TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL PACTS OF INSURANCE COMPANIES

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

CONSIDERING:

I. That Article 4 of the Insurance Companies Law establishes that insurance companies constituted in El Salvador must be organized and operate as indefinite-term anonymous companies, with fixed capital divided into registered shares, and may adopt any name they deem convenient, which must be different from that of any other existing company. They may operate as general insurance companies, life insurance companies, or specialized exclusively in surety bonds.

II. That Article 8 of the Insurance Companies Law establishes that the certified copy of the deed of incorporation must be presented to the Superintendency of the Financial System to verify whether the terms stipulated in the social pact comply with the previously authorized projects and whether the social capital has been effectively paid in accordance with the authorization.

III. That Article 16 of the Insurance Companies Law establishes that insurance companies may increase their social capital at any time, as established in Article 89 of the aforementioned law.

IV. That Article 89 of the Insurance Companies Law establishes the procedure that an insurance company must follow to modify its social pact.

V. That Article 3 letter b) of the Law on Supervision and Regulation of the Financial System establishes that it is the competence of the Superintendency of the Financial System to authorize the constitution, operation, 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 provisions established regarding the matter.

VI. That Article 4 letter d) of the Law on Supervision and Regulation of the Financial System establishes that the Superintendency shall have the power to authorize the public promotion, constitution, operation, and start of operations, modification of the social pacts and bylaws, and, where applicable, the merger of the members of the financial system in accordance with what is provided in the special laws on the matter.

VII. That Article 7 letter e) of the Law on Supervision and Regulation of the Financial System establishes that insurance companies, their branches abroad, and the branches of foreign insurance companies established in the country are subject to the supervision of the Superintendency of the Financial System.

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THEREFORE,

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

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL PACTS OF INSURANCE COMPANIES

CHAPTER I

OBJECT, SUBJECTS, AND TERMS

Object

Art. 1.- These Standards aim to establish the information requirements and procedures that insurance companies must follow when requesting authorization to modify the social pact; as well as the authorization for merger and the procedures that must be followed at the Superintendency of the Financial System to process such request.

Subjects

Art. 2.- The subjects obliged to comply with the provisions established in these Standards are the insurance companies constituted in the country.

Terms

Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:

a) Shareholder: Owners of the shares of the insurance companies;

b) Law: Insurance Companies Law;

c) Social Pact: Constitutive and organizational instrument of the insurance company; and

d) Superintendency: Superintendency of the Financial System.

CHAPTER II

ON INFORMATION REQUIREMENTS FOR MODIFICATION OF SOCIAL PACTS

Holding of General Shareholders' Meetings

Art. 4.- Prior to requesting authorization to modify the social pact, Insurance Companies must carry out the publications of the call for the respective Extraordinary General Meeting of Shareholders, which must have been published fifteen days in advance of the date of celebration of said Meeting, unless the social pact specifies a longer period, in accordance with what is established in the Code of Commerce.

The publications of said call must have been carried out three times, in the Official Journal and in a printed medium of national circulation or another digital publication platform with greater or equal coverage or on their website, in accordance with what is established in the current legal framework, alternately as appropriate.

The agreement to increase capital, mergers, or other modifications to the social pact must be adopted in an Extraordinary General Meeting of Shareholders in accordance with what is provided in the Code of Commerce.

In the case where the shareholders or representatives of all the shares into which the social capital of the Insurance Company is divided are already assembled and agree to install the meeting for the purpose of agreeing on the modification of the social pact, the call to the Extraordinary General Meeting of Shareholders will not be required, and the copy or evidence of the publications of the respective call referred to in letter c) of Article 5 of these Standards will not be presented. This, as provided in Article 233 of the Code of Commerce.

In the case of an increase in social capital, as a consequence of investment deficits or insufficiency of net equity, the increase must be paid in cash, within a period not exceeding sixty days, in accordance with what is regulated in Article 54 of the Law.

In the event of a decrease in capital to absorb losses in accordance with what is established in Article 89 of the Law, the agreement must be taken by an Extraordinary General Meeting of Shareholders specially called for this purpose and can only be carried out with the authorization of the Superintendency.

Request for authorization for modification of the social pact by the increase of social capital

Art. 5.- When an Insurance Company agrees to increase its social capital, it must request authorization from the Superintendency to modify the social pact. The request must be signed by the person designated to execute the agreement to increase the social capital or by the legal representative, accompanied by the following information:

a) Certification of the point in the minutes of the Extraordinary General Meeting of Shareholders, issued by its secretary, where the agreement on:

i. The amount of the increase in social capital and its form of payment; and

ii. The modifications of the relevant clauses of the social pact of the Insurance Company are found.

b) Report from the external auditor, which must contain the following:

i. The amount of social capital to be increased, the number of shares it represents, their nominal value, and the class of shares to be issued;

ii. The list of shareholders subscribing to the increase in capital, detailing the paid and unpaid amounts; regarding the paid amount, the account in which it is registered must be indicated;

iii. The result of its investigation regarding verifying compliance with Article 142 of the Code of Commerce, when dealing with capital increases paid in money;

iv. The result of its investigation regarding verifying compliance with Article 174 of the Code of Commerce; and

v. If the increase must be carried out with accumulated profits, it must inform that these are reflected in the accounting, specifying the period to which the profits to be capitalized correspond, mentioning the accounting account where they are registered. Under no circumstances can profits that are registered as undistributed be capitalized.

c) Copy or evidence of the publications of the call for the respective Extraordinary General Meeting of Shareholders;

d) Draft modification of the clauses of the social pact;

e) Sworn declaration of the legal representative, when dealing with capital increases paid in money, in a notarial instrument, according to Annex No. 1 of these Standards, where it affirms that the Insurance Company has not granted loans or advances on the shares that have been issued, and a report of the last loan granted by the Insurance Company to the shareholders;

f) Sworn declaration of the shareholder, in a notarial instrument, according to Annex No. 2 of these Standards, to which supporting documentation on the origin of the funds contributed for the increase in social capital must be attached, specifying whether they come from bank loans, dividends received from other companies, savings accounts, current accounts, or other sources. If the shareholder is a legal entity, the declaration must be made by its Legal Representative. This requirement will not be applicable when the increase in capital of the Insurance Company is carried out entirely with resources coming from the capitalization of reserves and distributable profits from previous years; and

g) Copy or evidence of the publications of the agreement to increase social capital, which must have been published in the Official Journal in accordance with what is provided in the Code of Commerce and once in a printed medium of national circulation or another digital publication platform with greater or equal coverage, or on their website, in accordance with what is established in the current legal framework.

Decrease in social capital

Art. 6.- When the Insurance Company intends to modify its social pact by reducing the social capital, authorization must be requested from the Superintendency for

Approval: 15/08/2024 TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL PACTS Validity: 30/08/2024 OF INSURANCE COMPANIES

the General Meeting of Shareholders to agree to such reduction.

Art. 7.- Subsequent to what is described in Article 6 of these Standards, the Insurance Company must present to the Superintendency the request for authorization for modification of the social pact by decrease in social capital, which must be signed by the person designated to execute the decrease in social capital or by the legal representative, attaching the following documentation:

a) Certification of the point in the minutes of the Extraordinary General Meeting of Shareholders, issued by its secretary, where the corresponding agreement is found, which must contain the following:

i. The list of the authorization for the decrease in capital, issued by the Superintendency;

ii. The amount of the decrease in social capital, indicating whether it is a decrease in the nominal value of the shares or an amortization thereof; and

iii. The modifications of the relevant clauses of the social pact of the Insurance Company.

b) Draft of the deed of modification of the clauses of the social pact;

c) Copy or evidence of the publications of the call for the respective Extraordinary General Meeting of Shareholders; and

d) Copy or evidence of the publications of the agreement to decrease social capital, which must have been published alternately in the Official Journal in accordance with what is provided in the Code of Commerce and three times in a printed medium of national circulation or another digital publication platform with greater or equal coverage, or on their website, in accordance with what is established in the current legal framework.

Art. 8.- In the case of a decrease in capital to absorb losses, in accordance with what is established in Article 89 letter b) of the Law, the provisions contained in Articles 30, 181, and 182 of the Code of Commerce will not apply.

Likewise, under no circumstances will the capital of the Insurance Company be authorized to be reduced below the minimum established by Law or to contravene what is provided in Article 30 thereof, in accordance with what is established in Article 17 of the Law.

By Merger

Art. 9.- When two or more Insurance Companies intend to merge, each of them must take the agreement in an Extraordinary General Meeting of Shareholders, specially called for this purpose.

Art. 10.- The person designated to execute the merger or the legal representative of the absorbing Insurance Company must present a request to the Superintendency for

Approval: 15/08/2024 TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL PACTS Validity: 30/08/2024 OF INSURANCE COMPANIES

authorization for the merger.

The request must contain the type of merger to be carried out, the reasons and justification for the decision to merge, and the Insurance Companies involved. The following documentation must be attached to said request:

a) Certifications of the point in the minutes of the Extraordinary General Meetings of Shareholders, issued by the secretaries of the Insurance Companies to be merged, where the corresponding agreement is found;

b) Copy or evidence of the publications of the call for the respective Extraordinary General Meetings of Shareholders, which must have been published in the Official Journal in accordance with what is provided in the Code of Commerce and three times in a printed medium of national circulation or another digital publication platform with greater or equal coverage, or on their website, in accordance with the current legal framework. The publications must be fifteen days in advance of the date of the aforementioned Meeting, through the previously described means and alternately, as appropriate;

c) Merger plan containing a projected schedule of activities to be developed to execute the merger. Additionally, this must also contain the plan for the merger process at the technological level and validation of its functioning, detailing at minimum the following:

i. Description of the new information technology area including at minimum: organizational chart of the area, strategic plan, schedule of the merger project, security tools, physical location of the data center and alternate site;

ii. Description of all implemented computer services, including for outsourced services, the provider's information;

iii. Inventory of applications that will remain in production, including description and characteristics;

iv. Data migration plan;

v. Communication diagrams (in which the composition of the network infrastructure of the Insurance Companies can be visualized), including links or connections to external Insurance Companies, as well as whether the equipment consists of physical and/or virtual servers;

vi. Risk analysis and information security management system, implemented or to be implemented, including at minimum the Computer Security Policy; and

vii. Documentation of the Information Technology (IT) tests that will be carried out in the merger process.

d) Risk management manuals and policies: credit, operational, market, liquidity, and anti-money laundering, counter-terrorist financing, and counter-proliferation of weapons of mass destruction;

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e) Projected Financial Statements of the absorbing company consolidated with the absorbed companies;

f) Projected net equity of the absorbing company consolidated with the absorbed companies;

g) Documentation establishing the no-objection of the head office to carry out the merger, where applicable;

h) Updates carried out by the merger process, referring to the following:

i. Business Impact Analysis (BIA);

ii. Business Continuity Plan (BCP); and

iii. Disaster Recovery Plan (DRP).

i) Action plan with defined dates and responsibilities regarding the compliance and management of risks: operational, technical, market, liquidity, anti-money laundering, counter-terrorist financing, and counter-proliferation of weapons of mass destruction, to be implemented by the absorbing Insurance Company;

j) Detail of the number of agencies and/or establishments, number of employees of the Insurance Companies before and after the merger; and

k) Detail of the image change process and substitution of stationery, if applicable.

Art. 11.- Once authorization from the Superintendency to carry out the merger is obtained, the agreement will be registered in the Commerce Registry. The registration of the merger agreement and the last balance sheet of the Insurance Companies must be published in the Official Journal in accordance with what is provided in the Code of Commerce and three times in a printed medium of national circulation or another digital publication platform with greater or equal coverage, or on their website, in accordance with the current legal framework.

Art. 12.- After the merger agreement is registered, the absorbing Insurance Company will present a request to the Superintendency to modify the social pact, which must be signed by the person designated to execute the merger or by the legal representative, attaching the following documentation:

a) The modifications of the relevant clauses of the social pact of the Insurance Company;

b) Draft of the deed of modification by merger of the companies;

c) Copy or evidence of the publications of the merger agreement, which must have been published in the Official Journal in accordance with what is provided in the Code of Commerce and three times in a printed medium of national circulation or another digital publication platform with greater or equal coverage, or on their website, in accordance with the current legal framework;

d) Table containing the shareholding composition of the Insurance Company after the merger, detailing the shareholding percentage of each of the merged Insurance Companies, number of shares, and amount of social capital,

Approval: 15/08/2024 TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL PACTS Validity: 30/08/2024 OF INSURANCE COMPANIES

as well as the detail of the nominal value of each share and the value at which it was traded;

e) Organizational structure of the new Insurance Company or of the new financial group once the merger takes place, where applicable;

f) Certifications issued by the External Auditors of the involved companies regarding that the social capital is fully subscribed and paid; and

g) Documentation in the Information Technology (IT) tests that will be carried out in the merger process, as well as user minutes or certification and internal audit review reports.

Art. 13.- When the merger process results in a distinct Insurance Company, the creation of the new Insurance Company will be subject to the provisions on the constitution of an insurance company.

Modification for other causes

Art. 14.- For the authorization of modification of the social pact for any other cause, the Insurance Company will present a request to the Superintendency.

The request must be signed by the person designated to execute the agreement or by the legal representative, attaching the following documentation:

a) Certification of the point in the minutes of the Extraordinary General Meeting of Shareholders, issued by the secretary of the Insurance Company, where the agreement on:

i. The approval of the modification of the social pact; and

ii. The modifications of the relevant clauses of the social pact of the Insurance Company are found.

b) Copy or evidence of the publications of the call for the respective Extraordinary General Meetings of Shareholders; and

c) Draft of the deed of modification including the reforms to the social pact of the Insurance Company.

Art. 15.- The requests and documentation referred to in this chapter of these Standards, depending on the case of modification, may be presented through the means made available by the Superintendency, which may be electronic. In any case, the period referred to in the first paragraph of Article 16 of these Standards will begin to run from the next business day after the respective request has been presented.

For the compliance with the documentation requested in the articles indicated in the previous paragraph, which is already in the possession of the Superintendency duly updated and whose effects have not expired for legal reasons, it will not be necessary to present it

Approval: 15/08/2024 TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL PACTS Validity: 30/08/2024 OF INSURANCE COMPANIES

again, the Insurance Company must refer to this situation in the presentation of the request.

CHAPTER III

PROCESSING OF THE REQUEST

Procedure for authorization of modification of the social pact

Art. 16.- Upon receipt of the request for authorization for modification of the social pact in accordance with what is established in Articles 5 to 14 of these Standards, the Superintendency will proceed to verify compliance with the requirements defined in the Law and in these Standards, having a maximum period of twenty business days to authorize or deny the request.

If the request is not accompanied by the complete and proper information detailed in Articles 5 to 14 of these Standards, the Superintendency, due to the lack of necessary requirements, may require the Insurance Company to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of said Insurance Company when there are reasons justifying such extension.

The Superintendency in the same notice will indicate to the Insurance Company that, if it does not complete the information within the aforementioned period, the request will be archived without further procedure, without prejudice to its right to present a new request.

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If, after analyzing the documentation presented in accordance with articles 5 through 14 of these Standards, the Superintendent has observations or when the documentation or information presented is insufficient to establish the facts or information intended to be accredited; the Superintendent may warn the Insurance Company to remedy the deficiencies communicated to it or to present additional documentation or information requested.

The Insurance Company 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 Superintendent.

The Superintendent may, through a reasoned resolution, extend the period indicated in the previous paragraph by up to another ten business days, when the nature of the observations or deficiencies warned requires it.

Extension Period

Art. 17.- The Insurance Company may submit a request for extension of the period indicated in the fifth paragraph of article 16 of these Standards to the Superintendent, before the expiration of said period, stating the grounds for the request and proposing, if applicable, the relevant evidence.

The extension period may not exceed 10 business days and will begin on the next business day following the expiration date of the original period.

Suspension of the Period

Art. 18.- The period of twenty business days indicated in the first paragraph of article 16 of these Standards will be suspended for the days that elapse between the notification of the request to complete information or documentation referred to in the second and fifth paragraphs of said article, until the observations required by the Superintendent are remedied.

Resolution

Art. 19.- Once the complete documentation has been presented in due form, the Superintendent will issue the resolution authorizing or denying the request for modification of the social agreement, which will be notified within a maximum period of three business days from the date the resolution is issued.

Art. 20.- With the aforementioned resolution, the Insurance Company will proceed to grant the public deed of modification of the social agreement, which it must present to the Superintendent so that it adds a note stating the favorable qualification, so that it can be registered in the Commercial Registry.

Art. 21.- Once the public deed is registered in the Commercial Registry, the Insurance Company must publish a notice of modification, only once, in two printed media of national circulation 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.

After carrying out the process referred to in this article, a copy of the public deed and evidence of the publications must be sent to the Superintendent.

CHAPTER IV

OTHER PROVISIONS AND VALIDITY

Regarding the capitalization of profits

Art. 22.- The capitalization of profits registered as undistributed at the close of the accounting year, as well as the surplus from the revaluation of assets, will not be authorized, except if it has been carried out by cash sale. Capital increases will also not be authorized when they come from accumulated profits and the Insurance Company presents losses in the current exercise.

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Approval: 15/08/2024 TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL AGREEMENTS Validity: 30/08/2024 OF INSURANCE COMPANIES

Sanctions

Art. 23.- 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.

Repeal

Art. 24.- These Standards repeal the "Standards to Authorize Modifications to Social Agreements due to Capital Increases of Insurance Companies" (NPS4-08), approved by the Board of Directors of the Superintendency of the Financial System in Session No. CD-61/1999, of August 26, 1999, whose Organic Law was repealed by Legislative Decree No. 592 which contains the Law on Supervision and Regulation of the Financial System, published in Official Diary No. 23, Volume No. 390, dated February 2, 2011.

Transitional

Art. 25.- Requests presented in accordance with what is established in the "Standards to Authorize Modifications to Social Agreements due to Capital Increases of Insurance Companies" (NPS4-08) and which were pending at the time these Standards enter into force, will be continued and concluded in accordance with the regulations under which they began.

Unforeseen Aspects

Art. 26.- Aspects not provided for in the regulatory matter in these Standards will be resolved by the Central Reserve Bank of El Salvador through its Standards Committee.

Validity

Art. 27.- These Standards will enter into force as of the thirtieth of August two thousand twenty-four.

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Approval: 15/08/2024 TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL AGREEMENTS Validity: 30/08/2024 OF INSURANCE COMPANIES

Annex No. 1

SWORN DECLARATION OF THE LEGAL REPRESENTATIVE REGARDING LOANS OR ADVANCES GRANTED ON SHARES

In the city ___________________, at ___ hours on the day __________ of ____ of two thousand _______.

Before me, _______________________, notary of this domicile, appears ___________________ of ______ years of age, _________________ (profession), from the domicile of ___________________, whom I know, holder of his/her Unique Identity Document Number ___________ (or Passport Number ___________), acting in his/her capacity as President and Legal Representative of ____________________, S.A., a position I certify as legitimate and sufficient having had the following documents in view: _______________________________________________________; and under oath HE/SHE SAYS: That as of today, the Insurance Company he/she represents has not granted financing or advances for the purchase of the shares issued by the entity he/she represents. Furthermore, he/she details below the shareholders to whom his/her entity has granted loans (mentioning the last loan granted):

Loan or Advance Number	Shareholder Name or Business Name	Loan Amount	Loan Purpose	Date of Granting
Xxxxxxxxx	Xxxxxxxxxxxxxx	xxxxxx	xxxxxxx	xxxxxxxx
Xxxxxxxxx	Xxxxxxxxxxxxxx	xxxxxx	xxxxxxx	xxxxxxxx

This was expressed by the declarant, to whom I explained the legal effects of this notarial act which consists of __ pages; and having read it to him/her by me in a single act, without interruption and in its entirety, he/she ratifies its content and we sign: I CERTIFY.

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Approval: 15/08/2024 TECHNICAL STANDARDS FOR THE MODIFICATION OF SOCIAL AGREEMENTS Validity: 30/08/2024 OF INSURANCE COMPANIES

Annex No. 2

SWORN DECLARATION OF THE SHAREHOLDER REGARDING THE ORIGIN OF FUNDS FOR THE CAPITAL INCREASE

In the city ___________________, at ___ hours on the day __________ of ____ of two thousand _______.

Before me, _______________________, notary of this domicile, appears ___________________ of ______ years of age, _________________ (profession), from the domicile of ___________________, whom I know, holder of his/her Unique Identity Document Number ___________ (or Passport Number ___________), acting in his/her capacity as shareholder (or Legal Representative of the shareholder, a position I certify as legitimate and sufficient having had the following documents in view: _______________________________________________________) of the company ____________________; and under oath HE/SHE SAYS: That the funds to subscribe to the capital increase come from lawful activities, which originate from _____ (bank loans, dividends received from other companies, bank deposits or other sources, etc.); consequently, said funds are not related to any of the circumstances established in the Law Against Money Laundering and of Assets. This was expressed by the declarant, to whom I explained the legal effects of this notarial act which consists of __ pages; and having read it to him/her by me in a single act, without interruption and in its entirety, he/she ratifies its content and we sign: I CERTIFY.