SBS Resolution No. 6422-2015: Incorporates Subchapter I-A On Independent Directors of AFPs

Los Laureles No. 214 - Lima 27 - Peru Tel. : (511)6309000 Fax: (511)6309239 Lima, October 23, 2015 S.B.S. Resolution No. 6422-2015 The Superintendent of Banking, Insurance and Private Pension Fund Administrators WHEREAS: WHEREAS, Supreme Decree No. 054-97-EF approved the Consolidated Text of the Law of the Private Pension Fund Administration System, hereinafter referred to as the Consolidated Text of the SPP Law; WHEREAS, Supreme Decree No. 004-98-EF approved the Regulations of the aforementioned Consolidated Text of the SPP Law, hereinafter referred to as the Regulations of the Consolidated Text of the SPP Law; WHEREAS, Law No. 29903 approved the Private Pension System Reform Law, hereinafter referred to as the Reform Law, which incorporated, among other aspects, Article 21°-C of the Consolidated Text of the SPP Law; WHEREAS, in accordance with Article 21°-C of the Consolidated Text of the SPP Law, the Private Pension Fund Administrator (AFP) must have at least two independent directors, who are not linked to the AFP, its main shareholders, or the predominant economic group in the AFP, and who must also adhere to the standards of responsibility, prudence, and due diligence required by their position, and comply with information commitments to AFP members through appropriate means, according to disclosure procedures determined by the Superintendency; WHEREAS, according to the aforementioned Article 21°-C, independent directors of AFPs must issue an annual report to the Citizen Participation Council in Social Security (COPAC); WHEREAS, in order to regulate what is established in the Reform Law regarding independent directors of AFPs, it is necessary to issue regulations governing the appointment of independent directors by administrators, the tasks they are responsible for performing based on information commitments with the administrator's members, as well as their connection with the corresponding information disclosure procedures, with a view to achieving better standards of compliance with good corporate governance principles by AFPs, in their capacity as administrators of the pension funds of members participating in the SPP; WHEREAS, the Regulations for Comprehensive Risk Management, approved by SBS Resolution No. 037-2008 and its amending norms, established its scope to AFPs, whose provisions include the concept of independent director indicated in literal e) of Article 2°, making it necessary to modify the scope of said Regulations in this aspect, Los Laureles No. 214 - Lima 27 - Peru Tel. : (511)6309000 Fax: (511)6309239 2 / 5 indicating its application, as long as it does not contradict specific provisions issued applicable to AFPs, as in the present case; WHEREAS, it is also necessary to incorporate into the Sanctions Regulations approved by SBS Resolution No. 816-2005 and its amending norms, the infractions related to the obligations concerning independent directors; WHEREAS, in order to gather public opinion regarding the proposed modifications to the SPP regulations, the draft resolution on the matter was pre-published on the Superintendency's electronic portal, under the provisions of Supreme Decree No. 001-2009-JUS and based on the exceptional conditions set forth in numeral 1 of Article 14° of the aforementioned supreme decree; Having the approval of the Deputy Superintendencies of Private Pension Fund Administrators and Legal Advisory; and, In use of the powers conferred by numeral 9 of Article 349° of the General Law of the Financial System and the Insurance System and Organic Law of the Superintendency of Banking and Insurance, Law No. 26702 and its amendments, and subsection d) of Article 57° of the Consolidated Text of the SPP Law, as well as by the provisions of the Third Final and Transitory Provision of its Regulations; RESOLVES: Article First.- Incorporate Subchapter I-A into Title III of the Compendium of Regulatory Superintendency Norms of the Private Pension Fund Administration System, approved by Resolution No. 053-98-EF/SAFP, related to Business Management, according to the following text: “SUBCHAPTER I-A ON INDEPENDENT DIRECTORS OF AFPs Article 6°-A.- Definition. An independent director is a principal, substitute, or alternate director who is selected for their professional trajectory, honorability, sufficiency, and economic independence and who, at the same time, complies with the following provisions: a) Is not linked to the AFP, its economic group, or the main shareholders of the AFP; b) Has not been linked to the AFP, its economic group, or the main shareholders of the AFP, for a minimum period of three (3) consecutive years prior to their appointment; c) Is not and has not been chairman of the AFP's board of directors, for a minimum period of three (3) consecutive years prior to their appointment. To determine the linkage, the provisions established in the special norms on linkage and economic group, approved by SBS Resolution No. 5780-2015 and any other norms on the matter issued by the Superintendency, shall apply complementarily. For this purpose, main shareholders are natural or legal persons who own five percent (5%) or more of the AFP's shares. Los Laureles No. 214 - Lima 27 - Peru Tel. : (511)6309000 Fax: (511)6309239 3 / 5 An independent director of an AFP may be an independent director of other companies within its economic group. Article 6°-B.- Appointment. In the process of appointing directors, the AFP must include at least two (2) principal independent directors in the list and, if substitute or alternate directors are considered, they must have the same independent quality to replace the principal directors. Independent directors must comply with the criteria indicated in Article 6°-A and the conditions and requirements established in the Regulations of the Consolidated Text of the SPP Law for any AFP director. Additionally, the AFP must disclose the profiles and/or suitability criteria that must be met for the selection of its independent directors, which must be stated in an AFP document such as a Board Regulations, code or manual of good corporate governance, or similar. Article 6°-C.- Duties of the independent director. Independent directors are responsible for the following: a) Inform the chairman and the internal auditor about any situation of non-compliance with the regulatory framework, especially regarding the disclosure of information to members. b) Prepare an annual report addressed to the Citizen Participation Council in Social Security (COPAC), as indicated in Article 6°-D. c) Be part of the AFP's Audit Committee, with one of them being a principal member of the committee. Article 6°-D.- Disclosure of information to members. Independent directors of the AFP must prepare an annual report addressed to the Citizen Participation Council in Social Security (COPAC). The preparation of said report may be individual per independent director or may be a collective report that gathers the opinions of all independent directors of the AFP. Such information may in no case contravene the provisions on reservation, trade secret, or confidentiality of information due to the AFP's participation. The annual report that independent directors submit to COPAC must focus on the work they have carried out in the AFP where they serve as independent directors, and must contain at least the following: a) Opinion on the level of compliance with the AFP's information transparency policy and norms; b) Mechanisms implemented to carry out guidance and/or information transparency tasks for members; c) Evaluation of the proposals made by COPAC, as well as the level of implementation of the suggestions and/or citizen proposals generated in COPAC; d) Opinion on the level of compliance with good corporate governance in the AFP, according to Article 21°-B of the Reform Law; e) Consented sanctions imposed on the AFP for infractions regarding information transparency, as well as the corrective measures proposed and/or implemented by the AFP in this regard; and, f) Other issues considered relevant for the fulfillment of the obligation regarding information transparency towards the members of their administrator. The deadline for submitting the annual report is ninety (90) calendar days after the close of the previous fiscal year. Los Laureles No. 214 - Lima 27 - Peru Tel. : (511)6309000 Fax: (511)6309239 4 / 5 The independent director must send a copy of the annual report sent to COPAC to the AFP so that the latter discloses its content to its members and publishes it on its website, in a visible place, within fifteen (15) calendar days of having received it. Likewise, within a similar period, the AFP may individualize the sending of the report's content to its members, using electronic means.” Article Second.- Incorporate the Seventh Final and Transitory Provision into Title III of the Compendium of Regulatory Superintendency Norms of the Private Pension Fund Administration System, approved by Resolution No. 053-98-EF/SAFP, related to Business Management, according to the following text: “Seventh.- As long as the Citizen Participation Council in Social Security (COPAC) is not in operation, the annual report issued by independent directors by virtue of what is established in Article 6°-D of this title, must be addressed to the AFP, with the information disclosure commitments provided in the aforementioned article being applicable to it.” Article Third.- Substitute Article 1° of the Regulations for Comprehensive Risk Management, approved by SBS Resolution No. 37-2008 and its amending norms, with the following text: “Article 1°.- Scope. These Regulations shall apply to the companies indicated in Articles 16° and 17° of the General Law, hereinafter referred to as companies. It shall also apply to Private Pension Fund Administrators (AFPs), Municipal Savings and Credit Banks (CMAC), the Municipal Popular Credit Bank, the Guarantee Fund for Loans to Small Industry (FOGAPI), the Banco de la Nación, the Banco Agropecuario, the Financial Development Corporation (COFIDE), Fondo MIVIVIENDA S.A., the Welfare Funds and Benefit Funds under the control of the Superintendency, the Peruvian Federation of Municipal Savings and Credit Banks (FEPCMAC) and the Fund of Municipal Savings and Credit Banks (FOCMAC), as long as they do not contradict the specific regulations governing the actions of these companies.” Article Fourth.- Incorporate the following infractions into sections II and III of Annex 4 “Specific Infractions of the Private Pension Fund Administration System” of the Sanctions Regulations approved by SBS Resolution No. 816-2005 and its amendments, as indicated below: In section II Serious Infractions Private Pension Fund Administrators: “176F) The independent director who fails to submit or submits outside the deadline the annual report to the Citizen Participation Council in Social Security (COPAC). 176G) The independent director fails to comply with the formal content of the annual report to the Citizen Participation Council (COPAC). 176H) Failure to publish on its website the Annual Report addressed to the Citizen Participation Council (COPAC), within fifteen (15) calendar days of having received it.” In section III Very Serious Infractions Private Pension Fund Administrators: “31E) Failure to appoint independent directors as established by the norm.” Los Laureles No. 214 - Lima 27 - Peru Tel. : (511)6309000 Fax: (511)6309239 5 / 5 Article Fifth.- The provisions of subsections a), b), and c) of Article 6°-A of Title III of the Compendium of Regulatory Superintendency Norms of the Private Pension Fund Administration System, are not applicable to those who, as of the date of publication of this resolution, are serving as independent directors in an AFP. Article Sixth.- This resolution enters into force on the day following its publication in the Official Gazette “El Peruano”, granting a compliance period until March 31, 2016, from which date any norms that oppose these provisions, totally or partially, shall be without effect. Register, communicate and publish. DANIEL SCHYDLOWSKY ROSENBERG Superintendent of Banking, Insurance and Private Pension Fund Administrators