Technical Standards for Constituting and Operating Reciprocal Guarantee Societies and Re-guarantors of Reciprocal Guarantee Societies

CNBCR-11/2023 NRP-48
TECHNICAL STANDARDS FOR CONSTITUTING AND OPERATING RECIPROCAL GUARANTEE SOCIETIES AND RE-GUARANTORS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 12/14/2023 Validity: 01/02/2024 Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

THE NORMS COMMITTEE OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING:
I. That Article 32, first paragraph, of the Law of the Reciprocal Guarantee System for Micro, Small and Medium Rural and Urban Enterprises, establishes the information that interested parties must present to the Financial System Superintendence to constitute a Reciprocal Guarantee Society.
II. That Article 34, first paragraph, of the Law of the Reciprocal Guarantee System for Micro, Small and Medium Rural and Urban Enterprises, establishes that the certified copy of the deed of constitution must be presented to the Financial System Superintendence so that it may qualify whether the terms stipulated in the bylaws conform to the previously authorized projects and whether the social capital has been effectively integrated in accordance with the authorization.
III. That Article 35, first paragraph, of the Law of the Reciprocal Guarantee System for Micro, Small and Medium Rural and Urban Enterprises, establishes that the Financial System Superintendence will certify that the Reciprocal Guarantee Society is authorized to begin operations.
IV. That Article 3, second paragraph, letter b), of the Law of Supervision and Regulation of the Financial System, establishes that the Financial System Superintendence is responsible for authorizing the constitution, functioning, start of operations, suspension of operations, modification, revocation of authorization, closure, and other acts of the members of the financial system, in accordance with the legal, regulatory, or technical norms established regarding the matter.
V. That Article 7, letter h), of the Law of Supervision and Regulation of the Financial System, establishes that the Financial System Superintendence is responsible for the supervision of Reciprocal Guarantee Societies and their local re-guarantors.
VI. That Article 99, third paragraph, letter a), of the Law of Supervision and Regulation of the Financial System, establishes that it is the responsibility of the Norms Committee of the Central Reserve Bank of El Salvador to approve technical norms on any other aspect inherent to risk management by the supervised entities.
VII. That in accordance with Article 101, fourth paragraph, of the Law of Supervision and Regulation of the Financial System, the faculties to approve, modify, and repeal technical norms that must be complied with by the members of the financial system and other supervised entities are transferred to the Central Reserve Bank of El Salvador.

THEREFORE,

by virtue of the regulatory powers conferred upon it by Article 99 of the Law of Supervision and Regulation of the Financial System,

AGREES to issue the following:

TECHNICAL STANDARDS FOR CONSTITUTING AND OPERATING RECIPROCAL GUARANTEE SOCIETIES AND RE-GUARANTORS OF RECIPROCAL GUARANTEE SOCIETIES

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Norms have as their object to develop the requirements and the legal and administrative processes, to constitute and operate the Reciprocal Guarantee Societies and the Re-guarantors of Reciprocal Guarantee Societies subject to the Law of the Reciprocal Guarantee System for Micro, Small and Medium Rural and Urban Enterprises.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Norms are the persons interested in constituting Reciprocal Guarantee Societies and the Re-guarantors of Reciprocal Guarantee Societies that are included in the Law of the Reciprocal Guarantee System for Micro, Small and Medium Rural and Urban Enterprises.

Terms
Art. 3.- For the purposes of these Norms, the terms indicated below have the following meaning:
a) Central Bank: Central Reserve Bank of El Salvador; b) Law: Law of the Reciprocal Guarantee System for Micro, Small and Medium Rural and Urban Enterprises; c) Participations: Social participations; d) Re-guarantor(s): Re-guarantor(s) of Reciprocal Guarantee Societies; e) Society or Societies of Guarantee: Reciprocal Guarantee Society or Societies; and f) Superintendence: Financial System Superintendence.

CHAPTER II
REQUIREMENTS AND PROCEDURE FOR THE APPLICATION

Application and documentation
Art. 4.- Persons who have an interest in constituting a Guarantee Society or a Re-guarantor, regulated by the Law, must submit an authorization application to the Superintendence and, in addition, the following documentation:
a) Draft deed of constitution in which the social bylaws will be incorporated. This draft must contain the requirements indicated by the Law, Article 22 of the Commercial Code, and the Notary Law; b) Scheme of organization and administration of the society; c) Financial bases of the operations it has projected to develop, commercial plans, and financial projections of at least three years; d) Activity program and the specific operations that are projected to be carried out; e) Requirements of the partners who will constitute the society, indicating their participations in the social capital; and f) List of the Protective Partners and the Founding Participating Partners of the Guarantee Society. In the case of Re-guarantors, the list of partners must be presented. The lists must indicate the amount of the respective subscriptions and their general information. Likewise, the subscriptions must be duly certified by a firm of External Auditors registered in the Register of Auditors of the Superintendence. In the event that the partners are natural persons, they must present the following information:
i) Copy of the Unique Identity Document (DUI); ii) Copy of the Tax Identification Number (NIT) which will be in accordance with what is established by the Tax Administration; iii) Notarially certified photocopy of the passport, in the case of foreigners; iv) Sworn declaration of not being in a situation of bankruptcy or insolvency; and v) Description of the origin of the funds, accompanied by documentation that evidences the source of funds, for the acquisition of social participations. If the future partners are legal entities, they must present the following information:
i) Copy of the Tax Identification Number (NIT) which will be in accordance with what is established by the Tax Administration; ii) Audited financial statements of the last accounting year; iii) Copy of the certified copy of the deed of constitution and bylaws with their reforms and legal representation; iv) Sworn Declaration of not being in a situation of bankruptcy or insolvency, issued by the legal representative of the company to be constituted as a protective or participating partner of the Guarantee Society or as a partner of the Re-guarantor; v) Certification of the minutes point, where the acquisition of the social contributions of the Guarantee Society or the Re-guarantor for its constitution is authorized; and vi) Description of the origin of the funds, accompanied by documentation that evidences the source of the funds, for the acquisition of social participations. In the case that the documentation presented comes from abroad, both the photocopies and the signatures appearing in it must be authenticated or certified by a notary or foreign official, as appropriate, and follow the apostille procedure in the case of countries signatories to the "Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents"; in other cases, they must be legalized by the Head of the Diplomatic Mission, Consul, Vice-Consul, or Officer in Charge of Consular Affairs of El Salvador, or in their absence, by officials of the Ministry of Foreign Relations from which such documents originate. g) List and general information of the future directors with their spouses, with the following information:
i) Sworn declaration of not having the disqualifications indicated in Article 47 of the Law, according to the model in Annex No. 1; ii) Valid certificate issued by the General Directorate of Penal Centers, of not having criminal records, as well as the valid solvency of the National Civil Police; and iii) Curriculum Vitae and documentation that accredits the experience and knowledge established as requirements to be a director, indicated in Article 46 of the Law. h) Name or corporate name of the audit firm that will presumably conduct the external audit. This firm must be registered in the register of external auditors kept by the Superintendence; and i) List of managers and their spouses, as well as persons who have authorization to decide on the granting of bonds or other types of guarantees. In the case of Re-guarantors, this refers to persons authorized to re-guarantee or re-guarantee the portfolios of guarantees and bonds granted by the Guarantee Societies. In both cases, they must comply with the same requirements of letter f).

The application and documentation may be presented through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of Article 5 of these Norms will begin to run from the next business day after the application has been presented.

Procedure for authorization to constitute a Guarantee Society or a Re-guarantor Art. 5.- Upon receipt of the authorization application to constitute a Guarantee Society or a Re-guarantor, in accordance with what is established in Article 4 of these Norms, the Superintendence will proceed to verify compliance with the requirements defined in the Law and in these Norms, within a maximum period of thirty days counted from the receipt of the application, for the review of the documentation. If the application is not accompanied by the complete and duly formatted information detailed in Article 4 of these Norms, the Superintendence, due to the lack of necessary requirements, may require the applicants to, within a period of ten business days counted from the day following the notification, present the missing documents, a period that may be extended at the request of the interested parties when there are reasons justifying it. The Superintendence in the same notice will indicate to the applicants that, if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the application, leaving them free to present a new application. If after the analysis of the documentation presented in accordance with Article 4 of these Norms, the Superintendence has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be accredited, the Superintendence may notify the applicants to remedy the deficiencies communicated to them or present additional documentation or information requested by them. The applicants will have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the additional information required by the Superintendence. The Superintendence may, through a reasoned resolution, extend by up to another ten business days, the period indicated in the previous paragraph, when the nature of the observations or deficiencies notified so requires.

Extension period
Art. 6.- Interested applicants wishing to constitute a Guarantee Society or a Re-guarantor may submit to the Superintendence an application for extension of the period indicated in the fifth paragraph of Article 5 of these Norms, before the expiration of said period, stating the grounds on which it is based and proposing, if applicable, the relevant proof. The extension period may not exceed ten business days and will begin from the next business day following the expiration date of the original period.

Suspension of the period
Art. 7.- The thirty-day period indicated in the first paragraph of Article 5 of these Norms, will be suspended for the days that elapse between the notification of the requirement to complete information or documentation referred to in the second and fifth paragraphs of said article, until the observations required by the Superintendence are remedied.

Resolution
Art. 8.- Once the complete and duly formatted documentation has been presented, the Superintendence will resolve within a period of sixty days on the application to constitute a Guarantee Society or a Re-guarantor and will notify within a maximum period of three business days, from the date the resolution is issued. The authorization may only be denied, through a reasoned resolution, when the projected Guarantee Society or Re-guarantor does not comply with what is provided in the Law or does not offer sufficient guarantees for the fulfillment of the corporate object for which it must be created. Art. 9.- If the resolution mentioned in the previous article is favorable, the applicants will have one hundred and eighty days, counted from the date of the respective authorization, to constitute the Guarantee Society or Re-guarantor. If not constituted within the aforementioned period, the resolution will become void.

CHAPTER III
CONSTITUTION OF THE GUARANTEE SOCIETY OR THE RE-GUARANTOR

Art. 10.- Prior to the presentation of the certified copy of the deed of constitution of the Guarantee Society or the Re-guarantor in the Commercial Registry, it must be presented to the Superintendence, so that it may qualify whether the terms stipulated in the bylaws conform to the previously authorized projects and whether the social capital has been effectively integrated in accordance with the authorization. The Superintendence will have a period of ten business days to carry out this verification. If there are differences between the public deed of constitution and the draft thereof authorized by the Superintendence, it must communicate this to the applicant within the period indicated in the previous paragraph, so that the authorizing notary proceeds to make the respective adjustments, and the certified copy of the public deed must be presented again to the Superintendence, within a period of twenty business days from the date of communication of the inconsistencies or differences for verification. Likewise, no Guarantee Society or Re-guarantor may be constituted that does not have the minimum capital fully subscribed and paid. For these purposes, it may not be less than what is established in Article 55 of the Law.

Art. 11.- In the case of the capital for the constitution of the Guarantee Society or the Re-guarantor, capital contributions must be accredited by cash deposit in the Central Bank or another means of proof authorized by the Superintendence.

Art. 12.- If it is determined that there are no inconsistencies between the public deed of constitution and the reviewed draft of the deed, or in the case that the inconsistencies that had been communicated in accordance with what is established in Article 10 have been overcome; the Superintendence will proceed within a period of five business days to extend a certificate signed by the Financial System Superintendence, containing the favorable qualification of said deed, for the purpose that it may be presented in the Commercial Registry for the corresponding inscription.

Procedure if the Commercial Registry makes observations to the Certified Copy of the public deed of constitution, or denies its inscription Art. 13.- When the Commercial Registry notifies the authorizing notary or any other interested person of the denial or the making of observations to the certified copy of the public deed of constitution of the Guarantee Society or the Re-guarantor, that person must, in turn, notify such circumstance to the Superintendence in writing and no later than the next business day after having received the respective notification. In said writing, the interested party or the authorizing notary must relate, at least, the presentation number of the respective instrument in the Commercial Registry and state whether they will file any type of appeal aimed at achieving the inscription of the certified copy or, in its case, the manner in which they intend to remedy the respective observations, as well as the result of such actions, must notify this latter to the Superintendence in the manner provided in the previous paragraph. If for the inscription of the instrument in question it is necessary to modify the conditions under which the Superintendence ordered its favorable qualification, it may, at the written request of the future partners, proceed to modify the certificate related in Article 12 of these Norms. Once the certified copy is inscribed and the bylaws are deposited in the Commercial Registry, the society will send a copy of said instruments to the Superintendence.

Art. 14.- The Legal Personality of the Guarantee Society or the Re-guarantor is perfected through the inscription of the deed in the Commercial Registry; however, the corresponding certified copy may not be presented for inscription in such Registry if it does not carry a reason signed by the Superintendence stating the favorable qualification of said deed.

CHAPTER IV
START OF OPERATIONS

Art. 15.- Within a period of one hundred and eighty days, counted from the constitution of the society, the executives of the Guarantee Society or the Re-guarantor must present the application for start of operations with the manuals of functions and operational procedures with the requirements contained in Annexes No. 2 to No. 3 of these Norms, description of the furniture and equipment to be used, of the surveillance systems and of the insurance to be contracted. Guarantee Societies or Re-guarantors to whom the Superintendence has authorized the start of their operations and do not do so within a period of one year from the authorization, will have said permission revoked. The application and documentation may be presented through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of Article 16 of these Norms will begin to run from the next business day after the application has been presented.

Procedure for authorization of the start of operations Art. 16.- Upon receipt of the application for authorization of the start of operations of the Reciprocal Guarantee Society or the Re-guarantor, in accordance with what is established in Article 15 of these Norms, the Superintendence will proceed to verify compliance with the requirements defined in the Law and these Norms, having a period not greater than fifteen business days. If the application is not accompanied by the complete and duly formatted information detailed in Article 15 of these Norms, the Superintendence, due to the lack of necessary requirements, may require the applicants to, within a period of ten business days counted from the day following the notification, present the missing documents, a period that may be extended at the request of the interested persons, when there are reasons justifying it. The Superintendence in the same notice will indicate to the applicants that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the application, leaving them free to present a new application. If after the analysis of the documentation presented in accordance with Article 15 of these Norms, the Superintendence has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be accredited; the Superintendence may notify the applicants to remedy the deficiencies communicated to them or present additional documentation or information requested by them.

CNBCR-11/2023 NRP-48
TECHNICAL STANDARDS FOR ESTABLISHING AND OPERATING RECIPROCAL GUARANTEE SOCIETIES AND RE-GUARANTORS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 12/14/2023 Validity: 01/02/2024 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

Applicants shall have a maximum period of ten business days, counted from the day following notification, to resolve observations or present the information required by the Superintendent.
The Superintendent may, through a reasoned resolution, extend the period indicated in the preceding clause by up to ten additional business days, when the nature of the observations or deficiencies foreseen so requires.

Extension Period
Art. 17.- Applicants may submit to the Superintendent a request for extension of the period indicated in the fifth clause of Article 16 of these Standards, prior to the expiration of said period, stating the grounds for the request and proposing, if applicable, the relevant evidence. The extension period may not exceed ten business days and shall begin on the business day following the expiration date of the original period.

Suspension of the Period
Art. 18.- The fifteen-business-day period indicated in the first clause of Article 16 of these Standards shall be suspended for the days elapsed between the notification of the requirement to complete information or documentation referred to in the second and fifth clauses of said Article, until the interested parties resolve the observations required by the Superintendent.

Resolution
Art. 19.- Once the complete documentation has been presented in due form, complying with all requirements established by the Law and these Standards, and after verifying its internal controls and procedures, and after the corporate deed has been registered in the Commercial Registry, the Superintendent shall certify that the Guarantee Society or the Re-guarantor is authorized to commence its operations with the public. The Superintendent shall notify the certification to the Guarantee Society or the Re-guarantor within a maximum period of three business days from the date the resolution is issued. This certification shall be valid for a period of one hundred eighty days from its issuance.

Art. 20.- The Superintendent's certification, indicating that the Guarantee Society or the Re-guarantor is authorized to commence operations, shall contain its name, data regarding the granting and registration of the corporate deed, the amount of the minimum paid-up social capital, and the names of its directors and administrators. This certification shall be published, at the expense of the Guarantee Society or the Re-guarantor, only once, in the Official Diary and in two national circulation printed media or another digital publication platform with greater or equal coverage, or on its website, in accordance with what is established in the current legal framework.

Art. 21.- The Guarantee Society or the Re-guarantor, prior to the start of its operations, must inform the Superintendent at least thirty days in advance of the following:
a) Start date of operations and service hours; b) List of the institution's executive personnel; and c) Tax Identification Number (TIN) of the institution.

CHAPTER V
OTHER PROVISIONS AND VALIDITY

Art. 22.- No later than thirty days after taking office and in the month of January of each year, the directors and managers of the Guarantee Societies or Re-guarantors must declare under oath to the Superintendent that they are not disqualified from holding such positions and inform the institution no later than the next business day if such disqualification arises subsequently. When any of the causes of disqualification mentioned in Article 47 of the Law exists or arises, the management of the director or official in question shall terminate, and the substitute shall be elected in accordance with the Law.

Art. 23.- Any official who has the disqualifications mentioned must cease the exercise of their functions, under penalty of the sanctions established by the laws. The Audit Committee must ensure compliance with the provisions of the Law and, in case of non-compliance by the official, must communicate this to the Superintendent and notify the Attorney General's Office. Employees of the Guarantee Society or the Re-guarantor may not apply for executive positions within it.

Sanctions
Art. 24.- Non-compliance with the provisions contained in these Standards shall be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Repeal
Art. 25.-
Reciprocal Guarantee Societies and Re-guarantors of Guarantee Societies -01), approved by the Board of Directors of the Superintendent of the Financial System in Session No. CD-42/2003 of October 8, 2003, whose Organic Law was repealed by Legislative Decree No. 592 containing the Law on Supervision and Regulation of the Financial System, published in Official Diary No. 23, Volume No. 390, dated February 2, 2011.

Transitory
Art. 26.- Applications, procedures, and information submitted in accordance with what is established in -01), and which were pending at the time these Standards enter into force, shall continue and be concluded in accordance with the regulations under which they began.

Unforeseen Aspects
Art. 27.- Aspects not provided for in the regulatory matter in these Standards shall be resolved by the Central Bank through its Standards Committee.

Validity
Art. 28.- These Standards shall enter into force as of January 2, 2024.

CNBCR-11/2023
NRP-48
TECHNICAL STANDARDS FOR ESTABLISHING AND OPERATING RECIPROCAL GUARANTEE SOCIETIES AND RE-GUARANTORS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 12/14/2023 Validity: 01/02/2024 Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv

Annex No. 1

MODEL OF SWORN DECLARATION FOR DIRECTORS OF RECIPROCAL GUARANTEE SOCIETIES AND RE-GUARANTORS OF RECIPROCAL GUARANTEE SOCIETIES SUBJECT TO THE LAW OF THE RECIPROCAL GUARANTEE SYSTEM FOR MICRO, SMALL, AND MEDIUM RURAL AND URBAN ENTERPRISES

To the Superintendent of the Financial System
Present.

I, ________________________________, aged ______, profession or trade _______________________, nationality _________________________, residing at ___________________________, with Unique Identity Document No. _______________, in view of having been proposed to be part of the Governing Body 1 of the Reciprocal Guarantee Society/Re-guarantor of Reciprocal Guarantee Society _____________________, declare under oath that:

I am not a director, official, or employee of another Reciprocal Guarantee Society or Re-guarantor of Reciprocal Guarantee Society.
I am not in a state of bankruptcy, suspension of payments, or creditors' agreement, nor have I been judicially qualified as responsible for a fraudulent or negligent bankruptcy.
I am not a debtor in the Salvadoran Financial System of credits to which provisions or cleaning reserves of 50% or more of the balance have been constituted, in the last ten years prior to assuming the present director position; nor am I the holder of shares in other societies in percentages equal to or greater than 25%. 2
For a better analysis of my debtor situation, I detail below the credits I currently have in the System:
Credit No. Amount Granted Financial System Institution
I am the holder of 25% or more of the shares of other societies, but these do not have credits in the Salvadoran Financial System to which provisions or cleaning reserves of 50% or more of the balance have been constituted, in the last ten years prior to assuming the current director position of the present Reciprocal Guarantee Society or Re-guarantor of Reciprocal Guarantee Society.
3

1 According to the case, place the position of General Managers, Managers, and officials who have authorization to decide on the granting of guarantees, in accordance with what is established in Art. 47 Inc. 3rd of the Law, according to.
2 If you find yourself in the present case, it will not be necessary to include item four in this sworn declaration.
3 If you find yourself in the present case, you must omit from item three the holding of 25% or more of shares mentioned at the end of the cited item.

Annex No. 1
For a better analysis, I detail the companies in which I hold 25% or more of the shares:

I have not been a director, official, or administrator of a financial system institution, in which administrative responsibility has been demonstrated for said entity, from the validity of the Law on Privatization of Commercial Banks and Savings and Loan Associations, to have incurred patrimonial deficiencies of 20% or more of the minimum required by the Law, in which it has received contributions from the State, the Deposit Guarantee Institute, or a stabilization fund for its cleaning, or that has been intervened by the competent supervisory body.
To confirm what is stated, I detail below the entities in which I was administrator, director, or official and the period in which I held such positions:
Financial Institution Position Period
I have never been convicted of crimes or for having participated in the commission of any intentional crime.
I have not participated directly or indirectly in activities related to drug trafficking, related crimes, and those typified in the Law Against Money and Asset Laundering.
I have not been administratively or judicially sanctioned for participation in serious infractions of laws and norms of a financial nature, especially for the collection of public funds without authorization.
I am not holding any of the following positions: President or Vice President of the Republic, Minister or Vice Minister of State, Deputy, Magistrate of the Supreme Court of Justice, Chamber Magistrate, or President of any autonomous institution.
In addition, for the purposes of the second clause of Article 47 of the Law of the Reciprocal Guarantee System for Micro, Small, and Medium Rural and Urban Enterprise, the name of my spouse is: _________________________________________________________________ Signature ________________________ Date_________________

In any computing system designed to operate the transactions of Reciprocal Guarantee Societies or Re-guarantors, such as guarantees, re-guarantees, accounting, cash operations, etc., it is a requirement that the following information be presented, at a minimum, to the Superintendent of the Financial System:
a) General description of the system and main processes; b) Relational design of files; c) Description and detailed design of files and fields; d) User manual for the systems of:
i. Member identification number, in the case of Guarantee Societies;
ii. Identification number of the Guarantee Society being re-guaranteed, in the case of Re-guarantors;
iii. Accounting;
iv. Cash;
v. Guarantees;
vi. Re-guarantees; and
vii. Others.
e) List of users who will have access, indicating the user's hierarchical level and the type of access they will have to each of the system options; f) Detail of the reports generated by the system, specifying for each the frequency with which it is generated, the number of copies, and how they are distributed; and g) The description of procedures to test and approve programs as well as the responsibilities of these activities, when data processing systems are being developed.

In addition, the following information must be added:
a) Characteristics of central and peripheral equipment; b) Detailed characteristics of development tools; c) Copy of the guarantee or maintenance contract for central and peripheral equipment; d) Copy of the guarantee or maintenance contract for programs, if these have been contracted to consultants; e) Procedures to perform information backups and restoration; f) Contingency plans in case of information loss and/or failures in computing equipment; g) Procedure for handling access keys; h) Hygiene standards for computing equipment and its peripherals; i) Authorized standards for system maintenance; and j) Graphical scheme on the interrelation and data communication to the central system and its peripheral systems (In the case that the society has agencies).

MINIMUM REQUIREMENTS FOR FUNCTION AND OPERATIONAL PROCEDURES MANUALS

Function Manual
It must contain the organizational chart and describe the functions of each of its components, including those of temporary units, such as committees, of which it must be exposed how they are integrated. These manuals must be authorized by the Board of Directors of the Reciprocal Guarantee Society or the Re-guarantor. The organization plan must contain the adequate segregation of operations and the functions necessary for the control and supervision of transactions. For such purposes, it is necessary to create at minimum the following units or positions:
a) Cash; b) Granting, processing, and control of guarantees or re-guarantees; c) Custody of documents and securities; d) Informatics; e) Accounting; f) Internal Audit; g) Qualification of the guarantee portfolio; h) Control of extraordinary assets; i) Technical Provisions Fund; and j) Training, consulting, and financial advisory. It must also include a section referring to the administration of the manual, which must have the modification procedures, the subjects who can propose modifications, and those authorized to keep them in custody, in the case of those authorized by the Board of Directors of the Society.
Operational Procedures Manual
This manual must describe the internal control procedures (administrative and accounting) for each of the operations that the Reciprocal Guarantee Society or the Re-guarantor must perform. Similarly to other manuals, these must be authorized by the Board of Directors of the Society. Internal control must be described by transaction cycles, preferably using the flowchart technique combined with narratives, which must be presented in computer applications or some other program. Also, a section referring to the administration of the manual must be included, which must have the procedures to effect modifications, the subjects or units that can propose them, the unit in charge of analyzing, correcting, and submitting them for authorization, and those authorized to keep the manuals in custody, once they have been approved by the Board of Directors of the Guarantee Society or Re-guarantor.

2.1. Main Transaction Cycles
The cycles considered mandatory, depending on the operations performed by the Guarantee Society and the Re-guarantor, are the following:
a) Cycles for the granting of guarantees.
It must comprise the following stages: Member's request for the granting of the bond, approval by a committee or the Board of Directors, percentage guaranteed by the Guarantee Society, amount of the guaranteed loan, period covered by the guarantee, etc.; b) Investment Cycle in financial instruments. It must comprise the following stages: Placement of funds in a financial institution or purchase of a financial instrument, sale and redemption, quantity and class of investment, authorization to make the investment, etc.; c) Re-guarantee Cycle. It must comprise the following stages: Request from the Reciprocal Guarantee Society for the granting of the re-guarantee, approval by a committee or Board of Directors, issuance of the contract which must include the percentage and amount re-guaranteed, period of the re-guarantee, etc.; and d) Other operation cycles. Similarly to the previous cycles, it must include the main stages they consist of. Each of the cycles described above must comprise the following aspects:
a) Adequate segregation of functions; b) Description of the distribution of the original and copies of accounting documents; c) Timeliness in which transactions or accounting operations will be registered; d) Quantification of transactions and operations; e) Systems of authorization and approval of transactions and operations; f) Informatics procedures (must describe generally the activities that will be carried out through computers, indicating the base documents to introduce information into the system, the authorizations to access the system, and the reports that will be issued); and g) The form of organization of document files.

2.2. Accounting Systems and Procedures
In addition to the cycles described above, procedures must be designed on the following aspects:
a) The way in which accounting operations will be recorded, in each of the legalized books and generally in the auxiliary accounting records;

b) The manner in which accounting vouchers are related to entries in the books and previous records; c) The authorization processes of accounting vouchers, generated by each operational department and by the accounting department; and d) The calculation and accounting of interest and commissions receivable and payable.

2.3. Information Systems
This section of the manual must deal with the data processing systems to be used in the different activities of an economic nature and must deal at minimum with the applications in the granting of bonds, investment portfolio, accounting, and cash operations. In each of these programs, at least the following must be described:
a) General description of the system and main processes; b) Relational design of files; c) Description and detailed design of files and fields; d) User manual for the systems of:
− Unique client identification number;
− Accounting;
− Cash; and
− Investments. e) List of users who will have access, indicating the user's hierarchical level and the type of access they will have to each of the options; f) Detail of the reports generated by the system, specifying for each the frequency with which they are generated, the number of copies, how they are generated, and to whom they are distributed; and g) If the systems are being developed, describe the procedure to test and approve the programs as well as the responsibilities of these activities.

In addition, the following information must be added:
a) Characteristics of central and peripheral equipment; b) Detailed characteristics of development tools; c) Copy of the guarantee or maintenance contract for central and peripheral equipment; d) Copy of the guarantee or maintenance contract for programs, if these have been contracted to consultants; e) Description of procedures to perform information backups and restoration; f) Contingency plan in case of information loss and/or failures in computing equipment; g) Procedure for handling access keys; h) Hygiene standards for computing equipment and its peripherals; i) Authorized standards for system maintenance; and

j) Graphical scheme on the interrelation and data communication of the central system and its peripheral systems

2.4. Forms to be Used
This section must contain the different forms that the Guarantee Society will use to contract with Participating Members and Re-guarantors to contract with Guarantee Societies, to attend their transactions, and for the registration of accounting operations, but especially related to:
a) Forms of requests, guarantee or re-guarantee contracts, securities, and other documents that will be used in the Society's operations; b) Models of the legalized accounting books that will be used; and c) Forms of accounting documents for income (credit notes, receipts, cash summaries), expenses (checks, vouchers, etc.), and journal entries.

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