Technical Standards for the Submission and Disclosure of Information of Investment Funds

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CN-04/2017
NDMC-13
TECHNICAL STANDARDS FOR THE SUBMISSION AND DISCLOSURE OF INFORMATION OF INVESTMENT FUNDS Approval: 07/28/2017 Validity: 08/25/2017

THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR, CONSIDERING:
I. That Article 6 of the Investment Funds Law establishes that it is the responsibility of the Central Reserve Bank of El Salvador to issue the Technical Standards necessary for the application of the aforementioned Law.
II. That Article 34 of the Investment Funds Law establishes that it is the permanent obligation of the Manager to disclose any fact or essential information regarding the Funds it administers or regarding itself; likewise, the Manager must publish on its website or other medium, a report that contains, among others, the value of the participation share, commissions, and expenses borne by the Fund. Additionally, the value of the Fund's equity and the aggregated structure of its investments must be published each month.
III. That Article 35 of the Investment Funds Law establishes that regarding reserved information, it shall be governed by what is provided in the Securities Market Law.
IV. That Article 35, letter h) of the Law on Supervision and Regulation of the Financial System, establishes that it is the responsibility of directors, managers, and other officials holding positions of direction or administration of the members of the financial system, the adequate disclosure of information, the timely availability of relevant information on the performance of their activities, the transfer of operations as well as the economic and financial status for decision-making by their governing bodies.
V. That Article 35, letter m) of the Law on Supervision and Regulation of the Financial System, stipulates that directors, managers, and other officials holding positions of direction or administration of the members of the financial system, must inform the Superintendence of all relevant facts, as determined in the technical standards issued for this effect.
VI. That in accordance with Article 99, letters a) and b) of the Law on Supervision and Regulation of the Financial System, the Central Reserve Bank of El Salvador is the institution responsible for the approval of technical standards related to the transparency of information by the supervised entities.
VII. That international best practices establish the need for comprehensive disclosure of any information to the market for investors' decisions as an important way to guarantee the protection of their rights, so that the investor has greater capacity to evaluate the associated risks, the potential fruits of their investments, and thus protect their own interests.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CN-04/2017
NDMC-13
TECHNICAL STANDARDS FOR THE SUBMISSION AND DISCLOSURE OF INFORMATION OF INVESTMENT FUNDS Approval: 07/28/2017 Validity: 08/25/2017

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 SUBMISSION AND DISCLOSURE OF INFORMATION OF INVESTMENT FUNDS

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards have as their object to regulate the submission and disclosure of information to the participants and to the Superintendence of the Financial System, by the Investment Fund Managers, regarding essential information or material events and information relative to the Funds they administer, as well as the disclosure of essential information or material events that affect the legal, economic, and financial situation of the Manager and its Funds.

Subjects
Art. 2.- The provisions established in these Standards are applicable to Investment Fund Managers authorized by the Superintendence of the Financial System for the administration of Investment Funds in accordance with what is established in the Investment Funds Law.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Senior Management: The Executive President, General Manager, or whoever acts in their place, and the executives who report to them; b) Central Bank: Central Reserve Bank of El Salvador; c) Financial Conglomerate: In accordance with Article 113 of the Banks Law, a Financial Conglomerate refers to the set of companies characterized by the fact that more than fifty percent (50%) of their respective share capital is owned by a controlling company, which is also a member of the conglomerate; d) Fund: Investment Fund; e) Open Fund: Open Investment Fund; f) Closed Fund: Closed Investment Fund; g) Manager: Investment Fund Manager; h) Business Group: In accordance with Article 5, letter n) of the Securities Market Law, it is that in which a company or set of companies has a common controller, who acting directly or indirectly participates with fifty percent (50%) as a minimum in the share capital of each of them or that has common shareholders who, directly or indirectly, are holders of fifty percent (50%) as a minimum of the capital of another company, which allows to presume that the economic and financial performance is determined by common interests or subordinate to the group; i) Investor: Natural or legal person interested in acquiring participation shares of an Investment Fund; j) Funds Law: Investment Funds Law; k) Participant: Investor in an Investment Fund; l) Related Persons: In accordance with Article 29 of the Funds Law, those regulated in Article 204 of the Banks Law shall be considered related persons to the Manager; and (2) m) Superintendence: Superintendence of the Financial System.

CHAPTER II
ESSENTIAL INFORMATION OR MATERIAL EVENTS

Essential information or material events
Art. 4.- Essential information or material events is considered to be any concrete fact or non-routine situation that, quantitatively or qualitatively, can significantly affect, positively or negatively, the legal, economic, and financial situation of the Manager and the Funds it administers, as well as the value of the participation shares of the Funds administered by it. The Manager will disclose in each case, if a certain fact or decision constitutes material events in accordance with what is established in their respective internal policies and what is established in these Standards. The disclosure and communication that the Manager carries out regarding the information of material events, must be in accordance with what is established in these Standards.

Disclosure and communication of essential information or material events Art. 5.- The Manager must disclose any essential information or material event regarding the Funds it administers or regarding itself, in accordance with what is established in Articles 6 and 7 of these Standards, and will submit to the Superintendence no later than the next business day that the fact occurs or is known to the Manager, in accordance with the model established in Annex No. 1 of these Standards. The documentation supporting these facts must be submitted to the Superintendence by means of a note signed by the Legal Representative or Attorney-in-fact of the Manager, or whoever is duly accredited before the Superintendence, within a maximum period of 30 days following the disclosure of the essential information or material events.

Without prejudice to what is established in the previous paragraph, in the case that the essential information or material events disclosed by the Manager corresponds to changes related to the Public Stock Register of the Superintendence, the Manager will submit the documentation within a maximum period of eight business days from the moment the change is formalized, in accordance with what is established in the "Technical Standards for the Authorization of Constitution, Start of Operations, Registration and Management of Operations of Investment Fund Managers" (NDMC-02).

Essential information and material events related to the Manager Art. 6.- For the purposes of these Standards, examples of essential information or material events regarding the Manager are any modification or information related to the following aspects:
a) Changes in controlling or relevant shareholders, administrators, or legal representatives; b) Changes in the Board of Directors, whether by resignation or appointment of any or some of its members; c) Distribution of dividends; d) Strategic alliances with other companies; e) Acquisitions or sales of shares of companies that are part of the business group or financial conglomerate; f) Investments in the capital of other companies, which exceed twenty percent (20%) of the capital of said companies; g) Seizure of assets of the Manager; h) Interventions by supervisory entities; i) Issuances; j) Increase or decrease of the social capital of the Manager; k) Appointment of External Auditor; and l) Process of merger and liquidation of the Manager. In no case will the previous list be considered exhaustive, and it will be the Manager's responsibility to treat as essential information or material events that meet the characteristics of what is established in Articles 4, 8, and 9 of these Standards.

Essential information or material events related to the Fund Art. 7.- For the purposes of these Standards, examples of essential information or material events regarding the Funds administered by the Manager are any modification or information related to the following aspects:
a) Operations carried out with Fund resources with companies that are members of its financial conglomerate, business group, or related persons to the Manager; b) Appointment and changes in the composition of the Surveillance Committee; c) Resignation, hiring, or substitution of Investment Administrators; d) Calls for meetings of participants, as well as the agreements made by the assembly of participants in their ordinary and extraordinary assemblies; e) Distribution of benefits; f) Form of constitution of the guarantee and changes in its amount; g) Report on the current Risk Classification; h) Signing of a contract with a price supply company; i) Signing of contract with the entity that provides the service of deposit and custody of securities; j) Start of placement of participation shares of a Fund; k) When the Fund reaches the minimum equity and number of participants in accordance with what is established in the Funds Law or in the internal regulations, as applicable; l) Changes in the company that provides the Manager with the participant registration service; m) Suspension of subscriptions or payment of redemption of the participation shares of the Fund; n) Acquisition or sale of shares for investments in companies, Securitization Funds, or Investment Funds for more than twenty percent (20%) of the capital of these; o) Process of transfer, merger, and liquidation of Funds; p) Modifications to the internal regulations and to the placement prospectuses of the Funds approved by the Superintendence; q) Essential information or material events that the Manager is certain about regarding companies, Securitization Funds, Investment Funds, or any issuance in whose values the resources of the Funds administered by the Manager are invested; r) Excesses in the investment or indebtedness limits of the Fund, in accordance with what is established in the Funds Law, the "Technical Standards for the Investments of Investment Funds" (NDMC-07) approved by the Central Bank through its Committee of Standards, and its respective internal regulations; s) Hiring or resignation of the External Auditor; t) Update of the risk classification of the Fund's issuance; u) Appointment of representatives of the beneficiaries of the guarantee; and v) Signing, changes in contracts with commercializing entities and sales agents to carry out the commercialization of participation shares. In no case will the previous list be considered exhaustive, and it will be the Manager's responsibility to treat as essential information or material events that meet the characteristics of what is established in Articles 4, 8, and 9 of these Standards.

CHAPTER III
DISCLOSURE OF ESSENTIAL INFORMATION OR MATERIAL EVENTS

Responsible Parties
Art. 8.- The Manager must appoint a person, who will have the responsibility for the submission of essential information or material events, in accordance with what is established in these Standards.
The appointment or modification of said appointment must be approved by the Board of Directors or by an official designated by it and communicated to the Superintendence within a maximum period of two business days, from its appointment. The person who has been appointed as responsible for the sending of information must have the following powers:
a) To qualify facts of a relevant nature; b) To respond on behalf of the entity to information requests regarding the disclosure of essential information or material events made by the Superintendence; c) To have access to the people who make up the organization of the Manager, managers, administrators, and directors with the object of corroborating the information in cases where it is necessary; and d) Other activities that the Board of Directors of the Manager considers necessary.

Internal policies and procedures
Art. 9.- The Manager must have policies and procedures, approved by the Board of Directors, for the identification of material events and for the management of essential information, which include aspects such as:
a) Mechanisms for identifying essential information or material events; b) Security measures for the custody, recording, and access to the information object of material events or essential information; c) Policy for the management of material event information in accordance with what is established in these Standards; d) Policy for the management of reserved information in accordance with what is established in Article 35 of the Funds Law, which includes procedures for the identification of reserved information and that incorporates potential events that can be qualified as reserved information; and e) Identification of persons with access to reserved information; as well as the deduction of responsibilities and behavioral standards of said persons. The internal policies and procedures approved by the Board of Directors must be submitted to the Superintendence within the first ten business days after their approval or respective modification. The Manager must keep an internal record of the essential information or material events identified and disclosed with their respective supporting documentation, indicating at minimum the information detailed in Annex No. 1 of these Standards.

Disclosure on website
Art. 10.- The Manager must disclose to the public investors or participants on their respective website a highlighted communication of essential information or material events and keep the same available to participants or investors in their offices, no later than the next business day that the fact occurs or is known to them. The Manager will ensure that the essential information or material events, disclosed on its website, is published on the date it was submitted to the Superintendence and the content thereof cannot differ from that informed to it. The Manager cannot disclose essential information or material events through other means without having previously or simultaneously communicated to the Superintendence in accordance with what is established in these Standards.

Art. 11.- The Manager must keep the essential information or material events published on its website for a period of two years from its communication.
The Manager may communicate to its participants through alternative means or agreed channels, the essential information or material events related to it and the Funds it administers.

Content of the communication
Art. 12.- The content of the communication of the essential information to be disclosed on the website, must be exposed in an objective manner and not generate confusion or distortions.
The communication must contain the elements defined in Annex No. 1 of these Standards, and include at the end of the communication the following note: "The truthfulness and timeliness of this Material Events Communication is the responsibility of [Name of the Manager disclosing the material event(s)]".

Reserved information
Art. 13.- In accordance with what is established in Article 35 of the Securities Market Law, the Manager, with the unanimous approval of the directors, may give the character of reserved to material events or essential information, which if known could harm its results and consequently, affect the interest of the Manager and the Funds administered by it. The agreement of directors must be communicated to the Superintendence no later than the next business day after its adoption, through a note signed by the Legal Representative, considering the following information:
a) A clear and detailed description of the material event or essential information considered as reserved information, specifying the dates on which the fact occurred or that it was known to the Manager specifying the reasons why it is requested to keep the notified fact with the character of reserved; b) Period during which the information is declared as reserved, as well as the justifications thereof; c) Certification of the Board of Directors agreement where it was approved unanimously to declare one or more material events as confidential or reserved; and d) Names of the persons who have access to the information classified as reserved.

In case that the reasons that motivated the classification as reserved information persist, the Manager may maintain said classification for which it must notify it again to the Superintendence attaching the reasons that motivate maintaining said classification. If before the expiration of the established period the reasons that gave rise to the material fact being considered as confidential or reserved disappear, the Manager must inform it to the Superintendence and, when applicable, to the corresponding stock exchange, for its disclosure.

CHAPTER IV
DISCLOSURE OF MODIFICATIONS OF THE CHARACTERISTICS OF AN INVESTMENT FUND

Publication of modifications of Open Funds
Art. 14.- Any change of the Fund that is a product of modifications to the internal regulations, placement prospectus, or the subscription model of participation shares, must have authorization from the Superintendence, which once authorized can be published by the Manager. The modifications approved by the Superintendence that require the publication of a highlighted notice in the newspaper indicated in the internal regulations of the Fund, in accordance with what is established in the "Technical Standards for the Authorization, Registration and Operation of Investment Funds" (NDMC-06) approved by the Central Bank through its Committee of Standards, must include the following:
a) Name of the Manager and the Fund; b) Summary of the modifications to be made, which allows identifying the previous situation and the modified situation; c) Date of authorization by the Superintendence and date of validity of the modifications; d) Indications that the participant has the right to redeem their shares without the charge of the redemption commission, when applicable, specifying the period for its realization; and e) Place and person designated to attend inquiries related to the publication. The modifications will enter into force fifteen days after the day of their publication in accordance with what is established in Article 56 of the Funds Law. Said publication and clarifying notes must be visible and written with a font size that investors and participants can clearly distinguish. The Manager must submit to the Superintendence a copy of the publication made no later than three business days after it has been carried out.

Obligation of communication to participants of Open Funds Art. 15.- Prior to the realization of the publication referred to in the previous article, the Manager must send to the participants, by the means they establish to receive communications, a detail of the content of each of the modifications made that allows identifying the previous situation and the modified situation, date of validity of the modifications, the period to carry out redemptions without the charge of commissions, when this corresponds, place and persons designated to attend inquiries related to the modifications.

Submission of modifications of Closed Funds
Art. 16.- The modifications that govern