Technical Standards for the Authorization and Establishment of Obligations of the Representatives of the Holders of Securities of a Securitization Fund — BCR — SV

CNBCR-11/2023
NDMC-30
TECHNICAL STANDARDS FOR THE AUTHORIZATION AND ESTABLISHMENT OF THE OBLIGATIONS OF THE REPRESENTATIVES OF THE HOLDERS OF SECURITIES OF A SECURITIZATION FUND Approval: 14/12/2023 Validity: 02/01/2024 THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING:

I. That Article 3 of the Asset Securitization Law establishes that the Superintendence is the competent administrative authority for the execution and application of said Law, with the responsibility to monitor compliance with its provisions, the supervision of Securitizers, their operations, and the entities participating in the securitization process.

II. That Article 80 of the Asset Securitization Law establishes that each Securitization Fund shall have a Representative of Securities Holders, who shall sign the Securitization Contract with the Securitizer and shall be responsible for monitoring that the Securitization Fund is properly integrated as established in this Law, in the Securitization Contract, and in what is established in the first General Meeting of Securities Holders. Likewise, the obligations of the Representative of Securities Holders are established.

III. That Article 83, first paragraph, of the Asset Securitization Law states that in addition to banks and brokerage firms, other legal entities authorized by the Superintendence of the Financial System may serve as Representatives of Securities Holders.

IV. That Article 5, letter a), of the Law on Supervision and Regulation of the Financial System establishes that it is the responsibility of the Superintendence of the Financial System to authorize, suspend, or cancel the public offering of securities and the operation of persons or transactions carried out in the stock market, in accordance with the applicable provisions.

V. That Article 7, letter u), of the Law on Supervision and Regulation of the Financial System establishes that other transactions specified by laws are subject to the provisions of the Law on Supervision and Regulation of the Financial System and therefore to the supervision of the Superintendence of the Financial System.

VI. That Article 99, letter e), of the Law on Supervision and Regulation of the Financial System regulates that it is the responsibility of the Committee of Standards of the Central Reserve Bank of El Salvador to establish technical criteria to determine acts and transactions considered contrary to stock market practices or sound market practices.

VII. That in accordance with Article 101, fourth paragraph, of the Law on Supervision and Regulation of the Financial System, the powers to approve, modify, and repeal technical standards that must be complied with by members of the financial system and other supervised entities are transferred to the Central Reserve Bank of El Salvador.

THEREFORE,

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

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE AUTHORIZATION AND ESTABLISHMENT OF THE OBLIGATIONS OF THE REPRESENTATIVES OF THE HOLDERS OF SECURITIES OF A SECURITIZATION FUND

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to develop the minimum requirements that banks and Brokerage Firms must attend to when acting as Representatives of Securities Holders of a particular Securitization Fund; likewise, they establish the requirements and procedures to be followed by other legal entities to be authorized by the Superintendence of the Financial System as Representatives of Securities Holders and the particular requirements they must fulfill to act as Representatives of Securities Holders of a specific Securitization Fund.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are:
a) Banks acting as Representatives of Securities Holders of a Securitization Fund; b) Brokerage Firms acting as Representatives of Securities Holders of a Securitization Fund; and c) Other legal entities interested in being authorized by the Superintendence of the Financial System to act as Representatives of Securities Holders of a Securitization Fund.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Central Bank: Central Reserve Bank of El Salvador; b) Brokerage Firm: Brokerage Firms, authorized and registered with the Superintendence of the Financial System; c) Fund(s): Securitization Funds; d) Securitization Law: Asset Securitization Law; e) Originator: Person owning assets susceptible to securitization in accordance with the Asset Securitization Law; f) Registry: Public Stock Registry; g) Representative of Securities Holders: Legal entity responsible for representing the owners of the securities of each Fund as established by Law; h) Superintendence: Superintendence of the Financial System; and i) Securitizer: Securitization Society registered with the Superintendence of the Financial System.

CHAPTER II
AUTHORIZATION REQUIREMENTS TO ACT AS REPRESENTATIVE OF SECURITIES HOLDERS, WHEN NOT A BANK OR BROKERAGE FIRM

Nature and Share Capital
Art. 4.- Any legal entity seeking authorization from the Superintendence to act as a Representative of Securities Holders must be incorporated as an Anonymous Society (Sociedad Anónima) and must have, at minimum, the share capital required for Brokerage Firms as established in Article 56 of the Securities Market Law, which must be fully subscribed and paid and shall be subject to variation in accordance with Article 98 of the aforementioned Law.

Regarding the Application and Its Content
Art. 5.- Legal entities seeking authorization to act as Representatives of Securities Holders must apply to the Superintendence and, for this purpose, must present the following:
a) Application signed by its Legal Representative, relating and attaching a notarially certified copy of the documents legitimizing its legal personality. In the case that the application is not presented to the Superintendence by the applicant, the signature on the application must be authenticated by a notary;

b) List of its shareholders, partners, or associates, as applicable, which must contain, at least, the full name, age, nationality, profession or occupation, domicile, expression of the type and number of personal identity document, Tax Identification Number, if applicable, percentage or amount of each shareholder's equity participation, and Registry of Taxpayers Number, the latter only if they are registered as such in the corresponding registry. The list must be signed by the applicant; c) The amount of subscribed and paid share capital of the society seeking authorization as a Representative of Securities Holders; d) Corporate name and trade name; e) Full name, age, nationality, profession or occupation, domicile, and expression of the type and number of personal identity document, of each of its directors, managers, and administrators; and f) Address, telephone, and email, as well as the persons commissioned to receive notifications or any other documentation.

Documents to be Attached to the Application
Art. 6.- The following documentation must be attached to the aforementioned application:
a) Legible notarially certified copy of the testimony of the public deed of incorporation, its statutes, and the corresponding modifications of both, if applicable, duly registered or deposited, as applicable, in the Commerce Registry. The purpose stated in the social pact must be compatible with the function of Representative of Securities Holders; b) Legible and certified copy of the Unique Identity Document, legible copy of the Tax Identification Number (NIT) which shall be in accordance with what is established by the Tax Administration, and legible and certified copy of the Registry of Taxpayers Number, if registered as such in the respective registry, of the directors, managers, and administrators, including, in addition, their curriculum vitae; c) At least two bank references or two credit references issued by institutions supervised or regulated by the office exercising state vigilance, when the references are issued abroad; d) When any of the certificates related in the previous letter have been issued abroad, applicants must also attach the documents by which it is proven that the person or entity that issued said certificate is legally authorized to operate in the corresponding country; e) In the case that one or more shareholders are legal entities and have a participation, either directly or through an intermediary, of more than fifty percent in the share capital, they must also attach the following documents, where applicable:
i. Notarially certified copy of their current Social Pact and the latest credential of the election of their administration body; and
ii. Certification of the list of shareholders holding twenty-five percent or more of their share capital. Such certification must be signed by whoever has the legal representation of the applicant and must be authenticated by a notary.
f) Legible notarially certified copy of the agreement appointing the External Auditor, who must be registered in the Special Registry of External Auditors maintained by the Superintendence; g) Legible, notarially certified copy of the point in the minutes by which the appointment of the General Manager or Executive Director was made, duly registered in the Commerce Registry; h) Legible copy of the Tax Identification Number (NIT) which shall be in accordance with what is established by the Tax Administration, and notarially certified photocopy of the Registry of Taxpayers Number of the applicant; i) Organizational chart, indicating the names of administrators, managers, and directors, with expression of their positions and support units; j) Appointment of personnel designated to exercise the functions of Representative of Securities Holders, indicating their experience in financial matters, including the sworn declaration of the appointees, stating that they have no conflicts of interest with the Fund, the Originator, or the respective Securitizer; and k) Description of internal control procedures that allow adequate separation or division of activities for the development of the duties corresponding to the Representative of Securities Holders. The documentation indicated in this article must be presented for each of the securitization processes in which it is intended to act as a Representative of Securities Holders.

Requirements to be Director, Manager, or Administrator Art. 7.- The administration of the applying society must be under the regime of a board of directors, and its members and administrators must meet the following requirements:
a) Be Salvadoran domiciled in the country, and in the case of foreigners, prove their physical and permanent residence in the country; b) Be over twenty-five years of age; and c) Be of recognized honorability and financial and administrative competence.

These requirements must be met while the society is authorized as a Representative of Securities Holders.

Ineligibility to be Director, Administrator, or Manager Art. 8.- Legal entities specified in Article 84 of the Securitization Law are ineligible to be Representatives of Securities Holders.
For the purposes of proving the above, the applying society must present to the Superintendence a Sworn Declaration stating that they are not included within the aforementioned ineligibilities, a circumstance that must be accredited with respect to each of the Securitization processes in which they intend to act as Representatives of Securities Holders issued against the same.

Procedure for Application for Authorization of Representative of Securities Holders Art. 9.- Upon receiving the application for authorization to act as a Representative of Securities Holders in accordance with Articles 5 and 6 of these Standards, the Superintendence will proceed to verify compliance with the requirements defined in the Securitization Law and these Standards, having a period of no more than fifteen business days for its review. If the application is not accompanied by the complete and proper information detailed in Articles 5 and 6 of these Standards, the Superintendence, due to the lack of necessary requirements, may request said persons to present the missing documents within a period of ten business days counted from the day following notification, a period that may be extended at the request of the interested persons when there are reasons justifying such extension. The Superintendence, in the same notice, will indicate to the legal entities interested in acting as Representatives of Securities Holders 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 submit a new application. If after the analysis of the documentation presented in accordance with Articles 5 and 6 of these Standards, 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 will notify said persons to rectify the communicated deficiencies or present additional documentation or information requested.

Legal entities interested in acting as Representatives of Securities Holders will have a maximum period of ten business days counted from the day following notification, to resolve the observations or present the additional information requested 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 notified deficiencies so requires.

Extension Period
Art. 10.- Legal entities interested in acting as Representatives of Securities Holders may submit to the Superintendence a request for extension of the period indicated in the fifth paragraph of Article 9 of these Standards, before the expiration of said period, expressing the grounds for the request and proposing, if applicable, the relevant proof. The extension period may not exceed ten business days and will begin from the business day following the expiration date of the original period.

Suspension of Period
Art. 11.- The fifteen business day period indicated in the first paragraph of Article 9 of these Standards will be suspended for the days between the notification of the request for information or documentation referred to in the second and fifth paragraphs of said Article, until the observations requested by the Superintendence are resolved.

Once the complete and proper documentation is presented, the Superintendence will proceed to respond whether the application is authorized or denied, which it will notify within a maximum period of three business days from the date the resolution is issued.

CHAPTER III
BANKS AND BROKERAGE FIRMS ACTING AS REPRESENTATIVES OF SECURITIES HOLDERS

Art. 12.- For a bank or a Brokerage Firm to act as a Representative of Securities Holders, they must be incorporated in accordance with the laws of the Republic and be domiciled in El Salvador.
Art. 13.- The bank or Brokerage Firm must inform that it will act as a Representative of Securities Holders, demonstrating that it is not within the ineligibilities specified in Article 8 of these Standards. The ineligibilities will apply to each of the Securitization processes in which it intends to act as a Representative of Securities Holders. Art. 14.- The bank or Brokerage Firm must appoint the personnel designated to exercise the functions of Representative of Securities Holders, including the Sworn Declaration of the appointees, stating that they have no conflicts of interest with the Fund, the Originator, or the respective Securitizer. Art. 15.- The bank or Brokerage Firm must maintain internal control procedures that allow adequate separation or division of activities for the development of the duties corresponding to the Representative of Securities Holders.

CHAPTER IV
OBLIGATIONS OF THE REPRESENTATIVE OF SECURITIES HOLDERS

Art. 16.- Any person acting as a Representative of Securities Holders must attend to at least the following obligations:
a) Exercise all actions or rights corresponding to the group of Securities Holders to claim payment of the rights granted in the acquired securities, as well as those required for the performance of the functions referred to the representation of Securities Holders and to execute necessary conservatory acts; b) Convene and preside over the General Meeting of Securities Holders and execute its decisions; c) Periodically and timely obtain from the administrators of the Securitizer, data regarding the financial situation of the same and the Fund, and any other data considered necessary for the exercise of their functions; d) Grant, on behalf of the group of Securities Holders, the documents or contracts that must be executed; e) Issue certification of the integration of the Fund; f) Give approval for the substitution of assets, in accordance with what is agreed in the Securitization Contract; g) Others established legally and normatively, as well as those defined in the respective Securitization Contract.

Conduct Obligations of the Representative of Securities Holders Art. 17.- Any person acting as a Representative of Securities Holders must adopt, in the exercise of their functions, at least the following conduct norms:

a) Refrain from carrying out operations in which there is a real or potential conflict of interest that opposes the interest of the Securities Holders; b) Maintain confidentiality regarding confidential information obtained in the course of their function as a Representative of Securities Holders, insofar as it is not indispensable for the protection of the interests of their represented parties; c) Refrain from giving any preferential treatment to a holder or group of holders; d) Refrain from any conduct or circumstance that, in accordance with applicable legislation, undermines the proper exercise of their functions as a Representative of Securities Holders.

Presentation of Information
Art. 18.- Any photocopy presented to the Superintendence in compliance with this regulation must be certified by a Salvadoran notary. Similarly, signatures appearing on all types of documentation, when applicable, must be legalized by a Salvadoran notary. In the case of photocopies corresponding to the Tax Identification Number (NIT) which shall be in accordance with what is established by the Tax Administration, notarized certification is not required. Notwithstanding the above, if the presented documentation originates from abroad, both the photocopies and the signatures appearing therein may be authenticated or certified, as applicable, by a foreign notary or official, in which case, the corresponding procedure for the legalization of signatures must be followed. Art. 19.- The Superintendence may request additional information or documentation to that indicated in this standard, when the documentation or information presented is not sufficient to prove the facts or information intended to be accredited.

CHAPTER V
OTHER PROVISIONS AND VALIDITY

Sanctions
Art. 20.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

CNBCR-11/2023
NDMC-30
TECHNICAL STANDARDS FOR THE AUTHORIZATION AND ESTABLISHMENT OF THE OBLIGATIONS OF THE REPRESENTATIVES OF THE SECURITY HOLDERS OF A SECURITIZATION FUND Approval: 12/14/2023 Effective Date: 01/02/2024 Repeal Art. 21.- These Standards shall repeal the Standards for Representative of the Security Holders issued for a Securitization Fund RCTG-7/2010), approved by the Board of Directors of the Superintendence of Securities in Session No. CD6/2010 on March 25, 2010, whose Organic Law was repealed by Legislative Decree No. 592 containing the Law of Supervision and Regulation of the Financial System, published in the Official Gazette No. 23, Volume No. 390, dated February 2, 2011. Transitory Art. 22.- Applications, procedures, and information submitted in accordance with what was established in RCTG-7/2010), and which were pending at the time these Standards enter into force, shall be continued and concluded in accordance with the regulations under which they began. Unforeseen Aspects Art. 23.- Unforeseen aspects in regulatory matters in these Standards shall be resolved by the Central Bank through its Standards Committee. Effective Date Art. 24.- These Standards shall enter into force as of January 2, 2024.

Lineage: No known changes