Technical Standards for the Registration of Appraisers and Their Professional Obligations — SSF — SV

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-04/2021
NRP-27
TECHNICAL STANDARDS FOR THE REGISTRATION OF APPRAISERS AND THEIR PROFESSIONAL OBLIGATIONS

Approval: 29/03/2021
Validity: 19/04/2021

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

CONSIDERING:
I. That Article 3 of the Law on Supervision and Regulation of the Financial System establishes that the Superintendence of the Financial System is responsible for supervising the individual and consolidated activity of the members of the financial system, and other persons, operations, and entities mandated by the laws.
II. That Article 78 of the Law on Supervision and Regulation of the Financial System establishes that the Superintendence of the Financial System will organize and keep updated the registers entrusted to it by the laws, among which are those relating to Experts/Appraisers in the cases specified by law.
III. That Article 81 of the Law on Supervision and Regulation of the Financial System establishes the requirements that natural and legal persons must meet to be inscribed and maintained in the Register of Experts/Appraisers of the Superintendence of the Financial System.
IV. That Article 236 of the Banking Law and Article 45 of the Cooperative Banks and Savings and Credit Societies Law establish that the valuation of movable and immovable assets of banks and cooperative banks, as well as when legally required to value such assets received as collateral, will require that such valuations be carried out by Experts/Appraisers inscribed in the Superintendence.
V. That Article 37 of the Insurance Companies Law establishes that the valuation of immovable assets of insurance companies, or when legally required to value assets received as collateral, will require that such valuations be carried out by Experts/Appraisers inscribed in the Superintendence.
VI. That Articles 27 and 28 of the Regulations of Insurance Companies establish the procedure for valuing immovable assets of insurance companies and the requirements that Experts/Appraisers must meet to carry out such valuations.
VII. That Article 46 of the Asset Securitization Law establishes that securitization funds may be constituted in existing or to-be-constituted immovable assets and that these must meet at minimum that the immovable asset be valued by Experts/Appraisers inscribed in the Superintendence of the Financial System or in another register recognized by the Superintendence, using for the valuations practiced, methods of recognized technical value approved by it.

Approval: 29/03/2021
Validity: 19/04/2021
VIII. That Article 72 letter b) of the Asset Securitization Law establishes that the presentation of the issuance for entry in the Register will be accompanied, in addition to the documentation generally required for issuances, by the description of the technical valuation procedure of the assets to be securitized and of the Securitization Fund, among others.
IX. That Article 96 of the Investment Funds Law establishes that in the case where the assets to be valued are immovable, they must be valued by Experts/Appraisers inscribed in the Superintendence or in other entities whose registers it recognizes.

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:

TECHNICAL STANDARDS FOR THE REGISTRATION OF APPRAISERS AND THEIR PROFESSIONAL OBLIGATIONS

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards aim to regulate and establish the procedure for inscription and registration of natural or legal persons interested in being qualified and inscribed in the Register of Appraisers of the Superintendence of the Financial System, as well as the professional obligations they must comply with in the execution of their services in the activity of valuing movable and immovable assets.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are the natural or legal persons inscribed in the Register who, according to their specialization, provide their services to the Financial System, as well as persons interested in inscribing as Appraisers in the same. These Standards are also applicable to entities that hire the services of Appraisers, to which the provisions established in Article 27 and in Chapter VI of these Standards apply.

Approval: 29/03/2021
Validity: 19/04/2021
Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Biological assets: Refers to living animals or plants that are part of an entity's activity, either to be destined for sale as agricultural products or to be converted into other different biological assets; (1) b) Real estate assets: Immovable assets, lands, buildings, and constructions of all kinds adherent to the soil. Part of the real estate assets are; plants rooted in the soil, pending fruits, mine deposits, doors, windows, slabs, etc., of buildings, and in general, all natural objects or of use or ornamentation that are fixed and stable to the real estate, so that they form a single body with them; c) Central Bank: Central Reserve Bank of El Salvador; d) Asset: Movable or immovable asset subject to valuation; e) Entity or Entities: Entities supervised by the Superintendence of the Financial System; that the laws require that their movable and immovable assets be valued by Experts/Appraisers inscribed in the Register of the Superintendence; f) Fund: Real Estate Investment Funds, Real Estate Development Funds, and Real Estate Securitization Funds; g) Infrastructure: Part of the infrastructure necessary to support the superstructure of the building below the upper part of the pavement slab base, or the foundation slab; h) Urban immovable: Those that are cataloged by the city halls within urban zones of the different municipalities and districts, such as houses, buildings, and premises of all types; (3) i) Rural immovable: Those immovables located outside urban zones, situated in rustic lands and indispensable for the development of agricultural, livestock, or forestry activities, as well as for residential use, among others; (1) (3) j) NIT: Tax Identification Number; k) IVS: International Valuation Standards; (1) l) Infrastructure Works: Any vehicular or pedestrian access with the corresponding set of installations that allow the operation of public services such as: drinking water supply, sanitary sewerage or solid waste disposal, rainwater drainage, electricity, and telephone lines; m) Expert or Appraiser of the Financial System: Natural or legal person inscribed in the Register of the Superintendence of the Financial System, whose purpose is to exercise the activity of valuing movable and/or immovable assets in the Financial System, in accordance with the specialties authorized by the Superintendence; (3) n) Agricultural Product: Is the product already harvested, coming from the biological assets of the entity; (1) o) Register: Register of Appraisers of the Superintendence of the Financial System;

Approval: 29/03/2021
Validity: 19/04/2021 p) Reviewer: Person designated by the financial entity that has met the qualification and suitability requirements defined by it to perform the verification and review of the valuation report provided by the Expert/Appraiser, in compliance with the provisions established in these Standards and that, in case deficiencies are identified in it, will follow up until such deficiencies are remedied; (1) q) Superintendence: Superintendence of the Financial System; r) Urban Lands: Lands located within the urban growth of a population, which possesses all or some basic services for its functioning; s) Rural Lands: Lands located outside urban or urbanized zones, known as non-urbanized land. It can be agricultural, livestock, forestry, historical, archaeological, cultural land, or reserved for public service buildings, among others; (1) (3) t) Value: Any negotiable amount in an organized market, expressed in monetary terms; u) Market Value: The amount for which an Asset can be exchanged between interested and well-informed parties, who carry out a transaction under conditions of mutual independence; and (1) v) Replacement Value: The amount estimated as necessary to replace an Asset, if it were totally or partially destroyed by natural causes; this value is obtained from the Cost Approach. (1)

CHAPTER II
ON THE REGISTRATION OF APPRAISERS

On registration and authorization
Art. 4.- The Superintendence will keep a Register of Experts/Appraisers, authorized according to their specialization, to carry out the valuation of movable and immovable assets that entities expect to receive as collateral or susceptible of forming a patrimony, as well as the movable and immovable assets of the entity itself. In accordance with the experience and university or technical training of the Expert/Appraiser, they may request to be inscribed in one or more of the categories. The inscription enables them to provide valuation services to entities that the laws require that their movable and immovable assets be carried out by Experts/Appraisers inscribed in the Register of the Superintendence. (3)

Validity
Art. 5.- In accordance with what is established in Article 236 of the Banking Law and Article 45 of the Cooperative Banks and Savings and Credit Societies Law, the authorization of the inscription will have validity for a period of two years, which will be

Approval: 29/03/2021
Validity: 19/04/2021 renewable.

On the categories of Appraisers
Art. 6.- Natural or legal persons interested in being inscribed in the Register must indicate in the inscription request, the category or categories in which they wish to provide their services, among which are the following:
a) Urban and Rural Immovables for General Use:
i. Lands (urban and rural);
ii. Subdivisions and Parcelings; (1)
iii. Urbanizations;
iv. Buildings for any destination (lodging, education, health, commerce, government, residential, etc.);
v. Infrastructure; and
vi. Others analogous.
b) Assets for Agricultural and Industrial Use:
i. Lands (of agricultural and industrial vocation and use); (3)
ii. Subdivisions and Parcelings; (1)
iii. Urbanizations; (1)
iv. Buildings;
v. Infrastructure;
vi. Biological assets;
vii. Agricultural or agro-industrial products; and
viii. Others analogous.
c) Movable Assets in General:
i. Motor vehicles;
ii. Aeronautical assets;
iii. Machinery for all destinations;
iv. Equipment for all destinations;
v. Works of art; and (3)
vi. Other Movable Assets. (3)

Inscription Requests
Art. 7.- Inscription requests to the Register will be received twice a year, during the months of February and August, in accordance with publications made by the Superintendence in two newspapers of national circulation and on the website or social networks of the Superintendence. For the inscription requests to be processed, they must meet the requirements established in these Standards. The person whose inscription requests are denied either for not reaching the minimum score or for not complying with any of the requirements established in these Standards may present a new inscription request in the following reception periods.

CHAPTER III
ON THE INSCRIPTION PROCEDURE

For natural or legal person
Art. 8.- Natural and legal persons wishing to inscribe in the Register and remain in it must meet the following minimum requirements:
a) Independence, economic solvency, and not having been convicted of an intentional crime; likewise, they must not be a debtor, co-debtor, or guarantor in the members of the financial system of credits to which fifty percent (50%) or more of sanitation reserves have been constituted and not be in a state of bankruptcy, suspension of payments, or creditors' concurso; b) Have specialized university or technical training for the type of Asset to be valued, with at least three years of experience and prove knowledge for the valuation of the type of assets for which they wish to be authorized; c) Not be a director, administrator, manager, official, or employee of any member of the financial system. Once inscribed, Experts/Appraisers may provide their services in any of the members of the financial system, with the exception of those in which their spouse or cohabitant, or relatives within the fourth degree of consanguinity or second of affinity, have the quality of director, administrator, manager, official, or employee; d) Comply with the regulations applicable to them in the exercise of their professional duties; e) Natural persons wishing to inscribe in the Register must obtain the minimum qualification in the knowledge test established in Article 14 of these Standards; and f) In the case of legal persons, the above requirements will be applicable to their Legal Representative, to the members of the board of directors or equivalent body, and to the general manager, or the person acting in their place.

Information required from natural person
Art. 9.- The natural person interested in inscribing in the Register must present to the Superintendence the following:
a) Letter of request manifesting their interest in being qualified and inscribed in the Register, indicating the categories in which they wish to inscribe, in accordance with what is established in Annex No. 1 of these Standards; b) Curriculum Vitae; (3) c) Copy of university or technical degree, with the respective authentication of the Ministry of Education, or its equivalent for cases where the degree obtained is abroad; (3)

Approval: 29/03/2021
Validity: 19/04/2021 d) Certification of criminal records from the General Directorate of Penal Centers; (3) e) Copies of Identity Document, Tax Identification Number (NIT), which will be required in cases defined by the Tax Administration; and Taxpayer Registration Card for the Tax on the Transfer of Movable Assets and the Provision of Services, if applicable; (2) (3) f) Sworn declaration corresponding to the type of procedure to be carried out, in accordance with the Annexes of these Standards; g) Copy of documentation that proves the training received in matters of valuations, if any; and h) Documentation related to valuations carried out in the last three years.

Information required from legal person
Art. 10.- In the case of legal persons, the requirements of the previous article will be applicable to their Legal Representative, and those listed in letters b), c), d), e), and f) to the members of the board of directors or equivalent body and to the general manager, or the person acting in their place. Additionally, they must present the following documents:
a) Deed of constitution or constitution form for the case of simplified share companies and their modifications, duly inscribed in the Commerce Register. It must be specified within its purpose that the society can carry out valuations of movable or immovable assets; (3) b) Credential of the appointment of the Legal Representative, duly inscribed in the Commerce Register; and c) Copy of NIT and Taxpayer Registration Card for the Tax on the Transfer of Movable Assets and the Provision of Services, of the society. (3)

On Foreign Experts/Appraisers
Art. 11.- Foreign natural or legal persons wishing to inscribe as Experts/Appraisers must comply with the documentation established in these Standards and present the information with the apostille procedure, in the case of countries signatories of September 1996, published in the Official Journal No. 194, Volume No. 333, of October 16 of that same year, or with the procedure established in Article 334 of the Civil and Commercial Procedural Code.

Verification of information
Art. 12.- The Superintendence will verify that the documentation presented is complete and in due form and in the absence of necessary requirements, it may require applicants to present the missing documents within a period of ten (10) business days counted from the day following the notification, a period that may be extended at the request of the interested parties when there are reasons that justify it. (2)

Approval: 29/03/2021
Validity: 19/04/2021
The Superintendence in the same warning will indicate to the applicants that if the information is not completed within the aforementioned period, it will proceed without further procedure to archive the request, leaving them free to present a new request. (2) If after the analysis of the documentation presented the Superintendence has observations or when the documentation or information presented is not sufficient to support the facts or information intended to be accredited, the Superintendence will warn the applicant to remedy the deficiencies communicated to them or present additional documentation or information requested of them. (2) The natural or legal person will have a period of ten (10) business days from the day following the notification to remedy the deficiencies. The Superintendence may, by reasoned resolution, extend by up to another ten (10) business days, the period indicated in the previous clause, when the nature of the observations or deficiencies warned requires it.

Communication of the resolution
Art. 13.- The Superintendence will resolve on the inscription requests to the Register in accordance with the results of the evaluation of the same and communicate them to the interested parties within three (3) business days following the agreement of the Superintendence.

Evaluation Factors
Art. 14.- The evaluation of the requests of persons interested in inscribing in the Register of the Superintendence will be based on the following evaluation factors and scores:
The minimum qualification required for inscriptions in the Register will be seventy (70) points, per category.

Weighting of Factors
Art. 15.- The factors enumerated in the previous article will be weighted based on the criteria described below:
a) Knowledge Test (60 points for inscription): The natural person or the Legal Representative, in the case of a legal person, must take a written knowledge test, which will be different for each category in which they intend to be inscribed, whose minimum grade to obtain must be six (6) points out of ten (10). In case the minimum grade is not obtained, the other factors will not be evaluated. The test will evaluate the following technical aspects:
i. Valuation approaches for assets;
ii. Depreciation, concepts, foundations, parameters, and valuation criteria;
iii. Minimum content of valuation reports, established in these Standards;
iv. Knowledge of applicable regulations that provide technical criteria to the Expert/Appraiser and natural or legal person interested in being inscribed in the register, of the Urbanism and Construction Law, Environmental Law, laws or regulations related to the Development and Territorial Ordering of the municipalities and districts of El Salvador, as well as the regulatory framework for appraisal services performed to institutions of the financial system; and (3)
v. International Valuation Standards, issued by the International Valuation Standards Council. (3)
b) Academic Training (20 points for inscription): Twenty (20) points will be assigned to the interested party who proves university training related to the type of Asset to be valued according to the category requested. Ten (10) points will be assigned to the interested party who has technical training related to the type of Asset to be valued according to the category requested. (3) c) Work Experience (10 points for inscription): One (1) point will be granted to the interested party for each valuation report presented, signed by them; up to a maximum of ten (10) points which must be related to the category in which they wish to be inscribed. In the case of the legal person, it will be the Legal Representative who must meet this requirement. The valuations carried out in the three years prior to the date of the inscription request are to weight the factors of work experience. The lack thereof affects the weighting but is not limiting for the authorization in the Register.

Approval: 29/03/2021
Validity: 19/04/2021 d) Training in Valuations (10 points for inscription): Ten (10) points will be assigned to the interested party who proves training in valuation matters, up to a maximum of ten (10) points. The training must be related to the category in which they wish to be inscribed. The training must have been carried out in the five years prior to the date of the inscription request. (3)

Evaluation Factors Weighting

Knowledge Test 60%
Academic Training 20%
Work Experience 10%
Training in Valuations 10%
TOTAL 100%

Approval: 29/03/2021
Validity: 19/04/2021
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