Regulation of the Risk Committee of the Pension Savings System

DE No. 27/2018
DECRETO No. 27/2018
REGLAMENTO DEL COMITÉ DE RIESGO DEL SISTEMA DE AHORRO PARA PENSIONES Aprobación: 22/05/2018 Vigencia: 03/06/2018 DECRETO No. 27 THE PRESIDENT OF THE REPUBLIC OF EL SALVADOR, CONSIDERING:
I. That by means of Legislative Decree No. 927, dated December 20, 1996, published in Official Diary No. 243, Volume No. 333, of the 23rd of the same month and year, the Law of the Pension Savings System was issued;
II. That by means of Executive Decree No. 3, dated January 15, 1998, published in Official Diary No. 15, Volume No. 338, of the 23rd of the same month and year, the Regulation of the Risk Commission of the Pension Savings System was issued;
III. That by means of Legislative Decree No. 787, dated September 28, 2017, published in Official Diary No. 180, Volume No. 416, of that same date, reforms to the Law of the Pension Savings System were issued, among others, those related to its article 89, in order to modify the composition of the Risk Committee, including the designees of workers and employers as members of the Committee, as well as other aspects related to its operation;
IV. That in order to update the legal framework to the reforms of the Law of the Pension Savings System, it is necessary to establish the procedure for the designation of the members of the Risk Committee by workers and employers and to regulate the operation of said Committee; therefore, it is appropriate to issue a new regulation.
THEREFORE, in exercise of its constitutional powers, DECREE the following:
REGULATION OF THE RISK COMMITTEE OF THE PENSION SAVINGS SYSTEM
CHAPTER I
OBJECT AND DEFINITIONS
Object
Art. 1.- The object of this Regulation is to establish the procedure for the election of the designees by workers and by employers as members of the Risk Committee of the Pension Savings System; as well as to establish aspects related to the operation of said Committee. Definitions Art. 2.- For the purposes of this Regulation, the following definitions will be used:
a) AFP: Pension Fund Administrators; b) Committee: Risk Committee of the Pension Savings System; c) Funds: Pension Funds; d) Law: Law of the Pension Savings System; e) President: President of the Committee; f) SAP: Pension Savings System; and g) Superintendence: Superintendence of the Financial System.
CHAPTER II
ON THE RISK COMMITTEE
Object and integration of the Risk Committee
Art. 3.- The Committee shall have as its object the analysis and establishment of what is provided in the first paragraph of article 89 of the Law; as well as to adopt other agreements for its administrative performance. The Committee shall be integrated in accordance with what is established in the second paragraph of article 89 of the Law, whereby its members assume office from their appointment or designation. Sworn declaration Art. 4.- The members of the Committee, upon assuming their office, must deliver a sworn declaration, granted before a Salvadoran notary, in which the following is detailed:
a) The securities and other financial instruments that they own, prior to the exercise of their function; b) The securities and other financial instruments that are held by their spouse, cohabitant, or relatives within the fourth degree of consanguinity or second degree of affinity; and, c) The names of the societies and institutions established in article 7 of the Law on Supervision and Regulation of the Financial System in which they, their spouse, cohabitant, or relatives within the fourth degree of consanguinity or second degree of affinity are partners, shareholders, directors, advisors, auditors, administrators, or representatives of the same. If there is any change in their declaration with respect to what is provided in the preceding letters, they must inform the Committee in writing on the next business day of the change being made. Conflicts of interest Art. 5.- In the event that a member of the Committee has a conflict of interest in any matter submitted for its approval or if their spouse, cohabitant, relatives within the fourth degree of consanguinity or second degree of affinity have such a conflict, they must withdraw from the corresponding session, while the point of interest is discussed and any provision relative to it is agreed upon.
CHAPTER III
ON THE PROCESS OF ELECTION OF THE MEMBER REPRESENTATIVES OF WORKERS AND EMPLOYERS
SECTION I
COMMON PROVISIONS
On the representatives
Art. 6.- The representative of the workers in the Committee shall be designated by the confederations and federations of workers that have legal personality, duly registered with the Ministry of Labor and Social Welfare and that have current representation. The business guilds duly registered with the Ministry of Governance and Territorial Development must designate the member who represents the employers at a general assembly, which the Superintendence shall convene for this purpose. The business guilds, confederations, and federations of workers that designate their representative must be contributors to the SAP and be up to date with the payment of pension contributions. The representative of the workers and the representative of the employers shall exercise their functions for a period of three years, counted from their designation; both may be reelected in their functions. The designation of the member representative of the workers, as well as that of the employers, must be made at least thirty days in advance of the end of the term of the member corresponding. If for any cause the designation of a new designee of the workers or of the employers is not made, the one who is in office will continue in the position until the designation of the new member. Requirements Art. 7.- The members designated by the workers and employers to integrate the Committee must meet the following requirements:
a) Have a university degree and experience in the field of economics or finance; b) Not be in an employment or professional relationship with entities of the public sector, nor with the entities that propose them; c) They cannot be leaders of political parties, unions, or guilds; and, d) Not be within the disqualifications set forth in article 55 of the Law.
SECTION II
ON THE PROCESS OF ELECTION OF THE MEMBER REPRESENTATIVE OF THE WORKERS On the publication of the call Art. 8.- The designation of the representative of the workers will be carried out in a special session of confederations and federations of workers, specifically convened for this purpose by the Superintendence and may attend the same, on behalf of said organizations of the workers, the legal representative, proxy, or special designee. The Superintendence will carry out a publication in two major national circulation newspapers and other media that it has available, to communicate the start of the election process of the representative in the Committee. The call will establish the place, date, and time in which the special session will be held, the documents that participants must present to prove their representation, the requirements that the persons to be nominated as designees must meet, and the disqualifications established in the Law, as well as the quorum for installation in the first and second call and the agenda of the session. Submission of the list of confederations and federations of workers Art. 9.- The Superintendence will request from the Ministry of Labor and Social Welfare, with a minimum of fifteen business days prior to the holding of the session, the submission of the list of the confederations and federations of workers registered with said Ministry. The list must be sent to the Superintendence, at the latest, within five business days of receiving the request, in the terms that it requires. Documentation to be presented by confederations and federations of workers Art. 10.- The confederations and federations of workers interested in attending the special session, within fifteen business days, from the date of publication of the call, will present to the Superintendence the following documentation:
a) Notarially certified copy of the statutes or constitutive document of the confederation or federation, as well as of the credential in which the current appointment of the legal representative appears, all duly registered with the Ministry of Labor and Social Welfare; b) Notarially certified copy of the power granted to the person who will attend the special session, if applicable; c) Simple letter authenticated by a notary in which the representation of the confederation or federation is authorized, through a special designee in the special session, if applicable; d) Notarially certified copy of the Unique Identity Document of the legal representative, proxy, or special designee who will attend the special session; and, e) Certificate issued by the AFPs in which they contribute, which must be valid on the date of its presentation. Only confederations and federations of workers that are included in the list provided by the Ministry of Labor and Social Welfare and present the aforementioned documentation in due form may participate in the special session. On the documents to be presented by candidate applicants Art. 11.- The persons who aspire to be candidates for representatives of the workers must present to the Superintendence, within the period established in the previous article, the following documentation:
a) Curriculum vitae; b) Notarially certified copy of the Unique Identity Document and Tax Identification Number; c) Notarially certified copy of the university degree; d) Sworn declaration that they are not within the disqualifications of article 55 of the Law; as well as not being in the circumstances provided for in letters b) and c) of the fifth paragraph of article 89 of the Law; and, e) Sworn declaration of their spouse and relatives within the first degree of consanguinity, that they are not within the disqualifications referred to in the last paragraph of article 55 of the Law. The Superintendence may request from the Ministry of Finance, the Supreme Electoral Tribunal, the Ministry of Labor and Social Welfare, and the Ministry of Governance and Territorial Development, as appropriate, information regarding compliance with the requirements established in letters b) and c) of the fifth paragraph of article 89 of the Law. Verification of information Art. 12.- To facilitate the holding of the special session, the Superintendence may verify the information referred to in articles 10 and 11 of this Regulation, with the purpose that what is established in article 89 of the Law is complied with. Correction of documentation Art. 13.- The Superintendence may communicate to the interested parties the inconsistencies it detects in the required documents, in accordance with articles 10 and 11 of this Regulation, in order that the corresponding documentation can be completed in due form within the period it determines. On the special session Art. 14.- The special session will be held with the number of accredited confederations and federations of workers, in accordance with what is provided in article 10 of this Regulation and will be valid with the attendance of more than half of the aforementioned entities. If the quorum for the first call is not met, a second call will be carried out on the same day, with the number of confederations and federations that are present. Both in the first call and in the second, the special session can only take place if at least ten representations of confederations and federations are present. In the event that the special session cannot be held, the Superintendence must start a new election process. Development of the special session Art. 15.- The special session will be developed in accordance with the following rules:
a) It will be presided over by the Superintendent of the Financial System or, by delegation, by the Deputy Superintendent of Pensions; b) It will be held with the corresponding quorum, in the first or second call, in which the legal representatives, proxies, or special designees must record their attendance; c) Candidate proposals, to be accepted, must have the support of at least three confederations and/or federations of workers, which will be documented in writing or in the manner established by the Superintendence; d) Each confederation and/or federation of workers that attends the special session will have one vote; e) Each attendee must express nominally and publicly the candidate to whom they grant their vote, which will also be documented through a voting form that will be delivered to the representative, proxy, or designee who signs the attendance; and, f) The person presiding over the special session will conduct the vote count, through the respective count, showing the final results to all attendees. The holding of the session will be documented in minutes, either by recounting what was done or, equivalently, by reference to the audiovisual recording of the special session. On the minutes of the session Art. 16.- The procedure of the session will be documented in minutes, in accordance with what is established in article 89, paragraph 10th, letter e) of the Law, in which the following must appear at a minimum:
a) Establishment of the quorum; b) Nomination of the candidate proposals, making note of the delivery of the documentation established in article 11 of this Regulation; and, c) Result of the vote.
The minutes of the special session will be signed by the person presiding over the session and by at least ten of the representatives of confederations and/or federations who attend the same.
Result of the process
Art. 17.- Once the election process is finished, the Superintendence will publish, within a maximum period of two business days, in two major national circulation newspapers and in the digital media it has available, the result of the process, establishing in its case the name of the representative of the workers who will conform the Committee. The Superintendent of the Financial System will issue a certificate of the designation of the representative of the workers.
SECTION III
ON THE PROCESS OF ELECTION OF THE MEMBER REPRESENTATIVE OF THE EMPLOYERS On the publication of the call Art. 18.- The designation of the representative of the employers will be carried out in a general assembly, which the Superintendence shall convene for this purpose and may attend the same, on behalf of the business guilds, the legal representative, proxy, or special designee. The Superintendence will carry out a publication in two major national circulation newspapers and other media that it has available, to communicate the start of the election process of the representative in the Committee. In the call, the place, date, and time in which the general assembly will be held will be established, the documents that participants must present to prove their representation, the requirements that the persons who aspire to be candidates for designees must meet, and the disqualifications established in the Law; as well as the quorum for installation in the first and second call and the agenda of the assembly. Submission of the list of business guilds Art. 19.- The Superintendence will request from the Ministry of Governance and Territorial Development, with a minimum of fifteen business days before the holding of the general assembly, that it send it the list of the business guilds registered with said Ministry. The list will be sent to the Superintendence, at the latest within five business days of receiving the request, in the terms that it requires. Documentation to be presented by business guilds Art. 20.- The business guilds interested in attending the general assembly, within fifteen business days from the date of publication of the call, will present to the Superintendence the following documentation:
a) Notarially certified copy of their statutes or deed of incorporation, as well as of the credential in which the current appointment of the legal representative appears, all duly registered with the Ministry of Governance and Territorial Development; b) Notarially certified copy of the power granted to the person who will attend the general assembly, if applicable; c) Simple letter authenticated by a notary in which the representation of the business guild is authorized, through a special designee in the assembly, if applicable; d) Notarially certified copy of the Unique Identity Document of the legal representative, proxy, or special delegate who will attend the general assembly; and, e) Certificate issued by the AFPs in which they contribute, which must be valid on the date of its presentation. Only business guilds that are included in the list provided by the Ministry of Governance and Territorial Development and present the aforementioned documentation in due form may participate in the general assembly. On the documents to be presented by candidate applicants Art. 21.- The persons who aspire to be candidates for representatives of the employers must present to the Superintendence, within the period established in the previous article, the following documentation:
a) Curriculum vitae; b) Notarially certified copy of the Unique Identity Document and Tax Identification Number; c) Notarially certified copy of the university degree; d) Sworn declaration that they are not within the disqualifications of article 55 of the Law, as well as not being in the circumstances provided for in letters b) and c) of the fifth paragraph of article 89 of the Law; and, e) Sworn declaration of their spouse and relatives within the first degree of consanguinity that they are not within the disqualifications referred to in the last paragraph of article 55 of the Law. The Superintendence may request from the Ministry of Finance, the Supreme Electoral Tribunal, the Ministry of Labor and Social Welfare, and the Ministry of Governance and Territorial Development, as appropriate, information regarding compliance with the requirements established in letters b) and c) of the fifth paragraph of article 89 of the Law. Verification of information Art. 22.- To facilitate the holding of the general assembly, the Superintendence may verify the information referred to in articles 20 and 21 of this Regulation, with the purpose that what is established in article 89 of the Law is complied with. Correction of documentation Art. 23.- The Superintendence may communicate to the interested parties the inconsistencies it detects in the required documents in accordance with articles 20 and 21 of this Regulation, in order that the corresponding documentation can be completed in due form within the period it determines. On the general assembly Art. 24.- The holding of the general assembly will be carried out with the number of accredited business guilds, in accordance with what is provided in article 20 of this Regulation and will be valid with the attendance of more than half of the aforementioned entities. If the quorum for the first call is not met, a second call will be carried out on the same day, with the number of business guilds that are present. In the event that the general assembly cannot be held, the Superintendence must start a new election process. Development of the general assembly Art. 25.- The general assembly will be developed, in accordance with the following rules:
a) It will be presided over by the Superintendent of the Financial System or, by delegation, by the Deputy Superintendent of Pensions; b) It will be held with the corresponding quorum, in the first or second call, in which the legal representatives, proxies, or special designees must record their attendance; c) Candidate proposals will be documented in writing or in the manner that the Superintendence establishes; d) Each business guild that attends the general assembly will have one vote; e) Each attendee must express nominally and publicly the candidate to whom they grant their vote, which will also be documented through a voting form that will be delivered to the representative, proxy, or designee who signs the attendance; and, f) The person presiding over the general assembly will conduct the vote count, through the respective count, showing the final results to all attendees. The holding of the assembly will be documented in minutes, recounting what was done or, equivalently, by reference to the audiovisual recording of the general assembly.

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DE No. 27/2018
DECRETO No. 27/2018
REGULATION OF THE RISK COMMITTEE OF THE PENSION SAVINGS SYSTEM Approval: 05/22/2018 Validity: 06/03/2018 From the minutes of the general assembly Art. 26.- The proceedings of the assembly shall be documented in minutes, which shall contain at a minimum the following:
a) Establishment of the quorum; b) Nomination of candidates, noting the submission of the documentation established in Article 21 of this Regulation; and, c) Result of the vote.
The minutes of the general assembly shall be signed by the person presiding over the session, as well as by those who attended and were present at the closing.
Result of the process
Art. 27.- Once the election process is completed, the Superintendence shall publish, within a maximum period of two business days, in two printed newspapers of the largest national circulation and in the digital media available, the result of the process, establishing, if applicable, the name of the employer representative who will form the Committee. The Superintendent of the Financial System will issue a certificate of the designation of the employer representative.
CHAPTER IV
OF THE ORGANIZATION AND OPERATION OF THE COMMITTEE Presidency of the Committee Art. 28.- The Presidency of the Committee shall be exercised by the Superintendent of the Financial System.
It is incumbent upon the President of the Committee:
a) To preside over and direct the sessions; b) To issue summonses for the sessions; c) To ensure the proper compliance with the agreements adopted by the Committee; d) To present to the Committee, for its information, the compliance by the AFPs with the maximum investment limits and the minimum risk classifications in the investments of the Funds; e) To request the analyses that the Committee agrees upon; and, f) To perform the functions necessary for the correct management of the Committee. Secretariat of the Committee Art. 29.- The Secretariat of the Committee shall be exercised by a member thereof, to whom the following shall correspond:

DE No. 27/2018
DECRETO No. 27/2018
REGULATION OF THE RISK COMMITTEE OF THE PENSION SAVINGS SYSTEM Approval: 05/22/2018 Validity: 06/03/2018 a) To verify the quorum and read the minutes of the previous session; b) To take note of the agreements adopted in each session and verify the entry of these in the Minutes Book that the Secretariat keeps for this purpose; c) To carry out the notification of the agreements, as appropriate; d) To keep control of the sessions and of the agreements; and, e) To ensure that the Minutes Book and the files are up to date. Quorum Art. 30.- The integration quorum of the Committee to validly hold a session and adopt its agreements shall be three of its members and, in any case, must include the attendance of the President, as well as the representatives of the workers and employers. In the event of absence or temporary impediment of the public official members of the Committee, the person performing the functions of the position shall attend. The employer and worker representatives on the Risk Committee shall receive payment of per diems from the Superintendence for each session they attend. The amount of the per diems shall not exceed two minimum monthly salaries of the commerce sector and shall be approved by the Board of Directors of the Superintendence. Sessions Art. 31.- The sessions of the Committee may be ordinary and extraordinary, for which the place, date, and time of their holding shall be established. Ordinary sessions shall be held at least once a year and extraordinary sessions as often as necessary, to address matters that must be attended to urgently. Regarding ordinary sessions, the summons shall be sent at least three days in advance of the date of the session and in the case of extraordinary sessions, two days in advance or immediately, when the situation warrants it; in any case, the draft agenda shall be attached. The summonses shall be made by any means, leaving a record of their delivery and receipt. Obligation of confidentiality Art. 32.- The members of the Committee must maintain absolute confidentiality regarding documents and background information from issuers and instruments subject to rating, until such information becomes public. The obligation of confidentiality regarding the deliberations and agreements adopted by the Committee shall apply to all members and persons who have participated and taken knowledge in the

DE No. 27/2018
DECRETO No. 27/2018
REGULATION OF THE RISK COMMITTEE OF THE PENSION SAVINGS SYSTEM Approval: 05/22/2018 Validity: 06/03/2018 adoption of the same. Likewise, they are prohibited from directly or indirectly using the information to obtain advantages for themselves or for others. Adoption of agreements Art. 33.- The agreements of the Committee shall be taken by majority vote and, in the event of a tie, the President of the Committee shall have the casting vote. The agreements shall be duly justified, which must be recorded in the minutes of the respective session. Communication of agreements Art. 34.- The agreements of the Committee, adopted pursuant to the first paragraph of Article 89 of the Law, shall be communicated in a timely manner and prior to their entry into force, to the AFPs and shall also be published on the website of the Superintendence. Minutes Book Art. 35.- The deliberations and agreements adopted in the sessions of the Committee must be recorded in a Minutes Book. This book may be kept by any means, provided that it is guaranteed that there can be no intercalations, interpolations, suppressions, or any other adulteration that could affect the integrity of the text of the minutes. Content of the minutes Art. 36.- The minutes of each session must contain the place, date, and time in which it was held; the name of the persons who acted as President and Secretary, the list of attendees, a summarized version of the matters discussed, the form and result of the votes, and the agreements adopted. When for any circumstance, the minutes of a session could not be recorded in the respective Book, it shall be recorded in a public deed. The minutes must be signed by the President, the Secretary, and the other members present. Members present who vote against the agreement and who wish to record their opposition, may request that their position be recorded in the minutes, or the sense of the opinions and votes they have emitted. Likewise, they shall have the right to record in the minutes the corresponding reservations, if they deem that such agreement suffers from inaccuracies or omissions. Support from the Superintendence Art. 37.- The Superintendence shall provide the necessary technical, financial, and administrative support for the functioning of the Committee, for which the Superintendent of the Financial System shall designate the personnel he deems necessary.

DE No. 27/2018
DECRETO No. 27/2018
REGULATION OF THE RISK COMMITTEE OF THE PENSION SAVINGS SYSTEM Approval: 05/22/2018 Validity: 06/03/2018 It corresponds to the personnel designated to support the Committee, the following:
a) To provide all necessary background information for the establishment of weighted average maturity ranges, maximum investment limits by type of instrument, and minimum risk qualification limits to carry out investments in securities and financial instruments, for the contracting of insurance companies and type of currency for investment in foreign securities; b) To manage and provide the required analyses, studies, or technical reports; c) To present the requests and proposals for modification of the minimum risk classifications and maximum investment limits submitted to them by the AFPs or the members of the Committee; and, d) To perform the other functions entrusted to them.
CHAPTER V
REPEAL AND VALIDITY
Repeal
Art. 38.- Executive Decree No. 3, dated January 15, 1998, published in Official Diary No. 15, Volume No. 338, of the 23rd of the same month and year, is repealed.
Validity
Art. 39.- This Decree shall enter into force eight days after its publication in the Official Diary.
GIVEN IN THE PRESIDENTIAL HOUSE: San Salvador, on the twenty-second day of the month of May of two thousand eighteen.
SALVADOR SÁNCHEZ CERÉN,
President of the Republic.
RAMÓN ARÍSTIDES VALENCIA ARANA,
Minister of Governance and Territorial Development.
Published in Official Diary No.95,
Volume 419, of May 25, 2018.

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