Operational and Financial Regulation of General Warehouses

Resolution No. CD-SIBOIF-1343-1-NOV8-2022
Dated November 8, 2022
OPERATIONAL AND FINANCIAL REGULATION OF GENERAL WAREHOUSES

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

CONSIDERING

I
That it is necessary to establish minimum guidelines to be followed by General Warehouses so that they develop their operational and financial activities within a more competitive framework aligned with the new market demands.

II
That the dynamics of the General Warehouses market demand activities that are necessary and useful for their development and economic strength, and that fall within the role of credit auxiliaries, which these institutions perform in support of other entities in the national and international financial system.

III
That based on the authority conferred by Articles 2 and 139 of Law No. 734, Law of General Warehouses; and Article 2, fourth paragraph, Article 3, numeral 13), and Article 10, numeral 2) of Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, both laws 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 updates.

In exercise of its powers,

HAS ISSUED

The following:

CD-SIBOIF-1343-1-NOV8-2022
OPERATIONAL AND FINANCIAL REGULATION OF GENERAL WAREHOUSES

TITLE I
GENERAL PROVISIONS

SINGLE CHAPTER
OBJECT, SCOPE, AND CONCEPTS

Article 1. Object and Scope.- This Regulation aims to regulate the operation of General Warehouses, Non-Bank Financial Credit Auxiliary Institutions, authorized by the Superintendence of Banks and Other Financial Institutions.

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

a. Warehouse, Warehouses, or Warehouse Operator: General Warehouses, Non-Bank Financial Credit Auxiliary Institutions. b. Financial Deposit: Storage operations of merchandise where the issuance of Deposit Certificates with or without Pledge Bonds is involved.
c. Fiscal Deposit: Storage operations of non-nationalized merchandise pending the payment of import taxes.
d. Simple Deposit: Storage operations of nationalized merchandise, of local origin or purchased locally, where the warehouse acts as the depositary without issuing Deposit Certificates and which are located in warehouses owned by the warehouse operator or directly leased by it. e. Endorsement of policies: Addendums or annexes through which partial or total rights to indemnifications in case of accidents are assigned to the Warehouse Operator. f. Warehouse Keeper: The owner of the merchandise or, in its case, 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 inventories of merchandise received in deposit in authorized premises. g. Law: Law 734, Law of General Warehouses, 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, properties, among others, that are clearly delimited and suitable for storing merchandise in deposit quality.
i. Accounting Framework: Accounting Framework for General Warehouses.
j. Merchandise: Goods subject to storage in financial, fiscal, or simple deposit. k. AML/CFT/CPF Regulation: Standards issued by the Superintendence of Banks and Other Financial Institutions on Prevention of Money Laundering and Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction.
l. Superintendence: Superintendence of Banks and Other Financial Institutions.
m. Superintendent: Superintendent of Banks and Other Financial Institutions. n. Titles: Deposit Certificates and Pledge Bonds.

TITLE II
OF SERVICES

CHAPTER I
OF FINANCIAL SERVICE LIMITS

Article 3. Capital Calculation Base.- For the purposes of Law 734 and the norms 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 integrated by the balances existing in accounts whose scope is defined in the Accounting Framework, being the following:
   i. Paid-up Social Capital.
   ii. Contributions to Capitalize.
   iii. Legal Reserve.
2. Secondary Capital: It is composed of the balances existing in accounts whose scope is defined in the Accounting Framework, being the following:
   i. Obligations Convertible into Capital.
   ii. Other Mandatory Reserves and Voluntary Reserves.
   iii. Accumulated Results.
   iv. Results of the Exercise.
   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 Exercise in case of losses; and
3. Provisions and adjustments pending to be constituted.

For the purpose of measuring concentration in related or unrelated parties, concentration of investments, global storage limit with titles, limits in operations with Deposit Certificates 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 accountingly in one or any of its components, to make the corresponding measurements.

Article 4. Credit Limits.- The credits granted by a warehouse shall be subject to the limitations and provisions established in Law 734.

Article 5. Global storage limit with deposit certificates.- The value of all Deposit Certificates that a warehouse can issue shall not exceed 30 times the amount of its capital calculation base. This is without prejudice to the limit established in Article 96 of Law 734.

Article 6. Limits in operations with deposit certificates in authorized premises.- The value of all deposit certificates that a warehouse can issue for the same client, natural or legal person, in authorized premises, shall not exceed 15 times its capital calculation base. This is without prejudice to the limit established in Article 96 of Law 734.

CHAPTER II
OF FISCAL SERVICES

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.

CHAPTER III
OF LOGISTICAL SERVICES

Article 8. Storage, custody, conservation, and handling of merchandise.- Warehouses may only provide logistical services of storage, custody, conservation, and handling of merchandise in their own premises or directly leased.

By directly leased premises, those shall be understood where the warehouse operator leases to carry out operations and activities proper to warehouses, in which it administers and carries out its operations under its total control, without intervention of its clients and/or third parties.

Article 9. Inventory management.- Warehouses may provide inventory management services in their own premises, or in directly leased premises at the express request of clients.

Article 10. Value-added processes, transformation, repair, and assembly.- In cases where it is established that merchandise may be subject to incorporation of value-added processes and of transformation, repair, and assembly, in accordance with letters e) and f) of Art. 57 of Law 734, this circumstance must be stated in the Simple Deposit Agreement or Contract and, if applicable, in the Deposit Certificate issued with or without Pledge Bond.

Article 11. Commercialization of goods under their custody.- Sales and purchase operations of merchandise shall be carried out complying with the following conditions:

a. Warehouses may be in charge of the sale of deposited merchandise, provided they comply with the following:

1. That in the corresponding agreement or contract, the sale conditions are clearly established, such as prices, currency, maximum and minimum quantities of merchandise to be sold, place of delivery of the merchandise, fund handling, commissions, and other requirements that must be observed in the operation.

2. The sale of merchandise when Pledge Bonds have been issued on them may only be carried out with written authorization from the holders of the Deposit Certificate and the Pledge Bond; prior to the delivery of those titles to the warehouse.

3. The proceeds of the sale shall be received by the warehouse; notwithstanding the foregoing, it shall be the responsibility of the owner of the merchandise to issue and deliver the invoice or corresponding sales document to the buyer.

4. The proceeds of the sale shall be delivered to the owner of the merchandise within the term established in the corresponding agreement or contract, after covering the expenses, commissions, and advances of the warehouse, without prejudice to the priority of payment of obligations referred to in Article 77 of Law 734, as applicable.

b. Warehouses may also execute on behalf of others, purchase operations of merchandise, provided they comply with the following:

1. In the corresponding agreement or contract, the purchase conditions are clearly established, such as prices, currency, quantities, class, and qualities of the merchandise, place where they will be stored, storage expenses, surveillance, insurance, and transport, if applicable, of the merchandise, fund handling, commissions, and other requirements that must be observed in the operation.
2. Warehouses shall require their clients to provide the funds in advance for the purchase of the merchandise.
3. The merchandise shall be delivered to its owner within the term established in the corresponding agreement or contract, after covering the expenses, commissions, and other services provided by the warehouse.

Article 12. Quality certifications and valuations of merchandise.- The certification of the qualities of the merchandise and its valuation may only be carried out in own premises or directly leased. The certification of qualities may only be done by qualified experts in the matter.

This is without prejudice to special certifications that, by the laws of the matter, correspond to state institutions.

Article 13. Weighing and inventory control.- The weighing services provided by warehouses must be carried out using scales calibrated and certified by experts in the matter. Such calibrations and certifications may not be older than one year at the time of the corresponding weighings.

They may also:

a. Provide inventory control services, in which case they may not constitute themselves as depositaries of the merchandise and their responsibility shall be limited exclusively to maintaining precise control of inventories (entries, exits, and existing quantities). The storage, custody, and conservation of the merchandise shall be at the expense and risk of the clients; consequently, they may not also contract insurance in their favor.

b. Provide inventory survey services.

Article 14. Customs Agency 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.

TITLE III
OF WAREHOUSES

CHAPTER I
OF WAREHOUSES OR STORAGE PREMISES

Article 15. Requirements of storage premises.- Own, rented, loaned, and those requested in the quality of authorization premises shall be inspected by the Superintendence prior to their use and not objected to, provided they comply with the following requirements:

a. Warehouses must be of concrete walls or solid and/or decorative blocks, or quarter-brick, or metal sheets, or quarry stone or pre-fabricated sheets or similar, or cyclone mesh with metallic structure, or a combination of these materials, with columns and structures of concrete, or iron or wood, with roofs of zinc or metallic or concrete, on iron, wood, or concrete structure; floor of tiles, bricks, cement, or wood, and any other structure and/or types of materials that provide security in the safeguarding of merchandise at the judgment of the Superintendent. b. Electrical installations must be tubed or of hard wire. Control panels must be located in such a way that they are easily accessible, with their cover and in normal working condition.
c. Properties and yards must be fenced and illuminated.
d. Special deposits and containers must be in good working condition. e. They must have the means to allow immediate communication at all times with the general management or operations management of the warehouse. f. Have direct access to the public road, in such a way that warehouse personnel and control employees can enter them and exercise their functions freely. g. They must also have sufficient parking and maneuvering areas that allow the movement of transport means (loading and unloading). h. Permanent surveillance by the warehouse 24 hours a day.
i. Buildings, constructions, or installations must not have holes or spaces that allow the fall of drips or breezes that could affect the merchandise and must have sufficient ventilation to avoid excess humidity.

j. Be under the control of the warehouse. k. Comply with all recommendations arising from the inspection of said premises.

Article 16. Maintenance of requirements and conditions.- Without prejudice to the requirements established in the preceding Article 15, during operations in premises authorized by the Superintendent, it is the obligation of warehouse operators to maintain and comply with the approved requirements and conditions unless there is an instruction from the Superintendent that expressly modifies them.

Article 17. Scales and other security elements.- Storage premises, when required, must be equipped with precise scales certified by specialists in the matter. The age of the certifications may not exceed one year at the time of the corresponding weighings; however, the warehouse must periodically review the good functioning of said scales. Additionally, fire extinguishers and all necessary security elements for the guarantee of deposited merchandise must be available.

Article 18. Use of pallets and others.- Merchandise that may suffer damage from humidity must be stacked as follows:

a. On pallets that avoid direct contact with the ground; or b. As established in the warehouse's insurance policy. In the latter case, if the policy indicates special particularities, these and their effects must be stated in the respective Deposit Certificate and Pledge Bond, or on a sheet attached to both titles.

Article 19. Storage in properties, yards, and others.- Warehouses may only store merchandise in properties and yards or in warehouses that are only roofed, when the merchandise cannot suffer damage from being exposed to the elements and/or whose process requires it.

Article 20. Authorization contract and appointment of the warehouse keeper.- In the case of authorized warehouses, the warehouse must comply with the following minimum provisions:

a. The warehouse is obliged to sign the corresponding authorization contract, in which the obligations, rights, and responsibilities of the parties must be clearly and precisely established; the appointment, powers, functions, attributions, duties, and rights of the warehouse keeper; and any other condition that the warehouse considers necessary to strengthen and preserve the security of the merchandise deposited in these warehouses. The Warehouse Keeper must guarantee to the warehouse the correct performance of their functions through the guarantees that the warehouse deems pertinent. b. In the Warehouse Authorization Contract, the faculty that the Superintendence has, at the moment it deems pertinent and in exercise of its legal powers, to inspect, supervise, and audit the adequate storage, conservation, custody, and control of inventories of merchandise received in deposit, among others, must be irrevocably recorded.

c. Likewise, the faculty that insurance companies with which the respective insurance has been contracted and the legitimate holder of the Pledge Bonds have, to verify the adequate storage, conservation, custody, and control of inventories, among others, of the insured or pledged merchandise, as the case may be, must be recorded in that contract.

d. In cases of transfer of Deposit Certificates in authorized warehouses, the warehouse, within a term not exceeding 72 hours counted from when it is notified of said transfer, must settle the relationship with the Warehouse Keeper, proceeding to receive the entirety of the pledged merchandise and assume the storage, custody, conservation, and handling of the merchandise directly, that is, through an employee of the warehouse with the same controls and requirements of own or leased warehouses, notifying the Superintendence once it has knowledge of the transfer. If the merchandise remains stored in the same premises, it must request the change of authorized warehouse to the operational quality corresponding, within the aforementioned term.

Article 21. Shortages of merchandise.- When there are shortages of merchandise, the warehouse must at least:

a. Immediately take the necessary measures to guarantee its interests and those of third parties. b. Immediately notify the Superintendent of said shortage indicating the following:

1. Identification of the depositor and the warehouse keeper, if applicable.
2. Data of the Deposit Certificate and the Pledge Bond, if applicable.
3. Location of the premises.
4. Preliminary detail of the missing product (description, quantity, value, etc.)
5. Actions being taken to remedy the situation.
   c. Conduct the relevant investigation to know the final detail of the shortage in physical and value terms, within a period not exceeding 15 days, and notify the Superintendent within the following 3 days of the actions taken before the corresponding authorities and the respective insurance company.
   d. When by means of a final judicial resolution the responsibilities of certain persons related to the shortage of merchandise referred to above are determined, the respective warehouse must send a copy of such resolution to the Superintendent within a period not exceeding 3 days after the aforementioned resolution is notified.

This is without prejudice to the actions that warehouses may take against the warehouse keeper and its guarantor for shortage of deposited merchandise in accordance with what is provided in Article 59 of Law 734.

CHAPTER II
OF PREMISES AUTHORIZATIONS AND THEIR VALIDITY

Article 22. Request for authorization and renewal of storage premises.- The requests for authorization and renewal of premises made by warehouse operators must contain at least the following:

a. The code or reference number of the request, which the warehouse will establish according to its own internal control. b. The operational quality of the premises (own, direct lease, lease, or authorized) required in the request.
c. The precise address and name by which the requested premises is known, if it has one.
d. The identification of the warehouses and/or premises and their corresponding dimensions. e. The product or products to be stored. f. The copy of the plans and the field report evaluating and concluding on the conditions, capacities, dimensions, and other characteristics of the storage premises, drawn up by the instance designated by the warehouse operator for this purpose.

Article 23. Leases and others.- In the case of premises that are not owned by the warehouses, they are obliged to sign a lease or sublease or loan agreement that grants them exclusive use rights of the premises in which merchandise will be deposited under their responsibility.

Article 24. Authorization of warehouses and premises.- Only premises that meet the requirements established in Article 15 of this regulation, and that additionally, when pertinent, have the respective lease, sublease, or loan contract, as the case may be, and which has not been objected to by the Superintendent, will be authorized.

Article 25. Duration of the validity of authorizations.- The validity of the warehouse and premises authorizations shall last twelve (12) months, counted from the date of receipt of the respective authorization.

Article 26. Renewal of authorizations.- Upon expiration of the twelve (12) months indicated in the preceding article, the warehouse shall be obliged, if applicable, to request the renewal of the authorization. It is the obligation of the warehouse operator to maintain the validity of the Superintendence's authorization and the lease, sublease, or loan contract, as applicable, and of authorization, if applicable, while issued and uncancelled titles exist.

Article 27. Free access to services.- The authorization for the use of a premises by the Superintendence in no way means that clients or depositors are obliged to carry out their operations with the requesting warehouse, being able to access the services of other warehouses if they deem it convenient.

Article 28. Signage.- It is the obligation of the warehouse to place visible signs with its distinctive mark in the authorized premises.

TITLE IV
OF MERCHANDISE

CHAPTER I
OF ITS ENTRY INTO THE WAREHOUSE

Article 29. Nature of deposits.- General Warehouses may receive goods or merchandise for: a) Financial Deposit, through the issuance of Deposit Certificates with or without Pledge Bond; b) Fiscal Deposit; c) Simple Deposit.

Article 30. Process of review and analysis of storage requests.- In the process of review and analysis of the storage requests referred to in Article 63 of Law 734, and