Technical Standards for the Constitution of Joint Stock Companies by Public Subscription When the Subscription Sale Process is Conducted Through a Stock Exchange — SSF — SV

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

CONSIDERING:
I. That Article 9-A of the Securities Market Law establishes that, when a joint stock company intends to be constituted by public subscription, and the promoters wish for the subscription sale process to be carried out in a stock exchange, the norms contained in the Commercial Code and the regulations issued for such effect shall apply to it.
II. That Article 1 of the Law on Supervision and Regulation of the Financial System establishes that the Financial Supervision and Regulation System is constituted by the Superintendence of the Financial System, hereinafter referred to as "Superintendence", and by the Central Reserve Bank of El Salvador, hereinafter referred to as "Central Bank". The supervision of the members of the financial system and other supervised entities in accordance with this Law is the responsibility of the Superintendence; the approval of the Macroprudential Regulatory Framework necessary for the adequate application of this and the other laws regulating the members of the financial system and other supervised entities corresponds to the Central Reserve Bank of El Salvador.
III. That Article 2, second paragraph of the Law on Supervision and Regulation of the Financial System establishes that the proper functioning of the Financial Supervision and Regulation System requires, from the members of the financial system and other supervised entities, compliance with current regulations and the adoption of the highest standards of conduct in the development of their businesses, acts, and operations, in accordance with what is established in this Law, in the other applicable laws, in the regulations, and in the technical norms issued for such effect.
IV. That Article 7 of the Law on Supervision and Regulation of the Financial System establishes the entities subject to the supervision of the Superintendence of the Financial System.

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:

NDMC-33
TECHNICAL STANDARDS FOR THE CONSTITUTION OF JOINT STOCK COMPANIES BY PUBLIC SUBSCRIPTION WHEN THE SUBSCRIPTION SALE PROCESS IS CONDUCTED THROUGH A STOCK EXCHANGE Approval: 12/14/2023 Validity: 01/02/2024 TECHNICAL STANDARDS FOR THE CONSTITUTION OF JOINT STOCK COMPANIES BY PUBLIC SUBSCRIPTION WHEN THE SUBSCRIPTION SALE PROCESS IS CONDUCTED THROUGH A STOCK EXCHANGE

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to regulate the constitution of Joint Stock Companies by public subscription, only in the case where the promoters wish for the subscription sale process to be carried out in a Stock Exchange.
Excluded from the object and scope of these Standards are the constitution of companies that require prior authorization from the State through the office that, in accordance with the Law, is in charge of their supervision, inspection, control, or surveillance, which for the purposes of these Standards corresponds to the Superintendence of the Financial System, as established in Article 9-A of the Securities Market Law. Also excluded are companies whose constitution process requires requirements that prevent the public subscription process.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are natural or legal persons who intend to be constituted as a Joint Stock Company by public subscription and whose promoters wish for the subscription sale process to be carried out in a Stock Exchange.

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) Stock Exchange: The Exchange; c) Brokerage House: Stock brokerage house; d) Banking Institution: Banking institution in which the restricted bank account is opened; e) Program: Document drafted by the promoters, which must include at minimum, the draft of the Social Constitution Deed, and the fundamental elements of the company intended to be constituted, such as the bylaws, the characteristics of the shares to be issued, and the conditions to which the subscription process will be subject, as well as other aspects of the constitution, such as the proposal for the appointment of the promoters' representative;

NDMC-33
TECHNICAL STANDARDS FOR THE CONSTITUTION OF JOINT STOCK COMPANIES BY PUBLIC SUBSCRIPTION WHEN THE SUBSCRIPTION SALE PROCESS IS CONDUCTED THROUGH A STOCK EXCHANGE Approval: 12/14/2023 Validity: 01/02/2024 f) Promoter(s): Natural or legal person(s) who drives the constitution of a Joint Stock Company by using a Stock Exchange for the public sale process of the respective subscriptions, participating directly or through an intermediary or attorney-in-fact, in the elaboration of a program, the draft social deed, and the corresponding economic feasibility study, and carrying out the remaining acts aimed at completing the social constitution process; g) Advertising or Propaganda: Any form of communication directed to the public with the purpose of promoting, directly or through third parties acting on behalf of the promoters or their representative, the subscription of shares. In any case, it will be understood that there is advertising activity when the medium used to address the public is through phone calls, home visits, personalized letters, email, or any other physical or electronic medium, that is part of a dissemination, marketing, or promotion campaign; h) Representative of the Promoters: Natural or legal person who has been elected by the promoters with the purpose of representing them throughout the social constitution process by public subscription, in accordance with the procedure indicated in these Standards; i) Superintendence: Superintendence of the Financial System; and j) Public Subscription: It will be understood that there is public subscription when means of advertising or propaganda are used making an appeal for the subscription of shares.

CHAPTER II
PROCEDURE FOR THE APPLICATION FOR CONSTITUTION BY PUBLIC SUBSCRIPTION

On the procedure to present the application for constitution by public subscription Art. 4.- When it is intended to constitute a joint stock company by public subscription and the promoters wish for the subscription sale process to be carried out in a Stock Exchange, the representative thereof must request it through a Brokerage House, which, in turn, must request it from the Superintendence and subsequently from the Exchange. Such application must be accompanied by the program, the documentation referred to in Articles 9 and 10 of these Standards, and a study demonstrating the feasibility of the project, indicating the destination of the resources. Art. 5.- Once the competent authority of the Exchange for such effect has approved the application, it must inform said circumstance to the promoters through the respective House. In the same way, it must inform the Superintendence of the above, having to present to it for its respective verification the program, the feasibility study of the project, and the documentation referred to in Articles 9 and 10 of these Standards.

Content of the Draft Social Deed
Art. 6.- The draft social deed must, in all cases, meet the requirements demanded for such effect by the Commercial Code and other applicable legislation.

Content of the Feasibility Study
Art. 7.- The feasibility study must contain at least all the technical and financial information that allows potential investors to evaluate without any restriction the potential of the project, as well as its main disadvantages, such as, for example, cost/benefit report, return rate, or environmental impact, being mandatory to explicitly and clearly indicate the destination of the resources, which cannot be modified. Additionally, mention must be made of the capital required for its development, which must be equal to or greater than the minimum capital established in the Constitution Deed.

On the deposit of the program in the Commercial Registry Art. 8.- Once the program with the draft Constitution Deed has been approved by the Superintendence, the promoters must deposit a copy thereof in the Commercial Registry. Said copy must be recorded in a notarial act, and must be accompanied by the approval issued for such effect by the Superintendence. In accordance with what is established in Article 191 of the Commercial Code, it is an indispensable requirement that the corporate name appearing in the program and in the draft social constitution be distinct from that of any existing society on the date the deposit is made. In this sense and in accordance with the above, the corporate name appearing in the documentation subject to deposit cannot be used by any other society that intends to be constituted after the date of the aforementioned deposit; therefore, the Registrar of Commerce cannot proceed to authorize the registration of any society that intends to operate under the aforementioned name. The restriction mentioned in the previous paragraph will remain in force until any of the following circumstances occur:
a) Until one hundred eighty (180) business days have elapsed counted from the date the deposit was made; b) Until the Public Deed of social constitution is presented for its corresponding registration in the Commercial Registry, which must bear a reason signed by the Superintendence, stating its approval; and

NDMC-33
TECHNICAL STANDARDS FOR THE CONSTITUTION OF JOINT STOCK COMPANIES BY PUBLIC SUBSCRIPTION WHEN THE SUBSCRIPTION SALE PROCESS IS CONDUCTED THROUGH A STOCK EXCHANGE Approval: 12/14/2023 Validity: 01/02/2024 c) In the case where the Superintendence orders the definitive suspension of the subscription process, in accordance with what is provided in Article 37 of these Standards, a circumstance that must be notified by the Superintendence to the Commercial Registry for the corresponding effects.

On the proposal for the appointment of the representative of the promoters Art. 9.- The promoters of the project must, by unanimous agreement, propose a common representative, who in turn will serve as administrator of the funds contributed by the same promoters. Said agreement must be recorded in a notarial act.

On the representative of the promoters
Art. 10.- The representative proposed by the promoters must meet and demonstrate conditions of professional training, experience in the financial area, and especially regarding the management of funds, and without antecedents that cast doubt on their honesty and suitability in the management of third-party resources. For this effect, the proposed representative must present to the Exchange, together with the Notarial Act referred to in the previous article, their Curriculum Vitae, and likewise, all kinds of documentation by virtue of which they intend to prove the aforementioned facts.

On the revocation of the appointment of the representative of the promoters Art. 11.- If the promoters decide to revoke the mandate conferred upon the representative appointed by them, said revocation must be carried out through a Notarial Act, which must be notified at the latest three (3) business days from the date of granting the aforementioned notarial act, to the revoked representative, to the Superintendence, to the Exchange, and to the Brokerage House, as well as to any other person that the Superintendence deems necessary. The promoters will have the obligation to choose a new representative following the requirements indicated in these Standards for such effect.

On advertising, propaganda, and dissemination
Art. 12.- Once the Superintendence has approved the registration of the program with the draft social deed, and after the deposit thereof has been made in the Commercial Registry and the appointment of the representative of the promoters has been formalized notarially, this representative must disseminate the basic content of the program, at least once in two printed media of national circulation or another digital publication platform with greater or equal coverage, or on the website in accordance with what is established in the current legal framework, having to relate the number of the entry of the deposit in the Commercial Registry. Art. 13.- The Brokerage House will be responsible for presenting to the Superintendence, prior to its dissemination, and for the latter to pronounce on the compliance with the pertinent requirements, any project of advertising or propaganda aimed at disseminating and informing potential subscribers about the draft social constitution project. In the same way, for informational purposes, the Brokerage House in question must send a copy of any propaganda project to the Exchange. Art. 14.- Both in the program deposited in the Commercial Registry, and in any kind of advertising or propaganda made by the promoters, must be supervised by the Superintendence. However, said supervision does not imply certification on the viability or economic feasibility of the project nor on any

Under no case can any kind of advertising or propaganda be disseminated that has not been previously presented to the Superintendence for its respective verification of the aforementioned requirements.

CHAPTER III
ON THE PROMOTERS AND PUBLIC SUBSCRIPTION

On the contribution of the promoters
Art. 15.- The contributions made by the promoters must be made in cash, being mandatory that they sum at least fifty percent (50%) of the planned social capital. The representative of the promoters must request from the Superintendence the delivery of a certification in which at least the following circumstances will be related:
a) The purpose of the account; b) The manner in which the funds deposited in it will be released and the process in which said funds will be returned to the depositors, adhering in this latter case, to what is provided for such effect in these Standards; c) That the requirements mentioned in the preceding articles have been met and that therefore, there is no impediment to opening a restricted bank account. The request made by the representative of the promoters referred to in the first paragraph of this article must be accompanied by a certification issued by the Commercial Registry, stating that the deposit of the program has been made in the manner provided for in this regulation. Art. 16.-Consequently, for the purpose of opening the referenced account, the representative of the promoters must present to the respective Banking Institution the following documentation:

NDMC-33
TECHNICAL STANDARDS FOR THE CONSTITUTION OF JOINT STOCK COMPANIES BY PUBLIC SUBSCRIPTION WHEN THE SUBSCRIPTION SALE PROCESS IS CONDUCTED THROUGH A STOCK EXCHANGE Approval: 12/14/2023 Validity: 01/02/2024 a) The certifications referred to in the previous article; b) A notarially certified copy of the mandate conferred in their favor by the promoters; and c) Any other documentation required by the respective banking institution. In the case where the representative of the promoters is a Brokerage House and it is part of a financial conglomerate, it will be unable to open the referenced account in the Banking Institution that is part of its same conglomerate. Art. 17.- Once said account has been opened, the promoters must deposit in it the contributions that, by virtue of the documentation presented to the Superintendence, they have committed to make. The contributions made by the promoters and future subscribers may be subject to transfer between them or to third parties under any title, in accordance with the applicable provisions contained in the Civil Code and the Commercial Code. However, this circumstance must be notified in writing by the representative of the promoters to the Superintendence, to the Exchange, and to the respective Brokerage House, so that the latter proceeds to update the registry contemplated in Article 20 of these Standards.

On the restricted account
Art. 18.- The restricted account corresponds to the Bank account opened in a Banking Institution authorized to operate in the country by the Superintendence of the Financial System, opened by the Representative of the Promoters in the name of the company intended to be constituted, in which all amounts of money contributed as subscription by the promoters and future subscribers will be deposited. The funds deposited in this account cannot be withdrawn until any of the following circumstances occur:
a) That the society has been constituted within the term fixed in this norm for such effect; b) That after the term fixed for the constitution of the same has elapsed, it has not been possible; c) Or when, through a reasoned resolution, the Superintendence orders the definitive suspension of the public subscription process in accordance with what is provided in Article 37 of these Standards. In any case, for the banking institution in question to proceed to open this type of account, it will be necessary for the Representative of the Promoters to present the certification referred to in Article 15 of these Standards.

On the immobilization of funds
Art. 19.- The funds deposited in the restricted account cannot be withdrawn until any of the following circumstances occur:
a) That the testimony of the public deed of constitution of the society has been registered in the Commercial Registry within the term established in these Standards, when the Superintendence communicates to the respective banking institution that the society could not be constituted within the fixed term; and b) When the Superintendence orders, through a reasoned resolution, the definitive suspension of the public subscription process of shares.

On the Registry of Contributions
Art. 20.- The respective Brokerage House will have the obligation to keep and update at least every fifteen (15) days, a detailed registry of the contributions made by the promoters. Said registry must contain at least the following information:
a) The name of each subscriber; b) The date of each contribution; c) The amount of each contribution made; d) The sum of the contributions made weekly; and e) The detail of the subscriptions that have been subject to transfer, if applicable.
The respective Brokerage House must notify in writing at least biweekly, the status of said registry, to the representative of the promoters, to the Banking Institution where the restricted account is opened, to the Exchange, and to the Superintendence.
Notwithstanding the above, the Superintendence may request at any time from the Brokerage House or from the Banking Institution where the restricted account is opened, any kind of information that in its criterion would be necessary to find out the status in which it was found on that date.
In any type of certification or statement that the banking institution issues regarding the status of the restricted account, mention must be made of the immobilization of the funds.

On the Public Subscription
Art. 21.- Once the requirements referred to in the previous articles have been met and once the promoters have deposited in the restricted account the contributions corresponding to each of them and therefore, the total amount of the capital they jointly obligated to pay is deposited in it, the Brokerage House must notify said circumstance in writing to the representative of the promoters, to the Superintendence, and to the Exchange, attaching to said notification a certification issued by the Banking Institution in which said circumstance is stated. With the above, the Superintendence will authorize the public sale process of subscriptions. The process of