Technical Standards for the Authorization and Registration of Investment Administrators of Investment Funds

NDMC-03
TECHNICAL STANDARDS FOR THE AUTHORIZATION AND REGISTRATION OF INVESTMENT ADMINISTRATORS OF INVESTMENT FUNDS Approval: 15/07/2015 Validity: 31/07/2015

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

CONSIDERING:
I. That Article 5 of the Investment Funds Law establishes that the Superintendency of the Financial System, within its scope of competence, is the administrative authority responsible for supervising Managers, their operations, and other participants regulated by the same, including the supervision of those in charge of administering the investments of Investment Funds.
II. That Article 6 of the Investment Funds Law establishes that it is the responsibility of the Central Bank of Reserve of El Salvador, within its scope of competence, to issue the necessary technical standards to allow the application of said Law.
III. That Article 26 of the Investment Funds Law establishes that those in charge of administering the investments of Investment Funds must be authorized by the Superintendency of the Financial System, in accordance with the Technical Standards issued by the Central Bank of Reserve of El Salvador for such effect.
IV. That Article 5, subsection a), of the Law on Supervision and Regulation of the Financial System establishes that it is the responsibility of the Superintendency of the Financial System to authorize, suspend, or cancel the operation of persons or operations carried out in the stock market, in accordance with the applicable provisions.
V. That Article 35 of the Law on Supervision and Regulation of the Financial System establishes that directors, managers, and other officials holding positions of direction or administration in the members of the financial system must conduct their business, acts, and operations complying with the highest ethical standards of conduct and acting with the due diligence of a good merchant in their own business.
VI. That Article 78, subsection c), of the Law on Supervision and Regulation of the Financial System establishes that it is the responsibility of the Superintendency of the Financial System to organize and keep updated the records relating to the administrators of the members of the financial system, in this case, those in charge of administering the investments of Investment Funds.

THEREFORE, by 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:

NDMC-03
TECHNICAL STANDARDS FOR THE AUTHORIZATION AND REGISTRATION OF INVESTMENT ADMINISTRATORS OF INVESTMENT FUNDS Approval: 15/07/2015 Validity: 31/07/2015

TECHNICAL STANDARDS FOR THE AUTHORIZATION AND REGISTRATION OF INVESTMENT ADMINISTRATORS OF INVESTMENT FUNDS

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to establish the requirements that natural persons working for an Investment Fund Manager must meet, in order to act as investment administrators of Investment Funds, in order to be authorized and registered in the corresponding Registry of the Superintendency of the Financial System.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are: (1) a) Natural persons seeking authorization to act as investment administrators of Investment Funds, and b) Investment Fund Managers authorized by the Superintendency of the Financial System.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning: (1) a) Investment Administrator: Natural person who is employed by an Investment Fund Manager for the purpose of managing the decision-making and execution of investments made with resources from Investment Funds, in accordance with the Internal Regulations and the investment policy of the Investment Fund. This category includes the Investment Manager or their substitute, according to the organizational structure of the Manager; b) Fund: Investment Fund; c) Manager: Investment Fund Management Company; d) Registry: Public Stock Registry of the Superintendency of the Financial System; and e) Superintendency: Superintendency of the Financial System.

CHAPTER II
AUTHORIZATION AND REGISTRATION OF INVESTMENT ADMINISTRATORS OF INVESTMENT FUNDS IN THE PUBLIC REGISTRY OF THE SUPERINTENDENCY OF THE FINANCIAL SYSTEM

Regarding Investment Administrators
Art. 4.- For a natural person to act as an administrator of the investments of the Fund, they must work for a Manager registered with the Superintendency, be previously authorized by the Superintendency to perform the function of investment administrator, and be registered in the Registry.

Art. 5.- Investment administrators will be designated by the Manager and must act with diligence, skill, and reasonable care, to ensure compliance with the investment policy of the Fund for which they administer investments, without prejudice to the Manager's responsibility for the administration of the Funds. No investment administrator may have a labor contract with two or more Managers simultaneously.

Requirements for Investment Administrators
Art. 6.- The Manager, for the purpose of requesting authorization from the Superintendency for the Fund's investment administrator and their registration in the corresponding Registry, must verify that the person for whom authorization is requested meets at least the following requirements:
a) Having signed a labor contract with the Manager; b) Holding a university degree related to the business of investment administration, registered or incorporated in the Ministry of Education for degrees obtained in the country. If the degree was obtained abroad, it must comply with what is established in subsection c) of Article 18 of these Standards. If the university degree is different from the business of investment administration, at least three years of experience in the business of investment administration must be accredited; c) Possessing knowledge and mastery of topics related to investment management and the field of specialization of the nature of the Fund to be administered; d) Not having been judicially qualified as responsible for a negligent or fraudulent bankruptcy; e) Not having been convicted by a final judgment in the country or abroad for having committed or participated fraudulently in the commission of any crime; f) Not having been judicially convicted for their participation in violations of laws and regulations of a financial nature; and g) Not having been judicially proven to have participated in activities related to drug trafficking and related crimes, and with money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction, in the country or abroad. (2) The requirements of subsections d), e), f), and g) shall also apply to the spouse of investment administrators.

The Manager shall be responsible for verifying prior to the start of the contractual relationship and during its validity, that the person for whom authorization is requested is competent to perform the function of investment administrator of the Fund and meets the requirements established in this provision. In case the person does not meet any requirement, the Manager must justify it.

Content of the Authorization and Registration Request for Investment Administrators Art. 7.- For the authorization and registry entry in the Superintendency of persons requesting authorization to act as investment administrators, it is necessary to present to the Superintendency a request signed by the legal representative or attorney-in-fact of the interested Manager, which must contain at least the following information:
a) Full name, age, nationality, profession or occupation, address, type and number of personal identification document, and Tax Identification Number of the potential investment administrator; b) Date on which the labor relationship with the Manager began; c) Evaluation and justification by the Manager regarding the person for whom authorization is requested, indicating their competence to perform the function of investment administration; and d) Type of Funds and assets that will be administered by the person for whom authorization is requested, for which they have accredited knowledge and experience.

Documents attached to the request
Art. 8.- The authorization and registration request must contain the following documentation, which must be certified by a Salvadoran notary, where applicable: (1) a) Legible copies of the personal identification document and the Tax Identification Number; b) Curriculum Vitae; c) Legible copy of documents accrediting their academic degree or level of education; d) Copy of the labor contract with the Manager; and e) Sworn statement, which must be authenticated by a notary and prepared in accordance with the format established in Annex No. 1 of these Standards. The request and documentation may be submitted through the means made available by the Superintendency, which may be electronic. (1) In any case, the time limit referred to in the first paragraph of Article 9 of these Standards shall begin to run from the next business day after the request has been submitted. (1)

Procedure for Authorization of the Investment Administrator in the Registry of the Superintendency (1) Art. 9.- Upon receiving the request for authorization for registry entry, in accordance with Articles 7 and 8 of these Standards, the Superintendency will proceed to verify compliance with the requirements defined by the Law and these Standards, having a time limit of up to ten business days for the authorization or denial of the Investment Administrator. (1) If the request is not accompanied by complete and proper information, as detailed in Articles 7 and 8 of these Standards, the Superintendency, due to the lack of necessary requirements, may require the Manager to submit, within a time limit of ten business days counted from the day following notification, the missing documents, a time limit that may be extended at the request of said entity when there are reasons justifying such extension. (1) The Superintendency, in the same notice, will indicate to the Manager that if they do not complete the information within the aforementioned time limit, it will proceed without further procedure to archive the request, leaving them free to submit a new request. (1) If, after analyzing the documentation presented in accordance with Articles 7 and 8 of these Standards, the Superintendency has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be accredited according to the type of registration process and what is stipulated in Article 26 of the Investment Funds Law; the Superintendency will notify the respective Manager once to rectify the deficiencies communicated or submit additional documentation or information requested. (1) The Manager will have a maximum time limit of ten business days counted from the day following notification, to resolve the observations or submit the additional information requested by the Superintendency. (1) The Superintendency may, through a reasoned resolution, extend by up to another ten business days, the time limit indicated in the previous paragraph, when the nature of the observations or notified deficiencies so requires. (1)

Extension Time Limit (1)
Art. 9-A.- The Manager may submit to the Superintendency a request for extension of the time limit indicated in the fifth paragraph of Article 9 of these Standards, before the expiration of said time limit, stating the grounds for the request and proposing, if applicable, the relevant evidence. (1) The extension time limit may not exceed ten business days and will begin from the next business day after the expiration date of the original time limit. (1)

Suspension of Time Limit (1)
Art. 9-B.- The ten-business-day time limit indicated in the first paragraph of Article 9 of these Standards will be suspended for the days that elapse 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 Superintendency are resolved. (1) Once the documents are submitted in proper form, the Superintendency will proceed to notify the resolution on the request for authorization of the Investment Administrator in the Registry of the Superintendency. (1)

Art. 10.- The Superintendency will proceed to notify the Manager of the resolution authorizing or denying the request, within a maximum time limit of three business days from the day the resolution is issued. (1) In the case where the Superintendency issues a favorable resolution for the authorization of the investment administrator, the Registry Entry will be issued in the corresponding Registry of the Superintendency and notified to the requesting entity within a maximum time limit of three business days, from the date the registry entry was issued. (1).

Validity of Authorization
Art. 11.- The authorization issued by the Superintendency to operate as an investment administrator will be for the duration of the labor relationship with the Manager. Notwithstanding the foregoing, such authorization may be suspended or revoked for non-compliance with the corresponding legal and regulatory provisions.

Archiving of Proceedings Initiated by Authorization Request Art. 12.- The Superintendency will proceed without further procedure to archive the proceedings initiated in the authorization and registration procedure detailed in these Standards, when the following situations occur:
a) The Manager has not submitted the required information within the stipulated time limit as established in Article 9 of these Standards; and b) The Manager submits a letter to the Superintendency, informing the desire to withdraw the request, at any time.
In any case, the interested parties will maintain their right to submit a new request to the Superintendency, which will result in a new procedure.

Publication of Authorized Investment Administrators Art. 13.- The Superintendency will keep updated on its Website the details of persons authorized as investment administrators, detailing at least the following information:
a) Name of the investment administrator; b) Registry Entry Number; c) Date of authorization by the Superintendency; d) Name of the Manager for whom they work; and e) Type of Financial or Real Estate Funds administered.

Additionally, the Manager will keep updated on its Website the information referred to in the previous paragraph regarding the investment administrators working for it.

CHAPTER III
UPDATE OF INFORMATION OF INVESTMENT ADMINISTRATORS

Update of Information in the Superintendency
Art. 14.- The Manager will communicate to the Superintendency any change related to the information presented for the Registration request of their investment administrators, within three business days following the occurrence of the event, submitting the corresponding documentation within a maximum time limit of five business days subsequent to such communication. This time limit may be extendable in justified cases, at the request of the Manager. In the case where the Manager is interested in having its investment administrators administer other types of Funds compared to those previously authorized to the investment administrator by the Superintendency, the Manager must submit to the Superintendency the respective request attaching the documentation established in Article 8, subsection c), of these Standards, in order to support the administrator's capacity to manage the new type of Funds for which authorization is requested. The Superintendency will proceed to resolve the request in accordance with Articles 9 and 10 of these Standards.

Art. 15.- The decision to appoint or dismiss the investment administrator will be the responsibility of the Manager.
It is the Manager's responsibility to inform the Superintendency of the termination of the investment administrator's duties and the interim measures that will be taken to replace them, on the next business day following the occurrence of the event, attaching the corresponding supporting documentation. In case of dismissal, the Manager must reason and document the reasons for the same. If the withdrawal of the investment administrator is due to a change of Manager, the new contracting entity is obligated to inform this situation to the Superintendency on the same day the investment administrator begins duties and submit a request for modification of the registry entry, attaching a copy of the labor contract and an update of the information related to the Registry within a maximum time limit of three business days counted from the start of duties of the investment administrator. If the withdrawal is not due to a change of Manager, the investment administrator will have a time limit of one year to join another Manager to perform the function of investment administrator; during this time limit, the Superintendency will suspend the registry entry to operate as an investment administrator. If during this time limit, the investment administrators show interest in having their registry entry reactivated, the new contracting Manager must submit to the Superintendency a request for modification of the registry entry, attaching a copy of the labor contract and an update of the information related to the Registry within a maximum time limit of three business days counted from the start of duties of the investment administrator. Once the one-year time limit mentioned in the previous paragraph has elapsed and if the investment administrator has not joined a new Manager, the Superintendency will proceed to cancel the registry entry and the authorization to operate as an investment administrator. Notwithstanding the foregoing, the interested party, upon joining another Manager again, will maintain their right to have a new authorization processed, for which the contracting Manager must initiate the authorization and registration process again.

Responsibilities of the Manager
Art. 16.- The Manager must keep an updated record available to the Superintendency when requested, which must contain at least the following information:
a) Full name of the investment administrator, profession, type and number of personal identification document, Tax Identification Number, address, phone number, and nationality; b) Date and number of the session in which they obtained authorization to operate as an investment administrator from the Superintendency; c) Date of hiring of the investment administrator; d) Date of withdrawal of the investment administrator, where applicable; and e) Signature of the investment administrator. The Manager is responsible for ensuring that the investments of the Funds are administered only by persons who meet the requirements for authorization and registration in the Registry of investment administrators established in these Standards and who have been registered with the Superintendency. In case that, having been granted the corresponding authorization by the Superintendency, any non-compliance with the requirements for authorization and registration in the Registry of investment administrators occurs, the Manager must communicate this to the Superintendency within a maximum time limit of five business days counted from the date on which the Manager became aware of such circumstance.

Art. 17.- The Manager must design and implement each year a training plan directed at its investment administrators on topics related to their functions, in accordance with international best practices. The training received by the staff must be documented, which must be available to the Superintendency when requested. Investment administrators registered in the Registry must accredit every two years a minimum of forty hours of training on topics related to investment administration. The training received must be documented and included in the record of investment administrators maintained by the Manager.

CHAPTER IV
OTHER PROVISIONS AND VALIDITY

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Presentation of Information
Art. 18.- The documentation presented to the Superintendence, in compliance with what is provided for in these Standards, must be in Spanish and conform to the corresponding legal formalities, especially regarding:
a) The photocopies presented must be legible and certified by a Salvadoran notary, in those cases where the document can be certified; (1) b) The signatures that match in all types of documentation must be legalized by a Salvadoran notary; and c) Public or authentic documents emanating from a foreign country, as well as their photocopies, may be admitted without the need for legalization or apostille, provided they allow reasonable verification of their authenticity, integrity, and content, in accordance with what is established in Article 4-A of the Administrative Procedures Law. (2)

Prohibition
Art. 19.- Investment administrators may not manage investments of Funds other than the types that have been authorized by the Superintendence; they also may not provide their investment administration services, directly or indirectly, to companies linked to the Manager nor to the Custodian, to Stockbrokerage Houses, nor to Specialized Agents in Securities Valuation that have been hired by the Manager, as well as to companies linked to them.

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.

NDMC-03
TECHNICAL STANDARDS FOR THE AUTHORIZATION AND REGISTRATION OF INVESTMENT ADMINISTRATORS OF INVESTMENT FUNDS Approval: 15/07/2015 Validity: 31/07/2015

Unforeseen Aspects
Art. 21.- Aspects not provided for in regulatory matters in these Standards will be resolved by the Central Bank through its Standards Committee. (1)

Validity
Art. 22.- These Standards will enter into force from the thirty-first of July of two thousand fifteen.

MODIFICATIONS:
(1) Modifications to articles 2, 3, 8, 10, 18 and 21, substitution of article 9, and incorporation of articles 9-A and 9-B, approved by the Central Bank through its Standards Committee, in Session CN-14/2021, of October 4, two thousand twenty-one, with validity from October 21, two thousand twenty-one. (2) Modifications to articles 6, 18 and Annex No. 1, approved by the Central Bank through its Standards Committee, in Session CN-05/2026, of June 30, two thousand twenty-six, with validity from July 15, two thousand twenty-six.

NDMC-03
TECHNICAL STANDARDS FOR THE AUTHORIZATION AND REGISTRATION OF INVESTMENT ADMINISTRATORS OF INVESTMENT FUNDS Approval: 15/07/2015 Validity: 31/07/2015
Annex No. 1

MODEL OF SWORN DECLARATION FOR APPLICANTS FOR INVESTMENT ADMINISTRATORS OF INVESTMENT FUNDS

In the city of San Salvador, at the _______ hours of the day ________ of _______ of two thousand ____. Before me, _______ notary of the domicile of ______________ appears the gentleman _________ of __________________ years, (profession) _______, from the domicile _____________ whom I know (or do not know), holder of (or I identify by) Unique Identity Document number (or passport number)________, with Tax Identification Number _______, who acts in his own name, and TELLS ME: That in his capacity as applicant for investment administrator of Investment Funds working for the entity ___________________, UNDER OATH MAKES THE FOLLOWING DECLARATIONS: A) That he has not been judicially qualified as responsible for a negligent or fraudulent bankruptcy. B) That he has not been convicted by a final judgment in the country or abroad, for having committed or participated fraudulently in the commission of any crime. C) That he has not been judicially convicted for his participation in infractions to laws or norms of a financial nature. D) That it has not been judicially proven his participation in activities related to drug trafficking and related crimes, and with money laundering, terrorism financing and financing of the proliferation of weapons of mass destruction in the country or abroad. The undersigned notary certifies: that he explained to the appearing party about what is established in the Penal Code, regarding the crime of ideological falsity, regulated in article two hundred and eighty-four. Thus the appearing party expressed himself to whom I explained the legal effects of the present notarial act, which consists of _____ sheet(s) front and back; and having read it to him by me in a single act without interruption and in its entirety, he ratifies its content and we sign. I CERTIFY. (2) The Sworn Declaration must comply with what is established in the Notary Law.