 2, fourth paragraph, Article 3, numeral 13), and Article 10, numeral 2) of Law 316, Law of the Superintendence of Banks and Other Financial Institutions, 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, of August 27, 2018, and its reforms.

In exercise of its powers,

HAS ISSUED,

The following:

Resolution No. CD-SIBOIF-1088-1-DIC6-2018
NORM REFORMING ARTICLES 2, 3, 7, 8, 14, 74, AND 78 OF THE OPERATIONAL AND FINANCIAL STANDARD FOR GENERAL WAREHOUSES

FIRST: Articles 2, 3, 7, 8, 14, 74, and 78 of the Operational and Financial Standard for General Warehouses, contained in Resolution No. CD-SIBOIF-841-1-JUL4-2014, dated July 4, 2014, published in La Gaceta, Official Gazette, No. 143 of July 31, 2014, are hereby amended, which shall read as follows:

“Article 2. Concepts.- For the purposes of this standard, the terms indicated in this article, whether in uppercase or lowercase, singular or plural, shall have the following meanings:

a) Warehouse, Warehouses, or Warehouse Company: General Warehouses, Non-Bank Financial Institutions Auxiliary to Credit. b) Financial Deposit: Warehousing operations in which Certificates of Deposit with or without a Pledge Bond are issued. c) Fiscal Deposit: Warehousing operations of non-nationalized merchandise pending payment of import taxes. d) Simple Deposit: Warehousing operations of nationalized merchandise, of local origin or purchased locally, in which no Certificates of Deposit with or without a Pledge Bond are issued. e) Endorsement of policies: Addendums or annexes through which partial or total rights to indemnifications in case of accidents are ceded to the Warehouse Company. f) Warehouse Keeper: Owner of the merchandise or, where applicable, the duly authorized legal representative to exercise this position on behalf of the owner, delegated by the warehouse for the storage, conservation, custody, administration, and control of inventory of merchandise received in deposit in authorized premises. g) Law: Law 734, General Warehouse Law, of August 24, 2010, published in “La Gaceta”, Official Gazette No. 201 and 202, of October 21 and 22, 2010, respectively; contained in Law No. 974, Law of the Nicaraguan Legal Digest on Banking and Finance Matters, published in La Gaceta, Official Gazette No. 164, of August 27, 2018, and its reforms. h) Premises: Warehouses, silos, tanks, granaries, cold or refrigerated rooms, yards, plots, or clearly delimited and suitable installations, in which merchandise is deposited in the usual operations of warehouses. i) Accounting Framework: Accounting Framework for General Warehouses. j) Merchandise: Merchandise or goods subject to storage in financial, fiscal, or simple deposits. k) AML/CFT Standard: Standard on Prevention of Money Laundering and Financing of Terrorism. l) Superintendence: Superintendence of Banks and Other Financial Institutions. m) Superintendent: Superintendent of Banks and Other Financial Institutions. n) Titles: Certificates of Deposit with or without a Pledge Bond.

Article 3. Capital Calculation Base.- For the purposes of Law 734 and the standards issued as a consequence thereof, the Capital Calculation Base of the warehouse is understood as the sum of primary capital and secondary capital, minus deductions.

a. Capital Components:
1) Primary Capital: It is composed of the balances existing in accounts whose scope is defined in the Accounting Framework, which are the following:
i. Paid-up Share Capital.
ii. Contributions to be Capitalized.
iii. Legal Reserve.
2) Secondary Capital: It is composed of the balances existing in accounts whose scope is defined in the Single Chart of Accounts for General Warehouses, which are the following:
i. Obligations Convertible into Capital.
ii. Other Mandatory Reserves and Voluntary Reserves.
iii. Accumulated Results.
iv. Results of the Period.
v. Other Net Comprehensive Income.
b. Deductions: The following items shall be deducted from the Calculation Base:
1) Accumulated Results in case of losses.
2) Results of the Period in case of losses; and
3) Provisions and adjustments pending to be established.
For the purposes of measuring concentration in related or unrelated parties, concentration of investments, global storage limit with titles, limits in operations with Certificates of Deposit in authorized premises, or any other relationship that is directly or indirectly linked to and/or uses as a parameter the Capital Calculation Base, this must be calculated and updated each time a change is registered in one or any of its components, to make the corresponding measurements.

Article 7. Fiscal Services.- The operation of fiscal services shall be regulated by the relevant law; however, their accounting records shall be subject to the Accounting Framework, which regulates the records of financial operations of warehouses.

Article 8. Storage, custody, conservation, and handling of merchandise.- Warehouses may only receive merchandise for storage, custody, conservation, and handling in their own or leased premises and in authorized premises, duly authorized by the Superintendence.

Article 14. Customs Agency Services and consolidation and deconsolidation of merchandise.- The operation of the customs agency and the consolidation and deconsolidation of merchandise shall be regulated by the relevant law; however, their accounting records shall be subject to the Accounting Framework, which regulates the records of financial operations of warehouses.

Article 74. Accounting record of financial operations.- Warehouses subject to the supervision and control of the Superintendence shall keep their accounting in accordance with the Accounting Framework and other applicable regulations approved by the Superintendence.

Article 78. On the acquisition of goods.- The acquisition of goods, furniture, and equipment that are not intended for offices or activities inherent to their corporate purpose is strictly prohibited. The values of goods, furniture, and equipment acquired in violation of the foregoing must be fully provisioned at 100%, and immediately sanitized by registering them in off-balance sheet accounts. This is without prejudice to the sanctions that the case may warrant.”

SECOND: The accounting provisions established in this standard shall apply from January 1, 2019; however, for the purposes of implementing IFRS 1 - First-time Adoption of International Financial Reporting Standards, Warehouses shall apply these provisions to the first financial statements generated during the transition period, as referred to in the regulation governing the implementation of Accounting Frameworks.

THIRD: This standard shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Gazette. (F) S. Rosales C (F) V. Urcuyo (F) Fausto Reyes B. (F) Illegible (Silvio Moisés Casco Marenco) (F) Illegible (Rafael Ángel Avellán Rivas) Secretary.

RAFAEL ÁNGEL AVELLÁN RIVAS
Secretary of the Board of Directors SIBOIF