Regulation on Dissolution, Liquidation and Merger of Pension Fund Administrator Institutions

DE No. 55/2000 DECREE No. 55/2000
REGULATION ON DISSOLUTION, LIQUIDATION AND MERGER OF PENSION FUND ADMINISTRATOR INSTITUTIONS Approval: 27/06/2000 Validity: 25/07/2000

DECREE No. 55.-

THE PRESIDENT OF THE REPUBLIC OF EL SALVADOR,

CONSIDERING:

I) That by Legislative Decree No. 927, dated December 20, 1996, published in Official Diary No. 243, Volume No. 333, of the 23rd of that same month and year, the Law of the Pension Savings System was issued, which comprises the set of institutions, norms, and procedures through which the resources destined to pay the benefits that must be recognized to their affiliates to cover the risks of Common Disability, Old Age, and Death will be administered, in accordance with said Law;

II) That Chapter VI of Title I of the Law of the Pension Savings System contemplates the provisions relating to the dissolution, liquidation, and merger of pension fund administrator institutions;

III) That in accordance with what is established in said Law and to develop the pertinent provisions, it is necessary to regulate the processes of dissolution, liquidation, and merger of pension fund administrator institutions.

THEREFORE,

in exercise of its constitutional powers,

DECREES the following:

REGULATION ON DISSOLUTION, LIQUIDATION AND MERGER OF PENSION FUND ADMINISTRATOR INSTITUTIONS

TITLE I

UNIQUE CHAPTER

GENERAL PROVISIONS

Art. 1.- The object of this regulation is to facilitate and ensure the application of the Law of the Pension Savings System, regarding the necessary procedures to carry out the dissolution, liquidation, and merger of Pension Fund Administrator Institutions.

Art. 2.- In the text of this regulation, the following designations will be used:

AFP: Pension Fund Administrator Institutions
CIAP: Individual Pension Savings Account
Insurance Contract: Disability and survivorship insurance contract CUA: Unique Agent Code

General Meeting: Shareholders' General Meeting Law: Law of the Pension Savings System IBC: Base Contribution Income Superintendence: Superintendence of Pensions Superintendent: Superintendent of Pensions SAP: Pension Savings System

TITLE II

ON THE DISSOLUTION AND LIQUIDATION OF PENSION FUND ADMINISTRATOR INSTITUTIONS

CHAPTER I

ON THE GROUNDS FOR DISSOLUTION AND LIQUIDATION

Art. 3.- The dissolution and liquidation of an AFP will proceed for any of the following causes:

a) By agreement of dissolution taken by the General Meeting; b) When the difference in minimum profitability referred to in article 85 of the Law has not been paid; c) When the Special Guarantee Contribution or the Equity has not been completed, within the deadlines established by the Law; d) When three custody deficits of securities are recorded in six months; and e) When the Superintendence revokes the authorization to operate.

CHAPTER II

ON VOLUNTARY DISSOLUTION AND LIQUIDATION

Art. 4.- The AFP that decides to initiate the process for its dissolution and timely liquidation due to the occurrence of any of the causes contemplated in letters a), b), c) or d) of the previous article, must convene for such purposes an extraordinary general meeting in accordance with the procedure established in its articles of association, and in its absence, in the Code of Commerce.

The decisions taken in said general meeting must have the quorum of attendance and voting established in the articles of association of the AFP initiating the dissolution process and must be issued in the form and with the requirements established in said articles of association and in its absence, by what the Code of Commerce provides for such purposes.

The AFP must communicate the aforementioned summons to the Superintendence within a period of two business days, counted from the day following its issuance. If the shareholders or representatives of all the shares that make up the social capital of the AFP are found assembled and they agree to install the meeting approving by unanimity the agenda for the purposes

of this article, the AFP in question must give notice in an immediate manner of such situation to the Superintendence.

After the aforementioned general meeting has been held and the corresponding agreement has been taken, the AFP must send a certification of the same to the Superintendence within a period of five business days counted from the day following the celebration of said meeting, attaching to it the draft of the corresponding dissolution deed.

Upon receipt of the agreement and the draft of the dissolution deed and if no observations are made, the Superintendence within a period of five business days will authorize said draft so that the AFP proceeds to sign the respective deed; if it observes it, the interested AFP will have a period of three business days to remedy the observations made and within the same period it must present it again to the Superintendence.

Once all observations made by the Superintendence on the respective draft have been remedied, the interested AFP will have three business days to grant the corresponding dissolution deed through the person or persons that the general meeting has designated for such purposes.

After the corresponding deed has been granted, the AFP must present to the Superintendence a copy of the same, and once it verifies the conformity of the dissolution deed with the previously presented and approved draft, it will proceed to record the written reference referred to in article 36 of the Law, in the corresponding copy.

Prior to the registration of said deed in the Commercial Registry, the AFP must publish the dissolution agreement in accordance with what is prescribed in the Code of Commerce.

After thirty days have passed from the last publication without opposition being presented, its registration in said registry will proceed.

The dissolution will take effect from the date of registration of the corresponding copy in the Commercial Registry.

Art. 5.- Once the AFP is dissolved, it will be placed in liquidation.

The phrase: “in liquidation” will be added to its name.

Prior to the start of the liquidation process and within a period of ten business days counted from the registration of the copy of the deed in the Commercial Registry, the dissolved AFP must request in writing from the Superintendence authorization to initiate said process and for a deadline to be set in which the corresponding liquidation must be verified. Attached to said writing, the AFP must present a liquidation plan, to which a delegate appointed by the Superintendent will give follow-up.

If the AFP fails to present the request for authorization along with the respective plan or if having presented them it fails to comply with the authorized plan, this will empower the Superintendent to proceed in accordance with what is provided in this regulation for the case of forced liquidation, and the Superintendent may appoint one or more liquidators in substitution of those designated or appointed by the AFP.

Art. 6.- If the liquidators have not been appointed within the same dissolution agreement taken by the general meeting, the appointment of the liquidators will proceed in accordance with what is provided in its articles of association and in its absence, in what is provided in the Code of Commerce.

Art. 7.- The liquidators will be in charge of the safeguarding of the Pension Fund and the equity of the AFP. For this purpose, they may exercise legal representation and the administration of the AFP, invest the quotas of the Pension Fund, and carry out the other functions that have been assigned to them; as well as the other functions inherent to their position, such as carrying out all necessary, related, or cooperative acts to carry out the transfer of the remaining CIAP to other AFPs and to effect the transfer of the affiliates who are owners of said CIAP to the destination AFPs, all in accordance with what is provided in article 75 of the Law.

Art. 8.- The liquidation will be carried out in accordance with the provisions of the Law, this Regulation, those contained in the Articles of Association, in the agreements taken by the Shareholders' General Meeting, in that order; and in its absence, in accordance with what is provided in the Code of Commerce.

CHAPTER III

ON FORCED DISSOLUTION AND LIQUIDATION

Art. 9.- Once any of the causes of dissolution contemplated in letters b), c), d) and e) of article 3 of this Regulation has been configured, the AFP involved within a period of five business days counted from the date of configuration of the cause, must convene an extraordinary general meeting, in accordance with the procedure established in its articles of association, so that its shareholders pronounce themselves regarding said cause and agree to the dissolution of the company.

The AFP must communicate the aforementioned summons to the Superintendence within a period of two days, counted from the day following its issuance. If the shareholders or representatives of all the shares that make up the social capital of the AFP are found assembled and they agree to install the meeting approving by unanimity the agenda to the effect of recognizing the configured cause of dissolution and consequently agreeing to the dissolution of the company, the AFP in question must give notice in an immediate manner of such situation to the Superintendence.

The Superintendent may, ex officio or at the request of any shareholder, convene the aforementioned general meeting, if the AFP does not convene it in due form, within the period of five business days mentioned in the first paragraph of this article; all in accordance with what is established in

article 7 of the Regulation on Corporate Management of Pension Fund Administrator Institutions.

If the general meeting is constituted in legal form and likewise it takes the agreement to recognize the configured cause and therefore to dissolve the AFP, then it will proceed in accordance with what is stipulated in Chapter II, Title II of this Regulation. In these cases, the AFP must strictly comply with all and each of the deadlines established in said procedure, since the non-observance or non-compliance with any of them will cause the dissolution or liquidation process to be continued by the forced route from that date.

If in the general meeting referred to in this article said cause is not recognized and the respective dissolution is not agreed upon or if for any reason attributable to the AFP or its administrators the aforementioned general meeting is not carried out, the Superintendence will revoke the authorization to administer the Pension Fund from the AFP involved and the Superintendent will judicially request its dissolution, without prejudice to the powers of the Attorney General's Office of the Republic.

Art. 10.- During the judicial process referred to in the previous article, the AFP may not continue with the operations that the Law indicates. The Superintendence must substitute it in the administration of the Pension Fund, while the judge issues the corresponding sentence.

Art. 11.- Once the AFP is dissolved and its liquidation is ordered, the following will proceed:

a) The phrase: “in liquidation” will be added to the name of the AFP. b) The Superintendent will appoint one or more liquidators, to whom he will set the deadline in which the liquidation must be practiced.

Art. 12.- The appointed liquidator or liquidators will have as their main attribute, the safeguarding of the Pension Fund and the equity of the institution. For this effect, they may exercise the legal representation and administration of the administrator institution, invest the quotas of that Fund, and carry out the other functions that have been assigned to them; as well as others inherent to their position, such as, carrying out all necessary, related, or cooperative acts to carry out the transfer of the remaining CIAP to other AFPs and to effect the transfer of the affiliates who are owners of said CIAP to the destination AFPs, all in accordance with what is provided in article 75 of the Law.

CHAPTER IV

PROVISIONS APPLICABLE TO DISSOLUTION AND LIQUIDATION IN GENERAL.

Art. 13.- The disqualifications established in Article 55 of the Law will be applied to the liquidators.

Prior to the liquidators taking possession of their positions, they must render and present to the Superintendence a sworn declaration before a Notary to manifest whether they are included or suffer from any of the aforementioned disqualifications.

Art. 14.- During the liquidation period, the liquidators may only execute acts and conclude contracts that tend directly to facilitate it. The liquidators must not carry out new affiliations, nor develop activities that negatively affect the Pension Fund.

If they fail to comply with what is established in the previous paragraph, the liquidators will incur in civil and criminal responsibilities as appropriate, without prejudice that they must respond with their personal assets for the damages caused to the Pension Fund.

Art. 15.- The agreement or resolution by which the liquidators have been appointed must be registered in the Commercial Registry. Until said appointment is registered and the liquidators have not entered into office, the administrators will continue in the performance of their position, without prejudice to the responsibility of one or the other, if the registration is not practiced due to fraud or negligence.

Art. 16.- The appointed liquidators upon taking possession of their positions in the AFP in liquidation, will immediately proceed to draw up an act that will contain the inventory of the assets and liabilities of the AFP and the assets and liabilities of the Pension Fund that said institution administers. These values must correspond to the date on which they take possession of their positions.

Persons with legitimate interest, such as the External Auditors of the AFP, judicial authorities, and the Attorney General's Office of the Republic, may obtain information from the aforementioned inventories in the offices of the AFP in liquidation.

The liquidators must send to the Superintendence along with the aforementioned inventory, the following documentation:

a) The general balance sheet and the income statement of the AFP duly audited, valid until the last day of the month immediately preceding the month in which the liquidators take possession of their positions; and b) The general balance sheet of the Pension Fund that the AFP in liquidation was administering duly audited, valid until the last day of the month immediately preceding the month in which the liquidators take possession of their positions.

This documentation and information must correspond to the date on which the liquidators take possession of their positions and will be sent by them to the Superintendence, within a period of fifteen business days counted from the day following the one in which they take possession of their positions, a period that may be extended by the Superintendence and at the request of the liquidators, for equal periods and only for justifiable cause.

Art. 17.- Likewise, upon taking possession of their positions, the liquidators must notify by means of notices published weekly in a newspaper of national circulation to all natural and legal persons who may have rights against the AFP in liquidation, to accredit their rights by presenting the necessary supporting documentation within the ninety days following the date of the last publication and in the place specified in the same. The notification will indicate the last business date for the receipt of said proofs, after which no claim will be accepted. Notwithstanding the foregoing, the Pension Fund of the AFP in liquidation will recognize its rights without the need for the aforementioned procedure.

The aforementioned publications must be carried out in a period of thirty days counted from the day following the one in which they take possession of said positions.

In the same publications, it must be made known to the affiliates of the AFP in liquidation, about the right they have to transfer to another AFP of their choice, in accordance with what is established in Article 75 of the Law. Furthermore, through the aforementioned publications, it must also be informed to the affiliates of the AFP in liquidation, about the conditions and the deadline date for them to exercise their right to transfer to another AFP.

Art. 18.- In the liquidation, the AFP with its own resources and after covering the expenses related to the liquidation, such as those incurred by the Superintendence in the process of dissolution and forced liquidation, will make payments according to the following order:

a) Payment of salaries, social benefits, and other social security obligations; b) The payment of the minimum profitability owed to the Pension Fund; c) Payment of liabilities with the Pension Fund that affect the individual accounts of affiliates, such as discounts for permanence and sums whose payment is the responsibility of the AFP arising from the granting of benefits established by the Law in favor of affiliates or pensioners. d) Obligations in favor of the State and Municipalities, including any type of tax, fee, and tariff; and e) Payment of obligations and other balances owed to third parties.

Art. 19.- During the liquidation process, the commissions received will be destined first to the payment of the insurance contract; said commissions will be unseizable.

Likewise, the complementary capital, the special contribution, and the payment of disability pensions originating from the first ruling that the AFP receives from the insurance company, cannot be seized.

Art. 20.- The Superintendence will publish in two newspapers of national circulation, at the expense of the AFP in liquidation, at least quarterly, the financial statements that inform on the situation of the AFP in liquidation, together with the report of the external auditor, as well as of the Pension Fund that it administers.

Art. 21.- Once the liquidation process is finished, those values that are not claimed by the creditors of the AFP in liquidation, will be deposited by the liquidators in the Central Reserve Bank of El Salvador in the name of the creditors.

The Central Bank will conserve said amount for a period of ten years or for the period of prescription of the corresponding obligation, if it were less, and may make the corresponding payments with the approval of the Superintendence. Upon expiration of the indicated period, the unclaimed balances will prescribe and pass to the General Fund of the State.

For pending litigious rights, the period runs from the date of the last final sentence.

Art. 22.- When the liquidator has fully paid the obligations of an AFP in liquidation and complied with what is provided in article 18 of this Regulation and whenever there is a remainder, he will convene the General Meeting so that they agree on its distribution in proportion to their contributions.

Art. 23.- Once the liquidation process of an AFP has begun, the affiliates to it may transfer to another AFP of their choice within a term of ninety calendar days. Said term, for legal purposes, will be counted from the date on which the liquidators take possession of their positions. This right may be exercised even by those affiliates who do not meet at that date with the minimum number of contributions required for a transfer between Pension Fund Administrator Institutions. The transfer process of an affiliate from an AFP to another that is in dissolution or liquidation, will be interrupted and will automatically become void, if the destination AFP is formally dissolved before receiving the confirmation of the transfer.

After the aforementioned ninety-day period has passed, the liquidators must transfer the remainder of the CIAPs, proportionally to the other AFPs. The classification of the remainder of accounts will be carried out by the Superintendence, grouping by ranges of IBC and Contribution Density. Once grouped in these ranges, it will proceed to determine the proportion corresponding to each AFP, attending to the financial capacity to receive these accounts.

The financial capacity for the reception of affiliates will be determined by means of a composite ratio, which will consider the market size attended by the different AFPs, as well as the amount of their capital.

DE No. 55/2000 DECRETO No. 55/2000
REGLAMENTO DE DISOLUCIÓN, LIQUIDACIÓN Y FUSIÓN DE INSTITUCIONES ADMINISTRADORAS DE FONDOS DE PENSIONES Aprobación: 27/06/2000 Vigencia: 25/07/2000

Additionally, the Superintendence must evaluate the capacity of the destination AFP to financially respond to the new conditions of its minimum net worth and special guarantee contribution within the legal timeframes, due to the potential entry of new affiliates.

Once the proportion of affiliates corresponding to each AFP has been determined, and the ranges in which affiliates will be grouped have been established, the specific assignment of each CIAP to an AFP will proceed. The Superintendence must carry out this assignment randomly within said ranges.

Once these assignments are made, they will be communicated to both the AFP in liquidation and the various destination AFPs. This assignment must be considered for all purposes as a notification of the transfer of affiliates, and due to the particularities of the case, it will take effect on the first day of the month following the Superintendence's notification.

Art. 24.- The Superintendent or the liquidators of an AFP must initiate and continue any necessary judicial action against those who may be responsible for their mismanagement, before the expiration of the statute of limitations periods established by the Commercial and Civil Codes. This is without prejudice to the action existing for the omission of officials in initiating such actions.

Art. 25.- The responsibility for the coverage of insurance companies that have concluded insurance contracts with AFPs undergoing liquidation will remain valid until the last day of the month in which the transfer of the respective Pension Fund is completed.

The insurance companies referred to in this article will receive the premiums accrued in that month and which would have corresponded to be contributed in the following month.

Affiliates of the AFP in liquidation will be considered as insured by the insurance company contracted by the AFP receiving the transfer of the Pension Fund constituted by the remaining CIAPs, to provide disability and survivorship coverage to their affiliates.

This will take effect from the first day of the month following the completion of said transfer of the Pension Fund.

Art. 26.- Upon completion of the liquidation process, the liquidators must submit the draft liquidation deed to the Superintendence.

If within five business days the Superintendence does not make observations on said draft, it will issue the authorization for them to proceed to sign the corresponding deed; if it makes observations, the liquidators will have a period of three business days to remedy the observations made and must resubmit it to the Superintendence. Once all observations made by the Superintendence on the respective draft have been remedied, the liquidators will have three business days to grant the corresponding liquidation deed.

DE No. 55/2000 DECRETO No. 55/2000
REGLAMENTO DE DISOLUCIÓN, LIQUIDACIÓN Y FUSIÓN DE INSTITUCIONES ADMINISTRADORAS DE FONDOS DE PENSIONES Aprobación: 27/06/2000 Vigencia: 25/07/2000

After said deed has been granted, the liquidators must submit a copy of it to the Superintendence, and once it verifies that the liquidation deed conforms to the previously submitted and approved draft, it will proceed to record the written reference referred to in Article 36 of the Law in the corresponding copy.

The copy of the liquidation deed duly registered in the Commerce Registry must be submitted to the Superintendence on the next business day following its registration.

TITLE III
ON THE MERGER OF PENSION FUND ADMINISTRATOR INSTITUTIONS
CHAPTER I
GENERAL PROVISIONS

Art. 27.- The AFP that decides to initiate the process for its merger with one or more Pension Fund Administrator Institutions must convene an Extraordinary General Meeting for such purposes to make a decision regarding this, in accordance with the procedure established in its bylaws, the Law, and, failing that, what is stipulated in the Commercial Code.

The decision taken in the aforementioned General Meeting must have the quorum of attendance and voting established in the corresponding bylaws and must be issued in the manner and with the requirements established therein, and, failing that, by what is provided in the Commercial Code.

The AFP must communicate the aforementioned convening to the Superintendence within a period of two business days, counted from the day following its issuance. If the shareholders or representatives of all the shares comprising the social capital of the AFP are found assembled and they agree to install the Meeting approving by unanimity the agenda for the purposes of this article, the AFP in question must give immediate notice of such situation to the Superintendence.

After the aforementioned General Meeting has been held and the corresponding agreement taken, the AFPs must send a certification of it to the Superintendence within a period of five business days counted from the day following the celebration of said General Meeting.

Likewise, in the Meetings mentioned in the first paragraph of this article, the AFPs must approve the text of the new bylaws or the modifications, if applicable, in accordance with the procedure stipulated in their bylaws, the Law, and, failing that, what is established in the Commercial Code.

DE No. 55/2000 DECRETO No. 55/2000
REGLAMENTO DE DISOLUCIÓN, LIQUIDACIÓN Y FUSIÓN DE INSTITUCIONES ADMINISTRADORAS DE FONDOS DE PENSIONES Aprobación: 27/06/2000 Vigencia: 25/07/2000

Each of the Pension Fund Administrator Institutions that has decided to merge with each other must comply with the procedure established by this article separately.

Art. 28.- Once what is provided in the previous article has been verified, the involved AFPs must jointly submit a request to the Superintendence detailing the following information and in the manner set forth below:

I) The request to authorize the merger of the requesting administrator institutions.

II) The draft public deed of merger.

III) The name and trade name of the new AFP, if the case of a true merger arises; or the name of the absorbing AFP if the merger is by absorption. In the first case, the involved parties must present a certificate issued by the Commerce Registry stating that the name proposed for the new AFP in the request is susceptible to being used by companies dedicated to this type of activity.

IV) The lists of shareholders, members of the new Board of Directors, owners and alternates, and the management body of the AFP resulting from the merger. These lists must be accompanied by the following documentation:

1. For future shareholders:
   a) In the case of a natural person:
   a.1) The name, age, sex, profession or occupation, domicile, and nationality of each; a.2) Notarized copies of the Personal Identity Card or suitable identification document, and the Tax Identification Number of each; a.3) Detailed Curriculum Vitae of each of the future shareholders, stating among other things, the name, age, sex, nationality, place and date of birth, profession, studies completed and the educational institutions where they were studied, work experience mentioning all jobs and types of positions held; a.4) Sworn declaration before a Notary detailing all assets comprising their estate, including real estate, bank accounts, and securities, and in the case of shares, naming the companies of which they are part; and regarding the income they receive, attaching a notarized copy of the last income tax return, or its equivalent in the country where they receive income, in the case of foreigners who do not receive any income in Salvadoran territory; a.5) Sworn declaration before a Notary stating that the future shareholder does not suffer from or is not included in any of the incapacities or prohibitions established in Article 31 of the Law. The future shareholder must state in this declaration whether they have fulfilled their tax obligations within the timeframes established by the laws on the matter, attaching a clearance from the General Directorate of Internal Taxes or its equivalent in the country where they receive income, in the case of foreigners who do not receive any income in Salvadoran territory; and, a.6) Two Bank References and two Credit References for each of the future shareholders, which must have the following characteristics:
   a.6.1) Be issued in original; a.6.2) Be updated, meaning they must not be more than three months old from the date they are submitted to the Superintendence; a.6.3) Bear the signature of the person representing the institution issuing said reference and the seal of said entity; a.6.4) If the Bank Reference is issued in the Republic of El Salvador, it must mention the classification of the future shareholder within the financial system; a.6.5) If the reference is Credit or is a Bank Reference issued abroad, it must mention what class of client the future shareholder is considered to be according to the credit history they have with the entity issuing the reference; and, a.6.6) The references must correspond to the future shareholder and not to the companies in which such person is a partner or shareholder. b) In the case of a legal person:
   b.1) The name or trade name, nature, domicile, and nationality of each of the future shareholders. b.2) Notarized copies of the following documentation:
   b.2.1) The deed of incorporation of the legal person duly registered in the corresponding Commerce Registry; b.2.2) The valid credentials with which their Judicial and Extrajudicial Representative acts, or the copy of the power of attorney with which their Attorney-in-fact acts, all of which must be duly registered in the Commerce Registry; and, b.2.3) The Tax Identification Number of each of the future shareholders. b.3) An authorization to invest in the AFP resulting from the merger by the absorbed society in the case of merger by absorption or by both societies in the case of true merger. Such authorization must be issued by the Board of Directors of the society intending to be a shareholder, if it is administered under this type of administrative regime and if its bylaws require such authorization. b.4) The list of shareholders, partners, or members who own 3% or more of the share capital of each of the legal persons intending to be shareholders in the AFP resulting from the merger process. This list must be issued by the Sole Administrator, the Secretary of the Board of Directors, or the person having the authority to issue certifications of social records, in accordance with the deed of incorporation and their respective Statutes. b.5) The name, age, profession or occupation, domicile, and nationality of the judicial and extrajudicial representative or attorney-in-fact of each of the future shareholders. Additionally, they must present notarized copies of the Personal Identity Card or suitable identification document, and the Tax Identification Number of said judicial and extrajudicial representatives or attorneys-in-fact. b.6) Audited financial statements for the last two years of operation. If it has been operating for more than one year but less than two, it must present the audited statement of the first year and the projected statement of the second. If it has been operating for less than one year, it must present projected financial statements. b.7) Sworn declaration before a Notary made by the judicial and extrajudicial representative or attorney-in-fact of the future shareholder, stating in their personal capacity that they do not suffer from or are not included in any of the incapacities or prohibitions established in Article 31 of the Law. Said attorney-in-fact or judicial and extrajudicial representative must state in this declaration whether they have fulfilled their tax obligations within the timeframes established by the laws on the matter, attaching a clearance from the General Directorate of Internal Taxes or its equivalent in the country where they receive income, in the case of foreigners who do not receive any income in Salvadoran territory. b.8) Sworn declaration before a Notary made by the judicial and extrajudicial representative or attorney-in-fact of the future shareholder stating that the legal person they represent does not suffer from or is not included in any of the incapacities or prohibitions
   established in Articles 31 and 32 of the Law. The judicial and extrajudicial representative or attorney-in-fact must state in this declaration whether their represented party has fulfilled their tax obligations within the timeframes established by the laws on the matter; additionally, a clearance from the General Directorate of Internal Taxes or its equivalent in the country where they receive income must be attached, in the case of foreigners who do not receive any income in Salvadoran territory; b.9) Two Bank References and two Credit References for each of the future shareholders, which must meet the requirements established in letter a.6) of this article.

2. For future directors (owners and alternates); and for future managers:
   a) The name, age, sex, profession or occupation, domicile, and nationality of each of the future directors and managers. b) Notarized copies of the Personal Identity Card or suitable identification document, and the Tax Identification Number of each of the future directors and managers. c) Detailed Curriculum Vitae of each of the future directors and managers, stating among other aspects, the name, age, nationality, place and date of birth, profession, studies completed and the educational institutions where they were studied, work experience mentioning all jobs and types of positions held. d) Sworn declaration before a Notary detailing all assets comprising their estate, including real estate, bank accounts, and securities, and in the case of shares, naming the companies of which they are part; and regarding the income they receive, attaching a notarized copy of the last income tax return or its equivalent in the country where they receive income, in the case of foreigners who do not receive any income in Salvadoran territory; e) Sworn declaration before a Notary in which future directors and managers state that they do not suffer from or are not included in any of the incapacities or prohibitions established in Articles 31 and 55 of the Law. Future directors and managers must also state in this declaration whether they have fulfilled their tax obligations within the timeframes established by the laws on the matter, presenting a clearance from the General Directorate of Internal Taxes or its equivalent in the country where they receive income, in the case of foreigners who do not receive any income in Salvadoran territory; f) Two Bank References and two Credit References for each of the future managers and future directors, owners and alternates, which must meet the requirements established in letter a.6) of this article.

V) The new managerial-administrative structure that the AFP resulting from the merger process will have.

VI) The detailed amounts of the commissions that the AFP resulting from the merger process will charge.

VII) The detail of all agencies and representation offices with which the absorbing AFP or the new AFP will operate, as the case may be.

VIII) General Balance Sheet and Statement of Results closed on the last day of the month prior to the last of the merger agreements of the AFPs interested in merging.

IX) The new shareholders and the shareholders of the absorbed AFPs who wish to own more than one percent of the share capital of the AFP resulting from the merger, in accordance with Article 30 of the Law, must submit the corresponding authorization request to the Superintendence.
In the case of a true merger, all future shareholders who wish to own more than one percent of the share capital of the AFP resulting from the merger must submit the request mentioned in the previous paragraph to the Superintendence.
In any case, if the request mentioned in this number is submitted by a future shareholder who does not own shares in any of the AFPs involved in the merger process and if such investment exceeds the sum of five hundred thousand colones, the Superintendence must inform the Financial Investigation Unit, for the purposes of the Law against Money Laundering and Assets.

X) In the case that a foreign society intends to own more than 50% of the capital of the future AFP, it must demonstrate that it currently has experience in the administration of Pension Funds; it must submit to the Superintendence a certificate stating this and that it also complies with all legal requirements. The certificate must be issued by the body that exercises its control by the State where it carries out its activities, all in accordance with Article 29 of the Law.

XI) They must designate a common place to hear notifications and designate one or more persons to receive them. Notifications made at the places and to the persons designated in said request will be understood to be known by all AFPs involved in the merger process.

XII) Economic-financial feasibility study which must include the following:
a) Specification and analysis of the target market demonstrating viability in the capture of pension resources, which must contemplate:
i. The main characteristics of the target market, indicating the expected participation in the pension market.
ii. Structure and levels of average remunerations of potential affiliates in the target market.
iii. Structure and levels of ages of potential affiliates.
iv. Levels of claim rates assumed.
v. Level of contribution density.
vi. Market program to be carried out, indicating the promotional and advertising programs supporting it and specifying the timeframes, budgets, and sales arguments proper to the initial positioning of the AFP resulting from the merger.
b) Organized system under which it intends to operate, considering:
i. Initial and projected five-year organizational chart of the AFP resulting from the merger.
ii. Definition and description of the units and their functions, specifying the objectives and activities to be developed in each.
iii. Profile and requirements required of the directors and managers of the AFP resulting from the merger.
iv. Number of pension service agents to continue or initiate their activities, as the case may be, as well as their expansion program in relation to the fulfillment of capture targets in their target market.
v. Profile and requirements required of pension service agents.
vi. Number of workers, including directors, managers, and employees, with which it is estimated to continue or initiate operations, as the case may be, as well as those projected for five years.
c) Justification of the viability of the AFP resulting from the merger, specifying for this effect the working assumptions for a five-year analysis period in which they explain

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and detail the base levels of the most important aspects of the project, considering the following:
i. Average levels of remuneration to affiliates.
ii. Levels or ranges of commissions that the AFP resulting from the merger intends to charge, as remuneration for the services it provides to its affiliates, attaching the cost structure that supports the level of commissions to be charged.
iii. Expected profitability of the fund it administers, for the next five years, at a minimum, with its respective justification.
iv. Levels of expected transfers.
v. Levels of benefits to be granted, according to the actuarial calculations and evaluations in question.
vi. Estimated levels of claims.
vii. Levels of contribution densities.
d) Projection of the fundamental variables of the study, for the next five years, considering the following:
i. Number of affiliates.
ii. Pension fund.
iii. Income and expenses of the AFP, derived from the direct administration of the fund.
e) Projection for the next five years of cash flows, balance sheet, and income statement, to be presented monthly for the first two years and annually for the following three, with explicit indication of pre-operational and startup expenses of the AFP resulting from the merger. f) Sensitivity analysis of the project taking into account significant alterations in the conditions of the parameters and working assumptions, especially in the cases of:
i. Affiliation levels.
ii. Average remuneration of affiliates.
iii. Expected profitability of the fund.
iv. Contribution density level.
v. Invalidity and survivorship insurance premium.
g) The project implementation plan, which will contain information related to the general program of operation and functioning, which must refer to:
i. Operation Plan. It will contain information related to the human, material, and financial resources to be used in the project.
ii. Control system in which the information processes that allow adequate functioning of the AFP resulting from the merger are determined and identified.
iii. Control mechanism for persons participating in the investment operations of the Pension Fund they administer.
iv. Collection and crediting control system; as well as evaluation and quality control system for affiliation processes.

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h) Schedule in which the activities to be carried out by the AFP resulting from the merger, until the start of its operations, are described in detail.
The calculations and projections referred to in this article must be presented in national currency at current value.
Any document that must be presented to the Superintendence by virtue of what is prescribed in the Law and in this Regulation, must be drafted in the Spanish language or legally translated into said language, and in any case, if said document has been issued abroad, it must be duly authenticated or apostilled, as the case may be. The application and all the aforementioned documentation must be presented in original and two copies. Art. 29.- Upon receipt of the application to the satisfaction of the Superintendence, it shall have a maximum period of twenty business days to issue observations on said application and documentation presented by the AFPs interested in merging. If deemed necessary, the Superintendence may indicate, within this same period, day and hour for the interested parties to support the feasibility study presented. Art. 30.- Once the Superintendence has reviewed the application and the documentation presented by the AFPs interested in merging, if there are observations, they must be remedied within a period of ten business days counted from the day following notification by the latter. If the interested AFPs present the corresponding documentation to remedy the observations made by the Superintendence, and if said documentation does not remedy all the aforementioned observations or if new ones arise, the Superintendence may require said AFPs to present the documentation again or to present new documentation, in order that all and each of those observations are duly remedied. Art. 31.- If there are no observations or if they have been considered remedied in their entirety by the Superintendence, it shall have three business days to publish in two newspapers of national circulation, once and at the expense of the AFPs interested in merging, the list of future shareholders who possess or will possess more than one percent of the social capital of the AFP resulting from the merger. In the event that these shareholders are legal entities, the list of their respective shareholders who possess more than three percent of the capital of said shareholder society must also be published. The list of future directors, whether principal or alternate, will also be included in the same publication. The purpose of the publication is that any person with knowledge of any of the disqualifications contemplated in articles 31, 32 and 55 of the Law, may object to the quality of shareholders and directors who are part of the AFP resulting from the merger. In the event that there are objections against one or some of the shareholders or executives of the AFP resulting from the merger, these must present a written statement to the Superintendence within a period of fifteen days counted from the date of the aforementioned publication, attaching the relevant indications and evidence. The information will be confidential. Art. 32.- If there are objections by virtue of the aforementioned publication, the Superintendence will communicate them in writing to
the AFPs interested in merging, so that within a period of three business days, they make the corresponding defense. While the objections referred to in this article are not remedied, the merger authorization procedure will be suspended. In the event that one or some of the objections prove to be well-founded, the Superintendence will declare the suspension of the procedure, while the interested parties do not present a new list of shareholders or directors. Upon presentation of the new list, the Superintendence will continue the procedure, according to what is established in articles 28, 29, and 30 of this Regulation, insofar as applicable. Art. 33.- If the period referred to in the final paragraph of article 31 has elapsed without any objection, or if an objection has been presented but is not admissible or has already been remedied by the corresponding AFP, the Superintendence will issue the resolution authorizing the merger, and modification of the social pact, approving the draft of the respective Deed; said authorization must contain the merger agreements and modifications referred to in article 28 of this Regulation and the last balance sheet of the AFPs involved; it must be published at the expense of the AFPs interested in merging in a newspaper of national circulation, within a period of fifteen days counted from the day of its issuance, and will produce the effect of merging the societies and the respective pension funds at sixty days from the verification of said publication. In addition to the aforementioned authorization, said publication must contain the amounts of the commissions established by the AFP resulting from the merger and that it will charge its affiliates for the provision of its services. Within the same period of sixty days from the effectuation of said publication, affiliates of the AFPs in the process of merging may transfer to another AFP of their choice. This right may be exercised even by those affiliates who do not meet the minimum number of contributions required for a transfer between Pension Fund Administrator Institutions on that date. Art. 34.- Once said authorization has been issued by the Superintendence, and notified to the AFPs in the process of merging, they must register in the Commercial Registry, the respective merger agreements referred to in article 28 of this Regulation, within the period of fifteen days mentioned in the first paragraph of the preceding article, attaching a certified copy of the authorization in question, without which said registration does not proceed.

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Art. 35.- After the corresponding deed has been granted, the AFPs in the process of merging must present to the Superintendence a testimony of the same, and once it verifies the conformity of the Merger Deed with the previously presented and approved project, it will proceed to record the written reason referred to in article 36 of the Law, in the corresponding testimony. At the start of the next business day concluding the period of sixty days referred to in the first paragraph of article 33 of this Regulation, the corresponding Public Deed of merger must be granted and the AFPs must present in the Commercial Registry for its respective registration, the testimony of the same with the reason related in the preceding paragraph. In the event that said testimony meets all the legal requirements, the Registrar will proceed to register said deed. Once registered in the Commercial Registry, the testimony of the corresponding merger deed, the merged AFP must present to the Superintendence a photocopy Certified by a Notary, within the next business day after its registration. Art. 36.- In any case and until the merger is verified in accordance with article 76 of the Law, this Regulation and, in its defect, what is established in the Code of Commerce, the AFPs in the process of merging will conserve their legal personality as if the merger agreement had not been taken. Art. 37.- In the case of merger by absorption, within the same period of sixty days established in article 76 of the Law and in addition to the publication mentioned in said article, the Superintendence will publish in two newspapers of national circulation and at the expense of the AFPs in the process of merging, a notice containing the following information:
a) The denomination and trade name of the absorbing AFP or the new AFP, as the case may be; b) The amount to which the social capital of the AFP resulting from the merger amounts, as well as the name of its administrators and principal and alternate directors.
Art. 38.- In the case of merger by absorption, on the last day of the period established in Art. 76 of the Law and prior to the registration of the testimony of the corresponding merger deed in the Commercial Registry, the Superintendence will revoke the authorization to operate for the absorbed AFPs, so that from the day following the expiration of the period, the absorbing AFP can start the administration of the merged Pension Fund. The revocation of the authorization to operate will not take effect until the merger deed is duly registered in the Commercial Registry.

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Art. 39.- In the case of merger proper, on the last day of the period established in Art. 76 of the Law and prior to the registration of the testimony of the corresponding merger deed in the Commercial Registry, the Superintendence will revoke the respective authorizations to operate for the AFPs, and in the same resolution authorize the new AFP to start its operations in the administration of the Pension Fund, from the day following the revocation of the authorizations to operate. The revocations of the authorizations to operate and the consequent authorization for the start of operations will not have any effect until the merger deed is duly registered in the Commercial Registry.
CHAPTER II
GENERAL PROVISIONS RELATING TO
THE PENSION FUND
Art. 40.- In the case of merger proper, the merged Pension Fund will be re-expressed in units, using the highest unit value, among the different pension funds that have been administered by the merged AFPs and that would be in effect on the day following the completion of the period of sixty days indicated in article 76 of the Law. This provision will not apply in the case of merger by absorption, where the unit value of the absorbing AFP must be used. The procedure for calculating the unit value in which the Pension Fund of the merged AFP is expressed will be determined by the instruction issued by the Superintendence for such purposes. Art. 41.- In no case will the merger produce a decrease in the balance of the CIAPs, nor of the benefits that are being granted to affiliates, at the time of carrying out the merger.
CHAPTER III
OF THE CONTRACTS RELATED TO THE
ADMINISTRATION OF THE PENSION FUND AND TO THE
GRANTING OF BENEFITS TO AFFILIATES
Art. 42.- The merged AFP, within a period of five business days counted from the day following the verification of the merger, must inform the Superintendence about those contracts related to the administration of the pension fund and to the granting of benefits to its affiliates that will remain in force under the new administration. Art. 43.- In the case of merger by absorption and from the day following that the revocation of the authorization to operate of the absorbed AFPs takes effect, only the Invalidity and Survivorship Insurance Contract that has been signed by the absorbing AFP will remain in force. Art. 44.- In the case of a merger proper and within the period of sixty days referred to in article 76 of the Law, the AFPs in the process of merging must agree which of the Invalidity and Survivorship Insurance Contracts contracted by each of them will remain in force, after the merger is verified. Having taken this agreement, the AFPs must communicate it in writing to the Superintendence and to the selected Insurance Company. Once the selected Insurance Company has knowledge of said decision taken by the AFPs in the process of merging, it must issue an amendment to the contract in force, in order for it to be applied from the moment when the Pension Funds are merged. From the day that the authorization for the start of operations of the new AFP takes effect, the Invalidity and Survivorship Insurance Contract that the merged AFPs have decided to keep in force among all the contracts granted by each of them will remain in force. The validity of this contract will subsist at least until the new AFP concludes a new contract according to the procedure established in the Law and in the Regulation of Contracting of the Invalidity and Survivorship Insurance for Pension Fund Administrator Institutions. This contracting must be carried out within a period not exceeding ninety days from the start of its operations.
CHAPTER IV
SPECIAL PROVISIONS
Art. 45.- To comply with what is established in Art. 88 of the Law, the merged AFP must make the pertinent modifications in the clause incorporated in all the titles in which the pension funds were invested, and that were administered by the AFPs to which the authorization to operate was revoked, in order to adapt it to the new administration. Art. 46.- The merged AFP must send to the Superintendence the list and the CUA of the pension service agents who will remain working for said AFP, within a period of five business days counted from the day following the day that the merger takes full effect. Art. 47.- Once the merger is verified, the merged AFP must carry out all the procedures and acts necessary to adjust, both the minimum net equity, as well as the special guarantee contribution to the new conditions in which the merged pension fund finds itself, within the periods that the Law has established for such purposes. Art. 48.- The Superintendence through an instruction will regulate the conditions of the transfer of the fund or pension funds, the payment of pending contributions, the procedure for determining the unit value and the corresponding operational procedure.

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TITLE IV
UNIQUE CHAPTER
FINAL PROVISIONS
Art. 49.- In the event of dissolution, liquidation or merger, the arrears and overdue contributions of workers affiliated to any of the AFPs that are in the situations regulated in this regulation, will be the responsibility of the AFPs to which the affiliates are transferred in exercise of the right established in Art. 12 of the Law. The same treatment will be given to the arrears and defaults of assigned accounts, according to article 75 of the Law. Art. 50.- The Superintendence will resolve any aspect not contemplated in this Regulation, in accordance with the Law. Art. 51.- This Decree will enter into force eight days after its publication in the Official Journal. GIVEN IN THE PRESIDENTIAL HOUSE: San Salvador, on the twenty-seventh day of the month of June of the year two thousand. FRANCISCO GUILLERMO FLORES PEREZ, President of the Republic. JOSE LUIS TRIGUEROS, Minister of Finance. JORGE ISIDORO NIETO MENENDEZ, Minister of Labor and Social Security. Published in Official Journal No.133 Volume 348, of July 17, 2000. This compilation is an exact copy of what is established in the Official Journal.