Resolution No. 18070-2010: Regulations for the Election of Representatives to the Board of Directors of Municipal Savings and Credit Banks

Lima, December 28, 2010

S.B.S. Resolution
No. 18070 - 2010

The Superintendent of Banking, Insurance and Private Pension Fund Administrators

CONSIDERING:

That, without prejudice to compliance with the requirements established in the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Insurance, Law No. 26702, hereinafter the General Law, and the regulations of this Superintendence for all multiple-operation companies, as stated in the Fifth Final and Complementary Provision of the General Law, the election of directors of the CMACs is carried out in accordance with their special law as long as private third-party shareholders have not acquired a majority in the shareholding of the respective Caja.

That, consequently, it is necessary to regulate certain aspects regarding the election of directors of the CMACs, taking into account the provisions of their special law and the General Law mentioned above;

That, for the purpose of collecting opinions from users and the general public, the pre-publication of this resolution was ordered on the electronic portal of the Superintendence, under the provisions of Supreme Decree No. 001-2009-JUS;

Being in accordance with the opinions expressed by the Adjunct Superintendencies of Banking and Microfinance, and of Legal Advice;

In exercise of the powers conferred by paragraphs 7, 9, and 18 of Article 349 of the General Law;

RESOLVES:

SINGLE ARTICLE.- Approve the Regulations for the Election of Representatives to the Board of Directors of the Municipal Savings and Credit Banks, in accordance with the following text:

REGULATIONS FOR THE ELECTION OF REPRESENTATIVES TO THE BOARD OF DIRECTORS OF THE MUNICIPAL SAVINGS AND CREDIT BANKS

TITLE I
GENERAL ASPECTS

CHAPTER I
SCOPE AND DEFINITIONS

Article 1.- SCOPE
This regulation applies to the Municipal Savings and Credit Banks, hereinafter CMACs, and to the Municipal Credit Bank of Lima (Caja Municipal de Crédito Popular de Lima) insofar as it is compatible with its Special Law (Law No. 10769).

Article 2.- DEFINITIONS
For the purposes of applying this regulation, the following definitions apply:

• Representative of Small Merchants or Producers.- Representatives of the Associations of Micro and Small Enterprises - MYPE designated in accordance with the provisions of Law No. 29051 and its Regulations approved by Supreme Decree No. 009-2010-PRODUCE.

• Municipal Council or Council.- Municipal Council, which exercises the functions of the General Meeting of Shareholders of a CMAC.

• Companies of the financial system.-

1. Multiple-operation companies and specialized companies contemplated in letters A and B of Article 16 of the General Law must be considered. Likewise, the Municipal Savings and Credit Bank Fund (FOCMAC) must be considered; as well as state-owned companies operating within the financial system, which are the Bank of the Nation, the Agricultural Bank (AGROBANCO), the Development Financial Corporation (COFIDE), and the MIVIVIENDA S.A. Fund. This definition includes foreign legal entities with operations equivalent to those mentioned above.

• Companies or institutions linked to the financial system.-

1. The following legal entities must be considered: i) insurance companies; ii) intermediation agents in the securities market; iii) mutual fund and investment fund management companies; iv) securitization companies; v) pension fund management companies; vi) complementary and related service companies established in Article 17 of the General Law. This definition includes foreign legal entities with operations equivalent to those mentioned above.

1 Definition incorporated by SBS Resolution No. 5581-2013 of 09/13/2013.

• Designating Entity.- Generic denomination for those who, in accordance with the Special Law, have the right and obligation to designate representatives on the Board of Directors of a CMAC. The representativeness of the designating entities may fall on a person who does not necessarily have to be a member or active member of them, provided that they enjoy their trust, meet the necessary conditions established in this Resolution, and do not have an employment link or economic link with any of the other designating entities. In the case of the Director representing the Small Merchants and Producers, the provisions of Law No. 29051 and its regulatory norms will be taken into consideration to identify the designating entity.

• General Law.- General Law of the Financial System and the Insurance System and Organic Law of the Superintendence of Banking and Insurance, Law No. 26702 and its amendments.

• Special Law.- Supreme Decree No. 157-90-EF, which has the rank of law conferred by Article 425 of Legislative Decree No. 770 and stated in Article 13 and the Fifth Final and Complementary Provision of Law No. 26702, which together with said regulation, governs the operation of the CMACs.

• Majority of the Council.- The group of councilors who are part of the candidate list of the elected Mayor.

• Minority of the Council.- The group of councilors who are not part of the Majority of the Council.

TITLE II
PROCEDURE FOR THE ELECTION OF REPRESENTATIVES TO THE BOARD OF DIRECTORS OF THE MUNICIPAL SAVINGS AND CREDIT BANKS

CHAPTER I
THE BOARD OF DIRECTORS

Article 3.- COMPOSITION OF THE CMAC BOARD OF DIRECTORS
As established in Article 10 of the Special Law, the Board of Directors of the CMAC is composed progressively up to 7 members who will represent the members of the Majority of the Municipal Council (2), the Minority of the Municipal Council (1), COFIDE or the Bank of the Nation (1), the Chamber of Commerce (1), the Clergy (1), and the Small Merchants and Producers (1) in the territorial area in which the CMAC operates, as regulated in Article 13 of Supreme Decree No. 009-2010-PRODUCE.

Article 4.- ELECTION OF DIRECTORS
The procedure for the election of directors, as long as third parties have not acquired the majority of the shareholding, is regulated by the norms contained in the Special Law and the specific provisions established in this regulation. Only when third-party shareholders have acquired the majority of the shareholding of a CMAC will the norms contained in the General Law of Corporations apply.

Article 5.- REQUIREMENTS TO BE A DIRECTOR 2
Members of the Board of Directors of a CMAC must meet the technical and moral suitability requirements that qualify them to perform the position adequately, and must not be subject to impediments, for which the following must be considered:

a. The requirements and impediments stated in Article 81 of the General Law, the General Law of Corporations, and the corporate bylaws of the entities.

b. Not having negative management records nor having been administratively or criminally sanctioned for it, or not having committed other acts implying dishonesty or fraudulent conduct that puts public confidence at risk or other acts that signify a lack of moral suitability.

c. Demonstrate technical suitability:

1. Having obtained a bachelor's degree or professional title in economics, finance, engineering, accounting, law, or administration; if not, accrediting master's or doctoral studies in any of these professions or specialties. Likewise, they must have experience in managerial or executive positions for more than three (3) years in companies or institutions with annual sales greater than 850 tax units; or,
2. Accredit having experience in managerial or executive positions for more than two (2) years in companies of the financial system or in companies or institutions linked to said system.

Article 6.- IMPEDIMENTS TO BE A DIRECTOR
No person who does not accredit compliance with the requirements established in Article 5 of this Regulation may assume the position of Director of a CMAC.

In accordance with the provisions of Law No. 27972, Organic Law of Municipalities, councilors cannot be members of the Board of Directors of the CMACs. Likewise, according to what is established in the General Law, Mayors are impeded from being members of the Board of Directors of the CMACs.

The prohibition established in Article 9 of the Special Law, regarding the fact that Directors can never exercise an executive position in the CMAC, does not extend to the responsibilities that may correspond to them by virtue of the regulations issued by this Superintendence, referred to Integrated Risk Management and other complementary and linked norms.

Article 7.- DURATION OF THE DIRECTOR'S POSITION
The duration of the Director's position is established in Article 11 of the Special Law, being one (01) year for the case of the representatives of the Municipal Council (Majority and Minority) and two (02) years for the rest of the directors, who may be re-elected in their positions except for the Director representing the Small Merchants and Producers who, in accordance with the provisions of Article 7

Article substituted by SBS Resolution No. 5581-2013 of 09/13/2013.

of Law No. 29051, immediate re-election is not permitted. The duration period will be calculated from the date on which the nomination occurred.

In the event of a vacancy in the Director's position, the replacement person must come from the same designating entity and will occupy the Director position for the time remaining to complete the period, and may be re-elected. In the case of the Director representing the Small Merchants and Producers, the provisions of Law No. 29051 and its regulations will apply.

The duration of the position of a Director of a CMAC is independent of changes in authorities or legal representatives that occur in the designating entities or in the Municipal Council.

Article 8.- RESPONSIBILITY OF THE DESIGNATING ENTITIES
Each designating entity is responsible for ensuring due observance of the deadlines for the duration of the term of the Director they are required to designate, and in that sense, each of them must initiate the process of designating their representative with due advance notice before the expiration of the period.

Regarding the designation of the Director representing the Small Merchants and Producers, it will be the responsibility of the Joint Management of the CMAC in coordination with the respective Local Governments to communicate to the Ministry of Production the need for the call, with an advance of no less than six (06) months before the holding of the electoral process, which will be carried out in a single act in the first bimester of the year in which the previous representation period expires, in accordance with what is provided in Article 5 of Law No. 29051 and Article 11 of its Regulations.

Article 9.- DOCUMENTATION REQUIRED FROM THE DIRECTOR FOR PURPOSES OF DESIGNATION 3
For the purpose of accrediting their representative, the designating entity must gather and evaluate the following documentation:

• The curriculum vitae duly documented and signed by the candidate for Director.
• Sworn declarations in accordance with Annexes II and III.
• Likewise, the designating entity must request the candidate for Director to present the respective Police Background Certificates, Judicial Background Certificates, and Criminal Background Certificates issued by the competent public entities, as well as the Negative Protest Certificate issued by the "National Registry of Protests and Delinquency" referred to in Article 85.3 of Law No. 27287.

CHAPTER II

Article substituted by SBS Resolution No. 5581-2013 of 09/13/2013.

OF THE ELECTION OF DIRECTORS

Article 10.- PROCESS OF ELECTION OF DIRECTORS
The process of election of directors consists of two stages: Designation and Nomination.

Prior to the start of the designation stage, the Joint Management of the CMAC communicates to the designating entities and the Municipal Council the upcoming expiration of the representation period of the directors, 60 calendar days before its end, using the format indicated in Annex I. In the case of the representative of the Small Merchants and Producers, the communication to be made to the Joint Management will be carried out in accordance with what is provided in Law No. 29051 and its Regulations, Supreme Decree No. 009-2010-PRODUCE.

10.1. DESIGNATION STAGE
This is the first stage of the election process of each of the members of the Board of Directors of the CMACs and consists of the act by which the authorized body of the designating entity simultaneously sends, via official communication, to the Plenary of the Municipal Council and to this Superintendence, the name of the person upon whom the responsibility of representing them on the Board of Directors of the CMAC has fallen. Likewise, the aforementioned authorized body of the designating entity also simultaneously sends this communication to the Internal Audit Unit, hereinafter the UAI of the CMAC, in order for it to issue the report referred to in paragraph 10.2.1 of this Regulation.

The submission of the communication to the Council and to the UAI without the documentation provided for in Article 9 will determine that the Municipal Council requires the designating entity to correct the omission within two (2) business days, under penalty of being considered not presented, and the process must be restarted, under the responsibility of said designating entity.

Prior to the designation of directors, the bodies responsible for the designation must verify that the potential Director meets the requirements required to hold said position established in Article 5 of this Regulation and that they are not subject to any of the impediments established in the current regulations, as well as have presented the documents indicated in Article 9 of this Regulation.

Each entity will designate its representative in accordance with its existing internal procedure for this purpose.

10.1.1. Designation of the director representatives of the Majority
In the designation of the representatives of the Majority, only the councilors of the Majority participate, and the process that results in the designation must be carried out in a separate act from the sessions of the Municipal Council. A copy of the Minutes of the designation must be sent attached to the communication referred to in the first paragraph of paragraph 10.1.

10.1.2. Designation of the Director representative of the Minority.
In the designation of the representative of the Minority, only the councilors of the Minority participate, and the process that results in said designation must

be carried out in a separate act from the sessions of the Municipal Council. A copy of the Minutes of the designation must be sent attached to the communication referred to in the first paragraph of paragraph 10.1.

In the event that the Minority is composed of more than one civil or political group, giving rise to the existence of several candidates for the designation, and after the voting among the members of the Minority has taken place, if no agreement is reached to determine the person who will finally represent them, the designation will be decided by lottery.

10.1.3. Designation of the director representatives of the institutions
The representatives of the Clergy, the Chamber of Commerce, and, of COFIDE or the Bank of the Nation are designated by each of these institutions, in accordance with their internal norms and/or internal regulations and by the competent body for this purpose.

10.1.4. Designation of the Director representative of the Small Merchants and Producers.
The designation of the representative of the Small Merchants and Producers is carried out in accordance with what is provided by Law No. 29051 and its Regulations, Law that regulates the participation and election of MYPE representatives in various public entities, representative who in accordance with Law No. 26702, is subject to the requirements established in Article 5 of this Regulation and must not be subject to any of the impediments established in the current regulations, as well as have presented the documents indicated in Article 9 of this Regulation.

10.2. NOMINATION STAGE
This is the second stage of the election process of directors of a CMAC and consists of the act by which the Municipal Council proceeds to formalize or officialize the nomination of the directors of a CMAC, after having the favorable report of the UAI of the CMAC. It begins with the receipt of the communication made by the designating entity in paragraph 10.1 of this Regulation. 4

10.2.1. Documentation verification report by the UAI of the CMAC
Within a maximum period of 15 calendar days from receiving the documentation established in the first paragraph of paragraph 10.1 of this Regulation, the UAI will prepare and send to the Municipal Council a report related to the verification of compliance with Articles 5, 9, and 10 of this Regulation to be a Director, and if applicable, the impediments it may have found, as established in Article 6 of this Regulation.

10.2.2 Nomination of the Director by the Municipal Council
After receiving the UAI report, the Municipal Council in its next session or within a maximum period of fifteen (15) business days from receiving said report, whichever occurs first, will proceed to the nomination of the designated director only if the UAI report verifies compliance with all suitability requirements and the non-existence of legal impediments, in which case the Council cannot contradict the designations.

Paragraph substituted by SBS Resolution No. 5581-2013 of 09/13/2013.

If the UAI report contemplates the existence of a legal impediment or the non-compliance with any requirement, the Council will reject the designation and communicate this decision to the designating entity. 5

The day after the nomination of the Director occurs, the respective Municipal Council must send to the CMAC all the documentation that was provided to it by the authorized body of the designating entity, as established in Articles 9 and 10 of this Regulation, as well as a certified copy of the Council Session Minutes containing the Council Agreement in which the representative of the Majority, Minority, Institution, and/or of the Small Merchants and Producers is appointed, as applicable, and the Council agreement must mention the document or formal procedure by which the respective designation was communicated to the Council.

Article 11.- AGREEMENT OF THE MUNICIPAL COUNCIL
The sessions of the Municipal Council, the minutes of said Sessions, and the agreements in which the nomination of the representatives before the Board of Directors of the CMAC is recorded and made, must comply with the formalities established in the Organic Law of Municipalities and in what corresponds in the General Administrative Procedure Law.

Article 12.- COMMUNICATION TO THE SUPERINTENDENCE AFTER THE NOMINATION
Within a period no greater than 1 business day from the CMAC receiving the documentation referred to in the second paragraph of paragraph 10.2.2 from the Council, the CMAC must communicate the nomination to this Superintendence attaching Annexes II and III of this Regulation; without prejudice to the adequate and timely compliance with the entry of the curriculum vitae information into the REDIR software.

Paragraph substituted by SBS Resolution No. 5581-2013 of 09/13/2013

CHAPTER III
VACANCY OF THE DIRECTOR'S POSITION

Article 13.- VACANCY OF THE POSITION OF DIRECTOR REPRESENTATIVE OF A CMAC 6
The declaration of the vacancy of the position of a Director of a CMAC occurs due to death, resignation, removal by the designating entity, or by incurring one of the causes or impediments established in the General Law, the General Law of Corporations, or the Statute of the CMAC.

For the declaration of vacancy for the impediment causes stated by the General Law, General Law of Corporations, or the Corporate Statute of the CMAC, it is required that the Board of Directors communicate such situation to the affected director, granting them a peremptory period that should not exceed three (3) business days to submit their defenses. After the aforementioned period has expired, the Board of Directors must send all actions taken to the designating entity so that it proceeds in accordance with what is stated in Article 15.

Article 14.- RESIGNATION FROM THE POSITION OF DIRECTOR
In the event of a Director's resignation, it must be made before the entity that had designated them; the designating entity the day after learning of the resignation of its representative must proceed to officially communicate the resignation to the Municipal Council, with a copy to the Board of Directors of the CMAC and to this Superintendence, and if possible, the designating entity must indicate in said communication the new designation in accordance with what is provided in this Regulation.

Article 15.- PROCEDURE IN CASE OF SUBSEQUENT IMPEDIMENT 6
The designating entity, upon learning of the existence of a cause of impediment of its representative on the Board of Directors of the CMAC, stated by the General Law, General Law of Corporations, or the Statute of the CMAC, without this having formulated a resignation, must proceed to remove them within a period of fifteen (15) business days under responsibility, or ratify their designation, in case it proves the non-existence of impediment. The removal or ratification must be brought to the knowledge of the Board of Directors of the CMAC and to this Superintendence immediately, for the corresponding supervisory actions.

In the event of determining the removal, the designating entity must, if possible, send the new designation together with the proposed removal, or in any case, its right to proceed with the new designation remains open, which must comply with the formalities and requirements specified in this Regulation.

Article substituted by SBS Resolution No. 5581-2013 of 09/13/2013.

Article 16.- PROCEDURE TO DECLARE THE VACANCY OF THE DIRECTOR POSITION
The Municipal Council, within a period not exceeding 7 business days from receipt of the communication from the appointing entity informing of the resignation or removal of a Director, or upon learning of their death, shall declare the vacancy through the respective Council Agreement, sending a certified copy of said agreement to the Board of Directors of the CMAC and to this Superintendency. In the event of receiving together with the vacancy communication the new appointment by the appointing entity, the Municipal Council shall proceed with its nomination in accordance with what is provided in these Regulations.

Article 17.- CONTINUATION IN THE DIRECTOR POSITION
The Director whose mandate has ended shall remain in office until their replacement is appointed and named, except for the Director who has incurred an impediment in accordance with Article 6 of these Regulations, in which case their functions shall be suspended until the pronouncement of the appointing entity in accordance with Article 15, or failing that, until the pronouncement of this Superintendency.

FINAL PROVISIONS
FIRST.- These regulations shall govern from the election of the new directors of the CMAC.

SECOND.-

THIRD.- In all matters not regulated by these Regulations, the norms on the subject shall apply, provided they do not oppose them.

FOURTH.- Repeal the Regulation on the Conversion to Joint-Stock Companies and Shareholding Participation of the Savings and Credit Municipal Banks, approved by SBS Resolution No. 410-97 dated 06.06.07 and its amendments, except for Sub-Chapter II Shareholders of Chapter II Shareholding Participation.

Register, communicate, and publish.

FELIPE TAM FOX
Superintendent of Banks, Insurance and Private Pension Fund Administrators

Provision repealed by SBS Resolution No. 5581-2013 of 13/09/2013.

ANNEX I
PRIOR COMMUNICATION BEFORE THE EXPIRATION OF THE DIRECTOR'S TERM

Dear Sir/Madam

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Legal Representative of the appointing entity

We have the pleasure of addressing you to inform you that the validity period of the position of Director of Mr. ______, representative of (name of the appointing entity) before the Savings and Credit Municipal Bank of ______ (CMAC), expires on ______ (dd/mm/yyyy), in accordance with what is established in Article 11 of the Special Law governing the System of Savings and Credit Municipal Banks.

Regarding this matter, in concordance with what is provided in the Special Law and the current Regulation for the Election of Representatives to the Board of Directors of the Savings and Credit Municipal Banks, each appointing entity is responsible for ensuring due observance of the duration deadlines of the validity period of the Director representing it, which in this case corresponds to designating and/or ratifying every ____ year(s).

In this sense, it corresponds to your represented entity to communicate before ______ (dd/mm/yyyy) the ratification of its representative for a new period or the designation of a new representative, in accordance with the procedures established to carry out such designation; and guaranteeing the adequate composition of the Board of Directors of the CMAC through a technically qualified representative based on compliance with the criteria established in the aforementioned Regulation.

Sincerely,

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Joint Management of CMAC

With Copy to the respective Municipal Council

Indicate “1” if it concerns Majority and Minority representatives or “2” for other cases.
Indicate expiration date.

ANNEX II
SWORN DECLARATION TO ASSUME THE POSITION OF DIRECTOR

Let it be recorded by this document, the sworn declaration that I, ______ with (Official Identity Document No.) ______, of nationality ______, marital status ______, profession ______, domiciled in ______, make for the purposes that correspond, in my capacity as ______ of the CMAC ______, in the following terms:

1. I declare that I am not included in the impediments provided for in Article 81 of the General Law, which I have read and understood its scope, and that I have fulfilled all my tax obligations for the period not subject to prescription.
2. I declare that I have no criminal or police records in the country and/or abroad, nor am I involved in unfinished judicial processes / I am involved in the following unfinished judicial processes: (Detail)
3. I declare that I have full knowledge that if any impediment arises to be a Director of a company under the supervision of the Superintendency during the exercise of the position, I will proceed to present my resignation from the position immediately and irrevocably, as provided in Art. 162 of the General Law of Corporations, Law 26887.
4. I declare that I have full knowledge of the Special Law, General Law related to the Board position, as well as the “Regulation for the election of Representatives to the Board of Directors of the Savings and Credit Municipal Banks” in force.
5. I declare that I am directly or indirectly, owner, partner or shareholder or exercise other positions regarding the following companies, simultaneously with the exercise of my function as Director:

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6. I declare that the information contained in this Sworn Declaration is true and that in case fraud and falsity are detected in it, I will be subject to the administrative sanctions established in the current legislation on the matter, without prejudice to the personal and/or criminal responsibility that corresponds to me for such infringement.

(Place), _____ of ______ of ______

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Signature

ANNEX III
SWORN ASSET DECLARATION

Let it be recorded by this document, the sworn declaration that I, ______ of nationality ______, marital status ______, profession ______, domiciled in ______, make for the pertinent purposes, in accordance with the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banks and Insurance, approved by Law No. 26702, hereinafter the General Law, in my capacity as ______ _____ of the company . ______, in the following terms:

1.- I declare that my assets are constituted by: (Indicate, in each case, if pertinent, the existence of any type of encumbrance or if they are subject to any limitation for free availability)
1.1. Real Estate:

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1.2. Movable Property:
a) Vehicles
______ b) Shares
______ c) Deposits in companies of the Financial System:

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1.3 Other goods and claims

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1.4 Direct and indirect obligations in the financial system or with other natural or legal persons (Detail)

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2.- I declare that as of today I do not have credits overdue for more than (120) one hundred and twenty days or that have entered judicial collection, nor with companies of the financial system nor with persons outside it. I also declare that I do not have overdue tax debts.
3.- I declare that I attach the following documentation, if applicable:
a. Independent person: Sworn declaration from SUNAT and of its companies, if any, as well as registry certificate and financial statements of the last two years of these. b. Dependent person: A letter of presentation from the employer and proof of income.
c. Non-resident person: Document from the corresponding tax authority entity on the compliance with tax obligations.
4.- I declare that the information contained in this Sworn Declaration is true and that in case fraud and falsity are detected in it, I will be subject to the administrative sanctions established in the current legislation on the matter, without prejudice to the personal and/or criminal responsibility that corresponds to me for such infringement.

(Place), _____ of ______ of ______

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Signature