Regulatory Alerts2016-11-15 | CD-SIBOIF-968-1-NOV15-2016Added · Updated
Resolution Amending Article 85 of the Standard on Administrative Companies and Investment Funds
The Superintendence of Banks and Other Financial Institutions amended Article 85 of the Standard on Administrative Companies and Investment Funds to establish that the final value of real estate assets in a fund's portfolio is the lower market value stated in appraisals by two registered experts. Administrative companies must submit these valuations to the Superintendent within five business days of purchase, provided the valuations are not older than six months. The resolution also mandates that real estate be recorded using the fair value model with an associated equity reserve for unrealized gains or losses, which remains undistributable until the asset is sold.
Resolution No. CD-SIBOIF-968-1-NOV15-2016 Dated November 15, 2016 STANDARD REFORMING ARTICLE 85 OF THE STANDARD ON ADMINISTRATIVE COMPANIES AND INVESTMENT FUNDS
The Board of Directors of the Superintendence of Banks and Other Financial Institutions,
CONSIDERING
I That on August 8, 2014, this Board of Directors approved the Standard on Administrative Companies and Investment Funds (Standard SAFI), contained in Resolution No. CD-SIBOIF-847-1-AGOST8-2014, published in La Gaceta, Official Journal No. 180, on September 24, 2014.
II That Article 85 of the aforementioned standard establishes that the final value of the real estate assets comprising the investment fund's portfolio shall be the lower realization value resulting from appraisals conducted by two experts registered in the Register of Valuation Experts maintained by the Superintendence.
III That by establishing the lower market value as the final acquisition value of the real estate in the fund's portfolio, in substitution for the lower realization value between two appraisals, the purchase and sale transactions of the aforementioned real estate would be facilitated.
IV That in accordance with the consideration stated above and based on the powers established in Article 6, letter b) and Article 208, of the Capital Markets Law.
In exercise of its powers,
HAS ISSUED
The following:
Resolution No. CD-SIBOIF-968-1-NOV15-2016 STANDARD REFORMING ARTICLE 85 OF THE STANDARD ON ADMINISTRATIVE COMPANIES AND INVESTMENT FUNDS
FIRST: Article 85 of the Standard on Administrative Companies and Investment Funds, contained in Resolution No. CD-SIBOIF-847-1-AGOST8-2014, published in La Gaceta, Official Journal No. 180, on September 24, 2014, is hereby amended, which shall read as follows:
“Article 85. Valuation of Real Estate.- The valuations of the real estate must be conducted by two experts registered in the Register of Valuation Experts (REPEV) maintained by the Superintendence, in accordance with the provisions of the regulations governing the matter on valuation experts who provide services to institutions of the financial system. The final value of the real estate is the lower market value stated in these valuations.
Within five (5) business days following the purchase of a real estate asset, the administrative company must submit the respective valuations to the Superintendent, which cannot be older than six (6) months. Investors will have access to the valuations of the real estate.
The registration of the real estate value in the fund's financial statements is carried out in accordance with accounting regulations, using the fair value model. Additionally, a reserve must be established in the fund's equity accounts, corresponding to the amount of unrealized losses or gains derived from a change in fair value, net of taxes. This reserve cannot be distributed to investors until the sale or disposal of the real estate asset has been realized.”
SECOND: This standard shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Journal. (f) S. Rosales C. (f) M. Díaz O. (f) Gabriel Pasos Lacayo (f) Fausto Reyes B. (f) illegible (Silvio Moisés Casco Marenco) (f) illegible (Freddy José Blandón Argeñal) (f) A. Morgan Pérez. Ad Hoc Secretary.
URIEL CERNA BARQUERO Secretary of the Board of Directors SIBOIF